Paul DietlChief Human Resources Officer

Commonwealth of Massachusetts

Transforming HR to a Shared Services Model

Overseeing and Managing Change: Three Case Studies

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Environment for 3 Case Studies

Key pressuresWhat agencies saidWhat the agencies were really saying

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Key pressures facing governments –facilitate change

Economic pressures and difficulties in balancing budgets and maintaining staffing levels.Rising expectations for government.Need to be more accountable to stakeholders.Struggling to provide more citizen-centric services with less funding.Ageing workforce and impending labor shortage create retention and recruitment issues.

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Challenges To Change

Inertia/Resistance to change – this is the way we’ve always done it. It’s more work (relationships, mandates, procedures, etc).Presumed loss of control – who calls the shots?Fear of failure – is it worth the risk?Opposition to standardization – let us decide what’s best and how to do it.Opposition to measurement – it’s a waste of time. Fear of accountability

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Challenges To Change: Just Leave Us Alone!

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Challenges To Change: Where Are We Going?

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What Were Agencies Really Saying?

Must protect our turf.

Fear of losing control of administrative resources/support.

Fear of misalignment of authority and responsibility.

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Three Case Studies

Three case studies: the Massachusetts experience from 1991 to the present.

The Office of Consumer Affairs & Business Regulation(1991 – Present).

The Central Business Office (1997 – 2002).

The Human Resources Division (2002 – Present).

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Office of Consumer Affairs & Business Regulation: ImplementationIn early 1990s administrative functions of 10 agencies merged to create Administrative Services Unit at Exec Office of Consumer Affairs & Business Regulation.

The driving motivation was budget savings.Implementation was characterized by top/down, centralized organization/management.

No involvement of affected Staff.Staff reassigned “in dead of night”.No reorganization plan, communications plan or change management plan.No performance agreements.

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Office of Consumer Affairs & Business Regulation: Results & Outcomes

In pursuit of budget savings shared services goal was allowed to devolve into a consolidated model with fewer resources.Absence of performance standards and data resulted in little accountability for either the ASU or the agencies.Several years of mixed performance.Perceived and actual loss of control and frustration.Climate of mistrust, defensiveness, ill will, no credibility.Agency heads claimed model did not work and wanted their people back.Some winners, mostly losers.The consolidation survived only because there were insufficient funds - no political will to change it back.

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Consumer Affairs: from Consolidated to Shared Services ModelIn the late 1990s:

Established Liaisons located at agencies.

Moved some responsibilities back to the agencies.

Better use of Technology/improved accountability.

Established performance parameters.

Several years of good will/enhanced support.

10 years later…move to true Shared Services Model.

So successful it is now the catalyst for moving ASU back up to Secretariat level.

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Central Business Office

1997 - 2002

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The Central Business Office (CBO): ImplementationIn the mid 1990s HR, procurement and payment functions of nineteen ANF agencies were consolidated.

The driving motivation was budget savings.Mandated from the “top” with no agency agreements.Little planning.Few standard operating procedures.Unclear outcomes.Agencies picked staff to transfer to CBO with little oversight of qualifications or prior job performance.Insufficient staff resources to fulfill the mandate.No performance agreements.

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Central Business Office: Results & Outcomes

In pursuit of budget savings shared services goal was again allowed to devolve into consolidated model with far fewer staff.

The model was attacked due to agencies' loss of staff and control.

A couple years of mixed/poor performance.

Never developed trust and accountability of agencies.

Chief sponsor left office.

The consolidated model “blew up” and business functions were returned to the agencies.

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Human Resources Division

2002 - Present

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Human Resources Division (HRD)

In the 1980s and 1990s HR was focused on transactions and centrally controlled by HRD.

HR processes were rule-bound and paper-based.Performance equaled compliance.Very little performance or management data.

In 2001 Commonwealth suffered a severe fiscal crisis.HRD staff reduction of 35%.Transition in HRD leadership.Transition in Administration.

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Human Resources Division (continued)

Confluence of these events forced HRD to take risks, both at HRD and at the agencies.

In 2001–2003 HRD focused on leveraging technology to streamline business processes and reduce paper.

In 2004 HRD began, and continues to implement the Shared Services model.

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Setting the Stage: Shared Services Model

• Higher Costs

• Variable standards

• Different ControlEnvironments

• Duplication of effort

• Unitsmaintaincontrol ofdecisions

• Recognitionof localpriorities

• Responsiveto clientneeds

• Pooledexperience

• Enhancecareerprogression

• Synergies

• Lean, FlatOrganization

• Recognitionof groupfunctions

• Disseminationof best practices

• Commonsystems &support

• Consistentstandards& Control

• Economiesof scale

• Criticalmass of skills

• Less responsive

• Central overheadcosts

• Less responsiveto agency needs

• More remote fromagencies/divisions

Decentralized to Decentralized to agencies/divisionsagencies/divisions

CentralizedCentralizedin HRDin HRD

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Strategy for Change

HRD secured the support of key stakeholders.

HRD did not limit its goals to consolidation or decentralization of transactions, but focused on performance enhancements and the opportunity for new services.

HRD fundamentally restructured its mission as a strategic partner with its constituent agencies.

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Key Attributes of HRD Shared Services: The HR Advisory Council

Composed of Secretariat HR directors.

Serves as decision-making body.

Offers first line of attack in breaking down fiefdoms.

Shares both financial and people resources to maximize efficiencies.

Uses task forces to address major initiatives.

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Key Attributes of HRD Shared Services: Focus on Performance

Develop standards with flexibility at local level to make decisions.Delegate transactions.Perform compliance audits against performance metrics.Sponsor strategic HR initiatives involving stakeholders as Subject Matter Experts.COMMUNICATE!

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Key Attributes of HRD Shared Services: Leverage Technology

Achieved greater responsiveness to internal and external customers.Reduced resources require broader technology solutions.Training available through e-learning directly at work location, wherever that may be .Developed E-forms (self-service) to administer processes more efficiently.Reduced turn-around times.Monitor performance against standards and goals.Enhanced accountability.

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Outcomes

Increased trust & collaboration.

Pooled financial resources/joint ownership.

Pooled/shared talent across agencies.

Pooled technology resources.

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Outcomes (continued)

Eliminated many low value, low risk redundancies and approaches.

Approvals for hiring or salary recruitment went from weeks/months to hours/days.

Compliance audits show a 99% compliance rate.

Eliminated workers comp & union grievance backlogs.

Reduced workers comp costs even in the face of growing salary and healthcare costs.

After losing a significant portion of HR staff we successfully increased HR service levels.

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Lessons Learned

Don’t starve the model.

Don’t limit the reorganization to a debate on consolidation/decentralization of existing transactions.

Find and market the opportunities for new programs and services.

Building collaboration and trust is essential and takes time and focus.

Good data is key to performance and accountability.

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Next Steps

Continue our progress from HR transaction police to delegated and collaborative service delivery model with oversight as needed.

Consolidate and measure our success in transaction management.

Continue to upgrade our HRIS systems.One central HRIS system is critical.Need to measure and demonstrate impact of HR system.

Further enhance accountability measures - key for long term survival, both from a fiscal perspective and a turf perspective.

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Next Steps (continued)

Phase II of Shared Services:HR now positioned to move beyond transaction management to talent management.Move from quantitative to qualitative definitions of success.

Focus less on time to fill and time on quality of new employees.Focus less on turn-over and more on retaining and developing our best employees.

Shared Services will allow us to define success by the impact HR services and programs have on the performance of the state workforce, not merely the sheer number of transactions processed.

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