Transforming the HR function through outsourced shared services: insights from the public sector

Abstract

Shared services arrangements have been increasing in prominence in the human resource (HR) field. Whilst much of the existing HR literature has focused on internally managed shared services arrangements, this paper reports on the experiences of a public sector organisation that established an outsourced HR shared services arrangement. Using the theoretical underpinnings of the resource-based view of the firm, transaction cost economics as well as organisational change the paper provides insights into how a public sector organisation implemented an outsourced HR shared services arrangement. The key findings from the study illustrated that whilst organisations may benefit from using external vendors to provide HR shared services arrangements, to truly facilitate the achievement of a HR function, which is able to make a strategic contribution to the organisation, they need to ensure that key internal stakeholders are fully engaged with throughout the process.

Keywords:

• business partnering
• HR devolution to line managers
• HR outsourcing
• HR shared services
• organisational change
• resource-based view
• transaction cost economics

Notes

1. A PPP is an agreement between government and the private sector for the provision of public services or infrastructure. The goal of PPP for government is to access the management skills of the private sector and reduce the capital expenditure involved in large projects.

2. FTE ratio denotes the number of HR staff to employees in the organisation.