Evolving Priorities and the Future of HR Service Delivery Originally published by Towers Perrin 2009 Research Report
At a Glance 2009 Survey Results The current economy is reinforcing the value of the HR function as an integrated and complementary support system for a company s business goals and priorities. Our 2009 HR Service Delivery Study shows that more and more companies view HR technologies and system budgets as must have expenses that support both short-term needs and long-term objectives. Among the key fi ndings of this year s survey: The overall cost of HR service delivery has become the top issue for HR and HRIT executives for the first time in the 12-year history of our survey. Organizations express the same fundamental reasons for choosing entirely different approaches to HR service delivery but, in the end, achieve very similar results against their objectives and priorities. Cost pressures notwithstanding, companies remain focused on their organizational initiatives, like globalization and experimenting with today s emerging tools and technologies. While it s not surprising that today s turbulent economy has had an impact on the HR function and related service delivery, what is revealing is exactly how. In the past, an organization s HR technology budget would have been among the fi rst things cut in challenging times. At a minimum, processes and investments would have gone into maintenance mode, with emphasis placed elsewhere in HR as the broader business set a course for recovery. Instead, in the current economic climate, HR faces not only challenges, but attractive opportunities as well. HR is emerging as a partner in identifying needed cost savings. But, more importantly, HR is increasingly seen as a partner in managing those costs and service quality while proactively addressing the business and workforce issues that will be critical long beyond the current recession. The 2009 study of HR service delivery strategies, trends and tactics our 12th annual survey tells the story of organizations seeking to balance longer-term service quality and transformation issues with near-term cost considerations. Many had embarked on larger-scale HR transformation projects prior to the economic downturn and are seeking ways to continue these efforts. Likewise, they are continuing to uphold a commitment to the effective and effi cient delivery of HR in key strategic ways evidenced, among other things, by a drive toward more effective management of organizational talent and using technology to enable that. Importantly, businesses remain supportive and appear to be providing HR with the resources to continue. Far from a story of retrenching and retreating, this year s HR service delivery survey reveals that HR, and the technologies that support it, have an important role to play in furthering the balance among service quality, cost and ongoing alignment with the business. 2 towerswatson.com
Top 3 Findings Finding 1 Cost of service delivery has emerged as a top issue for the first time in the history of our study while spending reflects an emphasis on technology as an effective service delivery and cost-cutting tool. Not surprisingly for these economic times, organizations acknowledge that cost is now a key factor in service delivery decisions. Our survey was fi elded in March and April of 2009, in the thick of the recession and, predictably, responses refl ect the economic realities of the times. The good news, though, is that organizations remain primarily focused on delivering talent and performance management through technology, and on streamlining business processes and systems currently in place. This trend, which we ve seen over the past three years, clearly suggests that organizations recognize the value of technology in helping to address strategic talent management priorities, even in a down economy, as well as the need to continue to maximize existing investments in HR technology. Perhaps most revealing of all, while some organizations have reduced spending on HR technology, nearly two-thirds are maintaining or increasing their spending. And although HR technology spending does have a fi xed cost component, technology is without question a very useful tool in helping the organization save money in other ways by improving the effi ciency (and effectiveness) of HR service delivery. Finding 2 Though the approaches to service delivery transformation can vary greatly, both the drivers of the change and the outcomes achieved (when successful) were the same. The decision of whether to operate an HR shared services center, outsource or deliver HR services through another means is complex, informed by factors as concrete as costs and as nuanced as the corporate environment and culture. Usually, the factors that contribute to an organization s decision to pursue a specifi c service delivery path are both qualitative and quantitative, and refl ect the organization s deeply held beliefs about service quality, cost, people and its future. Our survey found that organizations are heavily infl uenced by their internal perceptions of how well various modes of service delivery (e.g., shared services versus outsourcing) actually perform. And it s true that, in execution, shared services and outsourcing offer distinct challenges, as well as unique solutions. However, our study shows that, while the outcomes may be in some measures different, the drivers that lead an organization to make a certain service delivery decision are more alike than many might think. This year s research, which included surveys on largescale outsourcing and shared services, as well as traditional and emerging service delivery methods, demonstrates that an organization s beliefs about whether a specifi c service delivery approach would work for them may bear rethinking. Specifi cally, preconceived notions often guide initial thinking about what may work, and these notions are not always accurate. We recommend that organizations rely on both qualitative and quantitative factors in making a decision on service delivery approach and make decisions with an open mind. Finding 3: Organizations have held fast to the ideals of balancing quality and cost, and despite cost pressures, have kept their focus on higher strategic priorities, like globalization, growth, talent management and innovation. Time and again throughout our survey, organizations indicated that the priorities of globalization, implementing systems that facilitate talent and performance management, and rigorously experimenting with new and emerging tools like onboarding, Web 2.0 applications and learning management outweigh near-term cost considerations. The remainder of this report covers our detailed fi ndings. 2009 HRSD Survey Report 3
Exhibit 01. 2009 Spending on HR Technology 0% 10% 20% 30% 40% 50% 60% > 20% reduction 11 < 20% reduction Same < 20% increase > 20% increase 6 15 25 43 Impact of the Current Economy on Service Delivery Investments and Decisions This Year s Research This year s research confi rms that, regardless of service delivery method, organizations are seeking both cost savings and service quality in nearly equal measure. When we launched this survey in the thick of the recession, we expected to see dramatic decreases in capital spending. To our surprise, however, while some respondents reported a modest tapering off of planned investments in technology, fully 43% planned to maintain their current level of investment, and more than one in fi ve organizations planned an increase in HR technology spending (Exhibit 1). We believe this trend refl ects two important and related factors. One, the current economy has heightened recognition of HR s value in helping address key business goals and priorities, identifying potential cost savings and positioning the organization for future growth. Two, organizations now really understand that investments in HR technology can effectively address immediate cost-cutting needs and prepare the organization to better meet its future business needs. So while HR organizations still need to proceed thoughtfully in making technology investments, the proven value of HR technology has made these investments less of a discretionary cost and more of an imperative, even in today s diffi cult times. In yet a further affi rmation of the changing perspective on the business value that HR brings, delivering on talent and performance management systems remains a key priority for our respondents (Exhibit 2, page 5). Throughout our survey, we see quantitative evidence of these priorities put into action through the planned growth in systems like onboarding and learning management, even amid economic uncertainty. Our qualitative experiences with clients show the same direction and point to a need to balance short-term cost concerns with more critical business priorities, such as ensuring future workforce readiness to enable growth. Similarly, streamlining existing investments in processes and systems also remains a key service delivery priority for the year ahead. In past years, organizations were often singularly focused on upgrading and enhancing their service delivery systems, committed to wholesale system upgrades or implementing point solutions at the expense of taking an integrated view of their technologies. The current focus takes a more holistic view of those HR service delivery systems and technologies already in place. This closer alignment with the business ensures that its priorities are addressed, identifying gaps or areas for improvement where they exist and working to address them. This focus on improving processes also reveals a desire on the part of the HR function to address how it goes about delivering on its promises to the business rethinking its role, the use of technology and how they integrate. 4 towerswatson.com
Structure and Ongoing Evolution of the HR Function Prior to the current economic downturn, many organizations were engaged in some form of HR transformation, whether full-scale global restructuring or more discrete changes, like rethinking HR management systems or the use of self-service. Today, the focus has shifted more to leverage: making better use of shared services and centralized structures, and realizing cost savings through HR outsourcing. Put another way, this year s research confi rms that, regardless of service delivery method, organizations are seeking both cost savings and service quality in nearly equal measure. This doesn t mean organizations have taken their eyes off the ultimate goal of building the HR function of the future, but have temporarily shifted their priorities to take greater account of cost considerations and immediate effi ciency needs. More than seven in 10 organizations employ one of two key structures for their HR function: either a single function for the entire organization using shared services, or separate HR functions to support businesses and geographies, with corporate oversight, using shared services. Fewer than 30% of the organizations in our survey do not use shared services in delivering HR services; 40 companies have large-scale HR outsourcing arrangements. Exhibit 02. 2009 Top HR Service Delivery Issues (top three frequency) 0% 10% 20% 30% 40% 50% 60% Talent/performance systems 35 Streamline processes/systems 35 Cost 24 More involvement reported in strategic, business-driven issues 23 Upgrade HR system 18 Define human capital metrics and dashboards 17 Manager self-service 16 New HR system 15 Accuracy of data 14 Systems integration 13 Recruiting/staffing services/systems 12 2009 HRSD Survey Report 5
Current Focus of HR Economic challenges notwithstanding, HR executives remain committed to several key initiatives and report that results are meeting or exceeding expectations in most cases for these more complex undertakings. Looking back at our survey respondents actions during the past 18 months, HR has focused on: (1) reengineering key HR processes, (2) seeking increased alignment of HR strategy and business strategy, and (3) implementing a shared services model. This is perfectly logical. Revisiting HR processes (along with refocusing the role of the HR business partners) and implementing a shared services model are effective ways to achieve cost savings and effi ciencies while improving the overall capability of the HR function priorities that will still be relevant beyond 2010, regardless of how the economic climate evolves. Increasing the alignment of HR strategy with business goals is a similarly natural progression as the business demands more of HR in terms of ensuring an optimally sized and skilled workforce to meet both short-term economic realities and longer-term growth objectives. Not surprisingly, these processes are among the most diffi cult to complete, but provide the highest levels of success among the many HR service delivery initiatives that organizations can undertake. For example, among the organizations that have begun to reengineer HR processes, just over a quarter describe this activity as largely complete, the lowest level of completion in our survey (Exhibit 3A). That said, under half (46%) of the respondents who undertook reengineering HR processes, and who said they were between 76% to 100% complete, found that results were above their expectations the highest in our survey (Exhibit 3B, page 7). Exhibit 03A. Initiatives Undertaken in Past 18 Months Percentage Completed 0% 20% 40% 60% 80% 100% Implemented a new, robust HRMS 50 20 16 14 Developed a standard global data architecture for HR data 42 28 15 15 Implemented a shared services model 42 21 23 14 Introduced a new channel of HR delivery 41 22 21 16 Implemented and leveraged self-service (employee and/or manager self-service) 37 21 26 16 Refocused the role of the HR business partners 32 25 29 14 Sought to increase alignment of HR strategy with business strategy 31 31 31 7 Reengineered key HR processes 26 22 33 19 Largely complete (76%-100%) Mostly complete (51%-75%) Somewhat complete (26%-50%) Getting started (0%-25%) 6 towerswatson.com
Exhibit 03B. Success Achieving Expectations Among Processes 76%-100% Complete 0% 20% 40% 60% 80% 100% Reengineered key HR processes 46 36 4 14 Refocused the role of the HR business partners 39 49 6 6 Implemented and leveraged self-service (employee and/or manager self-service) 38 37 10 15 Sought to increase alignment of HR strategy with business strategy 37 47 4 12 Implemented a shared services model 36 52 12 Introduced a new channel of HR delivery 33 42 8 17 Developed a standard global data architecture for HR data 31 43 9 17 Implemented a new, robust HRMS 22 31 22 3 22 Exceeds expectations Met expectations Slightly below Well below expectations Too early to tell This is in contrast to other initiatives under way, and their relative levels of completion and satisfaction. For example, of the organizations that have sought to implement a new, robust HR management system, 50% describe this activity as largely complete, but only 22% report that results exceeded their expectations. Similarly, of the organizations that implemented a shared services model or developed a standard global data architecture for HR data (42%, in each case), 36% and 31%, respectively, report that their results exceeded expectations. In all cases, when it comes to HR service delivery initiatives, there are key criteria that need to infl uence an organization s choices. These include what s important to the business, what s feasible with the level of people and budget resources available, and what s most necessary and achievable within both the current and longer-term business environment. It may well be that the highest level of return is generated by the most challenging initiatives (our data confi rm this), but that other more tactical needs take precedence and are more likely to be completed. The trick is to fi nd that tipping point between achievable and important initiatives for your own organization, and focus your efforts and investments accordingly. Careful planning and monitoring of the most diffi cult tasks invariably enhance both the speed and the success of the changes introduced. The Trick The trick is to fi nd that tipping point between achievable and important initiatives for your own organization, and focus your efforts and investments accordingly. 2009 HRSD Survey Report 7
Service Delivery Strategies and Tools Self-service remains a critical pillar of HR service delivery, and continues to grow in use and sophistication. Whether an organization is seeking broad-scale HR transformation, or discrete support for a specifi c HR program, the use of self-service technology is ubiquitous. In fact, self-service has emerged as the workhorse of HR service delivery a staple that s helping organizations achieve their basic blocking and tackling needs. And it s commonplace across all levels of HR transformation and service delivery. Analysis of our 2009 research, along with anecdotal client experience, show that the more an organization employs self-service, the lower the overall cost of running the HR function itself. Generally speaking, the more an organization deploys self-service, the more effectively and effi ciently HR services are delivered to employees. What s more, manager self-service, once viewed as the next frontier of service delivery, has fi nally joined employee self-service as a key part of an organization s approach to delivering HR, benefi t and reward programs, for everything from traditional core benefi ts to emerging performance management services. Organizations investing in HR service delivery are focusing on those areas that support talent management. Among survey respondents using self-service, many functions will be widely available by 2010, including applying for posted jobs (91%), enrolling in annual benefi ts (90%) and enrolling in training (79%). Manager self-service is similarly available for core transactions like salary changes (61% by 2010) and transferring or promoting employees (also 61%). The specifi c advantages of self-service are broad. At a strategic level, self-service particularly when aided by solid change management efforts helps engender a culture of self-reliance among employees and supports line managers in acting as effective leaders, equipped with the tools they need to manage their staff. Self-service has also long held the promise of freeing HR to focus more on strategic initiatives and less on the day-to-day administrative work that so frequently occupies its time. In point of fact, self-service is delivering on its promise of workload reduction. Seventy-two percent of survey respondents report that employee self-service leads to less work for HR generalists and specialists (in some cases, signifi cantly less work). Furthermore, over a third also report less work for both employees and managers (Exhibit 4), exploding the myth that selfservice creates more work all around. Timeliness and accuracy of processing using employee self-service improve as well, with more than three-quarters of respondents reporting faster transaction processing and more accurate data using self-service. Exhibit 04. Impact of Employee Self-Service 0% 20% 40% 60% 80% HR generalist/specialist 8 20 72 HR service center administrator 18 13 69 Employee 22 37 41 Manager 29 34 37 8 towerswatson.com
Technology and Talent Management Forging closer ties between HR and the business Over the past three years, we ve observed a distinct pattern of growth in the prevalence and importance of technology used to help organizations meet their talent management objectives. Specifi cally, the identifi cation and implementation of talent and performance management systems has emerged as the top HR service delivery issue among survey participants. This is encouraging for a couple of reasons. First, we believe it accurately captures the closer alignment between HR and the business, with HR s priorities more closely refl ecting those of the broader organization when it comes to growth, talent and performance management, and workforce effectiveness. Second, it demonstrates to us that HR, and likely the broader organization as well, is coming to appreciate the contribution that technology can make to the effi cient and effective delivery of talent management from onboarding, to training, to managing the performance process. Indeed, technology can and does support all aspects of the employment life cycle. In terms of growth, organizations investing in HR service delivery are focusing on those areas that support talent management. Use of manager self-service, for example, will grow signifi cantly by the end of 2010, particularly in terms of onboarding (where availability will more than double, from 21% to 51% of companies) and succession planning (where availability again will more than double, to 47% from the current 18%). In like manner, use of manager self-service to deliver workforce planning is expected to increase from 12% currently to 28% by the end of 2010. What s more, organizations are reporting gains in the effectiveness of talent and performance management systems. Among respondents who use them, 65% report that their external recruiting systems are effective, with the effectiveness of internal recruiting systems just slightly behind. Compensation and performance management systems score similarly good results in terms of overall effectiveness. Lagging signifi cantly in effectiveness are those systems designed to meet emerging needs. Fully 28% of respondents that use workforce analytics programs are dissatisfi ed with the effectiveness of those systems, and almost as many (24%) report dissatisfaction with the technologies that support career development and planning. There is obviously more work to be done before these particular technologies enjoy widespread adoption and use. What s on the horizon? Clearly, organizations are continuing to invest in the technologies and systems that enable the delivery of talent and performance management initiatives, and this trend shows no signs of abating. The next frontier for organizations and vendors alike is to improve the quality of these systems so that they are more effective in meeting organizational goals. Vendors can do this through continued improvement of the technology. And organizations can help technologies take hold through a comprehensive change management and communication process that encourages adoption and use of these tools. 2009 HRSD Survey Report 9
Exhibit 05. Impact of Manager Self-Service (for HR and pay transactions) 0% 20% 40% 60% 80% HR generalist/specialist 10 24 66 HR service center administrator 23 17 Administrative support staff 31 21 48 60 Supervisor/manager 15 41 43 Less work No change More work 6 Results are similarly positive for manager selfservice related to pay transactions, with 66% reporting less work for HR generalists and specialists (Exhibit 5). Manager self-service also offers improved transaction speed and accuracy, although not to the degree yet of employee self-service. This is likely due to the increased complexity of manager transactions, the continued maturation of the tools themselves and the emerging nature of manager self-service relative to employee self-service. Much like the earlier days of employee self-service, the manager-initiated transactions that we are automating need to be further streamlined. Our data show that there is still a ways to go for many companies to achieve best practices in the number of authorization levels required and in deciding who needs to be involved in many of these transactions. While there s no doubt that manager self-service will ultimately catch up with employee self-service in terms of use and effectiveness, the full promise of total self-service remains stymied by HR s seeming inability to let go of oversight and control, even in cases where its continued involvement is unnecessary or even counterproductive. As an example, among survey respondents using manager self-service, 39% of all routine, on-cycle pay raises must still be reviewed and approved by HR even where manager approvals and business rule enforcement are in force as part of the self-service solution. This series of added steps and continued HR involvement reduces the gains possible with self-service and deters HR s ability to more fully partner with the business and deliver on its broader objectives. Correcting this situation is the next mandate toward a more effi cient and effective HR. Effective change management and thoughtful design of selfservice solutions are critical to the adoption of self-service. What s also worth noting is that effective change management and thoughtful design of self-service solutions are critical to the adoption of self-service. The most sophisticated systems, while capable of helping an organization achieve its transactional goals, are weakened without a consistent plan for managing the implementation, adoption and ongoing use among employees and managers alike. 10 towerswatson.com
Similar goals, different approaches: Shared services and outsourcing achieve consistent goals and results. Between the two predominant means of delivering HR services shared services and HR outsourcing organizations express the same fundamental reasons for choosing entirely different approaches. Among our survey respondents, under three-quarters (71%) use some form of shared services to deliver HR. Of these, roughly half do so with a single HR function that supports the entire organization, and half do so with separate HR functions organized by business and/or geography, with corporate-level oversight. Nearly half (48%) of the organizations that operate with a shared services approach cite eliminating the distraction of administrative and transactional HR work to focus on more strategic work as the primary reason for doing so (Exhibit 6). Other goals include realizing longer-term cost savings (40%), standardizing HR processes throughout the business (40%) and achieving substantial improvements in HR service quality beyond what the organization could realize on its own (35%). Forty of our 330 survey respondents have significant HR outsourcing arrangements. Organizations that chose the large-scale outsourcing alternative report goals similar to shared services organizations. Cost savings and eliminating the distraction of administrative and transactional work are far and away the top organizational goals for the HR outsourcing initiative, with each cited as key by 73% of respondents. Other goals include realizing HR service quality improvements (cited by 50% of respondents) and standardizing HR processes (35%). Exhibit 06. Top Reasons HR Shared Services Organization Was Created 0% 10% 20% 30% 40% 50% Eliminating the distraction of administrative and transactional HR work to focus on more strategic work Ongoing, longer-term operational cost savings Standardizing HR processes throughout the business Substantial improvements in HR service quality beyond what you could achieve on your own at the available level of investment 35 Changing the behaviors of employees/managers 25 As part of a broader HR transformation effort 22 Substantial improvements in the timeliness, accuracy and meaningfulness of the workforce information 20 Substantial productivity improvements in HR 17 Changing the behaviors of HR 16 As part of a move to a broader Corporate Shared Services function 11 Reduced capital expenditures 6 Obtaining a higher level/quality of service and support than that available through internal IT 4 Short-term operational cost savings 2 Facilitating mergers and acquisitions 1 40 40 48 2009 HRSD Survey Report 11
While the reasons that organizations undertake either initiative are similar, respondents report varying degrees of success in achieving their goals. Shared services organizations reported success in achieving service quality improvements beyond what HR could achieve on its own, in changing behaviors of employees and managers, and in substantially improving the timeliness, accuracy and relevance of workforce information. HR outsourcing, on the other hand, was more successful in achieving longer-term operational cost savings and standardizing HR processes throughout the business. Whichever path organizations choose, they are committed to it. Forty-six percent of companies that pursued a shared services approach never even considered HR outsourcing. And more than four in 10 of these companies that opted not to consider outsourcing did so because they did not believe that detailed review of the successes and challenges of HR outsourcing, both as a stand-alone and in the context of other service delivery decisions. Web 2.0 applications bear watching as a new model for innovative service delivery. Among the more exciting developments in HR service delivery over the past year is the growing use and traction of Web 2.0 tools as an enabler of workforce engagement, program delivery and interactive communication. Web 2.0 tools take advantage of the current groundswell of interest in social networking outside a business setting and are gaining acceptance and use in the workplace at a startling rate. Organizations implement Web 2.0 tools primarily to foster greater information sharing and teamwork within the organization both the HR organization Among the more exciting developments in HR service delivery over the past year is the growing use and traction of Web 2.0 tools as an enabler of workforce engagement, program delivery and interactive communication. HRO could achieve cost savings. However, those that chose the HR outsourcing approach did, in fact, achieve their cost-saving goals. And while they have historically struggled with service quality, they are making headway there as well. For related fi ndings, please consult our companion report on Towers Watson s study of large-scale HR outsourcing effectiveness. It offers a more itself, as well as across the broader enterprise. Among those survey respondents who use these tools, enabling knowledge management and collaboration within a team or department is the primary reason for doing so, followed closely by increasing engagement among all employees, increasing individual and group productivity with fewer resources, and enabling knowledge management and collaboration between departments and functions. 12 towerswatson.com
What s clear from our 2009 survey is that Web 2.0 tools are quickly taking their place as mainstream devices in daily life, whether used by HR or not. Respondents familiarity with Web 2.0 tools like forums, blogs and podcasts all exceed 85%, with roughly half of respondents using social networking (61%), forums (51%), podcasts (47%) and blogs (44%) on occasion or more frequently. Translated into a business setting, fully 60% of organizations use and offi cially endorse forums, with other tools similarly sanctioned. And roughly 20% of organizations report the use of, but not offi cial support for, these tools. So what s possible with Web 2.0, and why are these tools becoming so important? The better question might be: What s not possible? At this point, the sky s the limit. While adoption rates vary, and these tools are still in their infancy, our respondents report use of Web 2.0 technology, in varying degrees, for everything from HR communication and knowledge management, to training and career development (Exhibit 7). In a time of economic uncertainty, when organizations face very real business and workforce concerns, Web 2.0 tools offer an interactive, personal and immediate means of communication and employee engagement. They provide a direct conduit and twoway communication channel between leadership and employees, helping to provide context and content for business decisions and information, whether signifi cant or more mundane. As with most tools used for HR purposes, however, they require a wellplanned and managed approach that accounts for business needs, organizational culture and expected results. Currently, HR s role in setting up and deploying Web 2.0 tools for HR purposes is broad. Our survey results show that, in more than six out of 10 cases, HR is responsible for content generation (68%), initial implementation (67%), content maintenance (62%), and involvement in related change management and communications (61%). One concern is that HR s role drops off somewhat when it comes to program oversight. Less than half of the respondents are responsible for creation of policies, ongoing governance and risk identifi cation and mitigation. As use of these tools grows, HR will need to balance an informed steering of the use of Web 2.0 with an ability to relinquish control, where appropriate mindful of the fact that Web 2.0 tools, by their very nature, are nearly impossible to fully control. Furthermore, to gain full acceptance across the organization, Web 2.0 tools must ultimately be approached and managed with the same rigor applied to other business processes. Currently, there s little measurement of Web 2.0 tools, although that will change with time and greater adoption within organizations. Almost half of Web 2.0 users (44%) report that it s too soon to tell whether these tools have met HR s goals, and fully 63% report they have no formal way to measure impact at all. Exhibit 07. Tools Used for HR Activities Social Networking Blogs Wikis Forums Social Bookmarking Podcastss Recruiting 60% 15% 8% 21% 3% 8% 29% HR Communication 14% 23% 17% 29% 4% 21% 41% HR Knowledge Management 14% 11% 22% 23% 3% 5% 51% Training 11% 9% 11% 20% 4% 28% 52% Career Development 14% 8% 7% 14% 4% 10% 71% Talent Management 11% 7% 8% 13% 2% 3% 75% Onboarding New Hires 9% 2% 7% 4% 1% 5% 80% Workforce Administration 2% 2% 5% 7% 2% 3% 84% Workforce Planning 2% 2% 4% 5% 2% 2% 87% Web 2.0 Tool Not Used for This Purpose 2009 HRSD Survey Report 13
Exhibit 08. Main HR Management System Application Objectives 0% 10% 20% 30% 40% 50% 60% Streamline business processes Deploy additional manager self-service functionality 42 Deploy additional employee self-service functionality 41 Deploy reporting/analytics, KPIs and/or strategic reporting functionality 37 Utilize additional HR modules (e.g., benefits, comp., performance, recruiting) 35 Upgrade to new version 26 Consolidate multiple HR systems globally 18 Implement a new HRMS 16 Other 7 55 Still, organizations are actively encouraging employee adoption and participation for HR purposes. Fifty-six percent of organizations that use it fi nd direct leadership participation (for example, blogs from leadership) to be effective in encouraging employee use of the tools, followed by contests and incentives (52%) and Web-based training in the tools (41%). We expect that the use of Web 2.0 tools will continue to grow and will have a near-term impact in areas like recruiting, communication and training. HR management systems will continue as a mainstay of service delivery, and focus will remain on implementing performance and talent management applications. The vast majority of survey respondents (84%) use a vendor-purchased HR management system to deliver HR services to employees; another 11% outsource that function, and 5% use an in-housedeveloped solution. Three-quarters of respondents use one primary HR management system for all employees, while nearly one in fi ve use multiple HR management systems to deliver HR services for different regions or businesses. HR management system priorities in 2009 include streamlining business processes (consistent with HR s overall goals), as well as deploying additional manager and employee self-service functionality (Exhibit 8). Client experience tells us that organizations are most often successful at achieving these goals through the use of an HR management system with similar perspectives from users of both major systems, PeopleSoft and SAP. Specifi cally, 62% of PeopleSoft users and 59% of SAP users report that they are somewhat or very satisfied with their chosen system s ability to help them deliver on HR objectives. Changes in the industry over recent years have led to a more measured approach to adopting new systems, with organizations focusing more on implementing specifi c modules of their chosen systems predominantly in the performance and talent management areas than in the wholesale adoption of new releases or switching to new vendors. However, among survey respondents selecting new HR management systems, SAP has emerged as the leader, with 32% of those selecting new systems planning to adopt SAP. Oracle s PeopleSoft system, however, retains the greatest share of our respondents. 14 towerswatson.com
Conclusion The years ahead will offer more choices and more challenges than ever before for HR service delivery. The current economic climate has made clear that cost is, and will continue to be, a consideration. Still, HR service delivery appears to have come into its own as a critical contributor to the organization in balancing business goals and service quality with cost issues. Furthermore, economic uncertainty notwithstanding, both emerging technologies and tried-and-true service delivery methods are also coming into their own, offering innovative, effi cient and effective tools for helping lead HR into the future. And if the precise nature of that future remains unclear, there s no doubt leading HR organizations remain committed to building a vision of that future and plotting a path to get there. About This Survey Towers Watson s 2009 survey of HR service delivery, our 12th, details the HR service delivery and technology plans, tools, tactics and technologies of 332 organizations across many industries. Of responding companies, 79% are headquartered in the United States, 10% in Canada, 7% in Europe and 4% in Asia. Well over half (58%) are global or multinational fi rms, with nearly all (90%) having more than fi ve years in their current geographic footprint. Sixty-fi ve percent of responding organizations are publicly traded. Key industries include manufacturing (22% of respondents), fi nancial services (16%), health care (13%) and energy/ utilities (12%), among many others. Seventy percent of survey respondents are organizations of more than 5,000 employees, with a survey average of just over 11,000 salaried and nearly 18,000 hourly employees. This year s research was combined for the fi rst time with two other Towers Watson surveys of HR shared services and HR outsourcing. By conducting these surveys concurrently and with the same respondent group, we can offer a more consistent analysis and relevant set of fi ndings, as well as detailed and valuable benchmarking data. For more information on this report, or to learn about participating for 2010, please visit www.towerswatson.com/hrfe. About Towers Watson Towers Watson is a leading global professional services company that helps organizations improve performance through effective people, risk and fi nancial 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. Originally published by Towers Perrin. Copyright 2010. All rights reserved. towerswatson.com