Establishing an HR Shared Services Center for a Large Pharmaceutical Company

Client

Large Pharmaceutical Company
Challenge

The pharmaceutical company needed to streamline its HR operations, reduce costs, and ensure high levels of service quality and cultural alignment. High-cost specialist roles were being used inefficiently, and there was a need to evaluate whether outsourcing or insourcing HR services would be more viable. 

Objective

To determine the most cost-effective and culturally aligned strategy for HR service support and to establish an HR shared services center to enhance efficiency and employee satisfaction. 

Actions Taken

Thorough RFP Process

  • Conducted a detailed Request for Proposal (RFP) process to evaluate the costs and benefits of outsourcing versus insourcing HR services. 

  • Analyzed data from various vendors and internal capabilities to determine the most financially viable and culturally aligned option. 

Decision to Insource

  • Data indicated that insourcing HR services would be more cost-effective and allow for better cultural alignment. 

  • Projected savings from insourcing were estimated at $5 million annually compared to current organizational structure. 

Establishment of HR Shared Services Center

  • Developed a comprehensive plan to establish an HR service center that would support all areas of HR administration, including payroll, benefits administration, employee inquiries, onboarding, and offboarding processes. 

  • Replaced high-cost specialist roles doing largely administrative tasks with lower cost administrative positions with clear operational guidelines, established KPIs, and employee satisfaction metrics. 

Increased Efficiency and Engagement

  • The service center centralized basic HR support tasks, enabling higher-level HR staff to engage in strategic initiatives such as talent development, workforce planning, total rewards strategy, and employee engagement programs. 

  • Enhanced the focus of key HR talent, leading to higher engagement and retention rates. Employee engagement surveys showed a 25% increase in satisfaction among HR staff. 

Improved Employee Satisfaction

  • Established efficient, user-friendly systems and processes within the service center to handle HR inquiries and support requests quickly and accurately. 

  • Implemented a robust feedback mechanism to continuously improve service quality. 

Results

Cost Savings

  • The insourced HR shared services center resulted in annual savings of $5 million by reducing the reliance on high-cost specialist roles and optimizing HR operations. 

  • Avoided overhead costs associated with outsourcing (including internal management of outsourced vendors) and avoided potential cultural misalignments. 

Enhanced HR Efficiency

  • Streamlined HR processes led to a 30% reduction in response times for employee inquiries and support requests. 

  • Increased overall efficiency of the HR organization by 20%, allowing the company to redeploy resources to higher-value activities. 

Higher Employee Satisfaction

  • Employee satisfaction with HR support increased by 40%, as measured by internal surveys, due to the quick and accurate handling of inquiries and the availability of improved self-service options. 

  • The establishment of the internal service center created a single point of contact for all HR-related issues, reducing confusion and improving the employee experience. 

Strategic Focus and Talent Retention

  • By eliminating low-level tasks for higher-level staff, the company was able to focus on strategic HR initiatives, leading to improved workforce planning, talent development, and employee engagement. 

  • Retention rates for HR staff increased by 15%, avoiding recruitment and training costs estimated at $1 million annually. 

Added Value

  • The shift to a shared services model allowed the HR team to contribute more significantly to strategic business objectives. 

  • Increased employee engagement and satisfaction translated into better overall company performance, contributing an estimated $3 million in additional value through improved productivity and innovation. 

Conclusion

The strategic advisory services provided during the development of the HR shared services center was instrumental in achieving a cost-effective, efficient, and culturally aligned HR operation. By insourcing HR services, the company realized significant cost savings, improved employee satisfaction, and increased overall HR efficiency. The focus of the HR team on strategic talent activities led to higher engagement and retention among HR staff, ultimately adding substantial value to the organization. 

Kevin Benoit