adp - global hr transformation 2009

Global HR Transformation 2009

Conducted by HROA in association with ADP

TABLE OF CONTENTS

Global HR Transformation 2009 HROA © 2009

3

Introduction ......................................................................................................... 4

About the survey ................................................................................................ 5

Executive summary ............................................................................................. 6

Research findings ................................................................................................. 8

HR transformation status ........................................................................... 8

HR transformation outcomes ................................................................... 16

Outsourcing and shared services ............................................................. 20

HR management practices ......................................................................... 30

About the survey participants .......................................................................... 32

About the sponsors ............................................................................................ 34

INTRODUCTION


4

Back to basics…once again!

Are we really able to change before we have to? This

question is probably on many people’s minds as we

confront more and more transformations and crises

that have major impacts on the way we do business

and, most important, on our everyday lives.

There are always signs before any modification in the

environment, but very few can or have the will to

interpret them. Think of the fall of the Berlin wall in

1989, the Asian financial crisis in 1997 or, more

recently, the U.S. credit crisis that plunged the world’s

economies into hard times.

I’m sure you know many other examples as well. We

have to prepare ourselves to go through more and

more unforeseen transformations. Good or bad, the

world and the way we are managing our economies

are changing, and we’d better be prepared to face

these changes.

So, what lesson to take away from all this turmoil? To

remain humble and work hard together to find

solutions that will enable us to avoid the mistakes of

the past and head in a better direction. This is one of

the reasons why we have been supporting the Global

HR Transformation Report for so many years.

Like any transformation, improving your HR

Department’s performance is not something you can

improvise, especially in troubled times. As you will

read, the percentage of companies that declare they

are in a transformation stage may be declining slightly

compared with prior years, but their level of maturity

has clearly risen. Internal reengineering of processes is

now a significant part of the transformation strategy,

and companies progressively anticipate better the time

required for change and what outcomes to expect

from their transformation.

Of course, much remains to be resolved and reading

this report surely helps the reader to understand

trends in the HR market and dive deep in

organisations around the globe. Not only does it offer

a snapshot of HR organisations at one point in time,

but it also integrates comparisons and analysis with

past data, which gives a broader perspective to the

whole project. This dual vision has contributed greatly

to its success over the years.

Finally, The Global HR Transformation Report is also a

wake-up call to all the stakeholders in the HR industry,

be they final users, providers, market analysts, or

advisors. The message is clear: the best way to deal

with uncertainty is to work on setting up standards

that will define what our industry should be in the near

future. This is an imperative to progress and put

together solutions that will better enable HR Managers

to face changes and challenges in their companies’

markets.

New challenges lie ahead. It is up to us to leverage this

report to find innovative ways to meet them.

I wish you a rewarding read,

Hans Jansen

Vice President, Multinational Sales

ADP Employer Services International

ABOUT THE SURVEY


5

This year’s survey – our sixth annual edition – examines trends in human resources (HR) transformation

practices (which we define as any concerted effort to change and improve HR operations, whether through

outsourcing, shared services, internal reengineering, or a combination of these strategies) in organisations around

the globe. The 2009 report provides insights into market trends and changes, particularly in light of the recent

global economic situation, and offers perspective on future plans.

In addition to discussing transformation status and strategy, our report addresses:

• Reasons organisations transform, and the barriers that limit their transformation

• Transformation timing, cost and satisfaction

• Impact of recent global economic changes on transformation plans

• Engagement of external resources and experience

• Current and future transformation scope

• HR outsourcing and shared services strategy, budget and provider selection

The survey received responses from 188 executives around the globe in varying stages of HR transformation. For

a full breakdown of respondent demographics, please visit the “About the Survey Participants” section of the

report.

EXECUTIVE SUMMARY


6

HR transformation continues to be a significant

phenomenon, although down from last year

Whilst 81 percent of respondents say they are/have/

plan to transform HR, 2009 was the first time in four

years that we saw a decline in respondents saying they

are transforming HR. This year, only in the mid-market

companies did we see an increase in the number that

expect to transform HR.

Cost was a main factor for those organisations

not planning to transform HR, a significant

difference from last year

For those respondents with no plans to transform HR,

satisfaction with the current organisation and/or

solution remains the top reason not to make a change.

However, cost, which no one cited last year, is the

number two reason this year, with 40 percent of those

who are not transforming HR citing it as a main

reason. Additionally, we saw a near doubling in the

percentage of respondents who say HR simply isn’t

enough of a priority to merit a transformation effort.

HR transformation response to the recent

economic downturn is mixed

There is no real commonality of response as to how

the recent global economic downturn has impacted

HR transformation efforts; the highest percentage

indicate there has been no impact, but nearly as many

say they have accelerated their efforts. Generally it's

larger organisations that are accelerating their efforts

in response to the downturn.

Organisations most often employ a hybrid

approach to HR transformation, although that

strategy saw a decline in 2009

A hybrid approach of internal reengineering, shared

services and outsourcing remains the most common

HR transformation strategy, although both it and a

predominant shared services strategy declined, whilst

internal reengineering increased.

Although it remains the least likely strategy,

outsourcing has experienced a near double increase

between 2008 and 2009, from 7 to 12 percent, and is a

more common strategy amongst mid-sized than in

larger or smaller organisations.

Cost reduction/management leads the reasons

why organisations transform

The top reasons companies transform have remained

virtually unchanged over the past several years,

although they regularly change order. Cost topped the

2009 list, up from number three in 2008. Other top

reasons freeing internal HR staff to focus on strategic

issues, and to add or improve service for line

managers and employees.

Hurdles to HR transformation remain

unchanged over six years of research

In the six years we’ve been conducting this research,

the main hurdles to HR transformation have remained

unchanged. Skills of existing HR staff has been at the

top of the list from the start; internal bureaucracy, lack

of adequate technology, and underestimation of

resources required have rounded out the top four.

This year, however, did see a reversal of a trend that

we’ve noted in the past couple of years; it appears for

the first time this year that hurdles may be declining.

HR transformation most often takes three

years and generates cost saving in the 25

percent range

HR transformation most often takes three years –

slightly longer than anticipated. At the same time,

transformation generally generates savings in the 25

percent range, which is only slightly less than

anticipated.

HR transformation efforts have the greatest impact on

organisational management issues – rather than

service, technology, or staff/manager job performance

improvement; they have less positive impact s in two

areas that organisations say are key reasons to

transform: reducing/managing cost and freeing internal

HR staff to focus on strategic issues.

EXECUTIVE SUMMARY


7

HR outsourcing saw an overall decline this year,

but an increase in pockets of respondents

Outsourcing of HR processes saw a slight overall

decline between 2008 and 2009, but results show

significant variations among specific groups. For

example, the smallest saw a decline in HR outsourcing

activity, whilst larger ones experienced a slight

increase.

Although American organisations are still more likely

than others to outsource, they indicated a significant

decline in outsourcing activity in 2009, whilst Asia

Pacific organisations indicated a significant increase.

HR outsourcing, as always, is focused on

transactional processes

The 2009 data continue a trend we’ve found since we

started this research: transactional HR processes –

payroll, benefits administration, HRIS – are most likely

to outsourced, whilst strategic processes –

performance appraisal, employee communications,

career & succession planning – are least likely.

Top provider selection criteria remain

unchanged through industry change and growth

The top four provider selection criteria have remained

unchanged since 2006, although they have changed

order. In 2009, the top provider selection criterion

was functional coverage and expertise, followed by

proven ability to meet service levels, price, multi-

country capabilities, and specialisation in relevant

functions.

Many organisations are continuing to “go it

alone” when it comes to making outsourcing

decisions, although they are collecting more

information

An increasing number of respondents say they develop

and use their own process to identify and select their

provider(s).

The use of RFIs appears to be on the rise, whilst the

issuing of RFPs remains common.

HR outsourcing annual budgets are most often

less than US$1M; many say they anticipate

increases, but that number has declined

Respondents most often budget less than US$1M

annually for HR outsourcing. The highest percentage

of respondents say they anticipate increasing their HR

outsourcing budget; however, that percentage has

dropped from 55 percent in 2008. At the same time,

many fewer say they plan to decrease their HR

outsourcing budget.

Shared services continues to be comparatively

uncommon

Shared services continues to be uncommon, although

not in quite the decline we saw in 2008. Whilst we

noted a decline in shared services in 2008 – and

posited whether it was a trend in the making – it

appears to have been an anomaly. This year we see a

mix of growth and decline across HR processes

managed through shared services.

Like outsourcing, transactional services are more likely

to be managed through shared services than are

strategic processes.

Use of shared services varies by size and

location

Across most processes, the largest organisations are

less likely to be managing individual HR processes

through shared services, but the most likely to be

managing the entire HR function through shared

services.

HR is a local business

HR processes are most often managed locally, versus

regionally or globally, a finding that cuts across size and

geography.

Most organisations maintain a common HRIS

The vast majority of organisations have common HRIS,

generally managed at the domestic level.

RESEARCH FINDINGS


8

HR TRANSFORMATION STATUS

WHO is transforming HR

� Whilst HR transformation continues to be a significant phenomenon – 81 percent of respondents say they are/have/plan to transform HR – 2009 was the first time in four years that we had a decline in respondents saying they are transforming HR.

� The sole group that saw an increase in HR transformation in 2009 was organisations between US$1B and US$10B.

� Across all regions respondents indicated a decrease in likelihood to transform HR; EMEA experienced the greatest decline, with 17 percent saying they have no plans to transform, versus 7 percent in 2008.

� 40 percent of respondents who have no plans to transform HR cite cost as a main reason – significant because no respondents cited it in 2008.

A considerable percentage – 81percent – of

respondents have transformed, are in the midst of

transforming, or have completed HR transformation.

Whilst still significant, that number has dropped for

the first time in four years, down from a high of 90

percent in 2008.

As we’ve found in the past,

companies of less than

US$1B are considerably less

likely to be transforming HR

than are larger organisations,

and this year that finding was even more notable with

a full quarter of the smallest companies saying they

have no plans to transform HR. (Although it must be

noted that three-quarters planning to transform HR is

still a sizeable number.)

Companies between US$1B and US$10B are the only

group whose HR transformation participation is

growing, with 95 percent saying they’re transforming

HR versus 91 percent in 2008.

Companies based in the Asia Pacific region are less

likely to be transforming HR than those in EMEA or

the Americas, a finding that has been steady across all

years of our research. At the same time, EMEA

experienced the greatest decline in HR transformation,

with 17 percent saying they do not intend to

transform versus 7 percent in 2008.

Although we have both more Asia Pacific respondents

and more smaller companies in our 2009 respondent

pool than in the past, we find this trend still holds, as

both the smallest and largest organisations are a bit

less likely to be transforming, and all geographies

report less likelihood to transform HR.

For those respondents with no plans to transform HR,

satisfaction with the current organisation and/or

solution remains the top reason not to make a change,

a reason cited by over half of respondents this year.

However, significantly, cost, which not one single

respondent cited last year, is the number two reason

this year, with 40 percent of those who are not

transforming HR citing it as a main reason.

Another significant change is a near doubling in the

percentage of respondents who say HR simply isn’t

enough of a priority to merit a transformation effort –

up to 29 percent this year versus 15 percent in 2008.

headlines

findings

organisations

transforming HR

81%

RESEARCH FINDINGS


9

year all less than US$1B

US$1B – US$10B

more than US$10B

2008 % transforming HR

90% 81% 91% 95%

2009 % transforming HR

81% 74% 95% 93%

Figure 2: while still prevalent, HR transformation has declined across most groups

respondents with no plans to

transform who say cost was a

major factor in that decision

2008

2009

0%

40%

respondents with no plans to transform

who say HR’s low priority was a major

factor in that decision

2008

2009

15%

29%

Figure 1: where organisations are in their transformation process, by region

RESEARCH FINDINGS


10


WHERE organisations are in HR transformation

headlines

findings

� Respondents have experience in HR transformation; over 70 percent have been transforming HR for more than a year.

The highest percentage of respondents (34 percent)

have been transforming HR for one to two years, and

70 percent have been transforming HR for a year or

more. Not surprisingly, generally the larger the

company, the longer they have been transforming HR.

Respondents from EMEA have a bit

more experience than their counter-

parts in HR transformation; 80 percent

of them report launching their HR

transformation programs more than a

year ago.

IMPACT of the economic downturn on HR transformation

headlines

findings

� There is no real commonality of response as to how the recent global economic downturn has impacted HR transformation efforts; the highest percentage indicate there has been no impact, but nearly as many say they have accelerated their efforts.

There is a mix of response concerning the impact of

the recent economic downturn on HR transformation

efforts. The highest percentage (42 percent) say there

has been no impact to their efforts; another 38

percent say they’ve accelerated their efforts as a result

of the downturn, and the remaining 20 percent say

they have decelerated their HR transformation efforts.

Company size has some bearing on this issue. Nearly

half (48 percent) of organisations under US$1B say the

economic downturn has not impacted their HR

transformation efforts. Only 22 percent say the

situation has caused them to accelerate their efforts;

about a third (30 percent) say they’ve actually

decelerated their efforts as a result of the downturn.

On the other hand, over half of all respondents in

organisations of US$1B and larger say the economic

downturn has caused them to accelerate their efforts.

Next most common is no impact, followed by a

limited number who say they have decelerated their

HR transformation efforts.

Asia Pacific organisations’ response varies from their

counterparts’; they are considerably more likely than

others to say that the economic downturn has caused

them to accelerate their HR transformation efforts (58

percent).

organisations with

more than 1 year

of experience

transforming HR

71%

RESEARCH FINDINGS


11

Figure 3: organisations are experienced in HR transformation

Figure 4: impact of the economic downturn on HR

transformation plans

Figure 6: impact of the

economic downturn

on HR transformation

plans, by region

Figure 5: impact of the

economic downturn

on HR transformation

plans, by size

RESEARCH FINDINGS


12


HOW organisations are transforming HR

headlines

findings

� A hybrid approach of internal reengineering, shared services and outsourcing remains the most common HR transformation strategy, although both it and a predominant shared services strategy declined, whilst internal reengineering increased.

� Whilst still the least likely strategy, outsourcing has experienced a near double increase between 2008 and 2009, from 7 percent to 12 percent.

� Outsourcing as a predominant strategy is more common amongst respondents in the US$1B to US$10B range than in larger or smaller organisations.

The predominant strategy for transforming HR

remains a hybrid approach of internal reengineering,

shared services and outsourcing; however, the use of

that strategy saw a decline between 2008 and 2009

bringing it much closer to reengineering, the strategy

that saw the greatest increase. Shared services as the

main strategy saw the greatest decline, down to 20

percent from 30 percent citing it at a main strategy.

Outsourcing experienced a near double increase –

from 7 percent to 12 percent – although it remains

the least common predominant strategy.

Perhaps not surprisingly, the smallest organisations are

most likely to be transforming HR through reengineer-

ing and least likely to be using on outsourcing strategy.

Respondents in the US$1B to US$10B range are most

likely to be using a hybrid approach, but they are also

more likely to be focusing on outsourcing as their

predominant strategy than are either their smaller or

larger counterparts. Shared services is more common

amongst the largest respondents.

Strategies vary significantly by region. American

respondents are most often reengineering HR,

followed by employing a hybrid approach. They are

least likely to be making use of shared services.

European organisations, on the other hand, are most

commonly employing a shared services strategy,

followed by reengineering and hybrid approaches.

Finally, Asia Pacific companies are equally employing

hybrid and reengineering approaches. No one is

predominantly employing outsourcing.

WHY organisations transform

headlines

findings

� Cost reduction/management leads the reasons why organisations transform, up from number three in 2008.

� Reasons companies transform has remained virtually unchanged over the past several years.

The main reasons organisations transform HR have

remained fairly constant over the past several years,

although “to reduce or better manage” costs has

retaken the number one spot having dropped to

number three last year. (2008 may have been an

anomaly; cost savings was the top reason to transform

in 2007.) Other top reasons remain freeing internal

HR staff to focus on strategic issues, and to add or

improve service for line managers and employees.

Whilst there are slight variations based on size or

geography, none of them stands out as particularly

significant.

RESEARCH FINDINGS


13

Year hybrid reengineering shared services

outsourcing

2008 % predominantly using

44% 19% 30% 7%

2009 % predominantly using

35% 33% 20% 12%

Figure 8: changes in the

predominant HR

transformation

strategy year over

year

Figure 7: how organisations transform HR

Figure 9: why organisations transform HR

To access external sources of talent, expertise or technology

To facilitate reporting

To benefit from a new technology to empower line managers

To concentrate resources on core business

To align the organisation on common objectives

To respond to organisational changes

To add and/or improve service for line managers and employees

To free internal HR staff to focus on strategic issues

To reduce cost or better manage the cost of internal processes

RESEARCH FINDINGS


14


WHERE HR is centralised

headlines

findings

� Centralisation is split relatively evenly amongst the domestic, regional and global levels, although where HR is centralised depends upon company location and size.

Where respondents centralise HR is a nearly equal

split amongst domestic, regional and global, with a very

slight edge for domestic.

Size does appear to have some impact where an

organisation centralises HR, at least to some extent.

The smallest companies are most likely to centralise at

the domestic level, companies of US$1B to US$10B

are most likely to centralise at the global level, and the

largest companies are most like to centralise at the

regional level.

The Asia Pacific region presents the only notable

geographic difference in centralisation of HR. Asia

Pacific respondents are equally likely to centralise HR

domestically or globally – 43 percent for each – but

unlikely to centralise regionally.

HURDLES to HR transformation

headlines

findings

� Over the six years of research on this topic, skills of existing HR staff has remained the top hurdle to HR transformation.

� In 2009, almost all hurdles declined, reversing a trend of the last couple of years.

Over the six years we’ve been conducting this

research, the main hurdles to HR transformation have

remained unchanged. Skills of existing HR staff has

remained at the top of the list from the start; internal

bureaucracy, lack of adequate technology, and

underestimation of resources required have rounded

out the top four.

This year, however, did see a reversal of a trend that

we’ve noted in the past couple of years; it appears for

the first time this year that hurdles may be declining.

Last year we noted that 7 of the 10 identified hurdles

received higher responses between 2006 and 2008.

This year, all but one (opposition from worker’s

councils – and that had only a very slight increase)

experienced a decrease. That is, fewer respondents

noted almost every hurdle this year versus what they

noted in prior years. This change is driven in part by

respondent demographics. This year we had more

Asia Pacific respondents, and those respondents

selected hurdles in much lower numbers than in 2008.

Regardless of how long an organisation has been

involved in HR transformation, all say skills of existing

HR staff is the top hurdle. Those companies that are

earlier in their transformation next most often note

internal bureaucracy, whilst those with more

experience next most often cite an underestimation of

resources needed.

RESEARCH FINDINGS


15

domestic level

regional level

global level

Figure 10: HR centralisation

Figure 11: HR centralisation, by region

Figure 12: HR centralisation, by size

Figure 13: hurdles to HR transformation

RESEARCH FINDINGS


16

HR TRANSFORMATION OUTCOMES

TIME and SAVINGS

headlines

findings

� HR transformation most often takes three years – slightly longer than anticipated.

� HR transformation generally generates savings in the 25 percent range, which is only slightly less than anticipated.

As we’ve found in the past, HR transformation takes

slightly longer than anticipated to achieve – but only

slightly longer. Across all respondents, those

responsible for transforming HR expect to take in the

range of just under two years, but actually take three.

Half of all respondents met their transformation timing

expectations, but nearly half (45 percent) took longer

than anticipated; the remaining 5 percent are beating

their expectations.

The most common reasons respondents cite for taking

longer than anticipated to achieve HR transformation

include:

• Resistance to change and lack up support internally

• The cost of transformation and funding constraints

• Lack of upper management support and decision-making

• The impact of the economic downturn

• Execution problems

Similar to time to transform

results, organisations often miss

their cost savings results, but

generally by a slim margin. On

average, expected savings are in

the 24 percent range, and actual

are just under that. However,

across all respondents, whilst over

half (57 percent) say they met

expectations, nearly a quarter (24

percent) fell below expectations,

and the remaining 19 percent met

expectations.

Among those who exceeded

expectations, 80 percent set goals

at 25 percent or less; among those

whose results fell below

expectations, 45 percent

established goals of 26 percent or

more.

average number of

years to transform

3

average cost

savings

25%

RESEARCH FINDINGS


17

Figure 15: accuracy in estimating time to transform

Figure 16: accuracy in estimating cost savings

Figure 17: actual versus expected cost savings

Figure 14: actual versus expected time to transform

RESEARCH FINDINGS


18

HR TRANSFORMATION OUTCOMES

OUTCOMES versus expectations

findings

Respondents report the best results from their HR

transformation efforts in organisational management

areas: improving response to organisational change,

aligning the organisation around common objectives,

and concentrating resources on core business issues.

In each of those areas

three-quarters or more

of respondents say

performance has met or

exceeded their

expectations.

At the same time, HR transformation performs worst

in a couple of the areas earlier identified as main

reasons to transform, namely reducing/managing costs

and freeing internal HR staff to focus on strategic

issues. In those areas, 34 percent and 41 percent,

respectively, say performance has fallen below

expectations.

Organisations also note that HR transformation often

fails to meet expectations in benefiting from or

accessing technology, talent and expertise.

best results in HR transformation:

organisational management

worst results in HR transformation:

freeing HR staff to focus on strategic issues

headlines

� HR transformation efforts have the greatest impact on organisational management issues – rather than service, technology, or staff/manager job performance improvement.

� HR transformation efforts most often fail to meet expectations in two areas that organisations say are key reasons to transform: reducing/managing cost and freeing internal HR staff to focus on strategic issues.

RESEARCH FINDINGS


19

Figure 18: transformation efforts versus initial expectations

To access external sources of talent, expertise or technology

To facilitate reporting

To benefit from a new technology to empower line managers

To concentrate resources on core business

To align the organisation on common objectives

To respond to organisational changes

To add and/or improve service for line managers and employees

To free internal HR staff to focus on strategic issues

To reduce cost or better manage the cost of internal processes

RESEARCH FINDINGS


20

OUTSOURCING AND SHARED SERVICES

OUTSOURCING practices

findings

Just under 60 percent of all respondents currently

outsource or plan to outsource HR processes, down

slightly from 65 percent in our 2008 research. The

smallest organisations, those under US$1B, are least

likely to be outsourcing HR processes – just under half

say they currently do or plan to. Respondents from

the Americas (64 percent) are more likely than their

counterparts in EMEA and Asia Pacific (56 percent for

each) to outsource HR processes.

Whilst we saw an overall decline between 2008 and

2009 in organisations that say they are outsourcing,

breakdowns by size and geography reveal a more

dynamic situation. For example, the overall decline is

actually driven by smaller organisation; not only are

they the least likely to outsource HR processes,

organisations under US$1B also are the only ones to

indicate a decline in outsourcing activity. In fact, that

decline is fairly dramatic, from 64 percent in 2008

indicating they were or planned to outsource to 49

percent in 2009. Respondents larger than US$1B

indicated an increase in the same response from 70

percent to 75 percent.

A geographic breakdown of response provides an

equally contrasting result. Whilst respondents from

the Americas continue to be more likely to outsource

than their counterparts in other regions, the

percentage of American respondents who say they are

outsourcing or plan to outsource HR processes

declined by nearly 20 points between 2008 and 2009,

from 83 percent to 64 percent. At the same time, Asia

Pacific respondents outsourcing of HR processes

increased by an even greater amount, rising from 33

percent in 2008 to 56 percent in 2009. EMEA

respondents noted a slight decline from 60 percent to

56 percent.

headlines

� Outsourcing of HR processes saw a slight overall decline between 2008 and 2009, but results show significant variations when viewing response broken down by both respondent size and geographic region.

♦ Smaller organisations saw a decline in HR outsourcing activity, whilst larger ones experienced a slight increase.

♦ Whilst still most likely to outsource, American respondents indicated a significant decline in outsourcing activity, whilst Asia Pacific organisations indicated a significant increase.

� The trend to focus HR outsourcing on transactional versus strategic processes continues unabated.

RESEARCH FINDINGS


21

year less than US$1B

US$1B – US$10B

more than US$10B

2008 % outsourcing HR

processes 64% 74% 65%



Figure 20: increasing at larger organisations, declining at smaller

year americas asia pacific emea





Figure 21: and varied by region

year all


processes 65%


processes 59%

Figure 19: HR outsourcing declining overall, but ...

RESEARCH FINDINGS


22


OUTSOURCING practices, continued

Findings, continued

The 2009 data continue a trend we’ve found since we

started this research: transactional HR processes –

payroll, benefits administration, HRIS – are most likely

to outsourced, whilst strategic processes – perform-

ance appraisal, employee communications, career &

succession planning – are least likely.

Variance among respondents based on organisational

size is limited – regardless of size, companies generally

follow the trend noted earlier. Notable variations

include:

• The largest respondents (greater than US$10B) are less likely to outsource HRIS than are their smaller counterparts and more likely to outsource stock option administration.

• The smallest respondents are less likely to outsource expatriate and relocation.

Variations based on geography:

• American respondents more often outsource leave than do their counterparts elsewhere, whilst EMEA respondents are comparatively unlikely to outsource leave. Asia Pacific respondents fall between the two.

• Asia Pacific organisations are less likely to outsource HRIS than their counterparts in other geographies, and more likely to outsource training & development.

• American respondents indicate that it is less common for them to outsource recruitment those in other regions.

RESEARCH FINDINGS


23

Figure 22: HR outsourcing practices by process

RESEARCH FINDINGS


24


SELECTING a provider

findings

internal and external resources An increasing number of respondents say they develop

and use their own process to identify and select their

provider(s), up to 87 percent from 70 percent in 2008.

As more organisations engage in outsourcing and

outsource fewer processes at one time, this number is

likely to rise. The smallest companies are somewhat

more likely to use their own processes than are their

larger counterparts; 92 percent of these smallest

organisations say they develop their own processes,

versus 82 percent of larger ones.

Asia Pacific respondents, likewise, more often develop

their own processes than do their counterparts in

other geographies.

Just over half (51 percent) of organisations say they

engage a consultant or sourcing advisor, virtually

unchanged from last year’s 49 percent. Larger

companies more often engage consultants; 67 percent

of organisations of more than US$1B in revenue say

they engage consultants/advisors versus 56 percent for

US$1B - US$10B organisations, and 38 percent of

those with less than US$1B. Fewer than a fifth of Asia

Pacific organisations engage consultants/advisors,

making them more than three times less likely to do

so than their counterparts in EMEA and the Americas.

RFIs and RFPs It appears that organisations are increasingly issuing

requests for information (RFIs), up from about half in

2008 to 65 percent in 2009. The largest companies

outpace smaller organisations in their likelihood to

issue an RFI at nearly 80 percent versus closer to 60

percent for organisations of US$10B or less. Again

here, Asia Pacific organisations are considerably less

likely to issue RFIs than their counterparts in other

regions.

The issuing of requests for proposals (RFPs) is more

common than RFI requests (as it has been over the

past several years) at 76 percent overall, only slightly

increased from 2008’s 73 percent. As with RFIs, the

largest companies, at 84 percent, are more likely than

smaller organisations to issue an RFP. Asia Pacific

organisations are somewhat less likely than their peers

to issue an RFP, but at 67 percent, this number doesn’t

vary as much as it does for RFIs.

provider selection criteria The top several provider selection criteria have

remained unchanged over the time we’ve been

conducting this research, although they have regularly

swapped places among the top three or four spots.

Functional coverage and expertise is the top criterion

in 2009, up from number three in 2008, and proven

headlines

� In 2009, the top provider selection criterion was functional coverage and expertise.

� The top four selection criteria have remained unchanged since 2006, although they have changed order.

� An increasing number of respondents say they develop and use their own process to identify and select their provider(s).

� Larger companies are more likely to engage a consultant/sourcing advisor, up to 65 percent in 2009 versus 50 percent in 2008.

� The use of RFIs appears to be on the rise, whilst the issuing of RFPs remains common.

RESEARCH FINDINGS


25

ability to meet service levels is number two this year,

up from number three last year. Price holds the third

spot this year – 2008 appears to have been a bit of an

anomaly, when price jumped from the number three

spot up to number one for the first time – and multi-

country capabilities and specialisation in relevant

functions round out the top five.

All respondents, regardless of size, include the same

two criteria in the top two spots. Smaller and mid-

sized organisations generally rank the same criteria

among the top five as the overall rankings above. The

smallest companies (less than US$1B), not surprisingly,

rank multi-country capabilities lower than their larger

counterparts.

The largest organisations’ criteria vary a bit more.

Whilst the top two match the overall choices,

references and reputation rank much higher with this

group, in third place; flexible contract terms and

financial viability round out the top five for that group.

Again, all respondents regardless of location, rank the

top two criteria in the top two spots. Whilst EMEA

and the Americas companies generally don’t vary

significantly from the overall rankings, Asia Pacific rank

flexible contract terms number three, and multi-

country capabilities lower than their counterparts, at

number 12.

CRITERION 2009 2008 2007 2006

Functional coverage and expertise 1 3 2 1

Proven ability to meet service levels 2 4 1 2

Price 3 1 3 4

Multi-country capabilities 4 2 4 3

Specialisation relevant functions 5 8 7 7

References/reputation 6 5 5 6

Guaranteed cost savings 7 7 6 5

Cultural match 8 12 8 9

Financial viability 9 6 9 12

Flexible contract terms 10 9 10 8

Existing relationship 11 10 14 13

Unique provider (consulting, implementation, processing) 12 14 13 10

One stop shop (functions other than HR) 14 13 11 14

Size and market position 13 11 12 11

Figure 23: provider selection criteria ranking

RESEARCH FINDINGS


26


BUDGETING for HR outsourcing

findings

Respondents most often (38 percent) budget less than

US$1M annually for HR outsourcing, followed by

US$1M – US$10M at 35 percent. Nearly 90 percent of

respondents budget US$20M or less on HR

outsourcing.

Compared with 2008, there is a higher percentage of

respondents budgeting less than US$1M; however,

nearly the same percentage is budgeting less than

US$10M in 2009 as in 2008.

As has been the true for the entire time we have

undertaken this research, in 2009 the highest

percentage of respondents (42 percent) say they are

likely to increase their HR outsourcing budgets over

the next several years; however, that percentage has

decreased by more than 10 points since last year. A

significantly smaller portion than in prior years say

they plan to decrease their HR outsourcing budgets

over the next several years. The percentage of those

who say their HR outsourcing budget will remain the

same – 41 percent – has grown the most, by more

than three times since last year.

As we noted last year, the numbers above indicate a

disconnect between what people say they expect to

do and what they actually do. Despite the fact that the

largest percentage of respondents say they anticipate

increasing their HR outsourcing budget, actual budgets

do not appear to have increased over time.

Only the largest respondents (those with more than

US$10M in revenues) vary from the general profile

above. About the same percentage of those largest

organisations expect to increase their HR outsourcing

budget. However, a smaller percentage than overall –

29 percent versus 41 percent – anticipate their

budgets staying the same, and a larger percentage – 24

percent versus 16 percent – intend to decrease their

budgets.

In terms of geographical perspective, Asia Pacific

organisations are more likely than their counterparts

to plan to increase their HR outsourcing budgets, and

none indicate that they expect to decrease those

budgets. American respondents are more likely than

their counterparts to expect to decrease their

budgets, whilst EMEA companies more often say they

plan no change than do their counterparts in other

regions.

headlines

� Respondents most often (38 percent) budget less than US$1M annually for HR outsourcing.

� The highest percentage of respondents (42 percent) say they anticipate increasing their HR outsourcing budget; however, that percentage has dropped from 55 percent in 2008. At the same time, many fewer say they plan to decrease their HR outsourcing budget.

� The largest organisations are more likely than their counterparts to be decreasing HRO budgets

� Asia Pacific respondents are most likely to increase budgets, Americans to decrease, and EMEA respondents to remain unchanged.

RESEARCH FINDINGS


27

Figure 24: HR outsourcing annual budgets

Figure 26: Changes in annual HR outsourcing annual budgets

Figure 25: HR outsourcing annual budgets, 2008 and 2009

RESEARCH FINDINGS


28


SHARED services

findings

Shared services continues to be comparatively

uncommon; there are only two processes – HRIS (54

percent) and payroll (52 percent) – which more than

half of respondents say they manage through shared

services. Like outsourcing, transactional services are

more likely to be managed through shared services

than are strategic processes. As a result, career &

succession planning and assessment & performance

appraisal, for example, are among the least likely to be

managed through shared services.

We noted last year that shared services had declined

across the board, and we questioned whether this was

the beginning of a trend or simply and anomaly. Whilst

it remains unclear whether shared services is truly on

the decline, it does not appear that shared services is

on as significant a decline as the 2008 numbers seemed

to indicate. Just about the same number of processes

showed increases as declines this year, and there is no

clear correlation between increase/decrease and type

of process; in other words, transactional processes

were as likely to increase as decrease.

Across most processes, the largest organisations,

those with revenues of more than US$10B, are less

likely to be managing individual HR processes through

shared services; however, they are the most likely

group to be managing the entire HR function through

shared services. Mid-sized companies, US$1B –

US$10B, are generally more likely to manage HR

processes through shared services, particularly payroll

and health & welfare benefits.

Across almost all processes, Asia Pacific respondents

are more likely to be managing processes through

shared services than are their counterparts in other

geographies.

headlines

� Shared services continues to comparatively uncommon.

� Whilst we noted a decline in shared services in 2008 – and posited whether it was a trend in the making – it appears to have been an anomaly. This year we see a mix of growth and decline across HR processes managed through shared services.

RESEARCH FINDINGS


29

Figure 27: HR shared services by process, 2007, 2008 and 2009

RESEARCH FINDINGS


30

HR MANAGEMENT PRACTICES

CENTRALISATION of HR process management

findings

Across all respondents, all HR processes are more

likely to be managed locally than either regionally or

globally. Global management of processes, though

significantly less common than local, is next most

common. Leave, pensions administration, health &

welfare management, and recruitment are most likely

to be managed at the local level, whilst HRIS,

expatriate & relocation administration, stock options

administration are most likely to be managed globally.

Across all companies, regardless of size, local

centralisation of HR is still most common. However,

not surprisingly, the largest companies are more likely

than others to centralise globally, whilst the smallest

centralise locally more often than do their larger

counterparts.

There is limited difference in management by

geography compared to the overall numbers.

headlines

� HR processes are most often managed locally, versus regionally or globally, a finding that cuts across size and geography.

COMMON hris

findings

80 percent of organisations have a common HR

information system (HRIS), whether it is centralised at

a domestic, regional or global level. Among those who

do have a common HRIS, most often respondents say

they manage it at the domestic level (38 percent),

followed by the global level. Only 11 percent say they

manage their HRIS at the regional level.

The largest organisations are considerably more likely

than their smaller counterparts to manage their HRIS

at a global level; however, almost a quarter say they do

not have a common HRIS. The smallest organisations

are more likely than others not to have a common

HRIS, but the highest percentage of the smallest

organisations (44 percent) manage their HRIS at a

domestic level. Mid-sized companies (US$1B –

US$10B) are the most likely to have a common HRIS,

at 95 percent; 41 percent say they manage that HRIS

at a domestic level.

EMEA respondents are less likely than their

counterparts to have a common HRIS – 29 percent

say they do not. That said, all respondents, regardless

of geographic location, follow the same pattern, most

commonly managing their HRIS at a domestic level,

followed by a global level.

headlines

� The vast majority of organisations have common HRIS, generally managed at the domestic level.

RESEARCH FINDINGS


31

Figure 28: geographic management of HR processes

Figure 29: HRIS and HRIS centralisation

ABOUT THE SURVEY PARTICIPANTS


32

188

Figure 30: total survey respondents

Figure 31: headquarters location

Figure 32: breadth of operation

Figure 33: revenue (US$)

Figure 34: number of employees

ABOUT THE SURVEY PARTICIPANTS


33

INDUSTRY % INDUSTRY, cont. %

Consulting / Business Services 15% Media 3%

Technology, IT, Electronics 15% Transportation 3%

Manufacturing 13% Education 3%

Finance, Insurance & Real Estate 11% Hotels, Restaurants, Catering 2%

Health Care / Pharmaceuticals 6% Oil & Gas 2%

Public Administration 6% Construction 2%

Other Services 5% Other 2%

Mining & Utilities 4% Consumer Goods 1%

Retail & Wholesale Trade 4% Food & Beverage 1%

Telecommunications 4%

Figure 35: industry

Figure 36: function

Figure 37: title

ABOUT THE SPONSORS


34

ADP Who We Are Automatic Data Processing, Inc. (Nasdaq: ADP), with

nearly $9 billion in revenue and over 585,000 clients, is

one of the world’s largest providers of business

outsourcing solutions. Leveraging 60 years of

experience, ADP offers the widest range of HR,

payroll, tax and benefits administration solutions from

a single source. ADP’s easy-to-use solutions for

employers provide superior value to organizations of

all types and sizes. ADP is also a leading provider of

integrated computing solutions to auto, truck,

motorcycle, marine and recreational vehicle dealers

throughout the world.

What We Do ADP Employer Services, part of ADP, Inc., serves

clients in more than 50 countries worldwide. As a

leading provider of HR services, ADP Employer

Services’ offerings – from basic payroll processing to

being your payroll and personnel administration

department – are fully compliant with languages,

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companies’ structural and business needs. With its

suite of HRO solutions, ADP is well positioned to

serve the needs of multinational companies that are

looking for outsourcing services from one source.

More Information Additional information on ADP at: www.adp.com

http://www.adpstreamline.com

ABOUT THE SPONSORS


35

HROA Who We Are The HROA is the definitive independent organization

for those who purchase, provide, or participate in HR

transformation, shared services, and outsourcing. Our

membership encompasses over 7,500 HR executives,

including the largest 50 buyers, the top 30 providers,

the leading sourcing advisors and attorneys, and HR

Transformation thought leaders.

What We Do Events and Networking

The HROA produces a variety of strategic, highly

interactive conferences and webinars for executives,

managers and practitioners in the HR transformation,

shared services and process outsourcing communities.

Research & Standards

As the only independent organization representing all

participants in the industry, the HROA acts to

improve the practice of HR Transformation by

overseeing and accelerating the development and

adoption of effective industry standards and practices.

As part of this process, the HROA gathers broad-

based input from across the industry and works to

develop lasting industry consensus and to arrive at

conclusions that balance the various commercial

interests of all participants.

More Information For additional information about the HROA or to join,

visit www.hroa.org or contact Adam Bleifeld at

[email protected] or at +1 202 905 0351.

http://www.adpstreamline.com