Regional Banking HR Heads Discuss How to Maintain HR Service Levels While Saving on Costs

The Chapman Consulting Group today enjoyed co-hosting a lively group of HR Leaders from the Banking and Financial Services industries at the Singapore headquarters of ANZ Bank. Attendees from a wide selection of American, European and Asian banks gathered for our regular quarterly industry HR update.

The theme of today’s meeting was about maintaining high levels of service to the business while at the same time reducing costs. Everyone around the table agreed that this theme was hardly new, but cost considerations were now starting to reach a tipping point. Many companies were being forced to entirely re-think their HR service delivery models once again, and to find even more creative ways to squeeze out value out of the HR function.

In one key example, the HR team in a bank had devised a complex series of priorities, where each HR task was assigned with a priority number from 1 to 4 based on the company’s key strategic goals for 2012, and only the top priority tasks were taken on. This approach requires a high level of delicacy when communicating to the business about saying ‘no’, particularly when strategic goals in financial services organisations have a habit of changing very quickly!

In another key example, the HR team of another had made further cost savings by folding in the Country HR teams of Singapore, Hong Kong and Australia into one combined platform. This had the effect of reducing in-country HR teams to very skeletal levels, whereby only the most senior business leaders received high touch treatment. At the moment, these changes had been accepted very successfully by the business, since there’s a general recognition that there can’t be a reduction in costs without compromising on the ‘white glove treatment’ for medium to lower tier employees. However, time will tell whether the HR team will experience a backlash in the medium to longer term, when employee engagement and satisfaction levels may start to falter.

Perhaps the most interesting topic shared around the table during the session was around reporting structures in HR shared services models. Many HR Shared Services models are created very successfully ‘on paper’ and indeed do result in significant cost benefits in practice. However the HR Leader of one bank was very vocal about the dysfunction of their HR Shared Services structure in practice, with many simple tasks still not functioning properly many years after the switch to the new model. The key factor inhibiting the resolution of these problems is the lack of trust between the HR team and the Shared Services team, with neither team taking proper accountability for results, and with both teams locked in a ‘blame game’ with each other.

In another example, the HR Leader of a financial services firm had faced a very similar problem when they took on their role 9 months ago, but found that the way to fix it was to give responsibility of the HR Shared Services organisation to the Country Head of HR where the Shared Services team was largely located. From that point onwards, the HR team could not simply blame the HR Shared Services team, since they now had direct responsibility for it. The group agreed that this example works well in smaller and less complex shared services settings, but in other financial services firms, there doesn’t exist the same luxury of choice in reporting lines, simply because of the scale and geographical scattering of operations.

The meeting concluded with the simple point, that the successful delivery of any HR delivery model comes down to the behaviour and enthusiasm of the HR team itself. If the HR team truly believes in the model, they can truly ‘sell’ the concept to the business and successfully get buy-in. Resistance, cynicism and in-fighting are all very common dangers to avoid when changing HR service models.