Abstract
PurposeHR shared service centers (SSCs) have been claimed to innovate human resource management service delivery by centralizing resources and decentralizing control and, in doing so, create value for other business units. In response, to explain the value of HR shared services for the business units served, the purpose of this paper is to test hypotheses on the joint influence of HR SSC operational and dynamic capabilities and of control mechanism usage by the business units.Design/methodology/approachA survey methodology was applied to collect data among business unit representatives from 91 business units in 19 Dutch organizations. The data were analyzed using structural equation modeling in AMOS.FindingsThis study found that the use of formal control mechanisms (e.g. contracts, service-level agreements) relates negatively with HR shared service value, but that this relationship becomes positive once mediated by informal control mechanisms (e.g. trust and shared language) and operational HR capabilities. Furthermore, it shows that the dynamic capabilities of HR SSCs relate positively to HR shared service value for the business units, but only because of their effect on operational capabilities.Originality/valueWhereas previous studies into HR SSCs have examined the two antecedents independently, this study shows how organizational control and capabilities interrelate in explaining the value of HR shared services.
Highlights
Organizations are centralizing human resource management (HRM) activities in an HR shared service center (SSC) (Farndale et al, 2009; Richter and Brühl, 2017)
Proponents have argued that HR SSCs combine the benefits of the centralization and decentralization models, while reducing their drawbacks and, in doing so, improve the benefits and reduce these costs dimensions of HR service value ( Janssen and Joha, 2006; Farndale et al, 2010). In line with these conceptual insights, we focus on the decentralization and centralization features of HR SSCs, in terms of the control mechanisms used by the decentral business units and the central bundling of resources in an HR SSC, as critical success factors that explain the value of HR shared services
In this study, we have attempted to explain how the centralization and decentralization features of HR SSCs interrelate in explaining the value of HR shared services for the business units
Summary
Organizations are centralizing human resource management (HRM) activities in an HR shared service center (SSC) (Farndale et al, 2009; Richter and Brühl, 2017). Driven by the belief that HR SSCs increase the quality of HRM services and simultaneously reduce their costs (Cooke, 2006; Janssen and Joha, 2006), academic studies started to examine HR shared service value, which refers to the utility of the services provided by an HR SSC in terms of the trade-off between their benefits and their costs (Meijerink et al, 2016). The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
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