Enhancing HR shared service centers through resource orchestration: uncovering the dynamic capabilities of the administrative expert

Many organizations have introduced transactional HR Shared Service Centers (HR SSCs) that are responsible for supporting the business by providing administrative HR services. Many of these HR SSCs are faced with headcount and cost reduction objectives and therefore unable to respond to the increasing needs of the business.

The concept of the Shared Services Model (SSM) combines the best features of centralized and decentralized organizational models and is promised to benefit from the advantages of both models while minimizing the drawbacks. Knowledge and expertise regarding the execution of HR policies and practices are concentrated within the HR SSC, and resource use by the HR SSC is governed through the horizontal relationships of the management control structure by the business.

This thesis explores and explains how the combination of centralized and decentralized structural features enable the evolution of the transactional HR SSC to create value for the business and support integration of the HR Function.

A case study was conducted to uncover how the HR SSC identifies the need or opportunities for change as a result of the interactions with the business and takes actions by designing and developing capabilities that are deployed according a capability leverage strategy. A survey study was conducted to test hypotheses on the separate and joint influence of an HR SSC’s operational and dynamic capabilities and the control mechanisms used by the business units through the horizontal relationships of the management control structure, to explain the value for the business. Both structural features of the SSM – centralized resources and decentralized control – were found to be equally important in explaining the value creation within the HR SSM.

The evolution of the HR SSC should not be an objective, but a mean in an integrated effort to improve the performance of the HR Function. The findings presented in this thesis give rise to the reconsideration of the role of the HR SSC that goes beyond cost savings and should be considered as a plea to reinvest the savings realized as the result of the increased efficiency in the delivery of HR.