Finding your balance Top tips for successful HR delivery in multiple countries across Europe

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1 Perspectives Finding your balance Top tips for successful HR delivery in multiple countries across Europe

2 ...organisations are striving for a more standardised approach across all their business locations to maximise efficiency and capitalise on cost savings.

3 The complex European landscape can deter organisations from considering a multi-country HR service delivery model. Successful implementation of such a model can be challenging, however it is achievable if carefully planned, with key issues acknowledged and addressed at the outset. HR is being asked to deliver more in a difficult market We are beginning to see cost pressures in some organisations start to ease, but HR is still being challenged to maximise its current operations, service providers and technology and provide increased strategic value to the business. The trend towards globalisation continues as organisations expand through mergers and acquisitions, increasing their country coverage and inheriting additional headcount in HR. As a result, organisations are striving for a more standardised approach across all their business locations to maximise efficiency and capitalise on cost savings. We see organisations encounter a number of specific challenges when attempting to transform HR service delivery in Europe HR service delivery in Europe can be complex and fragmented and this can make it difficult for organisations to build a compelling business case for HR transformation. The most common challenges we see amongst our clients include: Multiple languages across Europe (and sometimes even within countries), including a mix of common and uncommon languages. Mix of regulatory environments the complexity of employment legislation in different countries can mean that some activities will always need to be undertaken locally, which affects the level of standardisation that can be achieved. Data privacy storing and transferring data outside of EU borders can be legislatively difficult. Works Councils and unions their strength in certain countries can make it challenging and time consuming to implement changes and move jobs outside of the country. There can be collective bargaining/labour agreements which need to be adhered to. Size and fragmentation many international organisations have small populations of employees scattered across multiple countries. This presents challenges in achieving efficiencies and cost savings, which can mean that a centralised service delivery model is not the right model globally. Maturity of HR markets varied stages of acceptance of HR service delivery approaches (such as self-service and remote contact centres) in different countries. Variety of technologies and infrastructure across the countries traditionally individual countries have sought local technology solutions which are directly aligned to local country requirements. This restricts management information access and global workforce oversight. Cultural differences reluctance in some cultures to increase automation and self-service which can be perceived as impersonal and as HR being unhelpful. Availability of HR talent to support a new model it can be difficult to find the required expertise in the right locations and existing HR resources can find it difficult to transition into more strategic roles without the relevant skills and experience. Finding your balance top tips for successful HR delivery in multiple countries across Europe 3

4 Spotlight on research 2011 HR service delivery survey What are organisations doing to overcome these challenges? Emerging trends in HR service delivery across Europe Our 2011 HR Service Delivery survey shows that many organisations have now successfully implemented a multi-country HR service delivery model across Europe, and we are seeing trends emerge in how these organisations implement and continuously improve their services. Outsourcing solutions for multi-country footprints are becoming more common we are seeing new providers enter the market and an improvement in the capability of existing suppliers, as well as organisations with wellestablished shared services models beginning the transition to outsourcing, especially when standardisation has already been accomplished. There is an increased desire to benchmark against best practice to achieve operational excellence with more robust and active use of HR metrics and scorecards. There is a desire to realise synergies and cost savings through integrating legacy HR structures following mergers and acquisitions, even though this can take time, particularly where there are Works Councils, unions or specific labour laws in place. There is continued automation of HR processes as technology is developed or new technologies introduced. Smaller organisations are showing interest in Software as a Service (SaaS) solutions, particularly as large scale ERP solutions tend to be costly to implement. Interest in next generation technology such as social media, collaboration tools to support innovation, problem solving, support infrastructure and cultural change. Large global organisations are utilising internal shared service centres, however, our research shows that the majority of small and some medium-sized organisations are not utilising a HR service centre model (see Figure 01). Whilst in part this could be due to the smaller geographic spread across countries which impacts opportunities for financial cost savings, this could also mean that some European organisations do not have significant critical mass in a single geography to justify implementing shared services. Figure 01. Towers Watson HR service delivery survey 2011 Does your organisation use a HR shared services organisation (HRSSO)/ contact centre to deliver HR services (by company size) 0% 20% 40% 60% 80% 100% Yes, we utilise an internal service centre(s) Yes, we utilise an external (for example, outsourced) service centre provider 3 3 Yes, we utilise both an internal service centre(s) and external service centre provider No Large greater than 20,000 employees (n=94) Medium between 5,000 and 20,000 employees (n=148) Small Less than 5,000 employees (n=178) 4 Finding your balance top tips for successful HR delivery in multiple countries across Europe

5 Top tips from Towers Watson to help make multi-country HR service delivery successful The key point to remember is that there is no standard formula for successful HR service delivery in Europe. Focusing on good practice initiatives is a good starting point, however it is essential to be flexible. Aim to create a more agile HR function which meets the business needs of the organisation rather than following a prescriptive model that all organisations adopt. 1. Aim for consistency and clarity when assessing which HR service delivery model will deliver the best results for the organisation Aim for consistent and standardised HR policies and processes but clearly identify where these need to be varied to meet specific local requirements (for legal, regulatory, statutory or compliance reasons only). Delivery of HR services within the HR operating model should be a seamless employee experience, regardless of location. Assess the number and allocation of HR resources across multiple countries to identify if there is a significant saving to be made by moving to shared services. If there are significant numbers across many countries, it may be cost effective to centralise services. If there are limited HR resources or low employee numbers in some countries, it may make sense to provide services locally in those locations. Consider clustering countries together based on language and cultural similarities to gain synergies when a central service centre is not the right solution, for example, due to small populations dispersed over multiple countries, language restrictions, and so on. Ensure there is clear definition of roles and responsibilities for all elements of the HR service delivery model, supported by detailed governance controls. Articulate the skills and capabilities required for each HR role. Assess existing HR staff to establish if they can transition to the new roles, identify training requirements, key capability gaps or recruit appropriate HR talent. 2. Invest in the right HR technology solution Technology is a key enabler to effective HR service delivery but requires major investment, and off-the-shelf solutions are not necessarily available for all European countries. Invest time to understand requirements, consider all options and identify the best solution for your organisation covering your current and future requirements. Focus on automating as many HR activities as possible and utilise employee and manager self-service to minimise HR administration, enabling HR to focus on more strategic activities. Market trends show (see Figure 02) the vast majority of organisations find that self-service significantly reduces the workload of HR and contrary to perceptions, also reduces the workload of employees and managers. Ensure you have ready access to accurate data to track progress against targets and strive for continuous improvement. 3. Dedicate resources to focus on change management to ensure the changes are fully embedded Communicate in an open and honest way about how the future HR service delivery model will impact and change local HR services. Begin communication early, particularly where there are Works Councils or unions present, as approval can take longer than expected. Overcoming cultural resistance to implementing manager and employee self-service requires excellent design, communication and change management that clearly articulates the benefits of new ways of working. Ensure there is adequate training in place so that people know how to use the new processes and systems, and understand how the model works to ensure that HR delivers benefit and real value to the business. Countries with small numbers of employees often have a small business culture which values face-to-face interaction. Determine whether there is value to be added by changing ways of working, feel confident in pushing through changes where there is value to be gained but do not make the changes unless they can be justified. Finding your balance top tips for successful HR delivery in multiple countries across Europe 5

6 4. Data privacy requirements do not need to be a restriction provided you are compliant Data privacy laws are a significant consideration across Europe. Complying with the most complex data privacy requirements will satisfy data privacy and compliance laws and will prevent issues if the organisation expands into new countries. Engage with employment lawyers to ensure data privacy requirements are fulfilled, particularly when employee consent is required to transfer personal data to third parties, for example, an outsourced payroll provider. 5. Plan how you will transition to the new HR service delivery model a phasing approach often works well in a multi-country environment The transition approach should be pragmatic and take into consideration the culture, people, processes, governance, technology, compliance issues and legal challenges. This may mean that you phase your approach to implementing a new HR service delivery model and transition the move to your final desired future state model. Identify appropriate HR skills and capabilities required to deliver the new HR service delivery model, populate supporting resources and any training prior to implementation. Transitional arrangements are especially important when work is being centralised or off-shored, for example, where a series of service centre hubs could be transitioned to a centralised regional service centre over time. Figure 02. Impact of manager self-service on workload (Europe) 0% 20% 40% 60% 80% 100% HR generalist/specialist n=17 0 HR service centre/adminstrator n= Manager n=18 11 Less work No change More work Figure 03. Impact of employee self-service on workload (Europe) 0% 20% 40% 60% 80% 100% HR generalist/specialist n=21 HR service centre/adminstrator n= Despite the complexities of operating in a multi-country environment, many organisations have proved that these challenges are not insurmountable and that they can operate an agile HR service delivery model that reflects the different requirements of both small and large countries across Europe. Employee n=22 14 Less work No change More work Finding your balance top tips for successful HR delivery in multiple countries across Europe

7 Towers Watson has a breadth of experience in transforming global HR functions Towers Watson has some unique insights into HR service delivery issues and trends through the depth of our research. This includes leading research such as: Annual HR Service Delivery Survey which covers the breadth of HR service delivery. Global Workforce Study which represents the largest polling study on the views of the global workforce; 18 countries across all regions. HR Outsourcing Research and Buyers Group which focuses on the effectiveness of large scale HRO deals. Human Capital Metrics Survey which combines operational and financial measures with workforce metrics for benchmarking purposes and linkage analysis. Towers Watson s depth of expertise in workforce behaviour, programmes, and HR service delivery, coupled with our leading technology capabilities, ensures that we can help you develop an HR strategy, implement it and sustain it over time to get the outcomes you need. Towers Watson has an unparalleled global market presence. Our 14,000 associates in 37 countries serve as a powerful resource to the consultants in your local market who provide important, on-the-ground support and knowledge of local issues and requirements. Towers Watson is trusted by the world s leading organisations, working with 75% of the FTSE 100. With many clients in every industry, we have developed the industry knowledge and expertise needed to address sector-specific HR function issues. Further information For further information, please visit: /united-kingdom/services/ HR-Function-Effectiveness or contact your usual Towers Watson consultant. Finding your balance top tips for successful HR delivery in multiple countries across Europe 7

8 About Towers Watson Towers Watson is a leading global professional services company that helps organisations improve performance through effective people, risk and financial management. With 14,000 associates around the world, we offer solutions in the areas of employee benefits, talent management, rewards, and risk and capital management. Towers Watson is represented in the UK by Towers Watson Limited, Towers Watson UK Limited and Towers Watson Capital Markets Limited. Towers Watson Limited is authorised and regulated by the Financial Services Authority. The information in this publication is of general interest and guidance. Action should not be taken on the basis of any article without seeking specific advice. To unsubscribe, eu.unsubscribe@ with the publication name as the subject and include your name, title and company address. Copyright 2012 Towers Watson. All rights reserved. TW-EU January 2012.