Mr. Brendan Howlin, T.D., Minister for Public Expenditure and Reform, today announced that the Government has agreed to proceed with the establishment of a Human Resources Shared Service Centre (HRSSC) for the Civil Service. The Shared Service Centre will consolidate administrative functions in areas such as finance, IT and Human Resources (HR) which allows organisations and Governments to focus their resources on core activities leading to administrative efficiency and reduced cost. This centre will also include the administration of pensions for the Civil Service.
On announcing the proposal Minister Howlin stated “this project is a key priority of our Reform Agenda and a significant milestone in achieving the Government’s commitment to introduce the Shared Service model in a number of areas. This initiative spans 40 Departments, Offices and Agencies and will result in the provision of a high quality and professional HR function at a significantly reduced cost and will also free up staff to focus on providing key services. Shared Services will result in substantial reduction in costs and will provide the impetus to transform HR delivery across the entire Civil Service. It is estimated that once fully operational the annual cost of HR services will be reduced by 26% and the number of staff involved in delivering the services will be reduced by a minimum of 17%.
The Government is committed to realising the significant benefits that can be achieved using this model and there will be a keen focus on realising these benefits for the taxpayer.”
Mr Brian Hayes TD, Minister of State with special responsibility for Public Service Reform and the Office of Public Service welcomed the announcement and stated that “the establishment of the HR Shared Service Centre for the civil service is a key transformational step towards making shared services a reality in the public service”.
The Public Service Reform Plan announced in November 2011 identified the implementation of shared services as a major element in the Reform Programme. However, given the level of investment required to deliver shared services the Minister, prior to approving this project, had requested that a financial analysis be undertaken. The outcome of the financial appraisal indicates that there are sufficiently sound financial, policy and operational reasons to support the establishment of a HRSSC.
The benefits of implementing a shared service arrangement include:
Ø Reduced cost of HR service delivery whilst maintaining quality;
Ø Greater efficiency in HR service delivery through standardising and optimising transactional HR processes into one Shared Service Centre;
Ø Increased focus on ensuring consistent high quality customer service; and
Ø Fostering of strategic HR capability which will drive capacity and capability building within organisations
ENDS
Notes for the Editor
· Shared service arrangements consolidate administrative functions in areas such as finance, IT and Human Resources (HR) which allows organisations and Governments to focus their resources on core activities leading to administrative efficiency and reduced cost.
· In a HR context, the focus is on consolidating transactional HR activity in a Shared Service arrangement. Over time this can be extended to facilitate higher level HR activity if doing so adds value for an organisation.
The types of activity classed as transactional or administrative are for example, the processing and recording of all leave options, recording and management of all employee records, recording and reporting of sick absences, pensions administration etc. It is also intended to automate PMDS to improve compliance and reduce administrative overhead costs in conjunction with the set up of the HR Shared Service in early 2013.
· There are 40 Departments, Offices and Agencies involved in this initiative
· A project team has been mobilised and is currently working on the detailed design of the HRSSC. Organisations will begin to use the new HRSSC on a phased basis and it is anticipated that the first group of organisations will be using the HRSSC from early 2013. The 40 Departments and Offices in the scope of this project will be transitioned to the new shared service by end 2014.
· HR Shared Services have been established in the public service in other jurisdictions including the UK, Holland, Germany and the US. The implementation of shared service projects is not without risk but where they are successfully implemented they achieve significant cost reduction – in the order of 20-25% - and increase efficiencies.
· It currently costs the Civil Service €85.6m annually to deliver HR services to forty Departments and Offices. These services are being delivered by 865 staff at an annual cost in salary terms of €53.4m. The financial appraisal suggests that implementing the shared service has the potential to save approximately 26% in the annual cost of running HR for the Civil Service which equates to savings of approximately €12.5 million per annum when fully operational.
· This is a conservative estimate of the potential of shared services and the drive will be to achieve greater savings as the efficiencies continue to be driven out by the HRSSC. It is estimated that there will be a reduction of, at minimum 149 staff or 17% in the number of HR staff.
· There are once off costs in setting up the Service; investment cost of this proposal is approximately €26m (inclusive of VAT) which includes the costs of Project resourcing, technology, facilities and data cleansing. The aim will be to diligently manage the project with the aim of reducing costs, if possible. The costs outlined are in line with figures for other shared service implementation costs in the public and private sector.