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Efficiency saving in the HR Department of St Leger Homes of Doncaster

发布时间:2017-11-21
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This report analyses the HR function within St Leger Homes of Doncaster (SLHD). The objective the analysis is to meet the requirements of a 5% efficiency saving as directed by the Chief Executive of SLHD. The author assumes that efficiency savings can be both financial and process driven and that to meet the 5% target a review of the HR function and practices is necessary. Evidence of this will be proved by the study.

A review of the current HR function in its current form was conducted by researching broadly into taking into consideration key stakeholder and shareholder views. A best practice and literature review was considered in recommending a new more efficient HR model. Analysis of added value to the organization was made and challenges, gaps and necessary resources were identified.

The analysis of the above activities was that the current state of HR was not fit for purpose and that a more strategic partner role would better fit the organization. This was evidenced by key stakeholders that SLHD needed a proactive, professional HR service

The results were summarised and this led to the implementation of a recommended programme of change.


1. INTRODUCTION

This report aids to reactively address the 5% efficiency savings directive to the HR department from the Chief Executive on behalf of SLHD.

1.1 St Leger Homes of Doncaster (SLHD)

St Leger Homes of Doncaster (SLHD) is a non-profit making organisation wholly owned by Doncaster Metropolitan Borough Council (DMBC). They do however have their own board of directors that makes decisions totally independently of the council. SLHD employs roughly 800 staff that are deployed all across the Doncaster Borough at various offices strategically placed in order to be more efficiently available to that particular area.

SLHD is currently under the scrutiny of the government like all other Public services. There are many external factors such as legislation, the economic downturn, competition from the private sector and technological advancements that are influencing change at SLHD. In conjunction with the Audit Commission for a 3 star rating the organisation is constantly aiming to achieve higher efficiency standards at all levels of operation. In relation to the HR department there is a close relationship between these organisation efficiency targets and the policies and procedures implemented and developed in the business.

In conjunction with the above internal and external factors inducing efficiency savings across the organisation, it is the HR department in particular that has been the target of an initiative directive from the company Chief Executive. A 5% efficiency saving is to be made prior to the Audit Commission in March and recommendations as to how this can be done have been requested.

To achieve these efficiency standards the organisation is driving towards "Excellence". The HR team however is without an agreed HR structure. The organisation is yet to find a HR model which best fits SLHD.

The ideal HR service would perform the role of a strategic partner to SLHD targeting employee capability and loyalty; introducing and performance managing standards for employees whilst ensuring that managers receive the support and training they need to fulfill their role and complete the cycle of aiding HR in people management.

It has been identified that employees are a crucial stakeholder for SLHD and therefore of the highest value to the organisation. They directly influence the achievement of the organisation in 'Quality Homes in Quality Neighbourhoods' for the Doncaster Borough.

This point is perhaps reinforced by the fact that the primary driver for structural transformation is the desire for the HR function to be a more strategic contributor.

(www.employment-studies.co.uk 2009)

1.2 Aim and Objectives of the Report

Ultimately the aim of this report will be to recommend methods for improvement and review of the HR department in order to meet the requirements of a 5% efficiency saving. This will involve;

  1. Review the HR Team Model; best practice analysis of improving communication, management of work, administration, better service to customers, more timely responses.
  2. Identify methods for transition between the current state of the HR department to a more strategic one to best fit the organisation.
  3. Examine how external service providers are managed and the standard of service they are required to provide. A reduced cost in the service and more beneficial aspects from the service.
  4. Recommend tools from which the HR team can manage their performance which will aid senior management in guiding and mentoring the team in line with the organisational goals. This will also enable the team to demonstrate performance levels more effectively to the Audit Commission.
  5. Recommend methods to reduce the costs of the HR department in order to reach or exceed a 5% efficiency saving.

1.3 Identification of the Client

The client for this study is the Chief Executive of SLHD who will make decisions based on the recommendations of the report. Decisions from the Chief Executive will be strategically implemented by the Director of Human Resources. The report will have a direct impact on the employees as a key stakeholder and add value to the service the HR department provides to them. It is therefore important that some consultation is given to stakeholders as they are directly affected by the outcome.

              If recommendations of the report are accepted there will also be added value to the organisation as it will have a more strategically operational HR department providing better service which SLHD can be proud of.

2. THE LITERATURE REVIEW

2.1 Best Practice

It has been questioned by Marchington and Grugulis (

2000) whether the practices typically assumed to be 'good' are actually beneficial to workers. It is argued that literature that is 'out there' is underpinned by unitary thinking, the thought of 'best practice' can be sometimes problematic despite the attractiveness to many organisations. More specifically it has b been pointed out that there are weak areas in relation to the meanings of specific practices, the consistent implementation with each other and the application of a best practice HRM. Truss (2001) found that the organisation had a huge influence in the process and implementation of HR policies and that successful organizations do not always implement 'best practice' HRM even if intended. Conversely, Hughes (2002) argues that empirical support for universal HRM is growing.

2.1 Strategic HR

Beer et al (1994) and Lawler and Mohrman (2003) state that the ever changing environmental challenges facing organisations has effectively increased the expectations of the HR function to replace its bureaucratic procedures, reactive style, incoherent processes and fragmented policies. As such, proponents of 'HRM' have advocated a new strategic agenda for the HR function and re-invention of HR roles.

It was found that a number of theorists agreed that; "tightening the linkages between HRM and organisation strategy has become essential to competitive viability" Lam and White (1998). Ulrich (1997) and Storey (2007) express the need for HR professionals to align their practices with wider strategic initiatives, such that they effectively form a strategic 'partnership' with organisational line managers. There are a number of critical reasons to move in this direction, not the least of which is that it may be the only way HR can take control of its own future. In support of this, Schuler and Jackson (1987);. They believe that through these partnerships, HRM efforts will become significantly more congruent with the overall strategic objectives of the organisation.

2.1 HR Models

When HRM first emerged it was assumed that it offered a new and more strategically integrated approach to the management of people (Guest 1987). Despite the growing shift towards more strategic and integrationist models of the HR function, there has been very little systematic empirical research on how the repositioning of HR has affected HR organisation; its structures, processes and boundaries (Pettigrew and Whittington 2003). (Ulrich 1997) concludes that.. "The failure of much of prescriptive literature on HR roles and business partnering is that they forget 'identity' and treat action one dimensionally as the instrumental realization of clearly defined strategic choices and goals."

Taking the above into consideration there may be lack of evidence in this particular subject and those identified may be subjective to their own beliefs with lack of evidence to substantiate them.

2.1.1 Ulrich's Model

Review of the HR topic area always retrieved Ulrich's three-legged stool model as the most common HR function structure implemented today. Ulrich (1998) states that there are five essential competencies that emerging HR professionals need to embody: Knowing the business, mastering HR practices, managing change processes, creating cultures and workplaces that build individual capability and organisational commitment, and finally they need to demonstrate personal credibility. Ulrich states that HR practitioners engage in a set of proactive roles defined along two axes: strategy versus operations, and process versus people. The business partner role, however, cannot work in isolation. In his original work Ulrich suggested three other complementary roles, as indicated in the table below (www.cipd.co.uk 2009).

Appendix XXX: Strategic Patner role

A diagram of the way in which each of the above areas operate within an organisation.

Literature questioning the strategic partner model such as (www.hrmadvice.com 2009) states that all the HR Roles defined by Ulrich are essential for the success of the whole HRM Function. The stress must be put to all the areas, there is no chance to select one and to excel in this one concrete area. Storey (2007) questioned the realism of the strategic partner model asking whether it is a business partner role, strategic boardroom role or an operational or both

2.1.2 Current State Model or Specialist HRM

Those HR departments that have not adopted the Ulrich Model, such as SLHD, utilize a mixture of generalist, specialist and administration.

In the public sector the pace of change and the demands placed on HR specialists have been identified as particularly intense with their roles reportedly having changed far more radically than their private sector counterparts Millward et al (2000), Guest and Conway (2001).

It is suggested that this operational environment has made the role of the HR function role as "the guardian of employee well being" Renwick (2003, p. 1) a crucial but particularly demanding one

The authors understanding of the above is that specialist roles are inherently unstable due to 'workflow overload' i.e. high volumes of absence imposed upon an individual whereas one may have no recruitment during a recruitment freeze.

In comparison however to Ulrich's model Hoque and Moon (2001) found that there were significant differences between the activities of those described as HR specialists and those described as personnel specialists. For example, workplace-level strategic plans are more likely to emphasize employee development in workplaces and HR specialists are more likely to be involved in the development of strategic plans than are personnel specialists.

2.3 Changing the HR Model

To be considered a strategic function, HR must escape its perception of an incompetent support staff Ulrich (1997). Increasingly, organisations are rushing into strategic HR partnerships at the expense of operational, day to day HR services and as such are instantly losing creditibility Pfau and Kay (2002).  According to Holbeche (2004), no strategic contribution of HR can be valued unless it achieves operational efficiency.

2.4 Efficiency

The report problem that has been identified lacks clarity in the way the 5% efficiency saving is to be addressed. It could form the basis of financial savings, addressing expectations of the organisation in regards to workforce planning or integrating policies and procedures more efficiently in the organisation.

Appendix XXX: Efficiency Calculation

Lawler and Mohrman (2003) state that for HR departments to be successful, companies need to first find a way to provide an effective transactional service. This may be through:

  • Outsourcing the day to day administrative functions
  • More effective use of Information Technology
  • Devolving responsibility to line management for HR processes

This then frees up time allowing for HR to participate in the strategic development. However in contrast where the transactional tasks directed upon the HR department are not adequately provided for and efficient, it will be difficult to break away from their reactive nature.

In accordance with the above Caldwell (2003), "what good is it to be HR strategic partner when recruitment processes are slow and employees don't get paid on time". "As much as HR professionals need to be commercially savvy, line management requires HR to be operationally efficient to support effective delivery of their HR activities" Reilly et al (2006, p.14).

2.4 Shared Services

An alternative approach is an internal model of shared services where a central hub of staff is established to deal with specified transactional and administrative HR work. This helps HR to achieve economies of scale and free up a distinct corporate HR group to focus on higher level strategy and policy work Reilly and Williams (2003).

2.5 Outsourcing

CIPD (2005a) definition of outsourcing

'the delegation of one or more business processes to an external provider, who then owns, manages and administers the selected processes based on defined and measurable performance metric'.

It is usually associated with process efficiency, technological expertise, service delivery and cost reduction. However, a strong argument against outsourcing is fears of losing organisational learning a shared vision Reilly and Williams (2006).

Similarly (Weick 2001) states that the exploration of HR organisation is by definition the restructuring, devolution and outsourcing of HR processes and activities.

3. METHODOLOGY

In this chapter I am to display rationale of my approach to research and describe the methods used.

The HR Model

Although the literature review encapsulates those prescribed models that can be used there needs to be some identification of the weakness in the current HR model so that improvement aspects are found. These aspects can then be cross-referenced with the benefits of other models to see which one would add the most value.

Therefore a number of focus groups were run with a selection of stakeholders in order to extract their views and opinions on the matter. A variety of senior managers, administrative and front line staff was asked to attend in other to encapsulate as wider view as possible.

Shared and Outsourced Services

Currently SLHD outsource the Occupational Health function and share the recruitment services run by the parent organisation DMBC. An analysis of the OH service will be reviewed to identify efficiency savings in the service.

Therefore in order to undertake the review of the Occupational Health service the author will utilize both quantitative and qualitative data via budget reports and customer satisfaction surveys. I will also benchmark the service in order to construct comparisons.

Presentation and Analysis of Data

Occupational Health (OH)

The occupational health service will not be named as the author does not want to influence the reputation of the company.

Secondary Research

It is known that the occupational health service provider has been scrutinized over the last 2 years for the quality of OH reports, and that the nurse is not available enough as one 1 clinic day is run per week. This means that employees requiring occupational health time have to wait longer than stated in the Managing Attendance Policy due to overflow. Absence levels also seem to be on the increase (Appendix xxx: Absence Report) and although pro-active health and wellbeing programs are run they are not ran coherently with the business.

Appendix XXX: OH expenditure

The expenditure costs of outsourcing a HR service are comparable with that of a full time occupational health nurse.

Appendix xxx: Advert OH nurse

When SLHD became an ALMO a shared services model of the Occupational Health service was ran in conjunction with DMBC. This tie was severed for reasons unknown; however it is known that the HR department at SLHD receives comments frequently stating that it was much better as a shared service.

A survey was therefore conducted in order to ascertain customer satisfaction with the current occupational health service and to ascertain whether or not employees preferred to share a service with DMBC.

Appendix xxx: Customer Survey

Appendix xxx: Analysis of Customer Survey Data

From review of the customer survey data it is apparent that 89% of employees that responded preferred the previous shared services model with DMBC. An extract of additional comments can be found in Appendix XXX

Both the feedback from customers and the cost of the Occupational Health service, comparable with that of either a full time Occupational Health Nurse or that of an Service Level Agreement (SLA) between DMBC and SLHD induce questions as to why the current service should be used.

The HR Model Analysis

Policies and procedures

It was apparent from focus groups with stakeholder that there were issues with the policies and procedures implemented by HR. The concerns stemmed from them not being either up to date or lack of clarity in the content.

A list of SLHD HR policies can be found at www.stlegerhomes.co.uk, most of which are either missing or older than 3 years.

Although there was a general feeling of contempt for all procedures specific ones were highlighted as the worst, these were:

4.3 Recruitment

The overall consensus was that the process was lengthy and difficult to keep track of. It was also apparent that budgets were overrun as found in Appendix xxx and xxx.

A contributing factor to this was the number of fixed term appointments used as a 'temporary fix'. This added workload to the HR team and increased advertising costs.

Appendix xxx: 2008 Northwest ALMO Benchmarking Survey:

The above survey displays a high turnover of staff in relation to the ALMO average and therefore increased recruitment costs.

It was generally recognised that with this level of recruitment, significant savings in time can be made by streamlining and e-enabling this process.

4.5 Performance management

The majority of stakeholders indicated that improvements in the pro-activity of the HR team towards addressing areas of poor performance were necessary. It was also raised that there was lack of clarity in how to address performance management issues and where the process started and finished.

4.9 HR strategy

The focus group did not picture the current HR department as being strategic. The majority thought of HR as an administrative and very reactive service.

It was identified by a number of the business managers that they would like to see a more pro-active HR service that can aid them in implementing a number of strategies that they currently can not do.

4.14 Case work

An analysis of casework was undertaking via the HR advisor in charge of employee relations. Since 2005 out of 95 cases:

62 cases (65%) related to sickness or absence

12 cases (13%) specifically mentioned bullying, harassment or discrimination.

During the focus group there were concerns that the number of cases seemed to be increasing and the total in 2009 could be over 100. Managers comments showed that they thought this was due to the lack of HR presence in the business.

Focus Group Analysis

To summarise the overall opinion of the focus group was that the HR department is currently largely operational. There appears to be a lack of strategy which has a huge impact on the HR team and the organisation. Due to the large amounts of casework HR advisors are kept in a never-ending circle of reactivity due to the lack of pro-active input to the organisation.

Also the consensus was that the HR policies and processes are currently too slow and that they lack the coherence mostly due to the bureaucratic signing of duplicate paperwork. In conjunction with the literature review, HR needs to achieve operational efficiency before it can add value to the organisation. This can be as stated in the literature review by utilising technology.

CONCLUSIONS

In conclusion to the findings from both research and literature it is the view of the author that in its present state the HR department within SLHD is caught in a vicious cycle of reactivity and because of this efficiency is poor. The organisation however aspires to make the transformation to a strategic HR service, but is without direction. This problem is not one that will go away however, as indicated in the literature; as organisations change towards future development, new knowledge is introduced and human capital becomes more and more important the fact that organisational strategies need to be quickly translated into HR strategies has become more apparent.

This means that SLHD requires an HR strategy that is aligned to the needs of the organisation, and supported by a suite of modern robust policies that incorporate the values of SLHD.

In conclusion the challenges detrimental to efficiency are as follows;

  • The aspired-to function is not understood by the organisation
  • The emphasis of administration negatively impacts the efficiency of the department and can be seen as conflict with becoming strategic

The need for the HR model to change within SLHD was apparent from the focus group analysis in conjunction with literature. The current HR model identified in the literature review represents the overwhelming expectations placed on HR roles when specialist in nature as discussed in the focus group. The business partner model very much reflected the aspirations of consulted business managers, who pictured a strategic partner to their own roles. As identified by Ulrich, the complementary roles to the strategic partner are crucial for the Business Partner model to work and even though weak currently these roles could be greatly improved by utilising technology, such as a HR system and by improving the occupational health service.

As stated in the literature review a number of efficiency gains can be made by outsourcing or utilising the shared services model. Within the current expenditure for OH it would be possible to make 3 choices;

  1. Keep with the current provider
  2. Change provider to another company
  3. Employ a full or part time OH nurse
  4. Create a SLA between DMBC and SLHD to utilize their OH department

However in line with the literature and the customer survey it is evident that option 4, to develop an SLA with DMBC, is the most attractive of the 4 options.

OPTIONS AVAILABLE

The administrational functional of HR services within an organisation are clearly moving more towards being a commodity or product with options to deliver these services in a number of ways.

1. Accept the expectations of the organisation and become administrative experts. This entails keeping the current HR model but improving upon policies, procedures increasing the efficiency of the team in processing administrative duties. Utilise the newly implemented HR I.T system to orchestrate most of the routine administrative tasks. This will be highly reactive however and the organisation may see the short term benefits, however when striving for 'excellence' may regret their decision and look towards change in order to adapt to the future of the business.

2. Become a business partner that targets specific areas of the business, aiding managers with performance management and pro-actively mentoring them to become 'organisation champions'. This would aid in the reduction of case work and administration.

3. Embrace the strategic direction of the organisation. This entails leading the development of human capital and addressing the organisational capabilities required to meet the future requirements of SLHD. The benefits are that the organisation will understand the value of its HR department and utilize its expertise to the best effect. It may however mean, as stated in the literature, that strategy impacts the day to day roles of HR and administration and support services are weakened.

RECOMMENDATIONS

The approach to which SLHD's HR department can achieve a 5% efficiency saving is without change to the HR model. The ideal model should entail components from the Business Partner Model and have key elements of strategy tied into processes right down to administration. Although there is a quick fix to achieving the 5% efficiency via review of administrative practices and outsourced services the future of SLHD will not allow for the HR department to maintain it's reactive state.

However a necessary quick fix is to review the OH service. There is substantial evidence and concern to implement this change. Consultation should be made with DMBC OH department and other service provides to benchmark service delivery and value for money. It should also be considered to develop a HR nurse post within the current or future structure to ensure alignment with organisational needs and to enforce control of the service.

This overall change needs to be implemented via specific, managed projects that are underpinned via the knowledge of an HR professional.

These project should have;

  • SMART, concise and realistic objectives
  • a project plan depicted in a GANTT chart with a fixed completion date

              Appendix XXX: Recommended GANTT Chart

  • dedicated project manager - ideally someone from an HR background

· necessary resource - consistency in the temporary resources already available

This approach allows for the transition to be broken down into manageable pieces.

Improvement Plan

How the HR team should address this change is to develop an agreed improvement plan detailing new ways of working to start the process of developing efficiencies.

Appendix XXX: Example Improvement Plan

Each of the stages detailed in the plan are dependent upon one another to be a success.

Appendix XXX: Recommended Aspects of Improvement Plan

Barriers: Investment to make savings

As depicted in the above graph the added value of changing the HR model will not be seen instantaneously.It is without contradictory that for in order for the HR department at SLH to make a 5% efficiency saving some short term financial spending is required. Sufficient resource support from senior management is required to fill all required posts.

Appendix XXX: Resource Analysis

It is by my recommendation that the temporary staff be made permanent in the new HR model. This is so that the HR Assistants can take on more progressive roles in HR as the support administrator will take charge of most of the admin responsibilities. The temporary HR advisor should be made permanent; this is because work load as it currently stands advocates for that number of resource. The implementation of a new HR system should reduce a high volume of administrative tasks and free up time for the HR Assistants to support the HR advisors, therefore it would not be necessary to keep the agency support staff.

The resulting expenditure would be somewhere around £35,000 due to the annual salaries. This spending will be offset by a more efficient service delivery and the true value of HR will then be recognized. In addition, financial costs can be somewhat offset by the cost savings of the review from the OH service.

Time

Due to union negotiations and executive management consultation it is recognised by the author that implementation will take time. The GANTT chart as depicted in appendix XXX shows that an implementation period of 3 months should be given, and as discussed above this should be a fixed completion date.

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    Ulrich, D. (1998), Delivering Results - A New Mandate for Human Resource Professionals


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