Global Business Driven HR Transformation


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Global Business Driven HR Transformation: The Future Starts Now

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Global Business Driven HR Transformation

  1. 1. Global Business DrivenHR TransformationThe Journey Continues
  2. 2. PrefaceSee farther down the lineYou can turn to the TV talking heads to hear opinions about the future. Or you can turn to the people in the trenches foran informed view of what really lies down the track.Global Business Driven HR Transformation is a crosscurrent of rapid changes in culture, technology, law, and leadingpractices. There’s no such thing as an organization that’s arrived at its destination — there are only ones that keepevolving and ones content to stand still. In our new book, Global Business Driven HR Transformation: The JourneyContinues, Deloitte has mined the experience and vision of its leading field professionals to explore the many future trendsthat are shaping the way companies relate to their people.The Global Business Driven HR Transformation journey is different for every global organization. From establisheddisciplines like payroll, compensation, and benefits to emerging ones like cloud computing, analytics, talent operations,and the effects of globalization, Global Business Driven HR Transformation: The Journey Continues provides a spectrum ofresources decision-makers will want to keep by their sides. Because the question is not whether you’re going to move intothe future — the question is how.Jason GellerPrincipalGlobal and U.S. Human Resources (HR) Transformation LeaderDeloitte Consulting LLP
  3. 3. 2 3 Solution integration Change analytics 1 What is truly 5 6 Governance and meant by global decision rights HR Business Partner and Centers of ExpertiseGlobal Business Driven 4 The HR ChiefHR Transformation: Operating Officer BenchmarkingThe Future Starts Now 7 8 Workforce HR shared services analytics Cloud HR and Outsourcing 9 10 Global privacy Talent 13 14 and Security Social Payroll 11 12 media Compensation 16 15 Contingent Global Benefits mobility workforce 17 18Setting the global HR Transformation strategy HR organization Numbers behind HR Enabling HR service delivery HR functional perspectives
  4. 4. Global Business Driven HR Transformation: The Future Starts Now The global business environment is experiencing Next generation HR Transformation unprecedented change, and human resources (HR) should In the past, HR Transformation mostly focused on making develop new capabilities if it wants to remain relevant. existing HR services more efficient, effective, and compliant. The unspoken assumption was that HR was already doing all Our world’s social and economic center of gravity is steadily of the things that needed to be done; it just needed to do shifting from west to east. Many developing countries are them more effectively, faster, and cheaper. facing a ‘new normal’ characterized by ongoing economic uncertainty, lingering underemployment, excessive debt, and Now, the rules of the game are changing. Basic HR stagnant consumer demand. At the same time, emerging capabilities — such as efficient and effective service countries are flourishing as their expanding populations delivery, integrated HR systems, employee self-service, and and growing middle classes give rise to a new and powerful timely access to relevant/correct workforce data — are as pool of consumers and workers. And all of this is happening important as ever. But today, they are merely table stakes: against an unpredictable backdrop of natural disasters, basic building blocks that each HR function should possess. political upheavals, dwindling global resources, and wildly fluctuating commodity prices. Looking ahead, what businesses should really consider are HR capabilities that do not just support the business strategy These forces have significant implications for the future of — but enable it. For example, HR can enable business business and HR. And the future starts now. growth by developing standard, repeatable systems, processes, and capabilities that make it fast and easy for the company to enter new geographic markets and integrate new acquisitions. HR can also enable business growth by developing new staffing models that fit a modern workforce, increasingly based on offshore talent, contingent workers, and global mobility. Transforming HR to deliver forward-thinking capabilities like these can help companies respond more timely and effectively to changes in the business environment, expand their global footprint, and increase revenue and margins. The results? Improved competitiveness, profitability, and growth.4
  5. 5. Global Business Driven HR Transformation: The Future Starts NowBusiness drivers that affect HR Globalization and emerging markets. As businessIn order to develop HR capabilities that can enable a becomes increasingly global, companies should improvecompany’s business strategy, it is important to understand their ability to build and manage a global workforce —the critical drivers that are shaping that strategy. This section often in places they have not operated before. Manyhighlights some of the market forces and trends that are companies are seeing their global footprint shift from westlikely to influence business strategy (and HR Transformation) to east as they pursue opportunities for accelerated growthin the months and years ahead. in emerging markets. By 2050, the global population is expected to grow by 50 percent — primarily driven byThis should not be viewed as a broad list, since the actual India and China. Yet 70 percent of the world’s corporatedrivers are particular to each business, industry, and management is currently located in Europe and Northregion — and generally change over time. However, the America. To thrive in this new environment, companies needdrivers presented here are likely to have a significant impact HR capabilities that can enable them to effectively realignon the business environment for the foreseeable future, their workforces with their changing global footprint. Theyand are factors that each company should consider. They should also consider creating an operating environment inalso provide the foundation for a broad set of examples to which global and virtual teams can thrive. Critical capabilitiesillustrate the types of issues businesses are wrestling with, include improved global mobility programs that make itand how companies can proactively develop HR capabilities possible to move employees between countries efficientlyto support and facilitate their business strategies. and easily; standardized and repeatable HR processes and systems for entering new markets; and new staffing modelsGrowth. Revenue and market growth are essential for that use outsourcing, contingent workers, and strategiccompetitiveness and long-term shareholder value. In fact, partnerships to improve scalability and flexibility.growth is so important and pervasive that most of the otherbusiness drivers listed here are in some way related to it. Cost pressure. Many companies are under constantUntil recently, businesses primarily grew by hiring additional pressure to reduce costs. And while HR has madein-house staff. But these days, the formula for growth has tremendous strides to manage its costs and improve itsbecome far more complex — involving acquisitions, new operating efficiency over the past two or three decades,staffing models, new technologies, and new approaches there is usually room to improve. That said, it is importantfor finding, attracting, developing, and managing talent. to remember that HR must not only be efficient, but alsoMoreover, today’s companies aren’t just looking for growth; effective and compliant. The direct impact of improving HR’sthey are looking for profitable growth, which significantly internal efficiency is relatively low. To have a greater impactincreases the challenge. For HR, the key is to develop new on costs, HR should focus its specialization on people-relatedcapabilities that can enable the business to expand as timely costs that are outside of the HR budget, such as pensionsand efficiently as possible. and health care. Another way for HR to contribute is by helping the business reduce the ‘cost of work’ through improvement initiatives that focus on things like worker productivity and management of contingent workers. Global Business Driven HR Transformation The Journey Continues 5
  6. 6. Global Business Driven HR Transformation: The Future Starts Now Talent. Most savvy business leaders know that having Emerging technologies. New technologies such as cloud the required talent is critical to business performance computing, social media, and mobile devices affect HR in and growth. But putting that insight into action can be two ways. First, they help enable HR to deliver services more a significant challenge — especially in the midst of a efficiently and effectively. For example, cloud computing changing talent landscape. Around the world, jobs are can reduce the cost and time required to develop new moving from mature markets where talent is expensive and HR solutions, and can improve scalability, enabling HR to scarce to emerging markets where talent is cheaper and effectively and efficiently grow or shrink its capacity and more plentiful. This fundamental shift requires companies capabilities in response to changing business needs. Second, to consider developing new HR capabilities for managing and perhaps even more significantly, new technologies raise a global supply chain for talent — just as manufacturing the bar on what HR’s customers expect. For example, thanks companies have had to learn how to manage a global to smart phones and the Internet, today’s employees expect supply chain for products. Demographic shifts at both ends the ability to access HR systems and services 24/7 from of the age spectrum are also having a big impact on talent. anywhere on the planet. Similarly, today’s recruits expect Many companies continue to face a mass exodus of retiring the ability to interact with a company and its HR function baby boomers, even as they struggle to deal with an influx through social media. HR can use emerging technologies to of young workers who have different needs, skills, and satisfy these ever-increasing expectations, and to deliver new expectations than their elders. This changing workforce innovations quickly and affordably. requires new talent management capabilities in areas such as leadership development, workforce planning, strategy Mergers and acquisitions (M&A). Mergers, acquisitions, alignment, and workforce diversity. and divestitures have become a standard part of business strategy. Yet HR still tends to approach each M&A deal as a Innovation. The days of relying on a small, elite group of once-in-a-lifetime event. Also, HR’s goals are often limited innovators are over. In today’s business world, breakthrough to achieving cost synergies and integrating workforces from ideas and continuous improvement can come from an administrative perspective. Although such goals are anywhere in the organization. To tap into this priceless important, they are just a starting point. What companies resource, leading companies are developing new ways to should really consider are HR capabilities that make help their employees around the world collaborate and share mergers, acquisitions, and divestitures fast, efficient, and information. And more often than not, HR is at the center of repeatable. These new capabilities should include the ability the action. Whether the task is developing a ‘people portal’ to effectively and reliably combine two distinct workforces that bring employees closer together; working with the into a truly integrated organization that can help the business to create a more innovative culture; or developing business achieve its growth goals. They should also include new rewards programs and performance management an improved ability to retain critical talent. The value of a processes to promote innovation, HR has a valuable role merger often hinges on the talent being acquired, and if too to play in helping companies use innovation as a many people leave, much of that value may be lost. competitive weapon.6
  7. 7. Global Business Driven HR Transformation: The Future Starts NowRisk and compliance. This business driver affects HR in a ratcheting up for growth, or navigating the twists and turnsnumber of ways. On one level, HR must deliver services that of local markets.comply with local labor laws and workforce regulations — achallenge that is magnified as a business expands its global Repeatable. Develop demonstrated HR capabilities thatfootprint. On another level, HR must also comply with broader can be rapidly and efficiently deployed in new situationsbusiness regulations, such as those related to data privacy — instead of reinventing the wheel by treating eachand security. Although these regulations are not specifically new challenge as a one-time occurrence. Repeatability istargeted at HR, they often have significant HR implications especially important for business events that are likely todue to the highly sensitive nature of HR’s work. Finally, HR can recur, such as new market entry, M&A, and global a valuable role in helping a company manage the changeassociated with developing a risk-intelligent, compliant culture Standardized. Create HR systems, processes, and— a culture where employees understand the full impact of policies that are as standardized as much as possible.their actions and take smart risks that are consistent with the Standardization can improve efficiency, consistency, andorganization’s policies and objectives. collaboration across the global enterprise — and makes it easier to move resources across global boundaries. TheGuiding principles for HR Transformation default approach for HR Transformation should be “whyWhen developing and implementing new HR capabilities, not standardize?” Although there are situations where athere are a number of useful design principles to nonstandard solution is truly justified, those situations areconsider. These guiding principles can help you create HR the exception rather than the rule. In the manufacturingTransformation strategies, initiatives, and solutions that business, there’s a saying that 80% standardization beatsmake sense for the future. 100% variation, and the same philosophy applies to HR.Business-driven. Consider developing HR capabilities that Looking aheadalign with your company’s strategy and business needs. The business world is changing, and HR should adaptFocus on high-impact HR activities that can create significant accordingly. Although efficiency, effectiveness, andvalue for the business, rather than commodity activities such compliance are still important transformation goals, theyas transaction processing and administration. Ideally, HR now represent the bare minimum that HR is expected toTransformation should be integrated with business strategy, deliver. What businesses really need are HR capabilities thatso that new HR capabilities are developed in sync with the do not just support the business strategy, but enable it —business and are readily available when needed. That’s a big making it possible for the business to design and executeshift from the usual approach, where HR is not involved until strategic moves that capitalize on HRs capabilities, ratherlate in the game and may thus become a bottleneck that than being limited by them.slows things down and limits the business’ strategic options. This forward-looking vision for HR Transformation doesn’tScalable. Establish HR capabilities (i.e., systems, processes, end with making HR strategic and getting a seat at theprograms, infrastructure) that can effectively, easily, and strategy table. It presumes HR has a seat at the table andefficiently adjust to changes in business demand — whether focuses on what HR will do with it.that means scaling back in the face of a global slowdown, Global Business Driven HR Transformation The Journey Continues 7
  8. 8. Setting the global HR Transformation strategy8
  9. 9. 2 3 Solution integration Change analytics 1 What is truly meant by globalSetting the Global HRTransformation Strategy
  10. 10. 1 What is truly meant by “global”? Aligned, not alike: What does global mean? Globalization: Building the right infrastructure Just saying you “want to get global” is not enough. is critical Globalization is not something that just applies at the Globalization is near the top of many organizations’ business strategy level. The appeal of globalization and the agendas, and not without good reason. The growing pressure to get there fast has put an enormous amount of populations and economies in China, India, Brazil, and pressure on functions, such as HR, information technology other fast-developing countries will likely continue to (IT), finance, procurement, and legal, as they are the key to represent fertile ground for market growth. They also offer building the global infrastructure and foundation required the sustained potential of reduced cost pressure thanks to to achieve this business objective. And with the need for a labor and regulatory differences. As a result, organizations globally diverse and highly mobile talent base on the top are finding it attractive to recast their structures along of most organizations’ global agendas, HR is often at the global lines. There are three principal reasons: It helps them forefront of the globalization mandate. manage risk, it can help reduce operating costs to generate a more effective return on investment, and it can ease the Many HR organizations have responded to this call for action way to a greater reward through market growth. by aggressively looking to standardize across the relevant elements of the HR operating model — people, process, and However, with all this talk of globalization, there still is technology. The thinking has been that in order to support not a clear definition of what “going global” means. the organization’s objective to become global, there needs Defined as everything from market expansion to to be one system, one support structure, and one set of end-to-end standardization, it is apparent that not only processes when it comes to HR activities. But, when looking are there multiple paths to achieving the global vision, but at their experiences, those organizations often come to determining which path an organization should take is the find that taking global to the extreme may not be a cultural critical factor in reaching the globalization goal. fit and may be unnecessary to achieve the required level of globalization. In many cases, HR leaders who push the global agenda too far find that what started as a seemingly effective foundation for their transformation yields a step backward in the evolution of the HR function and a giant leap backward toward achiving “global.”10
  11. 11. What is truly meant by “global”?Globalization is not just about minimizing differences.It is about making the most of commonalities so that A one-size-fits all doesn’t fitcore distinctions, such as language, customs, regulatory Recently, a large, global, highly decentralized companycompliance, education level, technology, and other factors decided to outsource much of its HR function. Usingwork to an advantage. It is critical that HR first evaluates and the outsourcing initiative as a catalyst for change, thedefines what “global” means to the business strategy. It is company sought to standardize its policies, procedures,natural to want to avoid excess duplication and unnecessary processes, and technology infrastructure across moredifferences from business to business and country to than 80 countries. The standardization was core tocountry. But making everything the same is not always making the outsourcing solution work as the companyachievable, and won’t always be desirable. In some cases, was planning to achieve a significant reduction inenforced uniformity can even blunt regional advantages by operating costs.tying each part of an organization to the lowest commondenominator. Instead of bringing disparate operations The company’s HR leadership encountered a challengetogether, it can isolate countries or regions that do not fit in understanding where HR processes truly requiredthe mold, or minimize the particular qualities that foster a differentiation or uniqueness for specific business unitsbusiness units potential to lead its market. for true business needs. The company’s all-in, global standardization approach quickly led to serious resistanceCase in point: the failed global revolution to the idea of standardization from leadership, makingThe trap of taking globalization too far is often seen in the progress toward globalization under the chosenhighly decentralized environments. These organizations approach impossible. And, although the initiative on itsmay find that globalization — when not focused on those surface was designed to meet the organization’s overallelements core to business strategy — is counter-cultural needs, business leaders fought with great resistanceand difficult, if not impossible, to implement and sustain. to the point where it could not recover. Where did thisA decentralized operating model, itself, implies that some company go wrong? By not understanding the tolerancecomponents of the business run independently to preserve for globalization at the process level, this organizationthose qualities that provide competitive differentiation. went too far and lost the support of the business toWhen HR globalization is pushed too far, it can contradict push ahead.the very operating principles that make the organizationsuccessful. Global Business Driven HR Transformation The Journey Continues 11
  12. 12. What is truly meant by “global”? Understanding the options apply (See table on next page.). A set of objective criteria or Cautionary tales like that of the one-size-fits all company guiding principles that account for the true business drivers in the sidebar are not unique when looking at attempts by is helpful. For example, the criteria might include types of HR to become global. To proactively avoid these types of position, location, population size, or complexity of the challenges, it is important for HR organizations to consider workforce mix. Some regions or countries, as defined by the range of options as it relates to becoming global. As the chosen criteria, may not be best served by the global shown in the table below, each option is premised on solution as much as others, or at all. For example, many understanding overarching business needs and each has organizations start with a rule of thumb that locations in a set of distinct challenges and opportunities. Identifying countries with fewer than 500 employees should consider where your company places within the spectrum is an alternate solutions because that employee threshold doesn’t important first step to defining what globalization of HR always support a business case unless the market is a growth means to the organization and can help set the mandate target for the organization. and support required to drive the initiative forward. Finally, with all these determinations in place, the HR After defining the desired global solution, the next step team should craft a deliberate road map to deploy the is segmenting the regions to which it will apply — and new HR delivery solution in a sequence that addresses the the ways in which the solution or a modified version may populations and implement it according to a timetable that aligns with the business need that began it all.12
  13. 13. What is truly meant by “global”? Connecting the dots Improving the infrastructure Driving consistency Seeking a global view of its data to drive Seeking to drive toward a more global Seeking significant cost savings its globalization agenda; often required business operating model and looking or preparing for a significant in organizations looking to expand into for the core functions, such as HR, to transaction (e.g., merger or Business need growth markets and need to effectively mirror that global model to the extent acquisition); as a result, the need for identify and redeploy talent required to support the business strategy standardization is high and model Roles are standardized to drive security Roles are standardized for HR operations Roles are standardized across the and workflow within the selected supporting countries with large entire HR operating model (shared technology solution; commonality is populations of employees and/or those services, HR Business Partners, typically focused on transactional-type components of the HR operating model and Centers of Expertise); this can People roles only, not strategic activities that are which provide core transactional support involve organization redesign, skill performed by HR business partners or (i.e., navigation of the technology and competency analysis, rebanding centers of expertise platforms, core transactional processes) or reassessing compensation levels and potentially workforce transition Common processes to support the Common processes across critical areas Common processes across the Design use of the technology solution only; of focus for the business (e.g., talent relevant areas of the employee life Process processes are standardized to the extent management, workforce planning) or for cycle (hire to retire) and across the that they affect the inputs and outputs a subset of countries which are core to countries in which the business for the HR solution market growth operates Multiple systems are integrated via feeds Core set of common systems focused One global HR system used as the and interfaces into a central database for on specific areas which are core to central point of input for employee Technology core reporting and analytics (e.g., data the organization’s business strategy data across all countries in which warehouse) (e.g., talent management, recruitment, the business operates workforce planning) While the implementation investment This model is often premised on a The extent of globalization in is often low, the operational phased implementation approach where this model requires a very large, maintenance in this type of model can the HR function is looking to globalize upfront implementation investment; be high. Because the organization is still over time and is starting with what typically, the biggest challenge working with a disparate technology is core to the organization’s business is creating a business case that Investments and infrastructure, investments should be strategy. While this approach can help can justify the spend required challenges made so that data standards are adhered to spread the implementation costs and still produce a level of either to and governance is in place to monitor over time, the challenge is sustaining one-time or ongoing savings for the and guide changes to the applications. the organization’s ability to handle organization. constant change to be able to realize the full vision.Source: Deloitte Global Business Driven HR Transformation The Journey Continues 13
  14. 14. What is truly meant by “global”? Selecting the ideal option: It is about aligning to the Case in point: the global evolution business strategy The benefits of a thoughtful approach to globalization, When considering globalization and identifying the applied by a large, global, and complex organization implications for HR, defining “global” is key. That effort whose HR function was trying to tackle its need to get starts with truly understanding the business strategy and the global quickly, drove an outcome with minimal impact drivers for going global. For HR, this includes understanding to its existing operations. HR leadership decided upon the specific markets that drive the business strategy, now an evolutionary approach to globalization. Attuned to and in the future. HR should also understand how the the company’s tolerance for change and to the real business strategy and environment differ in each specific business drivers behind the globalization need, the HR market, determine what drives those distinctions, and use team understood that trying to standardize too quickly that insight to create guidelines useful to the organization. across all countries would not create a sustainable For example, some markets may plan more growth than model. They recognized from the onset that the others — and the degree of HR investment in each place driver for globalization was the need to increase the should reflect that understanding. organization’s presence in critical emerging markets and, as a result, the primary goal of globalization Once they’ve identified the business need, leaders should needed to focus on providing a global view of the define the solution that will drive toward it. As shown organization’s talent base. through the spectrum of choices presented above, one organization’s solution might be confined to technology To that end, HR prioritized and narrowed its definition or it might extend into processes and roles. The solution of global to focus on three core elements: (1) may require consistency across the end-to-end processes, implementing a single, global HR solution where or it may touch only the portions that deal with data inputs employee data could be housed; (2) standardizing the and outputs. Even after an organization has determined talent-related processes that affected the organization’s what elements should and shouldn’t “go global,” it should ability to identify, grow, and develop the talent consider how much local variance the new solution can base (e.g., recruitment, performance management, permit. Somewhere, there’s a balancing point between succession planning); and, (3) harmonizing only global and regional needs. the core data elements that drive those identified processes. Without creating a completely standard HR organization or driving full, end-to-end HR process standardization, HR was able to support the need for globalization while establishing the foundation for future globalization efforts.14
  15. 15. What is truly meant by “global”?Specific challenges and practical advice Lots of ground to coverChange at the scale of a global enterprise is difficult to There was a time when “global” and “standard” were neartransfer from theory to practice. Any level of standardization synonyms. In truth, one-size-fits-all may not have been thecan mean that a given business unit or geography has a most effective way to visualize global operations; it is evenperceived loss related to a process, procedure, or system less applicable in the global economy of today and thethat it once found core to executing its business objectives. future, and it has seen many challenges for a function asAs a result, it is important to continue to tie HR globalization nuanced as HR.efforts to the business strategy and the business drivers.Each decision — whether it is where to focus or what Adopting the new view described here, gaining criticalcountries to prioritize — will be essential to defining the leadership support and alignment, and putting it into actioncontext of the businesses’ mandate to globalize. That is heavy lifting, and it won’t all happen at once. The longbusiness case-based explanation, whether rooted in strong march will achieve the desired outcomes for organizationsfinancials or purely qualitative benefits, should be central to that view HR globalization in the context of achievingthe communications plan and change management efforts defined business objectives and set clear goals that are firmlythroughout the implementation of the solution. grounded in business needs.Even after the implementation, keeping the new solution In the years to come, a global organization will likely be onemoving forward will take a sustained governance model that allows different HR practices in different places to the— not just a one-time meeting, but a process that drives extent that they benefit the organization. When operationscontinuous change as needs and capabilities evolve. The in different parts of the world each operate according toleaders of a global transformation must have tangible local needs, conditions, and opportunities — and when theyinfluence across the global enterprise. They should be on have common systems and standards that let them shareboard from the beginning and remain involved, so they can relevant information and data — then they will be the partsspeak with authority when people challenge the process that make a global organization truly whole.— and somewhere, someone will. In some organizations,change like this may alter the structure of HR leadership.In each case, the new governance structure should beas global as the business it supports. Some organizationsintroduce a new role, the HR chief operating officer (COO),as part of this structure. This role can serve as a drivingforce in sustaining the global solution once implemented.Whatever the structure, it is important to dedicate focus tothe ongoing maintenance of the global solution as just assignificant investment is made in building it. Global Business Driven HR Transformation The Journey Continues 15
  16. 16. 2 3 Solution integration Change analytics 1 What is truly meant by globalSetting the Global HRTransformation Strategy
  17. 17. 2 Solution IntegrationThe days of a “one size fits all” HR service delivery model • A core Human Capital management technology.delivered by one technology solution, or one service Organizations may either continue to leverage existingprovider, are gone. Many companies are now searching enterprise resource planning (ERP) solutions, or deploy afor HR service delivery models that meet their specific software-as-a-service (SaaS) solution as the central systemneeds, are scalable, and can easily adapt to the changing of record for employee data that acts as the overall “hub”demands that come with globalization. Achieving the most for the solution.overall value from a new model begins with defining the • Best-of-breed point solutions. Many organizations aredesired outcomes. turning to “best-of-breed” solutions that can provide specific functionality with the most efficient/particularizedThose outcomes are more effectively achieved by setting features. The most common solutions include those thatguiding principles to establish alignment with the anticipated relate to talent, staffing, and learning and many are beingneeds of the business. This approach flows through to delivered as SaaS solutions as well.designing processes, organization, technologies, and • Portals. Many organizations are deploying new portalthird-party providers that collectively will deliver the clearly solutions or extending their enterprise portals to “wrap”established desired outcomes. Across the delivery model various solutions together into cohesive packages. Thesolutions, creating an integrated solution that creates an portals can provide employees with direct access into each“easy” experience for employees, managers, and leaders is of the solutions that make up an organization’s blendedcritical to long-term performance. models, but also typically provide access to HR-related content, such as forms, policies, and other related keyAcross the highly varied HR Transformation experiences decision support material.among industries, one common thread runs throughoutmany: Most organizations deploy a “blend” of technologies • Selective and strategic outsourcing. Organizationsand third-party providers in addition to internal capability are reviewing the areas that make the most sense forto create the end-state model for delivering HR services as outsourcing on a function-by-function basis insteadthis typically yields the required combination of speed, cost, of focusing on full-scale outsourcing. The most typicaland quality. outsourcing candidates in the blended model include payroll, benefits, and absence management, but they canThe “blend” varies according to the particular needs of the also include other areas depending on the specific needsorganization. Typically, it involves the following components: of the organization. Global Business Driven HR Transformation The Journey Continues 17
  18. 18. Solution Integration • Internal shared services. Many organizations are deploying global, regional, and satellite shared services Case study: centers to most effectively fit the needs of delivering HR Solution integration at a Life Science client services to their global workforces. The focus of these Spinning off from its parent company into a stand-alone organization presented shared services centers is to help create systems that many opportunities and challenges for a health care and life sciences company. adapt to the demands of flexible and fluid organizations. The first challenge was how to define the components it wanted in a new HR This means they can scale to deliver services to the entire service delivery model, and the second was how to implement this solution. organization while still being specialized enough to provide tailored services that can meet the specific needs The organization selected an HR service delivery model that combined an of a regional or local employee population. internal shared service center as its core Human Capital Management (HCM) solution. The selected solutions that made up the HR service delivery model Implementing a blended HR service delivery model comes perfectly suited the needs of the growing organization. It also introduced with its own set of challenges. To realize the value such a increased complexity around the HR business processes. In the new model, HR model can deliver, organizations should focus on creating business processes, such as onboarding new hires, would now involve multiple a seamless, integrated experience across many elements of solutions with data passed between each solution. the solution. To deploy its HR service delivery model, the organization developed an • Data must flow smoothly across the solutions implementation plan that put solution integration front and center. The • Clear ownership of types of data must be defined organization focused on the integration points between the solutions and • Employees must be able to get the answers about their placed special attention on how the data was passed through the solutions HR inquiries from external service providers — or from to enable the HR business processes. The organization also made solution internal service centers that are delivered in a common integration a priority of the individual vendors. It insisted that the vendors who and consistent manner to avoid confusion and frustration were responsible for implementing the solutions not only considered their own solutions, but how those solutions fit into the overall solution that was being These are only a few of the elements a blended HR service deployed by the organization. delivery model requires. If an organization fails to deliver on these elements a blended HR service delivery model can By maintaining this focus, the company was able to deploy a solution that was generate more confusion than cohesion. both comprehensive and cohesive, with an excellent employee experience. Keeping solution integration front and center during the implementation has also paid dividends to the organization, which has been operating its HR service delivery model while globally deploying new integrated functionality to its entire employee population.18
  19. 19. Solution IntegrationAchieving cohesion. Blended HR delivery models Solution integration oversight. It should be thetypically work when the solution integration is built into responsibility of one or more specific people to focus on theimplementation from the outset. When looking at the oversight of solution integration for the implementation,elements of the overall model, an organization should share and on an ongoing basis. Maintaining a focus on solutiona clear vision of how it wants the elements of the solution to integration during the implementation and after go-live willintegrate and operate in the future state. help the solution adhere to the guiding principles and not fragment into disparate parts.Achieving this integration is not easy. It cannot be anafterthought. Integration should be a primary driver of Data governance framework. Data that flows acrossthe design of the overall solution. Embedding solution multiple solutions must depend on a common frameworkintegration activities and considerations into the required that establishes clear ownership of data elements (suchphases of an implementation is essential. Listed below as employee data, benefits data, payroll data, and otherare some of the specific elements to consider when categories), and defines the process and policies forimplementing a blended HR service delivery model. dealing with issues, updates, and correction specific to the data across the solutions. Not having a data governanceGovernance. An organization should set a clear project framework in place introduces a significant risk that data willgovernance structure that includes the elements of the likely become out of sync and incorrect as it moves betweenoverall solutions, such as vendors and internal functions. each solution. Establishing the data governance frameworkThis structure permits the management of implementation during the design phase can also provide a clear road mapactivities, and can evolve into a structure that will support for fixing data issues that come up once the solutionsoperations ongoing post go-live. are live.Solution integration guiding principles. The organization When organizations take these considerations into accountshould define a number of master principles that will apply in implementing and operating a blended HR model,to the design of overall solution. Establishing these principles the result is more likely to be a solution that operates inwill help drive a cohesive and broad design across the a cohesive manner. This cohesion is most visible whenelements of the solution. employees use the solution. Employees and managers understand the tools they need to use to carry out day-to-day HR activities, and it matters little to them that they may actually be using multiple solutions that have been integrated together. Global Business Driven HR Transformation The Journey Continues 19
  20. 20. Solution Integration Challenges and mitigation strategies for deployment Deploying a blended HR service delivery model can be very challenging, even when organizations focus on solution integration throughout the lifecycle of the implementation. Here are some of the typical challenges that arise — and some strategies to leverage to overcome them. Challenges Mitigation strategies Vendor conflicts When organizations use different vendors and • Write provisions into vendor contracts that contractually bind them to “play solutions, they often experience conflict over nice in the sandbox.” For example, make implementation fees contingent on a implementation methodologies, timelines, and common approach defined by the company. approaches. Vendors typically want to use the • Engage vendors as early as possible in the planning phase and bring the approach and methodology that works for their vendors together to conduct joint planning. Make the vendors aware of the own solutions and services. Their concern centers on integration points and critical dependencies that exist between the different what is in their contract, not on the overall solution. parts of the solution. Instill the spirit of the whole as early as possible. Internal function When different functional groups within the HR • Create a cross-functional team for vendor selection, with representatives conflicts organization, such as benefits, compensation, or from all functions that will participate in the overall solution. Include IT and payroll, manage different vendor relationships — or finance as well, especially if payroll is in scope for the implementation. A team when responsibility for selecting different vendors or that understands the overall requirements for each functional area will help solutions falls to a particular group — the potential establish a collective approach that focuses on the solutions and vendors that grows for dissent within HR and disaster for the suit the overall needs of the organization. implementation. If left to focus solely on what works • Consolidate vendor governance under a separate function. Ongoing for their particular functions, groups may end up management of vendors and solution providers should be done under a choosing solutions that do not integrate well with separate group that evaluates and manages the elements of the solution. This other solutions, or negotiating contracts that do not structure will prevent any vendor from receiving preferential treatment, and all induce providers to integrate into a broader service will have to perform under common terms and delivery model. service level agreements (SLAs). The outside group should gather the input of the functional groups but ultimately be in charge of the vendor relationship. Lack of participation Designing a blended HR service delivery model • Call upon a business advisory group to get user input throughout the and involvement of without the participation of the business can implementation. The basic nature of a blended HR service delivery is the business have serious potential risks. Among these risks complicated — more solutions and providers are providing selective services. are designing an overly complicated solution that These services must be presented to employees and managers in a broad, doesn’t factor in the core needs of employees and cohesive, and integrated manner. The “how,” “who,” and “when” of using managers — the primary users of the solution. these solutions must be self-evident as well. A business advisory group can be a sounding board for solution-related decisions and help make the eventual solution more in touch with the needs and understanding of the users. • When dealing with a blended HR service delivery model, a detailed change and communication plan is required. Employees must clearly understand what is changing, when it is changing, and how. This information also needs to be tailored to individual groups so that the message20
  21. 21. Solution Integration Starting the journey Deploying a blended HR service delivery model has its challenges, but adopting a focus on solution integration can make these challenges negligible, and the benefits far outweigh them. Organizations should select the solutions and providers that fit their needs and not feel they must adopt a one-size-fits-all model for delivering HR services to their employees. Keeping the focus on how all the parts will fit together, from the initial vision of the future state solution through to when the solution is deployed, will help that vision meet the reality of what actually goes live. Global Business Driven HR Transformation The Journey Continues 21
  22. 22. 2 3 Solution integration Change analytics 1 What is truly meant by globalSetting the Global HRTransformation Strategy
  23. 23. 3 Change analyticsComplex basics: Managing change as part of One useful determinant is the way an organization definestransformation change management to begin with. Too many leadersEffective change analytics can help align the view it as nothing but a vehicle to drive user adoption — inorganization to improve everything else you’re doing. effect, an institutional-level behavior modification exercise.Transformation is change. No insight there. But when HR They focus almost entirely on pre-go-live measures to raiseorganizations manage transformation, do they manage user awareness and alter activity patterns.change well enough? Successful HR transformations thataddress requirements include change — and they invest as A more mature view of change management goes broadermuch as 15 percent of the overall transformation budget in and deeper than that. True change management is a riskchange management, (2003 AMR Research Report). Real mitigation approach that identifies and addresses criticallife experience confirms that when a transformation issues around strategy, process, technology, and people overteam is well experienced in change management the the complete lifecycle of an HR transformation program.transformation achieves — and often exceeds — its Key to this approach is a seasoned understanding of thefinancial and qualitative goals. points where HR transformations can fail. By developing a comprehensive view of transformation risk, a changeSo there is a strong case for making sure an HR team can then mitigate each risk with targeted strategiestransformation builds in enough change management skill. and tactics and systematically remove the obstacles toThe question is: How much change management is enough? transformation success. One of these common risk areasWhat does the right approach look like? of course is user adoption, but there are many others that often go unnoticed until it is too late. With a risk mitigation approach to change management, the result can influence the quality of the business case, strengthen leadership alignment, improve process design, and support successful adoption of processes and tools. Change is therefore crucial to realizing real business benefits, driving growth and retaining key talent by ensuring the HR transformation is not thwarted by unforeseen challenges. Global Business Driven HR Transformation The Journey Continues 23
  24. 24. Change analytics Become experts in program risk • Do you know the level of geographic readiness across Intelligent change data before, during and after your organization, to ensure that your implementation implementation is fundamental to identifying resistance roadmap has the right sequence and accounts for hotspots, understanding where exactly to make change preparations that need to be made in advance? investments, and to help maintain strong leadership • Are you working on a training needs analysis, to alignment around where the implementation challenges are determine what capabilities the new environment will and what to do about them. require of your employees? With these capabilities carefully mapped, you can determine where the gaps From the moment an organization plans a transition, it are to the current capabilities. This gap analysis helps to should make sure to invest time in studying its own risks. identify what kind of training will be needed to ensure a These things can’t be left to chance — planners should map smooth transition. and study leadership alignment levels, employee readiness, • Are you developing a user adoption measurement change impacts, geographic readiness, and user adoption strategy that clarifies post-go live goals and how you levels related to the proposed transformation changes. will measure your progress against them? Measuring user adoption will indicate where additional intervention may Here are some of the questions to ask to ensure that your be required and will help you continually improve change assessment of program risk is broad and deep enough management throughout the transformation. before moving to change solution development. • Are you tracking leadership alignment levels to ensure What could be so bad as to put a transformation at risk that there is strong agreement around the HR operating of failure? Why all this talk about risk? Our experience model and vision for the transformation? with global HR transformations shows that risks pop up everywhere and can be just as lethal at the start of a • Do you have change readiness tools to objectively transformation as they are near go live. Strategic alignment assess employee readiness for the changes that are levels, for example, often are misleading at first glance. coming? Knowing readiness levels early and consistently Leadership teams are prone to believe they are aligned throughout an HR transformation is a critical input. and agree about the general direction of their respective • Are you analyzing the change impacts resulting from programs, but when prodded and studied at close range, your HR transformation? Is there a disciplined approach to the strength of those alignment levels often doesn’t hold identifying, mapping and translating change impacts into up. What one leader feels is a critical strategic objective, change management strategy for your transformation? another feels is not so critical, and they disagree about how24
  25. 25. Change analyticsthe objectives should be translated into tangible outcomes. The As One diagnostic survey can help organizationsSuch small, seemingly inconsequential cracks in alignment measure readiness in three ways:can cause huge, negative ripple effects down the road. • To what extent do leaders and employees understand andDisagreements at the top can serve as ammunition for support the HR priorities?employees at the lower ranks who don’t want the change in • How strongly do leaders and employees identify andthe first place. connect with different parts of the organization (such as geographies, functions, divisions, and the corporateInvesting in the right change analytics tools and measuring center)? This can inform where they prefer to get theiralignment, readiness and adoption early and often can be information and whom they will listen to the mostthe difference between a transformation that succeeds throughout the HR transformation process.and one that fails. HR Transformation leaders who thinkabout Change Management as much more than a function • How do people in the organization prefer to workof driving end user adoption will be more likely to avoid together employee to employee? Employee to leader?the typical pitfalls of many transformation efforts. Change These “collaboration models” can help predict the wayanalytics data can be the driver for leaders to establish a large-scale transformation will be received, and wheresufficient support to adequately mitigate risks and close challenges may lurk.readiness and alignment gaps in time — helping to morequickly realize the business imperatives at the heart of the The results of the As One diagnostic survey are easilytransformation. manageable in a self service tool that filters survey scores against a host of demographics and other inputs. TheseA market-leading approach to studying change results are not meant to locate weakness in a team. Onreadiness the contrary, they are designed to locate opportunities toKey to your change analytics approach will be using tools strengthen a team’s ability to work together effectively.that are well-tested and respected in the market. One such When people work together during a big transformation,tool is Deloitte’s proprietary approach to assessing change their ability to do so may be the most important metricreadiness — As One. Based on a best-selling book of the of all.same name, the As One approach employs a diagnosticssurvey that many Deloitte clients currently use around theworld to understand how “ready” their employees are forthe transformation they are about to undertake. Global Business Driven HR Transformation The Journey Continues 25
  26. 26. Change analytics Change solutions and the silent sound of success • Are your stakeholder engagement tactics well-planned As you utilize a host of change analytics tools to locate and and well-executed? Are they achieving measurable assess program risk, solving that risk becomes an equally gains in sentiment and behavior change? Among other important focal point of the change team. Some of the considerations, timing is important for stakeholder questions your change team will need to address from a engagement. Engaging employees, managers and HR too solution standpoint include: early or too late can create unnecessary anxiety in the • Do you have a leadership alignment plan that will address organization. Transparency is imperative throughout. all of the gaps in support, overcome any confusion, and • Do you have a communication plan that strikes the right help turn your leadership team into strong champions of balance of relevant content and appropriate style and the transformation approach? tone? Are your messages well timed and well written? Are • Are you employing formal change advocates, selected they written in the language of the audience to ensure from throughout your own leadership ranks, who can they’re actually digesting the material? help develop the approach with the change team — and • Is there a global component to your HR transformation serve as champions for the initiatives you launch? Involving that makes use of both regional and local change change advocates early increases perceived legitimacy of resources, engages country and local HR leaders, and change management efforts and helps bring the rest of drives the organizational readiness approach down to the the organization along to increase commitment to the country-level roadmap and timing? future state. • Are you coordinating change strategy and tactics • Do you have the right training strategy to help prepare across your entire HR transformation program? This HR team members whose roles may change? The includes maintaining awareness of other initiatives in the “right” training strategy will consider the needs of global organization that may affect the same resources or impact stakeholders and will be aligned with other changes taking implementation timing. place in the organization.26
  27. 27. Change analytics Having the right change solutions to mitigate each of the risks identified — and to prevent risks that haven’t had a chance to take form yet — will be a critical part to your change management approach. So how will you know when it’s working? What are the signs of success? Often a successful result proves anti-climactic for leadership teams, because success typically is accompanied by a prolonged silence. Nobody complains. There are no spikes in calls to the shared service center. Emails do not flood the program inbox. Meetings are not consumed by rudimentary questions that should have been predicted and addressed earlier in the change approach. Silence therefore is a great outcome. More often than not, however, there are ongoing questions and concerns. And the good news is that the analytics and solutions outlined above are designed to catch those early, and address them quickly. This is why the change management team and approach needs to be vigilant at every stage of an HR Transformation. Risks are like weeds. They find ways to pop up when you’re not looking. Understanding the nature of those risks, and having strategies to mitigate them, is therefore a very simple equation that helps focus change efforts and ensure a positive HR Transformation experience. Global Business Driven HR Transformation The Journey Continues 27
  28. 28. HR Organization28
  29. 29. 5 6 Governance and decision rights HR Business Partner and Centers of Expertise 4 The HR ChiefHR Organization Operating Officer
  30. 30. 4 HR Chief Operating Officer Despite the demonstrated benefits of HR Transformation, The challenge of getting to “better, faster, cheaper, and business executives and HR leaders alike continue to more agile” is daunting for any organization, but it is doubly voice frustration with HR’s ability to deliver value. With difficult for HR organizations, where many leadership teams no shortage of talented people doing great work, what is still operate with structures and roles that have been in place the problem? All signs point to the need to rethink how for decades. HR organizations deliver on the intent of supporting the business — with a new role designed to drive performance The traditional model for HR leadership improvements across the entire HR organization. The Today, a typical corporate HR leadership team is led The HR Chief Operating Officer (HR COO). by a CHRO, and includes HR vice presidents (VPs) for business units, HR VPs for centers of specialization (e.g., The business wants more — not less — from HR compensation and benefits), a VP for HR operations, a VP for Most business leaders today fully understand the value of HR technology, a head of legal for HR, and an HR controller. people. They can clearly articulate their top people priorities Some leadership team members have dual reporting and are more than willing to invest to get what they need. relationships, which can include direct lines to the Chief At the same time, chief HR officer (CHRO) leaders know Information Officer (CIO), Chief Financial Officer (CFO), they have to deliver what the business needs and wants. As Chief Administrative Officer (CAO), or chief legal counsel. a result, when business and HR leaders sit down to work together, they are often focused less on what needs to be Within this familiar structure, leadership team roles and done and more on how. responsibilities are predictable. For example, most HR VPs for business units are naturally focused on business unit Predictably, business leaders want better, faster, and HR issues. Centers of Expertise leaders concentrate on HR more compliant HR services at a lower cost and an HR policies and programs. Leaders for HR shared services and organization that can turn on a dime to support their technology manage operations and technology and so on. ever-changing business strategies and goals. Unfortunately, many HR organizations continue to struggle to meet those demanding requirements.30
  31. 31. HR Chief Operating Officer In those circumstances, integration is typically handled on an Chief HR officer ad hoc basis through an informal network of “go-to people” in the HR organization. The network steps up and pulls Business HR HR Talent Centers HR legal and HR HR special together to handle deals when they happen, with leadership unit A Technology Operations of Expertise compliance controller projects and often provided by an experienced team of HR leaders. program/ Effectiveness hinges on relationships and special effort rather Business Compensation portfolio unit A Centers of management than reliable processes, lines of authority, and structure. As Expertise a result, there is often a gap between the expectations of Business unit A Benefits business leaders and what HR is set up to deliver. Centers of Expertise What’s not working? Learning Most HR leaders can point to an innovative service they Centers of Expertise developed to solve a critical business challenge. Their stories have a familiar theme: the work required a lot of Global cooperation, goodwill, and effort by HR people who stepped mobility Centers of up to the challenge to get something important done. The Expertise examples are hard to replicate because they required hugeSource: Deloitte commitments of time and energy. In terms of operating model, HR leadership team members Similarly, many HR organizations have gone through typically have their own budgets and resources and are effective HR Transformation programs. By design, these responsible for developing an annual operating plan to programs come to an end point at which the transformation support their priorities and projects. Implementation, of current HR services (or the development of new HR however, is often the responsibility of an IT or shared services) stops. There is rarely a structure in place to sustain services group, which may have its own resources and the cycle of continuous performance improvement. budget. Members of the leadership team and their organizations provide implementation support as needed, These two scenarios illustrate a fundamental dilemma. On such as communications assistance or loaned resources. one hand, most HR leaders understand that the business understands the value of people and is willing to invest This traditional model works well as far as it goes — but in people more than ever before. Yet on the other hand, it does not go nearly far enough. For example, when their HR organizations are not prepared to take advantage coordination is required across multiple functions and of this opportunity with their current structures, roles, and business units — such as merger integration or enterprise- processes. HR leaders understand this dilemma and want a wide rollout of a new HR initiative — the model falls short. solution to this problem. Global Business Driven HR Transformation The Journey Continues 31
  32. 32. HR Chief Operating Officer Rethinking structure • Development of a vendor management plan To help HR organizations seize this business challenge, • HR compliance and risk management incorporating a simple step in the evolution of HR • Project management, including building capabilities for organizations can bring significant value: a division of HR, to manage projects, such as Six Sigma in HR responsibility between HR executives who focus primarily on what needs to get done and those who focus on how it gets • Development and implementation of an HR technology done. That step requires creating a new, senior HR role — strategy to support the business needs the HR Chief Operating Officer. Structure The HR COO is the leader who focuses on how HR services The HR COO role will generally have a combination of solid- are delivered, as well as the design, development, and and dotted-line reporting relationships. Below are examples implementation of HR services. The person in this new role of reporting structures seen in organizations that have will drive efficiency, effectiveness, cost, and compliance for effectively embraced the role of the HR COO. (See Samples the HR services. The table on page three shows the division 1 and 2.) of responsibility in the HR leadership team when an HR COO is established. Influence The ability to exert influence is very important in leadership, Getting it done but it is even more critical in structures with multiple dotted- Like any other leadership position, the role of the HR COO line reporting relationships. HR COOs and their direct and should be defined to establish clear lines of responsibility indirect reports need a solid understanding of how goals are and reporting relationships. However, because solid line set and how performance will be evaluated. This requires reporting relationships will not typically exist, the influence clarity about who influences and shapes day-to-day work, as element of the HR COO role should also be well defined. well as long-term career needs of these individuals. Responsibilities In search of Superman or Wonder Woman? • Current HR service delivery, as well as driving At first blush, the list of qualities you’ll want from improvements, to provide efficient, effective, and an HR COO may seem daunting. The role requires compliant HR services a mix of experience in HR, finance, technology, • Design, development, and implementation of new operations, and executive leadership — with a focus HR services on HR service delivery and operations. That’s asking a • Development and implementation of business-focused lot — especially when you add in responsibilities for HR metrics regulatory, risk, compliance budgets, and for managing change. But none of this means the HR COO has • Delivering reliable workforce data with corresponding to be a superhero, not at all. The HR COO is part of workforce reporting and analytics your leadership team. The desirable/effective person • Development of the overall HR budget and analysis of will balance and complement other executives, using total HR spend influence and alliances to get the job done.32
  33. 33. HR Chief Operating OfficerStrength through business results Looking aheadThe HR COO is a new and evolving role, but from To put it simple, the HR Chief Operating Officer is not a roleorganizations that have taken early steps in this direction, that someone can be phased into over time nor can it bethere are clear indications of common themes that can piloted. It requires a depth of conviction from CHROs whodrive effectiveness. know they are not yet delivering the services that the business needs.For starters, the HR COO role depends on having a clearand communicated mandate to drive HR service delivery, But the effort is worthwhile. Positioned appropriately, thewith responsibility for HR efficiency, effectiveness, and HR COO can be the key to creating a high-performing,compliance. As such, it requires full support of the Executive well-integrated HR leadership team. There is tangible valueCommittee and the HR leadership team. The HR COO will to be realized, but it will likely take a departure from theneed to develop working relationships with members of the current model.senior leadership team. One way to garner that support isto establish shared HR leadership team goals that are part ofeach member’s performance objectives. Division of HR leadership responsibilities with an HR COO Role Key responsibilities Key focus CHRO • Provides HR leadership • HR strategy • ocuses on business-HR alignment F • usiness-HR alignment B • Develops HR strategy • Owns HR governance HR COO • rives implementation of new HR D • HR operations services responsible for ongoing HR • R efficiency, effectiveness, and H service delivery compliance • rives efficiency, effectiveness, and D • R operating costs H compliance Business unit • evelop business unit HR strategies D • usiness unit HR strategy B HR VPs and plans; drive business-corporate HR • usiness-HR alignment B alignment HR Centers of • evelop HR policies and programs D • R policy and program effectiveness H Expertise VPs related to functional areas (talent, compensation, benefits, Learning, etc.)Source: Deloitte Global Business Driven HR Transformation The Journey Continues 33
  34. 34. HR Chief Operating Officer In the months and years ahead, more and more CHROs will likely embrace the HR COO model as they strive to crack the code for operational excellence in HR service delivery. Recognizing that even the most experienced people cannot excel in a suboptimal operating model, they will likely make the call that only leaders can make — to change the operating model of the HR organization to harness the power of how. Sample 1: Formal and structured HR COO model Chief HR officer CIO or CAO or COO HR Center of Business unit A HR COO Expertise leader Business unit A Talent Center of HR operations Expertise Business unit A Compensation HR technology CIO Center of Expertise Benefits Center HR controller CFO of Expertise Learning Center HR legal and Legal of Expertise compliance Global mobility HR vendor Procurement Center of Expertise governance HR special projects and program/portfolio management Source: Deloitte34