HR Transformation Update HR Community Town Hall June 18, 2013 1
Today s agenda Review HR Transformation initiative Discuss results of HR Online Survey Review guiding principles and HR Vision Share leading practice in HR Service Delivery Outline next steps/ key upcoming milestones 2
What is the HR Transformation? A strategic initiative that is focused on creating a more efficient and effective HR function that increases the value the HR Community provides to the University By the end of 2014, we will have our new HR structure / foundation in place http://ohr.psu.edu/transformation/ 3
Why are we doing this work? The HR function faces many challenges in delivering value to Penn State No overall HRIS system making it difficult to provide answers to simple inquiries Duplication of effort which results in unnecessary cost Inconsistent interpretation of policies and processes that results in answer shopping and confusion High focus on transactional, repetitive work that could be performed more consistently 4
Our transformation objectives Operate More Efficiently Achieve Desired Outcomes Be Wholly Successful Ensure Accountability Maintain Some Flexibility Become More Effective 5
Three Phases to Transforming HR Phase 1 Current State Assessment We are here Phase 2 Detailed Future State Design Phase 3 Implementation Change management, project management, and Leadership / Governance bridge all three phases 6
Unit HR: Definitions Employees that are part of the Office of Human Resources (OHR) HR Reps and their direct reports DBSs and their direct reports Non-Unit HR: Other employees across the university who touch HR-like activities like I-9s, onboarding, new hire letters, etc. Strategic Activities Forward looking plans and actions that help institution leaders solve people/workforce related challenges and opportunities (e.g., Designing the talent management strategy for Penn State) 7
Consultative Activities Definitions (cont.) Collaborative efforts between HR and university leaders or internal customers with the objective to understand the issue, develop appropriate insights and create solutions ( Candidate interviews) Administrative Activities Predictable, repeatable, routine actions that tend to be driven by predefined criteria (Complete I-9s, answering routine queries from internal customers) FTEs Full-time Equivalents the number of working hours to equate to one full-time employee 8
HR Survey results Comprehensive current state assessment of HR involving HR Community and others who do HR-related work Excellent response rate: 66% ( 97% HR; 62% non-hr) Provided detailed financial data around: What HR work is being done and what employees do How much it costs How consistently these services are provided across the University Survey included 214 activities (strategic, consultative, and administrative) 9
Current State Analysis: Key themes Total spend for HR-related activities is $50M; the work is highly-distributed and focused on routine tasks Over two-thirds of total time is focused on administrative activities which equates to $29M with only 7 FTES focused on HR Strategy and Planning Unit HR accounts for $13M of the overall spend and equates to approximately 214 FTEs For Non-Unit HR, two-thirds of their work is focused on HR activities, at a cost of $37M or approximately 780 FTEs Administrative activities include things like new hire data processing, answering routine employee queries, posting jobs, and creating job descriptions 10
Current State Analysis: Key themes (cont.) Administrative activities for Unit HR account for 55% of their time - the highest of all AIM surveys recently conducted by Towers Watson. Everyone is responding to routine inquiries HR Reps/DBSs and their staff spend a small amount of time on each of the full range of HR activities (they touch 191 out of the total 214 activities) Unit HR is spending significant time on Non-HR activities at a cost of nearly $1M 11
Overview of time spent and associated cost (all participants) Overall Function Name Time (hrs) Cost FTE Non - HR Activities 853,023 $21,404,374 410.11 Recruiting and Staffing 534,358 $12,588,474 256.90 Payroll and Time & Attendance 430,565 $8,827,873 207.00 HR Department Management 264,755 $6,496,710 127.29 Training 176,393 $4,261,349 84.80 HR Information Systems (e.g., IBIS) 170,205 $3,798,167 81.83 Employee / Labor Relations 99,661 $2,764,072 47.91 Talent Management 93,976 $2,695,636 45.18 Compensation 68,602 $2,040,710 32.98 Benefits 54,923 $1,376,391 26.41 Organizational Development 53,802 $1,652,367 25.87 Safety 37,056 $1,017,971 17.82 HR Communication 31,642 $822,525 15.21 HR STRATEGY AND PLANNING 15,030 $657,565 7.23 Other 7,961 $177,285 3.83 Total 2,891,953 $70,581,467 1,390.36 If you exclude the $21M in Non-HR Activities, the total cost is nearly $50M
Classification of Activities Classification of activities selected by all participants (n = 1,401) Other Admin Strategic Consultative Classification Time (hrs) % Cost % FTE % Administrative 1,299,631 45% $28,686,141 41% 624.82 45% Consultative 487,872 17% $14,143,619 20% 234.55 17% Strategic 94,388 3% $2,843,153 4% 45.38 3% Other 1,010,062 35% $24,908,554 35% 485.61 35% Total 2,891,953 100% $70,581,467 100% 1,390.36 100% 13
HRIS Current state analysis Key themes (cont.) $3.8M of Unit and Non-Unit HR time is spent on HRIS technologies that are sub-optimal, resulting in manual work, workarounds and frustrated employees and managers Stakeholders share HR s frustration with antiquated technology Hinders the HR function from doing their jobs effectively Lack of accurate data impedes sound decision making 14
Recruiting and Staffing Current state analysis Key themes (cont.) The cost and resources associated with Recruiting activities are high There are 10 FTEs within the recruiting department but over 250 FTEs touch this activity - making it a highly fragmented activity, that is a large number of individuals spend a small amount of time performing the work - for a spend of $12.6M Most of the fragmented activities are also manual such as New Hire Data Collection, On-boarding, Application/Resume Processing and Pre-Employment Background Checks During the interviews, leaders voiced a desire for HR to analyze future workforce needs (current supply v. future 15 demand) instead of filling vacancies
Compensation Current state analysis Key themes (cont.) The compensation department is 6 employees, but 33 FTEs perform compensation activities and the top 10 activities are routine/transactional Benefits The benefits department has 19 employees, with 26 FTEs performing these activities and the top 10 activities are predominantly transactional Communications With a spend of almost $1M, and 133 FTEs touching the communication content development, there is room for improvement 16
Current state analysis Key themes (cont.) Training Four of the top five training function activities are administrative, at a cost of almost $2.5M Payroll and Time and Attendance The overall spend for Payroll and Time & Attendance is $8.9M Travel and Expense Reimbursement is more than three times the cost of any other individual payroll activity and accounts for $3.2M of the total 17
Ratio of employees to Unit HR staff The number of HR resources supporting colleges, campuses and administrative units has evolved over time resource allocation should be thoughtful Note: Administrative Assistants are included in these numbers, as are DBSs with non-hr staff under them
Overall improvement opportunities 1. Up-to-date technology to enable redesigned processes 2. Improve service delivery through: Simplified and standardized processes and consistent workflow Automated activities for routine, transactional and repetitive work Improved clarity of HR roles to support HR and a consistent employee experience Align work in more focused roles in COEs and HR Services and leverage expertise and economies of scale more widely Faculty, staff and tech services are provided specialized support in key areas such as Recruiting/Staffing, Training, and ER (investigations) through HR Services These steps will create capacity for Unit HR to do more strategic and consultative work and Non-Unit HR to focus on serving students and other primary university customers 19
Improvement opportunities (cont.) 3. Implementation of employee and manager self-service capabilities as well as an HR Portal to provide access 24/7 to streamline the answering of routine questions 4. Investigate opportunity to outsource certain activities (e.g. I-9 s) that are routine and may be executed more efficiently by vendors 20
Purpose Focus on the future: Guiding Principles Guide direction and decisions during our future state process redesign work; help shape the HR service delivery strategy Effective guiding principles: Forecast business needs 2-3 years out Address multiple dimensions of delivering HR services (e.g., people, process and technology) Support HR and University s goals, strategies and commitment 21
Guiding Principles for Future State Design Guiding Principle Processes will be standardized and technology-enabled with a focus on consistency, simplicity and limited customization. Policies will be governed at the University level, with variations and exceptions governed centrally. Line managers will have access to online tools, data and information to manage their teams; HR will support complex people management issues. HR Strategic Partners will be aligned with University leaders to act as advisors, consultants and coaches on workforce planning needs, talent management, change management and employee engagement. HR Services will provide focused delivery of day-to-day operational support as well as consulting support for LR/ER, employee development and recruiting. HR will provide a balanced customer experience with strategic and highly sensitive discussions occurring face-to-face and routine queries being addressed through self service. 22
Guiding Principles for Future State Design Guiding Principle (Cont.) Outsourcing will be considered as appropriate. HR s governance processes (for prioritizing, decision making and delegation of authority) will be clear and consistent. HR will operate as one team. Technology will enable 24/7 mobile access for HR, employees and managers. Reporting will be decentralized to recognize the needs of academic and nonacademic units; tools will be intuitive and easy to use. 23
Penn State s HR vision We are an agile, trusted, customer-focused partner who delivers strategic solutions that enable the attraction, retention and engagement of a talented and diverse workforce to support the creation of Penn State s future. 24
The three-circle model offers clarity on what each role does Defines the strategic HR agenda for the University and oversees its delivery Provides leadership and support to the HR function Broker services from COEs Focus on future workforce needs Know the key talent (emerging leaders) at the colleges, campuses and Non-Academic Units to drive Talent Management Programs Deliver change management support Support university restructurings Focus: Connecting HR and the University Focus: Leads, governs and integrates Strategic Partners HR Leadership Team HR Services Centers of Expertise Design core strategy, policy, programs and plans Are core functional experts, as well as specialists in specific employee segments (e.g., Faculty, Staff and Tech Service) Leverage industry trends and best practice to ensure the University is competitive v. its peer group Provide solutions that are needed by Academic and Non-Academic Units Focus: Standardization and simplification Leveraging expertise across the enterprise Delivers core, routine operational services, as well as professional services / consulting support; the HR Engine Focus: HR operational efficiency and end-to-end service delivery Underpinned by partnership and collaboration at all levels to provide integrated services to the University 25
and what they don t do Don t Use governance process as a means to micro-manage Become a bureaucratic nightmare preventing reasonable people from getting their work done Become a bottleneck to the effective and timely resolution of issues Don t Do routine administration Do work of a routine, repetitive or operational nature Establish shadow organizations Create customized solutions Go local rather than supporting the University agenda Strategic Partners HR Leadership Team HR Services Centers of Expertise Don t Do routine administration Live in an ivory tower, developing solutions unconnected to University requirements Think in functional silos without integrating with other specialist areas Don t Roll-out new services and delivery channels without collaborating fully with Strategic Partners and COEs Establish rigid Service Level Agreements and charge-back mechanisms that inhibit the delivery of integrated services Measure service delivery minutiae that don t add value Allow work-arounds or special treatment which limits the effectiveness of the model
2013 2014 J A S O N D J F M A M J J A S O N D Process Design Org Design & Staffing Requirements / Define Impact on Univ. Budgets Preliminary Implementation Roadmap Assumptions: - Basic HRIS functionality goes live in January 2015 - Payroll (if included) follows in a future phase - HRIS is based on a SaaS technology solution - Excludes the POV of your technology implementation partner HR SERVICE DELIVERY HR PORTAL HRIS Design / Deploy Staffing Strategy and Approach Staffing for Future State in waves into 2015 Phase 1 Change and Communications Implementation Planning and Change HR Policy Harmonization HR Portal Implementation M2 M1 HRSSC Build Out HRIS Vendor Selection HRIS Planning HRIS Analysis & Design HRIS Implementation M3 M4 HRIS Vendor Approval Board approval of HRIS vendor HR Portal LIVE: Implementation of knowledgebase for HR, line managers and employees HRSSC FACILITY BUILD OUT: Establishment of HR Services with telephony and case management HRIS LIVE Jan 2015: Implementation of new core HR processes and HRIS solution; HR Services go live to follow 27
Questions? 28