Pre-millennium Barclays was formed by clusters of business units each with its own head office; when new CEO Matt Barrett announced tough financial targets in line with his value-based management philosophy, the decentralised and fragmented HR function was an obvious candidate for review.

The challenge:
Barclays Bank is one of the UK’s largest retail financial services groups, with assets exceeding £45 billion and 75,000 employees worldwide. In 2000 Barclays’ new CEO, Matt Barrett, announced a strategic review of support functions.

Barrett believed the existing decentralised model of HR support was inefficient and provided a fragmented service with excessive costs. He was right – by 2000 Barclays had 28 business units in the UK, each of which had separate, dedicated HR provision and technical systems.

Some 120 systems across the business held HR data, which meant that it was difficult to get consistent HR advice across Barclays or a consolidated view at the corporate level.

The bank concluded that it should centralise and re-engineer many of its HR processes in order to remove duplication and provide a unified and efficient service. However, it recognised that the transition represented a formidable challenge.

Barclays asked PA Consulting Group to help it overhaul the decentralised HR model. The objective was to reduce costs (by almost 50%) yet at the same time substantially improve the delivery of HR services, across the bank’s six operating divisions and 75,000 employees.

The assignment presented challenges on many fronts. There was no precedent for an HR shared service centre of this size or complexity. PA and Barclays worked closely together to gain executive support for the project and to satisfy the complex groups of stakeholders across Barclays that all their individual HR needs would be more than accommodated by the new SSC.

The action:
Barclays invited PA to support it through this period of major change. The objective was to help Barclays design and implement a best-in-class operational model for its HR function, and in the process deliver substantial cost and headcount savings and operational improvements.

Targets were cost and headcount reductions of 38% and 44% respectively. The project also aimed to deliver operational improvements to the efficiency and effectiveness of the HR function and to the quality and consistency of management information and HR advice.

The solution was a groundbreaking in-house HR shared service centre (SSC). A single source of HR advice and service, unique in its customer focus, size, processing power and commercial outlook.

Planning and implementing shared services:
Although designed to generate cost savings by automating and aggregating present processes, its raison d’être was more than simple economies of scale.

The vision for the Barclays SSC was to add real value to the business by creating better HR processes designed around a central proposition of customer service. In addition, the SSC was designed to have the commercial ethos of a small business within Barclays. The key benefit is that through providing visibility of volumes as well as costs, rather than a single aggregate overhead charge, business units can influence demand in line with affordability targets.

Though the technical questions raised by the creation of the SSC were complex, the principal issues involved a focus on the customer, and on achieving process improvement through close attention to customer needs.

There were many different customer types to consider: a customer could be an employee with a query about pay, a line manager requiring advice on disciplinary procedures, or a business group negotiating the price of HR advice, among other possibilities.

At the outset, Barclays and PA developed a blueprint that described the overall process and key benefits. This document was fundamental in securing senior management buy-in to the new operational HR model.

With this buy-in secured, a combined team of PA and Barclays people implemented the recommendations. The project was structured around five workstreams:

• developing an operational design to meet service




• flexibility




• cost




• control targets




• preparing the business readiness (to ensure a positive attitude to the SSC prior to launch, both inside the SSC and throughout the bank)




• formulating a new office environment




• realising a fully integrated customer




• work and management control system




• managing programme implementation and communications

Challenges and how they were overcome:

• Balancing needs, issues and stakeholders was one of the biggest challenges. The issues generated by complex IT, infrastructure and communication projects had to be balanced against the needs of Barclays’ complex group of stakeholders. These comprised Barclays’ executive, the bank’s various subsidiaries – Barclaycard, Retail Bank, Corporate Banking, Barclays Capital, to name only four – together with all employees, line managers, and senior executives, both within those businesses and in the SSC. Developing the new world, ‘tomorrow’s dream’ of the SSC, had to be balanced against the reality of maintaining business as usual. The old-world HR systems had, for example, to keep on paying people until the new system was in place.
• The SSC represents a continuing challenge to the HR generalist role already, the SSC is handling more complex decision-making, such as advice about disciplinary matters and complex benefits issues. The question is now how far up the HR ‘judgement chain’ it is possible for the SSC to function. Longer term, the value that will emerge from the SSC will be largely dictated by its ability to take on areas requiring more judgement. Already the SSC is taking on more of the high level HR issues than SSCs in peer organisations.
• IT requirements of the SSC were complex and demanding but IT was always recognised as an enabler and not a driver. PA helped specify the IT systems and helped select Siebel, a powerful customer relationship management tool, which was used extensively to enhance customers’ experience of the SSC. For example, the system captures information on the status of a query centrally so that a caller’s details are available to whoever takes the call. Hence any adviser who answers will be able to deal with the enquiry seamlessly.
• How would the SSC speak to its customers? the SSC was designed to mirror the customer service experience of well-run external call centres. Barclays chose telephony over e-mail as the delivery system, because it wanted to give staff ‘HR with a human face’ – or more accurately a human voice.
• The impact of the SSC on the role of Barclays’ line managers was central to its development. Every new HR process and every new item of management information was designed to support line managers and enable them to manage their people better.
• Speed of implementation in just 18 months the SSC was fully established, including the migration of 65,000 UK-based staff records to the SAP personnel and payroll system, and the electronic imaging of all staff files.

  This achievement is due to the fact that the project workstreams, which would normally run in sequence, happened in parallel. In addition, the tight timeframes for delivering headcount reduction were met at the same time as maintaining an expected level of HR service to the business.

• Managing expectations and relationships new senior HR personnel from the business group arrived during the design and implementation of the SSC. This meant that at critical points relationships had to be managed and
  business cases revisited several times to establish comfort levels.
• Designing a new working environment in order to support the new HR operating model, PA helped design a new working environment for the SSC that would look and feel very different. Critically the project not only looked at changing the layout of the space, but also focused on changing shift-working patterns.

  This had three major benefits: first, the business can access the SSC over a longer daily period of operation; second, it allows for greater rotation of people among the desks; and lastly, by optimising the use of floor space, Barclays saved £1 million.

• Cost reductions the SSC has already met its target of a 44% reduction in headcount and is on track to achieve 56% by the end of 2002, with corresponding cost savings. This saving not only exceeds the target but is being achieved a whole year ahead of schedule.

The result:
Not only has the SSC met its financial targets a year ahead of schedule; it has also given Barclays’ line managers access to more consistent, high quality advice, and answers to both simple and complex HR queries.

On completion of the project, all HR administration, contact with employees, and HR advice was centralised to the SSC. Barclays has re-engineered its core HR processes, such as employee relations advice and resignation, and automated all the high volume processes, such as payroll, pensions and benefits.

Staff feedback is positive about dealing directly with HR rather than through a set of paper forms, with many commenting on the quality of the customer service experience they have received via the telephone-based service.

Every employee is just one call away from advice and the aim is to resolve 90% of all queries in the first call – an impressive aim given that the SSC currently receives 3,000 calls a day. The shift to a paperless environment is a major culture change.

Observers are surprised that most of the work of the SSC is done by telephone, especially as it delivers so much value in terms of efficiency and effectiveness. These are two of the value creation criteria set by CEO Matt Barrett to measure the SSC’s success.

Professional outsourcers regard Barclays groundbreaking HR SSC as being at the leading edge in terms of its processes, customer orientation, and commercial success. Peers from many sectors and from banks overseas have asked to visit and learn from Barclays experiences.