HR Shared Services Changing for efficiency and satisfaction (Model Behaviour – designing a vision for success)

1. HR Shared Services Changing for efficiency and satisfaction(Model Behaviour – designing a vision for success) Second Provincial Public Sector HR Management Convention 20 September 2007 Murray Burger (murrayb@absa.co.za)

2. Content: • Shared services? • Why HR shared services? • Implementing shared services • Beyond shared services • Absa HR Contracted Services - Vision • Execution

3. Shared services?

4. Shared Services: Shared services are those which a single entity provides to two or more different organizations (e.g. clients, business units, brands, agencies) in exchange for an agreed-upon price (charge out), quality and/or other key performance indicators (SLA and Productivity ratios) with the goal of reducing cost, improving satisfaction and adding value to the organization.

5. Why HR shared services?

6. HR: Functional evolution Less time for transactional work As the evolution of HR progresses technology becomes more importantas an enabler

7. Tangible benefits: Reducing paperwork and streaming work flow – eliminating the “middleman with middleware” Improved data and content accuracy Automating redundant tasks Lower operating costs Reducing staff Reducing/eliminating print, distribution, postage costs (forms, manuals, newsletters, etc.) Providing higher quality services (accuracy, consistency, access, timeliness, relevance to individual, etc.) Intangible benefits: Provide a single channel for interacting with employees Providing for more timely and well-informed decisions Empowering the workforce with self-service, enhancing employee services, and keeping employees more fully informed – enhancing employee relationship Leveraging the brand (internally) Increasing worker productivity Supporting culture change Stability Benefits of technology enabled HR shared services

8. To be successful: • HR professionals need to develop an understanding of the potential of technology as a strategic tool • HR executives need to take charge of HRIS selection, implementation and utilization. They need to ensure that systems are configured to support HR strategies and not simply to support basic features such as payroll • The chief custodian of HRIS needs to be an HR specialist and not an IT specialist

9. Research and benchmarking HR shared services operating model comparisons: • Absa conducted extensive studies in respect of operating models, specifically relating to shared services and the value of outsourcing • The focus was internationally as stretch targets locally in South Africa could not be attained • IBM, Exult, Standard Charter & Nike

10. International FTE Benchmark Ratios SOURCE: PwC 2002 Global Human Capital Survey The survey, in which Absa participated, covers 1056 organisations in 47 countries, representing a combined workforce of over 6 million employees. 20.5% of the participants stem from the financial services industry. Average no of employees per participant - 6000. Median no of employees supported by each HR person (FTE) by region: • Australasia 1:92 • Eastern and Central Europe 1:68 • North America 1:68 • Northern and Western Europe 1:59 • Mediterranean 1:58 • Middle East and Africa 1:55 • Other Asian Countries 1:55 • South America 1:54 • All Regions 1:62 SOURCE: e-people serve (Accenture) • Telecommunications and high technology industries 1:76

11. Benefits derived over a period of six years in Absa H R, resulting from the implementation of shared services with SAP as the technology solution: • Quantitative benefits: • H R head count reduction: 38.30% • H R cost reduction: 24.79 % • Absa HR FTE ratio: Improvement from 1:67 to 1:89 (33%) • Qualitative benefits: • Decrease in manual transactional activities • Increase in business partnering (transformational) capability • Increased alignment of H R strategy and activities to that of business strategy

12. Implementation of shared services:“Success equals behavioral changes”

13. Shared services implementation model Architecture Blueprint Current Skills Assessment E-Business Governance Policies & Procedures Change & People Management Strategy Formulation • Change readiness assessment • Change leadership • Communication and stakeholder strategy • Organisational design (job redesign, alignment & performance management) • Education, training and support Rollout of Education, Training and Support • Phased rollout throughout organisation based on skills assessment and e-readiness • Sustainable growth and change Effective and Efficient Communication

14. Values Formal designs and linkages Behaviours Roles and Communication 2 1 accountability patterns Organisation Organisation definitions Learning practices behaviour structure Policies and Attitudes operating practices Leadership models Cost structure and "How we do things resource allocation around here" Reward and performance management systems Competency design and management 3 HR Planning Structural & Management development and training behavioural Communication and information sharing enablers programmes Organisation design elements The following three themes underpin organisation design:

15. … the importance of Change Management must never be under estimated … Change is a loss of the familiar. New variables introduced by the change may cause stress on the individual and the organisation.

16. Challenges to consider … • Change Management • First in – must be the custodians (believe in it themselves) • Managing expectations • Address concerns in HR about job changes • Deal with line Management scepticism about the increase in HR workload • Culture - HR & Customers • Change in the operating model • Differing comfort levels with e-, contact centre and F2F • Keeping focus on Group alignment • Realignment of technology competencies and roles of Product Specialists, Power Users & Super Users • Realising the financial benefits of the ESS and MDT implementation

17. Sustainable Change The key to achieving significant and sustainable change lies in: • Establishing a credible case for change • Helping people understand the requirement for change • Creating understanding of, and commitment to, the new business model • Communicating, communicating and communicating more • Effectively involving all people • Providing capabilities to make needed adjustments • Ensuring that business results are achieved quickly • Integrating all changes within a coherent framework.

18. Lessons learned • Changing culture/behaviour is harder than solving technical, product reengineering and logistical problems • Research indicates that a phased approach to implementation started with the basic functionality only is preferable • High quality, repeated communication is essential • Marketing (internal and external) must continue • Aggressive focussed migration timetable is needed • Gives early response to sceptics • Establishes momentum for change • Provides vehicle for further enhancements

19. Lessons learned (cont.) • Executive sponsorship is vital • E- and Contact Centre delivery … • Migration of HR activities and products, need wide buy in • Technology customisation and adoption • Provides a focus for HR re-engineering • Process simplification and harmonisation • Benefit realisation methodology to be implemented • Disciplined planning and project management required

20. Beyond shared services

21. Beyond Shared Services to Business Proficiency Business Proficiency Organization (BPO) The “BPO” is categorized by the co-accountable agreement in which it offers customer centric products, services and business consulting in both transformational and transactional interactions to the business partners it engages with. The “BPO” objective it to enable it’s business partner (BP) to achieve their business goals by utilizing and engaging the required resources of the “BPO” and it’s associate strategic alliances. The engagement agreement between the BPO and the BP will be governed by a Governance agreement inclusive of a service level agreements, metrics and risk and compliance plans.

22. Migration path of HR to bottom line accountability Decentralization Standardization Centralization Shared Services Business Proficiency Organization Policy and Process Standardization Applications and Systems Implementation Employee and Management Self-service Asset Optimization Co-accountability

23. Strategic partnering (BPO & BP) enables the BPO to become a natural extension of the business (BP) and this relationship is characterized by: • Fused into the business strategy • Highly relationship based • Integration of all relevant networks • Virtual extension of the business • Transparency in terms of financial and business practices • High level of compliance • Customer centric

24. Absa HR Contracted Services - Vision

25. Vision to be achieved by 2009Absa HR Contracted Services To be the Global Hub for HR and related business operations ( Shared Services ) for the Barclays Group and creating a challenging and fulfilling work environment where the best people aspire to work.

26. HR operating model and functional structure Group HR Absa Capital Personal Bank Absa Africa Talent Sourcing and Learning & Development Leadership and Change Management Executive Services Employee Relations Contracted Services: Payroll, Org & Pos, MI, HRIC COO/ Central Functions AFS ACBB HR central functions (HR Costs are centralised) HR customer facing function reports into BU (Direct cost to BU) with dual functional reporting line to Group HR and HR BU Embedded reports into HR Customer Facing BU Embedded HR BU Embedded HR BU Embedded HR HR Governance Structure and Principles 2

27. The fundamentals of the operating model and structure Direction Policy Business process System Implementation Limited customisation Dispensation Customer facing functions Central functions 3 As the evolution of HR progresses technology becomes more importantas an enabler

28. HR operating model and governance structure/principles Customer Facing Absa Capital Personal Bank COO/ Central Functions AFS ACBB Absa Africa Central Functions Contracted Services: Payroll, Org & Pos, MI, HRIC Talent Sourcing and Learning & Development, Leadership and Change Management Executive Services Employee Relations 4

29. HR operating model for Contracted Services (Barclays and Absa – governed by SLA) Customer Facing (AM) Absa Africa Barclays SSA Barclays UAE & Gulf Barclays Egypt & North Africa Barclays India & Indian Ocean Barclays CIO SA Central/Specialist Functions Recruit Resources: • Pre-screening • Org & Pos management Pay Resources: • HR System implementation • Payroll implementation • Expatriate benefits admin • Payroll controls • Payroll training Develop resources: • Instructional design • Training delivery • Skills assessment Manage & Sustain: • Org structure design • Role profile (database) • Job evaluation • MI reporting & training • Policy maintenance • Process improvement • SLA Maintenance • Management assurance • Change management Manage Resources: • Wellness • HR contact centre 4

30. The face of shared services and beyond Transformational Services: • Internally • Externally Transactional Services: • Internally • Externally SLA SLA Absa HR Contacted Services (BPO) SLA Business Partner

31. Execution

32. Implementation “Implementation is the ultimate source of competitive advantage – our best ideas are only as good as our ability to execute them. Knowledge related to strategy is only useful if we do something with it”. Ungerer, Pretorius andHerold 2002.

33. Why CEO’s Fail “You’d never guess it from reading the papers or talking to your broker or studying most business books, but what is true at most companies where CEO’s fails - we estimate 70% - the real problem isn’t the high-concept boners the boffins love to talk about. It’s bad execution. As simple as that; not getting things done, being indecisive, not delivering on commitments”. Charan and Colvin 1999