2011 – 2012 hr service delivery survey (towers watson)
TRANSCRIPT
New Horizons, No Boundaries
An Expansive Landscape of HR Service
Delivery Opportunities 2011 – 2012 HR Service Delivery and Technology Research Report
“We are seeing a shift from organizations throwing old technology at problems to looking at flexible new technologies that leverage self-service and shared services functions, deliver more streamlined capabilities and robust analytics, and orga-nize existing systems around enhancing HR service delivery more broadly.”
2011 – 2012 HR Service Delivery and Technology Research Report 1
New Horizons, No Boundaries: An Expansive Landscape of HR Service Delivery Opportunities2011 – 2012 HR Service Delivery and Technology Research Report
Table of Contents
Executive Summary and Key Findings 2
About the Study 3
HR Initiatives and Issues for 2011 – 2012 5
Talent Management in Motion 7
Self-Service Overview 9
Service Delivery Strategies and Tools 11
SaaS: Steady Growth and Acceptance 13
HRSSOs: A Success Story 14
Web 2.0 Tools 15
Global Highlights 16
What’s Ahead for HR: Agility 18
Featured Figures
Figure 1. Top HR service delivery issues 5
Figure 2. HR initiatives undertaken in last 18 months 6
Figure 9. Planned new HRMS 12
Figure 11. Is your organization using SaaS to support HR service delivery? 13
Figure 14. HR shared services: Extent to which results met expectations 15
2 towerswatson.com
The landscape of HR service delivery and technology has proven both resilient and rewarding over the past decade. Once a highly tactical, transactional consideration — a delivery afterthought once workforce decisions were made — technology has evolved to become a critical strategic support for HR today. It’s the engine that drives many business strategies, enables workforce processes and provides the backbone for delivering programs efficiently and effectively.
As organizations have awoken to this reality — and discovered new and powerful ways to deliver HR services to managers and employees alike — the technology itself has likewise continued to evolve in positive and meaningful ways. The result today is an ideal combination of organizational receptiveness to technology and advancements that make the technology work more powerfully than ever before.
Add to this a favorable external environment — economic tides have risen somewhat, and cost issues, at least for now, have ebbed — and opportunities to further increase the value of HR technology have expanded. No longer pressured to govern service delivery decisions by cost alone, HR organizations can select from a broader, more integrated set of options now available for streamlining and improving the effectiveness and efficiency of HR.
What are organizations doing with these advances? For starters, they’re improving their approaches to talent and performance management. Regardless of economic conditions, talent is here to stay as an organizing framework for growth in the years ahead. After five years as the top HR service delivery issue in our survey, we can clearly see that managing talent remains critical to business success. Now that HR technology offers increasingly effective, innovative systems for doing so — and related budgets are steadily increasing — companies can explore new methods, expand tactics, and improve overall results from their focus and investments in this area.
Indeed, talent management technology has never been more important in HR’s arsenal of tools. New integrated systems are now capable of providing excellent support for performance management, learning and career development, and succession planning, among many other areas. HR organizations are identifying and implementing technology approaches that link together to serve the broader concerns of the business — people, growth and globalization among them.
Also, approaching HR issues with a broader and more sophisticated perspective delivers improved results for both HR and business. In terms of service delivery and technology, this means integration — systems whose components can talk to one another and whose whole is greater than the sum of their parts.
We are seeing a shift from organizations throwing old technology at problems to looking at flexible new technologies that leverage self-service and shared services functions, deliver more streamlined capabilities and robust analytics, and organize existing systems around enhancing HR service delivery more broadly. In essence, it’s about taking a holistic look at the organization’s approach to service delivery and technology, and making decisions and investments that support loftier goals. When examined together, previously disparate approaches and systems can provide exponentially greater power.
Executive Summary
“Once-discretionary HR technology spending is now a needed-to-play expenditure and far less subject to reduction when the economy turns.”
2011 – 2012 HR Service Delivery and Technology Research Report 3
What’s driving these shifts? There are several factors. As the recession abated, HR organizations redirected their primary focus from cost efficiency to strategy. Accordingly, the top initiatives undertaken by HR over the last 18 months — reengineering key processes, refocusing the role of HR business partners, and implementing and leveraging self-service — have supported the larger goal of enabling HR to rethink and redesign its own role, ideally bringing greater strategic value to the business.
At the same time, once-discretionary HR technology spending is now a needed-to-play expenditure and far less subject to reduction when the economy turns. Organizations now rely heavily on the benefits that technology provides and are much more
thoughtful in ensuring that technology resources stay sound. For the short term, this is evidenced by a wave of planned human resource management system (HRMS) upgrades and new system implementations for the next year.
What does the future hold? We can see that across the new technology landscape, organizations have more and better choices in service delivery. At the same time, improved, integrated systems and processes are helping to enable the transition from basic manager self-service transactions to more complex, cross-domain functions. Together, these initiatives will improve the business and propel HR’s role toward more strategic support for the business.
Towers Watson’s 2011 survey of HR service delivery, our 14th, details the plans, tools, tactics and technologies of 444 organizations across many industries. This year’s survey is more global in scope than our past surveys: Of responding organizations, 59% are headquar-tered in the United States, 15% in Europe, 13% in Asia Pacific, 11% in Canada and 2% in Africa. More than half (55%) are global or multinational companies.
Key industries include financial services (18%, including insurance), health care (15%, including pharmaceuticals), manufacturing (15%, including aerospace and defense, automotive, and transpor-tation equipment), high tech (10%, including semiconductor), and utilities and energy (7%).
Fifty-seven percent of survey respondents represent organizations of more than 5,000 employees. Twenty-two percent of responding companies have employee populations greater than 20,000; 35% are of medium size (5,000 to 20,000 employees), and 43% have fewer than 5,000 employees.
For more information on this report, or to learn about participating for 2012, please visit towerswatson.com/hrsdsurvey.
About the Study
Employee population
22% Large — greater than 20,000
35% Medium — 5,000 to 20,000
43% Small — fewer than 5,000
22%
35%
43%
n = 424
Industry0% 5% 10% 15% 20% 25%
Media and Communications
Public Sector and Nonpro�t
Utilities and Energy
High Tech, including Semiconductor
Manufacturing, including Aerospace andDefense, Automotive and TransportationEquipment
Health Care, including Pharmaceuticals
Financial Services, including Insurance1818
1515
1515
1010
77
66
55
n = 444
0% 5% 10% 15% 20% 25%
Other
Chemical, Oil and Gas
Transportation Services
Property and Construction
Professional and Business Services
Retail
Food and Beverage44
44
44
33
33
33
22
4 towerswatson.com
Key Findings
This report details the results of this year’s HR Service Delivery Survey — our 14th. Key findings include:
• While the top HR service delivery issues — talent and performance systems (41%), streamlining processes and systems (27%), becoming more involved in strategic business issues (25%) — have endured, this year, organizations are looking at a rich mix of ways to address them: implementing a new HRMS, leveraging self-service, outsourcing, standardizing global data architecture, building shared services organizations and refocusing the role of HR business partners.
• Organizations have shifted from a focus on cost reduction to putting more strategic goals first once again. A majority (62%) have undertaken initiatives to reengineer key HR processes; less than half (43%) are working to redefine the roles of HR business partners, and more than a third (37%) are implementing new or leveraging existing self-service functions. Seen as a whole, these initiatives work together to enable HR to rethink its own role in providing greater value to the business.
• Technology spending is holding steady or on the rise for most organizations, and new technologies are available, including more agile solutions — some flexible enough to fold all HR processes into
one integrated system. One in five respondents (20%) implemented a new HRMS in the last 18 months, and another 20% cite upgrading an existing HRMS as a top service delivery goal this year.
• Within a dynamic HR technology market, software-as-a-service (SaaS) is on an upward trend. More than half (54%) of the organizations surveyed are either using or planning to implement a SaaS solution. Traditionally, these were siloed, best-of-breed solutions. Now Workday, the first comprehensive SaaS system, along with SAP, lead the other HRMS vendors by a widening margin. With nearly a quarter of respondents that plan to implement a new HRMS still evaluating new options, we may be witnessing a significant shift toward newer technologies.
• A majority of respondents (59%) use internal or external HR shared services organizations (HRSSOs), and of those companies changing their current HR structure, 45% will be moving to a shared services environment. Organizations for which long-term cost was the primary driver for implementing an HRSSO most frequently report savings between 10% and 20% — with about a third more reporting 20% to 40% savings. Fully 60% realized these savings within two years of implementing their HRSSO.
These issues are explored in more detail in the following sections of the report.
2011 – 2012 HR Service Delivery and Technology Research Report 5
In a year replete with choices and opportunities, as well as greater means to act upon them, talent and performance management systems remain top of mind for four in 10 survey respondents. As technologies have become more flexible, a significant number of organizations have engaged in system upgrades, implemented a new HRMS or are currently evaluating new HRMS options.
Organizations’ involvement in strategic, business-driven issues, and streamlining processes and systems, reflect a greater focus this year on reporting and analytics (19%, up from 6% in 2010), system integration (14%, up from 11% last year) and accuracy of data (13%, up from 9% last year) (Figure 1).
Related to this, companies are employing a variety of strategies to obtain standardized, timely global data — from data warehouses to new technology solutions offering more cohesive processes. These initiatives are aimed at increasing HR’s strategic value to the business through providing more solid information for decision making.
Cost, which peaked as a priority in 2009, has continued to decline in importance; only 11% of respondents, worldwide listed it in their top three concerns. More organizations report that HR technology spending has increased rather than decreased and has become a foundational element of HR efficiency and effectiveness.
0% 10% 20% 30% 40% 50%
HR website/usability
Employee self-service
De�ne human capital metrics and dashboards
Manager self-service
Payroll/time management services/systems
Reporting/analytics
Compensation/bene�t services/systems
Accuracy of data
Systems integration
Training
Cost
Recruiting/staf�ng services/systems
Streamline processes/systems
More involvement in strategic business-driven issues
New HRMS
Upgrade HRMS
Talent/performance systems
20 13 8 41% 20 13 8 41%
13 3 4 20% 13 3 4 20%
10 2 1 13% 10 2 1 13%
8 8 9 25% 8 8 9 25%
7 9 11 27% 7 9 11 27%
7 9 6 22% 7 9 6 22%
5 2 4 11% 5 2 4 11%
4 6 5 15% 4 6 5 15%
4 6 4 14% 4 6 4 14%
4 5 4 13% 4 5 4 13%
3 8 7 18% 3 8 7 18%
3 7 9 19% 3 7 9 19%
3 6 3 12% 3 6 3 12%
3 5 5 13% 3 5 5 13%
3 3 8 14% 3 3 8 14%
1 4 6 11% 1 4 6 11%
1 2 5 8% 1 2 5 8%
First Second Third
Figure 1. Top HR service delivery issues (top three frequency)
n = 441
HR Initiatives and Issues for 2011 – 2012
6 towerswatson.com
Accordingly, with the cost pressures of the recession abating, HR organizations have been able to look anew at their own priorities. In the last 18 months, organizations have focused on initiatives aimed at reengineering key HR processes, refocusing the role of the HR business partners, and implementing and leveraging self-service technologies (Figure 2).
Shared services is also seeing growth. More than half (54%) of the companies we surveyed use internal shared services organizations, and these are being implemented quickly. The majority of implementations were completed within 24 months (53% within 13 months).
In addition to rapid implementation, many companies that instituted an HRSSO created substantial improvements in service quality over the short term. Respondents that implemented HRSSOs reported improvements in the timeliness, accuracy and meaningfulness of workforce information that met or exceeded their expectations.
Finally, among companies that indicated cost savings as a top reason to create an HRSSO, the most frequent ongoing cost-saving result reported was a significant 10% to 20%, while nearly a third of respondents reported savings of 20% to 40%. It must be noted, of course, that these successes were not achieved through technology alone but together with effective self-service processes and excellent change management.
Figure 2. HR initiatives undertaken in last 18 months 0% 20% 40% 60% 80% 100%
None of the above
Brought back services previously outsourced to a vendor
Developed a standard global data architecture for HR data
Sought to increase alignment in the delivery of HR with other selling, generaland administrative functions
Implemented a shared services model
Implemented a new HRMS
Outsourced activities previously handled internally
Implemented and leveraged self-service
Refocused the role of the HR business partners
Reengineered key HR processes6262
4343
3737
2121
2020
1919
1717
1616
77
1414
n = 438
“With the cost pressures of the recession abating, HR organi-zations have been able to look anew at their own priorities.”
2011 – 2012 HR Service Delivery and Technology Research Report 7
Organizations’ focus on talent management is borne out by their planned investments. Technology spending is up again in 2011 — with 34% of survey respondents reporting higher spending for technology, a solid 52% maintaining about the same levels as in 2010 and only 14% decreasing (Figure 3). De-emphasis of cost as an issue, along with the availability of new technologies and upgrades, is driving significant opportunities ahead.
Since last year’s survey, HR technology effectiveness for some of the more complex talent management processes has increased markedly. Nearly three-quarters (73%) of HR executives who use onboarding technology rated it as effective or very effective. Other technologies with improved effectiveness scores include workforce planning and analytics, succession planning, and career development and planning (Figure 4, page 8).
0%
10%
20%
30%
40%
50%
60%
Much higher( > 20% increase)
Higher( < 20% increase)
About the sameLower( < 20% reduction)
Much lower( > 20% reduction)
Figure 3. HR technology spending vs. prior years
447766
1111 1010101099
2525
525254545555
4343
22221818
2222
151512121111
88 66
2008 Survey (n = 382) 2009 Survey (n = 331) 2010 Survey (n = 453) 2011 Survey (n = 437)
Talent Management in Motion
8 towerswatson.com
The complexity of succession planning is further evidenced by the fact that only about a third of responding organizations have a clearly articulated succession plan (34%); significantly, 57% are actively working to develop one. Change in these areas is also indicated by companies implementing or exploring new technology vendors for performance management (24%), succession planning (22%), onboarding (25%), career development (22%) and workforce planning (21%).
It is important to note that HR is shifting away from relying on basic, siloed transactional functions and is moving toward using cross-domain tools and capabilities such as those previously mentioned. HR is beginning to deliver a broader, more integrated experience for employees and managers as it takes a more holistic and connected view of various talent management programs.
0% 20% 40% 60% 80% 100%
Career development/planning (n = 135)
Succession planning (n = 129)
Workforce planning/workforce analytics (n = 134)
Learning management and training (n = 249)
Recruiting/staf�ng - internal (n = 288)
Performance management (n = 241)
Onboarding/joiner administration (n = 166)
Compensation - sales/incentive (n = 149)
Total rewards statements (n = 156)
Compensation - variable pay/bonus (n = 210)
Recruiting/staf�ng - external (n = 285)
Compensation - global grading (n = 121)
Compensation - base pay (n = 249)
Compensation - design and survey management (n = 161)
Compensation - market analysis (n = 177)
31 53 12 3 1 31 53 12 3 1
30 52 14 4 30 52 14 4
33 46 12 9 33 46 12 9
26 53 16 4 1 26 53 16 4 1
25 50 10 14 1 25 50 10 14 1
25 49 17 8 1 25 49 17 8 1
32 41 20 5 2 32 41 20 5 2
27 46 19 7 1 27 46 19 7 1
25 48 14 11 2 25 48 14 11 2
24 49 15 10 2 24 49 15 10 2
25 47 12 14 2 25 47 12 14 2
17 53 18 9 3 17 53 18 9 3
18 45 23 12 2 18 45 23 12 2
16 46 25 11 2 16 46 25 11 2
16 45 22 16 1 16 45 22 16 1
Very effective
Somewhateffective
Neither effective nor ineffective
Somewhatineffective
Not at alleffective
Figure 4. Effectiveness of technology in helping meet talent managementobjectives
2011 – 2012 HR Service Delivery and Technology Research Report 9
Another of the top service delivery issues of 2010 was defining human capital metrics (HCM). This year, expansion of measurement plans ranging from 10% to 31% is planned for all of the areas we asked about in our HCM data gathering. The greatest focus is currently on increasing measurement of leadership and succession, development and manager performance (Figure 5). The real challenge, however, is to improve the effectiveness of these metrics in helping meet talent management objectives.
Self-Service Overview
With the availability of sophisticated new tech-nologies, organizations are adding more complex self-service capabilities over the next 18 months, including onboarding new employees, succession-planning activities, searching the existing population for candidates, a scorecard of key human capital and business performance, and workforce planning.
Employee and/or manager self-service (ESS/MSS) capabilities are in place at nearly eight in 10 (79%) of the U.S. companies surveyed (Figure 6). The other regions (Canada, Europe, Middle East/Africa and Asia Pacific) fall into a range from slightly above to slightly below half of companies providing MSS and ESS. However, nearly three-quarters of these respondents plan to provide self-service capability by 2012.
0% 20% 40% 60% 80% 100%
Merger integration (n = 337)
Customer performance (n = 352)
Manager performance (n = 346)
Mobility (n = 346)
HR function ef�ciency (n = 354)
Leadership and succession (n = 351)
Development (n = 359)
Business performance (n = 362)
Attraction (n = 362)
Engagement (n = 356)
Diversity (n = 362)
Workforce demographics (n = 361)
Retention (n = 366)
81 7 3 9 81 7 3 9
72 9 6 13 72 9 6 13
70 9 6 13 70 9 6 13
61 11 8 20 61 11 8 20
57 13 8 22 57 13 8 22
50 9 10 31 50 9 10 31
47 15 14 24 47 15 14 24
42 15 16 27 42 15 16 27
42 15 11 32 42 15 11 32
41 12 12 35 41 12 12 35
37 12 16 35 37 12 16 35
35 5 5 55 35 5 5 55
20 7 9 64 20 7 9 64
Measured now During 2011 In 2012 Beyond 2012 or no plans
Figure 5. Measurement plans for human capital metrics included on HR,talent management or balanced scorecard
0% 20% 40% 60% 80% 100%
Latin America (n = 113)
Asia Paci�c (n = 183)
Middle East/Africa (n = 103)
Europe (n = 181)
Canada (n = 167)
United States (n = 288) 79 15 6 79 15 6
52 25 23 52 25 23
50 24 26 50 24 26
48 24 28 48 24 28
46 24 30 46 24 30
42 23 35 42 23 35
Figure 6. Availability of employee and/or manager self-serviceby country/region
Have self-servicein place now
Have plans to implementself-service by the end of 2012
No plans to provideself-service
“De-emphasis of cost as an issue, along with the availabil-ity of new technologies and upgrades, is driving significant changes in HR.”
10 towerswatson.com
In the United States, while ESS personal data tools such as those for viewing pay stubs, changing personal data, and viewing vacation/sick time usage and balances are well established, we are seeing plans for substantial (18% to 20%) growth in 2011 and 2012 for setting up and making changes to direct deposit, viewing total compensation and benefit statements, and updating education/certifications (Figure 7).
We are seeing a growth trend in online offboarding (or “leaver”) administration as organizations seek to leverage their successes in other areas to further reduce administrative burdens. Our experience shows that even as organizations deploy self-service technology at a fairly rapid pace, employees and line managers are interested in an even more aggressive pace for receiving these capabilities and the ability to access and control their own data.
Meanwhile, 77% of respondents report that the HR generalist and specialist transactional workload has declined — without affecting employee workloads — and 69% of respondents reported HR service center and administration workload reductions as a result of ESS tools.
Results are similarly promising for MSS experiences. Less than three-quarters (72%) of organizations report less work for HR generalists, and two-thirds report less work for the HR service center — with six in 10 (61%) reporting less work or no change in managers’ workload.
Across all countries and regions, more than three-quarters (81%) of survey respondents said initiatives undertaken in the last 18 months to implement and leverage self-service had met or exceeded expectations, with more than half (55%) exceeding expectations.
0% 20% 40% 60% 80% 100%
Workforce planning (n = 231)
View scorecard of key human capital and business performance metrics (n = 231)
Search existing employee population for suitable candidates (n = 233)
Perform succession-planning activities (n = 235)
Onboard new employees (n = 233)
Extend/make offers (n = 234)
Plan annual incentive pay (n = 240)
Post jobs (n = 238)
Track status of applicants (n = 240)
Approve training classes for employees (n = 237)
View employee data history (n = 239)
Plan annual merit/base salary (n = 239)
Initiate/approve job requisitions (n = 239)
View applicant resumes (n = 241)
Review/update employee performance (n = 243)
67 7 11 15 67 7 11 15
62 8 6 24 62 8 6 24
61 8 7 24 61 8 7 24
59 5 13 23 59 5 13 23
56 9 10 25 56 9 10 25
55 4 8 33 55 4 8 33
53 10 9 28 53 10 9 28
50 5 6 39 50 5 6 39
47 5 11 37 47 5 11 37
34 9 8 49 34 9 8 49
31 10 12 47 31 10 12 47
23 14 19 44 23 14 19 44
21 9 15 55 21 9 15 55
16 13 13 58 16 13 13 58
9 6 18 67 9 6 18 67
In place now During 2011 In 2012 Beyond 2012 or no plans
Figure 7. Talent management self-service tools currently providedto managers in the United States
2011 – 2012 HR Service Delivery and Technology Research Report 11
Several service delivery issues have grown in importance since our last survey — including shared services, outsourcing, system integration and core HRMS — as HR looks for new opportunities and methods to support business strategies and integrate processes and information.
More than one-quarter of respondents (28%) reported they anticipate changing their current HR structure in 2011 or 2012. Under half (45%) say they will be moving to a shared services environment supported by HR centers of excellence. An additional 34% are planning to either increase their use of outsourcing or move to a single HR function for their entire organization (Figure 8).
About one-fifth of HR executives reported currently working on outsourcing activities previously handled internally (21%), implementing a new HRMS (20%) or shared services model (19%), or seeking to increase alignment of HR delivery with business functions (17%).
Service Delivery Strategies and Tools
Figure 8. Do you anticipate changing your current HR structurein 2011 or 2012?
28% Yes
72% No changes anticipated
28%
72%
0% 20% 40% 60% 80% 100%
Yes, other*
Yes, we will be moving away from a Shared Services environment
Yes, we will be separating HR, allowing HR to be run by business unit or geography
Yes, we will be bringing outsourced functions back in-house
Yes, we will be outsourcing functions
Yes, we will be moving to a single HR organization for the entire organization
Yes, we will be moving to a Shared Services environment with HR Centers of Excellenceand HR Business
4545
1717
1717
77
33
22
3131
* Frequent entries to “Yes, other” included undergoing analysis on current HR structure andbringing additional services into their current Shared Service Organization.
n = 121
n = 436
12 towerswatson.com
A majority (59%) of our respondents now utilize an internal or external HRSSO — 40% have internal centers; 14% use both an internal service center and an external service center provider, and 5% use only an external service center provider. (For further details, see HRSSOs: A Success Story, page 14.)
Evidence of the availability of new technology solutions and HR’s momentum in addressing perennial talent and performance system concerns can be seen in the wave of HRMS upgrades. For those on 8.9 or an earlier version of Legacy PeopleSoft, close to half (44%) are moving aggressively in 2011 to be as current as possible on PeopleSoft by upgrading to 9.1 rather than continuing to hold out for the long-awaited Fusion release.
Streamlining business processes, deploying MSS, utilizing additional modules, adding ESS functionality and deploying reporting analytics are the top HRMS application objectives for 2011, closely followed by integrating HR modules, and upgrading and implementing a new HRMS. For those organizations implementing a new HRMS, the top choices are SAP and Workday, an integrated SaaS-based system — and the gap between these two and the rest of the vendor field is widening.
Figure 9. Planned new HRMS (for those implementing a new HRMS) 0% 10% 20% 30% 40% 50%
Other HRMS
Currently evaluating the new HRMS options
Will be provided by an HRO vendor
NuView
Ultimate Software/Ultipro
ADP/EmployEase
Microsoft Great Plains
Lawson
Oracle (legacy Oracle HRMS)
Oracle (legacy PeopleSoft)
Workday
SAP2222
1818
99
66
66
44
33
33
11
00
2323
55
n = 71
Figure 10. Main HRMS application objectives for 2011 0% 10% 20% 30% 40% 50%
Other
Consolidate multiple HR systems globally
Create a global data warehouse
Implement a new HRMS
Upgrade to a new version
Integrate HR modules into one system/platform
Deploy reporting analytics/KPIs, and/or strategic reporting functionality
Deploy additional employee self-service functionality
Utilize additional HR modules
Deploy additional manager self-service functionality
Streamline business processes3939
3636
3535
3535
3131
2424
2424
1717
1313
1111
1212
n = 425
2011 – 2012 HR Service Delivery and Technology Research Report 13
SaaS: Steady Growth and Acceptance
The HR technology market of the last few years functioned as a catalyst for readdressing HR processes — organizations often were forced to change by their choice of technology solution (or vendor). But the increased configurability of SaaS systems has shown that older technologies have been too rigid to provide the transactional capability and the strategic information needed for accurate reporting and workforce analytics.
Starting with a focus on rethinking their data structures and processes, organizations can now configure a SaaS solution to provide that information — an appealing opportunity, especially when paired with a quicker implementation of an HR-focused SaaS system, rather than a drawn-out, heavily IT-dependent and relatively costly update cycle.
More than half (54%) of survey respondents are currently using, implementing or planning a SaaS-based solution. Quick implementation, better functionality and ease of ongoing management lead the list of benefits reported by users. Respondents currently using SaaS also cite as primary advantages lower and more predictable ongoing and up-front costs, and no need to upgrade. Respondents that have not used SaaS, and don’t plan to, list inability to customize, lack of data ownership and data security as their perceived concerns.
Figure 11. Is your organization using SaaS to support HR service delivery?
0% 10% 20% 30% 40% 50%
No, and we have no plans to use SaaS
No, but we plan to use SaaS in the future
Not yet, but we are implementing a SaaS-based solution
Yes, we use SaaS somewhat for HR
Yes, we are using SaaS extensively for HR99
2828
55
1212
4646
n = 396
Sign of the Times: SaaS Has Arrived
When SaaS solutions first arrived on the scene several years ago, they were niche tools looking to fit into siloed HR system designs. But SaaS has never stood still — it has continued to develop, and its acceptance, by both the HR function and IT organizations, has grown.
For the last two years, Workday, a broadly integrated SaaS solution, has been one of the top two HR systems of choice for those companies buying new HR systems (Figure 9, page 12).
Workday’s ascendance is another indication that HR and IT have reached a comfort level with new technologies, including SaaS solutions. Organizations that are ready and willing to take advantage of the expanded range of HR capabilities and enhanced user experience offered by new technologies are moving toward the HR function of the future to help their businesses succeed.
14 towerswatson.com
HRSSOs: A Success Story
More than half of survey respondents (54%) currently have an internal HRSSO, and 45% of organizations planning to change their current HR structure in 2011 or 2012 will be moving to a shared services environment with HR centers of excellence and HR business partners.
Companies with an existing HRSSO are expanding services, leveraging even beyond HR, and taking on more complicated processes such as relocation, employee relations and expatriate services. The most pressing HRSSO issues for 2011 include improving efficiency, the quality of service and the user experience, and the accuracy of responses and transactions (Figure 12).
More than half (53%) of HRSSO implementations were completed in less than 13 months. About one-third were phased in by both population and service, but nearly as many (30%) were rolled out using the “big bang” approach: to all services and populations at once.
For organizations that cited cost savings as either a factor or the main reason for moving to shared services, the majority of such initiatives (even for smaller companies with fewer than 5,000 employees) produced cost savings of 10% to 20% within 24 months — and more than a quarter (27%) reported 20% to 40% savings — largely due to streamlined processes and better-managed resources. Respondents that did not achieve cost savings attributed the failure largely to poor change management resulting in lack of utilization by end users.
Figure 12. The most pressing/important issues for your HRSSO in 2011
0% 20% 40% 60% 80%
Implementing Enterprise 2.0 tools
Consistency of user experience
Integration of HRSSO technologies
Upgrade of HRSSO technologies
Training of HRSSO staff
Cost reduction
Building or improving the knowledgebase technology
Expansion of shared services footprint
Self-service implementation and/or promotion
Expanded service offerings
Accuracy of responses and transactions
Quality of service/user experience
Ef�ciency improvement5959
3838
3030
2929
2929
2222
2222
1515
1515
1515
99
77
00
n = 69
Figure 13. Companies that indicated “ongoing longer-term cost savings” as a top reason to create an HRSSO
Targeted % of Cost Savings
Actual Cost Savings
No responseNone <10%
10% – 20%
21% – 30%
31% – 40% >40%
None (n = 3) 1 0 2 0 0 0 0
<10% (n = 4) 0 4 0 0 0 0 0
10% – 20% (n = 18) 0 2 12 4 0 0 0
21% – 30% (n = 6) 0 0 0 5 0 0 1
31% – 40% (n = 3) 0 0 0 0 2 1 0
>40% (n = 1) 0 0 0 0 1 0 0
Total (n = 35) 1 6 14 9 3 1 1
Above target At target Below target
0%
10%
20%
30%
40%
50%
Over48 months
37 – 48months
25 – 36months
13 – 24months
Within12 months
4747
1313
3030
3377
n = 30
Period of time to realize cost savings
2011 – 2012 HR Service Delivery and Technology Research Report 15
Overall, expectations for HRSSOs have been met or exceeded by wide margins (60% to 100%). The greatest success has been substantial improvements in the timeliness, accuracy and meaningfulness of workforce information.
More than six in 10 (63%) respondents with a shared services function measure customer satisfaction via a regular survey or in other ways. For those organizations measuring customer satisfaction, their general perception — based on case management surveys, live feedback and end-of-call surveys — is that 98% of customers had their expectations met or exceeded, with 31% well above expectation (Figure 14). As shared services organizations evolve, we look forward to seeing the results of our next biennial HRSSO survey.
Web 2.0 Tools
HR organizations say they are using Web 2.0 tools most frequently for recruiting, HR communication, training, and affinity and alumni groups. Growth in the use of these tools has been slow, and respondents say this is because use of these tools is not a priority, HR is too busy to explore or consider them, or the business case for them is weak.
Based on recent Towers Watson research, recruiters ranked LinkedIn as the top source for quality applicants — two to six times better than traditional job boards. Savvy HR organizations are tapping into this source by developing proactive recruiting plans. We will be watching this trend in surveys to come.
0% 20% 40% 60% 80% 100%
As part of a broader HR transformation effort (n = 22)
To change the behaviors of HR (n = 20)
To facilitate future growth (e.g., through mergers and acquisitions) (n = 5)
To eliminate the distraction of administrative and transactional HR work to focuson more strategic work (n = 40)
Substantial productivity improvements in HR (n = 14)
Ongoing, longer-term operational cost savings (n = 39)
As part of a move to a broader corporate shared services function (n = 6)
To standardize HR processes throughout the business (n = 26)
Substantial improvements in HR service quality (n = 29)
To drive globalization of HR service delivery (n = 7)
Substantial improvements in the timeliness, accuracy and meaningfulnessof workforce information (n = 9)
44 12 44 44 12 44
43 43 14 43 43 14
38 24 21 7 10 38 24 21 7 10
35 15 27 19 4 35 15 27 19 4
23 23 33 13 3 5 23 23 33 13 3 5
15 10 35 25 5 10 15 10 35 25 5 10
14 27 27 14 9 9 14 27 27 14 9 9
21 21 29 14 15 21 21 29 14 15
20 22 32 20 3 3 20 22 32 20 3 3
20 20 20 40 20 20 20 40
33 17 17 33 33 17 17 33
Well above expectations Slightly above expectations Met expectations
Slightly below expectations Well below expectations Too soon to tell
Figure 14. HR shared services: Extent to which results met expectations
Figure 15. Does your organization currently use Web 2.0 tools for HR purposes?
37% Yes
55% No
8% Don’t know
37%
55%
8%
n = 404
16 towerswatson.com
Globalization is driving an increasingly standardized approach for HR across geographies and businesses in a number of countries. Reflecting the need to realize synergies across multiple geographies and businesses, this year’s survey included region-specific questions about the extent of and trends in ESS and MSS capabilities.
As organizations standardize processes across regions and continents, the goal is often to create a single HR function for the entire organization, utilizing shared services centers to achieve:
• A consistent employee experience across the enterprise
• Consistent expectations of line managers for people management (a key element of employee engagement)
• Expertise that’s leveraged as much as possible • Economies of scale • Stronger governance and change management • Centralized control of policies • Vendor consolidation as widely as possible (e.g., executive search and selection for global roles and benefit providers)
A centralized HRMS is frequently used as an engine for globalization. Implementation of a global HR system can be easier to implement, for example, than a global finance system. Increasingly, global organizations develop a common global template to assist with implementation. As a result, global policies and processes can be more easily rolled out across geographies.
The trend toward SaaS technology has helped organizations harmonize their existing processes to align with out-of-the-box templates without expensive customization. Technology enables the transformation of HR’s global role from a purely administrative to a strategic one through the use of ESS and MSS. In addition, truly global reports can be produced across the organization, enabling value-added HR activities such as talent management and workforce planning.
The following summaries highlight some of the regional differences revealed in our survey:
Europe. HR challenges in Europe include a mix of languages (both across and within countries), multiple regulatory environments and complex employment legislation. EU data privacy concerns, works councils, and differences in technology and infrastructure also add to the complexity. Differentiated HR service delivery models are common in Europe to help serve smaller and larger countries’ requirements. There is an increasing push to move more self-service transactions to line managers and employees, especially across Northern Europe.
Most large global organizations in Europe have insourced shared services organizations in place, and the focus now is on getting the most out of them. We are seeing some organizations with well-established shared services models beginning the transition to outsourcing, especially when standardization has already been accomplished.
Asia Pacific. The high-growth environment in Asia creates a need for speed and flexibility. While Asian organizations have traditionally been highly controlled, requiring a detailed business case before accepting any change, once leadership is engaged and convinced, change can take root swiftly.
Global Highlights
“The high-growth environment in Asia creates a need for speed and flexibility. The emphasis is on pace and end results rather than HR structure.”
2011 – 2012 HR Service Delivery and Technology Research Report 17
Infrastructure, talent, cultures, legislation and working practices in the Asia Pacific region are diverse, and approaches to employee engagement and talent management vary from country to country. The emphasis is on pace and end results rather than HR structure. Companies with fast-growing operations in Asia use outsourcing to scale up quickly. The rapidly growing economies of the area have resulted in examples of both innovative practices as well as underdeveloped HR functions, with high staff turnover.
Canada. The most prevalent employee personal data self-service tools currently provided are those to change personal data, view pay stubs, and view vacation and sick time usage and balances. Respondents say they are planning to expand these capabilities significantly by the end of 2011. The most prevalent MSS talent management tool is reviewing and updating employee performance, which is in place at six in 10 (63%) responding organizations, with plans to increase to 68% of organizations by the end of this year.
Latin America. Rapid growth of self-service is planned. The most ambitious expectations are for personal data ESS tools (55% now, 73% during 2011), updating education certifications (36% now, 53% in 2011), and setting up and making changes to direct deposit information (30% now, 47% in 2011). The most prevalent talent management tools currently in place are those that review and update employee performance (69%), and those that plan employee annual merit/base pay (57%) and incentive pay (53%).
The Middle East and Africa. Changing personal data (57%) is the only ESS personal data tool currently in place at more than half of responding companies, but five more self-service tools are slated for implementation this year by 12% to 23% of respondents in this region. The MSS talent management tool most often in place in this region is reviewing and updating employee performance (60%), but double-digit growth in all MSS tools is expected this year.
18 towerswatson.com
The pressures of the economic crisis demonstrated that many HR functions were insufficiently agile, unable to respond and adapt aggressively when needed. In a slow recovery, persistent concerns about risk and cost require organizations to become more flexible in managing the workforce. Organizations are looking to develop analytically rigorous approaches to managing talent, accurate business cases and realistic returns on investment. Design and delivery of talent management programs and technology remain the top priority for HR, with a focus on the value-added areas of employee engagement, succession planning and leadership development.
The HR function of the future will allow the demand for services to drive how HR develops solutions and deploys resources. In this model, complete accountability for administrative and transactional work may be transferred to a third party, another part of the business or an entirely new function.
Expert teams will tend to be much smaller and designed for human capital and business outcomes.
HR staff may be in a flexible pool that can be deployed across the HR function for various initiatives. Business partners will be truly embedded in the business, with a strong governance model addressing multiple priorities. Reporting structure and budget ownership will be fluid, based on what the business is ready to own.
What’s Ahead for HR: Agility
“In a slow recovery, persistent concerns about risk and cost now require organizations to be more agile in managing the workforce.”
2011 – 2012 HR Service Delivery and Technology Research Report 19
An agile competency architecture will connect all talent management processes to ensure value across the talent management life cycle; establish fair, uniform criteria and standards for excellence; identify hiring and selection criteria, and improve the quality of hiring decisions; and enhance the organization’s ability to differentiate performance.
An agile organization will implement good governance to address efficiency, effectiveness and return on investment. HR governance will prescribe the discretion afforded managers, employees and local HR professionals, and will become less about “command and control” and more about “inform and ask.”
The HR technology of the future will be designed to manage data and processes for employees, and also to maximize the people element as an input to business strategy — through a combination of best-fit tools and business-focused HRIT. Cost-effective SaaS solutions configured by HR (rather than IT) experts will be a growing trend.
Other features of the envisioned HR function of the future include:
• Reporting that focuses managers’ attention on key business issues and provides meaningful prospective modeling to support business decisions
• Workforce planning, performance management and succession planning that is owned by managers and supported by integrated, easy-to-use online tools
• Global HR portals with content owned and updated by HR functional experts
• A single global HR system with web-based manager dashboards, and transaction and modeling capabilities
Sometimes the best of times follows the worst of times. Right now, there is a fortunate convergence — of organizations realizing HR technology is a nondiscretionary budget item, and the marketplace presenting an array of new and more effective technologies. This convergence creates an unprecedented opportunity for reengineering, leveraging and enhancing HR processes, programs and roles.
Organizations that fail to seize this chance to rethink HR functions and management systems, employ thorough communication and change management programs, and carefully select best-fit technology will have missed a great opportunity for strategic growth.
“An agile HR model will allow the demand for services to dictate how HR develops solutions and deploys resources.”
Copyright © 2011 Towers Watson. All rights reserved.TW-NA-2010-18972
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About Towers WatsonTowers Watson is a leading global professional services company that helps organizations 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.