ADP Global HR Transformation Survey 2010

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What are the trends in Human Resources transformation practices?
What is the current and future transformation scope?
In which way have recent global economic changes affected HR transformation plans?

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ADP Global HR Transformation Survey 2010

  1. 1. Global HR 2010Transformation An ongoing journey Conducted by SharedXpertise in association with ADP
  2. 2. table of contents introduction 4 about the survey 5 executive summary 6 introduction ............................................................................ 4 research findings about the survey...................................................................... 5 8 executive summary.................................................................. 6 HR transformation status 8 research findings ..................................................................... 8 HR transformation outcomes 12 HR transformation status .................................................. 8 HR transformation outcomes .......................................... 12 outsourcing and shared services 18 outsourcing and shared services ..................................... 18 HR management practices 28 HR management practices .............................................. 28 about the survey participants about the survey participants ................................................ 30 30 about the research research .................................................. 32 about the sponsors sponsors 32Conducted by SharedXpertise in association with ADP [3]
  3. 3. introduction one glass, two ways to see it There are many ways to look at things, but a situation can usually be analysed by viewing it from one of two angles: the glass is half full or it’s half empty. In other words, look on the bright side of the story or let your less optimistic side take control. In fact the real choice is between the intent to get better at something or just maintain a situation as is. What do you think we chose for ADP, a company that has been in business for over 60 years? What could have led us to support the Global HR Transformation Report for so many years, if not the will to understand where room for improvement exists? What does this year’s report tell us? First of all, things are heading in the right direction. No revolution here but a movement that has been steadily gathering momentum. Companies around the world that embarked on HR Transformation years ago now reap the rewards of their efforts. Regional variances still exist but those of you who have been reading the report for several years will find concepts that were previously unfamiliar are now conventional wisdom. So, is HR Transformation over? It would be foolish to think so. There are in fact many aspects yet to be examined; ideas and actions to be carefully considered that could lead to fantastic opportunities. I am confident the HR Transformation journey is far from over. More than ever, companies have to deal with uncertainty and new forms of competition, and I invite you to listen carefully to how other HR professionals identify new challenges and bring innovations. Any component of a business has the potential to play a significant role in the changes that must be made for a company not just to survive, but to thrive. HR plays an important role in reaching this goal. It is in our interest, as solution providers and HR professionals, to strive to move forward together toward the goal of making HR more agile. We may then accurately assess the resources needed to manage change, deal with cultural differences, and define the appropriate breakout of processes to manage at the local, regional and global levels. These are but a few examples of how to solve the equation. This is how HR and, more specifically HR Transformation, should be viewed: a sophisticated equation. No one said it would be easy to figure out, nor that its components would remain the same, but mathematics is all about defining new possibilities and transforming them into real opportunities. 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, Doug Cummings Senior Vice President, Global MNC Sales ADP Employer Services[4] Conducted by SharedXpertise in association with ADP
  4. 4. about the survey Our survey, now in its seventh year, 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 2010 report offers a view of market trends and changes in HR transformation, as well as a 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 • 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 225 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.Conducted by SharedXpertise in association with ADP [5]
  5. 5. executive summary summary of 2010 findings Transformation is on the rise again. After a dip in 2009, HR HR transformation continues to take longer than anticipated. transformation appears to be on the rise again with 85% of all Organisations in all regions take slightly longer to transform respondents saying they are considering, in the process of, or than they originally anticipate, a finding that has been finished with HR transformation. In fact, although the recent consistent throughout the seven years of our research. economic recession does appear to have had some impact on On average, HR leaders say HR transformation requires two to HR transformation activity (many indicators were down in three years; more than a quarter of organisations take more 2009 over 2008) there are signs of increased transformation than four years to transform HR. The top reasons activity improvement in 2010 (though generally not back to transformation is delayed are: management/leadership/ 2008 levels): organisational changes impacted transformation progress; • Transformation efforts overall were down in 2009, and, timing and transformation is/was more complex than reversing a years-long trend of growth, but on the rise expected. again in 2010. And continues to generate less in savings than anticipated. At • The proportion of respondents who say they are not the same time, organisations often miss their transformation transforming due to cost pressures increased savings targets by a slim margin: whilst 62% of all respondents significantly from 2008 to 2009,but declined from 2009 anticipate savings of 6% – 25%, 57% actually achieve those to 2010. savings; another 14% anticipate the lowest level of savings • Internal reengineering (versus engaging outsourcing, (less than 5% savings), but 20% say they actually achieve shared services or some kind of hybrid approach) was up savings in that range. Respondents in EMEA are more significantly in 2009 over 2008, but it stayed virtually the aggressive than those in other regions in both their cost same in 2010. savings expectations and results. Regional shifts in HR transformation may be appearing on the Organisations achieve the best transformation results in horizon. On a regional basis, organisations in the Americas are organisational management areas. Survey respondents say slightly more likely than their counterparts in other regions to they perform best in aligning the organisation around be engaged in HR transformation, but longitudinal research common objectives (79% of respondents say they exceed or indicates there may be changes. Our results show an increase meet expectations in this area) and responding to in HR transformation activity in Europe/Middle East/Africa organisational changes (73% of all respondents exceed or (EMEA) (75% transforming in 2008 versus 87% in 2010), and a meet expectations). Respondents rate themselves worst at decline in activity in Asia Pacific (93% transforming in 2008 leveraging HR transformation to free internal HR staff to focus versus 81% in 2010), whilst the Americas remain fairly steady on strategic issues (46% say the fall below expectations in this at 89%. area) and benefiting from a new technology to empower line Transformation approaches vary by region. Americas-based management (42% say they fall below expectations in this organisations are most likely to employ a hybrid approach, area). Asia Pacific oranisations focus on internal reengineering, and Organisations do a good job of matching areas of importance EMEA organisations are the most varied with nearly equal to performance. Generally, organisations are performing best portions engaging hybrid, internal reengineering and shared in the areas that they deem important, with the single services approaches. exception being the objective of freeing internal HR staff to Top reasons organisations engage in HR transformation also focus on strategic issues, which has the lowest reported vary by region. In a departure from prior years, our 2010 performance of all key performance areas. research indicates different top reasons for transformation by HR transformation hurdles are becoming entrenched. Across region: all seven years we’ve been conducting this research, the main • Americas: to align the organisation on common hurdles to HR transformation have remained unchanged, with objectives and to free internal HR staff to focus on skills of existing HR staff at the top of the list every year. strategic issues (both selected by 56% of respondents) Other top hurdles continue to include underestimation of resources needed (52%), lack of adequate technology (41%), • Asia Pacific: to add and/or improve service for line and internal bureaucracy (40%). management and employees or to respond to organisational changes (both are selected by 65% of HR outsourcing appears to be declining. Across the past three respondents) years, the proportion of respondents who say they are • EMEA: to reduce/better manage costs (62% of currently outsourcing or considering outsourcing HR respondents) processes has slowly declined, from 65% in 2008 to 59% in 2009, and 54% in 2010.[6] Conducted by SharedXpertise in association with ADP
  6. 6. executive summary Even with changes across time, HR outsourcing continues to The use of shared services for some transactional services be focused on transactional activities. Organisations in all remains common. Just about two-thirds of all respondents say regions are most likely to outsource/consider outsourcing they manage one or more HR process(es) through a shared payroll, and least likely to outsource/consider outsourcing the services model. As with outsourcing, organisations are more entire HR function. likely to manage transactional processes – such as payroll and HR information systems (HRIS) – in a shared services With HR outsourcing as a whole down, few individual environment than they are strategic processes. Respondents processes experience an increase in outsourcing between from the Americas are more likely than are their counterparts 2009 and 2010. The highest increase in outsourcing is in in other regions to manage at least one HR process through a assessment/performance appraisal, which, although shared services model (71% of Americas respondents versus uncommon, rose from 19% to 26% between 2009 and 2010. 56% of Asia Pacific respondents and 63% of EMEA Payroll, the most commonly outsourced HR process, also saw respondents). an increase, from 80% in 2009 to 84% in 2010. HR functional management may be becoming increasingly Most buyers develop their own processes for identifying and global. The HR function is most often centralised at a global selecting their provider(s). Nearly three quarters of all level, with 42% of all respondents selecting that option, respondents say they develop and/or use their own process versus domestic and regional centralisation, each selected by to identify and select their provider(s), down from a high of 29% of respondents. This finding represents a change over 87% in 2009, but nearly equally to 2008’s 70%. 2010 saw a 2009 when the split was fairly equal amongst the three decline in the use of consultants or sourcing advisors, with options (35% domestic, 33% regional and 32% global). 36% of respondents saying they engage a consultant or sourcing advisor versus 51% in 2009. The issuing of requests Whilst HR functions are most often centralised on a global for information (RFIs) and requests for proposals (RFPs) is also level, individual HR processes are most often managed on a down. local level. Nearly all HR processes are most likely to be managed locally, versus regionally or globally. Only stock The top four provider selection criteria remain ever constant. option management is just slightly more likely to be managed The top four provider selection criteria remain unchanged on a global level than a local level. over the previous four years, although they regularly change positions. In 2010, the top provider selection criterion is Most organisations have a common HR information system proven ability to meet service levels, followed by functional (HRIS). Amongst those organisations that have a common coverage and expertise, then price followed by multi-country HRIS (80% of all respondents), over a third (35%) say it is capabilities. There are limited differences in the top criteria managed at a global level; nearly as many (32%), though, say amongst the different regions. their HRIS is managed at a domestic level. Least likely amongst those that have a common HRIS is management at Organisations most often budget less than US$1M annually the regional level (14% of all respondents). for HR outsourcing. The highest percentage of respondents (41%) budget less than US$1M annually for HR outsourcing; another 30% budget US$1M – US$10M, and the remaining 29% budget more than US$10M. Analysis of year-over-year HR outsourcing budgets indicates growth at both ends of the budget scale, with an expanding proportion budgeting either less than US$1M or more than US$11M. Although HR outsourcing appears to be declining, respondents say budgets are rising. In spite of the fact that a declining percentage of respondents say they are currently outsourcing or considering doing so, the percentage of respondents who say their HR budgets are increasing is up: 48% of respondents say they anticipate their HR outsourcing budgets to increase over the next three years versus 42% in 2009 (although not up to the 2008 level of 55%). Most often, organisations say they expect budgets to increase by 10% – 24% (20% of all respondents); 17% say they anticipate an increase of less than 10%.Conducted by SharedXpertise in association with ADP [7]
  7. 7. research findings HR transformation status headlines • HR transformation is on the rise again following a dip in 2009; 85% of all respondents say they are engaged in HR transformation in some form, whether reengineering, outsourcing, shared services, or hybrid approach. Just over a third say they have been engaged in HR transformation over a year. • Whilst organisations in the Americas are still more likely to be transforming HR than are those in other regions, the most significant year-over-year change has taken place in the Europe/Middle East/Africa (EMEA) region, with a 16-point increase in organisations saying they are engaged in HR transformation in 2010 over 2009. • Those that are transforming HR most often engage a hybrid approach (41%), combining internal reengineering, shared services, and possibly outsourcing. Next most common is internal reengineering, with nearly a third engaging that strategy. • Transformation strategies vary by region: organisations in the Americas are most likely to engage a hybrid approach; those in the Asia Pacific region most often employ internal reengineering, and EMEA organisations are the most diverse, employing a variety of approaches • The reasons organisations engage in HR transformation has remained constant over years of research, the most common being to reduce or better manage costs. However, there are variations by region: those in the Americas most often say their focus is to align the organisation on common objectives and to free internal HR staff to focus on strategic issues; Asia Pacific- based respondents most often say it is to add and/or improve service for line management and employees or to respond to organisational changes; EMEA headquartered organisations most often say they are engaged in HR transformation to reduce/ better manage costs. • Amongst those respondents who say they are not engaged in HR transformation, most say the reason is that they are satisfied with their current organisation or strategy. findings who is transforming HR Amongst those organisations that have chosen not to engage in HR transformation, most often it is because they are After a dip in 2009, HR transformation appears to be on the satisfied with their current organisation or solution (53%), HR rise again with 85% of all respondents saying they are is not a priority (26%) or transformation is considered too considering, in the process of, or finished with HR costly (24%). The order and magnitude of these reasons are organisations transforming HR transformation. HR transformation activity remains largely unchanged between 2009 and 2010, although cost was down from its highest (90% in 2008). significantly up in 2009 over 2008, and appears to be waning 85% On a regional basis, organisations in the Americas in 2010. (Cost was selected as a reason not to transform by 0% in 2008, 40% in 2009, and 24% in 2010). are slightly more likely than are their counterparts in other regions to be engaged HR transformation. However, where organisations are in HR transformation survey results indicate activity is shifting by region. The highest percentage of respondents (40%) organisations The most significant change has been in been in the Europe/ with more than 1 year of have been transforming HR for one to two years, Middle East/Africa (EMEA) region, which has seen an increase experience in and 64% have been transforming HR for a year or transforming HR in HR transformation activity: 87% of EMEA respondents say more. Predictably, generally the larger the they are engaged in HR transformation, up from a low in 2009 of 71%. On the other hand, the Asia Pacific region has company, the longer they have been transforming HR. 64% experienced a decline in HR transformation activity, from 93% in 2008 to 81% in 2010. HR transformation activity in the Americas is virtually unchanged at 89% of all respondents.[8] Conducted by SharedXpertise in association with ADP
  8. 8. research findings figure 1: where organisations are in their transformation process, all figure 2: organisations engaged in HR transformation, 2006 – 2010 respondents 15% 90% 21% Planning to transform 85% 85% 81% 75% % engaged in transformation 7% In transformation Completed transformation No plans to transform 57% 2006 2007 2008 2009 2010 figure 3: organisations engaged in HR transformation, by region, 2008 – 2010 Americas Asia Pacific EMEA % engaged in transformation % engaged in transformation % engaged in transformation 93% 89% 87% 89% 87% 83% 81% 75% 71% 2008 2009 2010 2008 2009 2010 2008 2009 2010 figure 4: reasons organisations are not transforming HR, all respondents Satisfied with current organisation/solution 53% HR is not a priority 26% Cost 24% Company currently under re-organisation 15% Company policy 3% % who select figure 5: how long organisations have been engaged in HR transformation, all respondents 14% <1 yea r 24% 1 – 2 years 22% 3 – 4 years 5+ yea rs 40%Conducted by SharedXpertise in association with ADP [9]
  9. 9. research findings HR transformation status, continued findings how organisations are transforming HR Organisations are most often transforming HR through a hybrid approach of outsourcing, centralised services and internal reengineering (40% selected this option). Next most common is internal reengineering (31%), followed by a predominantly shared services approach (23%), then by a predominantly outsourcing approach (6%). This pattern is somewhat similar to the approach organisations noted in our 2009 research, when, likely due to the global economic recession, internal reengineering jumped from 19% of all respondents to 33%. Whilst down slightly, to 31%, in 2010, that approach remains strong. At the same time, outsourcing rose in 2009 over 2008, but is off again in 2010. Transformation approaches vary somewhat by region. Organisations in the Americas are the most likely to engage in a hybrid approach (45%), whilst those in the Asia Pacific region are most likely to engage in internal reengineering (44%). Organisations headquartered in EMEA are much more diverse in their approach, with nearly equal portions engaging in hybrid (32%), internal reengineering (31%) and shared services (29%) approaches. In all regions, a transformation approach based predominantly on outsourcing is uncommon. why organisations are transforming HR The main reasons organisations transform HR have remained fairly constant over the past several years, with reducing/ better managing costs the top reason (56% select this option on 2010), as it has been for all but one year. (2008, when cost reduction/management dropped to number three, appears to have been an anomaly.) Other top reasons to transform HR (also consistent across the years) are adding/improving service for line managers and employees (52%), responding to organisational changes (52%), aligning the organisation on common objectives (51%), and freeing internal HR staff to focus on strategic issues (51%). Unlike in years past, this year’s results indicate some variation in response by region. Respondents from organisations based in the Americas most often say they are engaged in HR transformation to align the organisation on common objectives and to free internal HR staff to focus on strategic issues (both are selected by 56% of respondents). Asia Pacific- based respondents most often say they are engaged in HR transformation to add and/or improve service for line management and employees or to respond to organisational changes (both are selected by 65% of Asia Pacific respondents). EMEA headquartered organisations most often say they are engaged in HR transformation to reduce/better manage costs (62% of EMEA respondents).[10] Conducted by SharedXpertise in association with ADP
  10. 10. research findings figure 6: approaches organisations are taking to transform HR, all figure 7: approaches organisations are taking to transform HR, 2008 – 2010 respondents 6% 2008 44% 19% 30% 7% 23% 40% 2009 35% 33% 20% 12% 2010 40% 31% 23% 5% 31% Figure x: approaches organisations are taking to transform HR, by region Hybrid Internal reengineering Americas 45% 27% 23% 5% Predominantly shared services Asia 36% 44% 16% 4% Predominantly outsourcing Pacific EMEA 32% 31% 29% 7%figure 8: reasons organisations engage in HR transformation, all respondents and by region To reduce cost or better manage the cost of internal processes 56% To add and/or improve service for line management and employees 52% To respond to organisational changes 52% To align the organisation on common objectives 51% To free internal HR staff to focus on strategic issues 51%all respondents To concentrate resources on core business 35% To benefit from a new technology to empower line management 33% To facilitate reporting 25% To access external sources of talent, expertise or technology 17% % who select To align the organisation on common objectives 56% To free internal HR staff to focus on strategic issues 56% To reduce cost or better manage the cost of internal processes 53% To respond to organisational changes 52% To add and/or improve service for line management and employees 51% americas To benefit from a new technology to empower line management 33% To concentrate resources on core business 33% To facilitate reporting 25% To access external sources of talent, expertise or technology 18% % who select To add and/or improve service for line management and employees 65% To respond to organisational changes 65% To free internal HR staff to focus on strategic issues 58% To align the organisation on common objectives 55% To concentrate resources on core business 52% asia pacific To reduce cost or better manage the cost of internal processes 48% To benefit from a new technology to empower line management 42% To facilitate reporting 42% To access external sources of talent, expertise or technology 32% % who select To reduce cost or better manage the cost of internal processes 62% To add and/or improve service for line management and employees 49% To respond to organisational changes 47% To align the organisation on common objectives 44% To free internal HR staff to focus on strategic issues 42% emea To concentrate resources on core business 30% To benefit from a new technology to empower line management 28% To facilitate reporting 19% To access external sources of talent, expertise or technology 9% % who selectConducted by SharedXpertise in association with ADP [11]
  11. 11. research findings HR transformation outcomes headlines • HR transformation takes slightly longer and generates slightly less savings than first anticipated, a finding that has remained unchanged across seven years of research. • Organisations cite management/leadership/organisational changes as the top reason for slower-than-expected results. • Organisations realise the best results from HR transformation in organisational management areas, and the worst results in leveraging HR staff into more strategic areas. • On the whole, respondents do not appear terribly happy with their HR transformation performance overall. On a 5-point scale, the highest performing area (adding and/or improving service for line management and employees) achieves only a 2.89 score. • That said, organisations generally report performing better in areas that they deem important and less well in areas they deem unimportant, so it appears focus and resourcing are being thoughtfully applied. • The main hurdles to successful HR transformation remain unchanged over the years, with skills of existing HR staff perpetually topping the list. In the 2010 research the next most common hurdle is underestimating the resources needed to transform. findings time and savings As with time-to-transform results, organisations often miss their cost savings expectations by a slim margin. A majority of HR transformation takes slightly longer than anticipated to respondents (62%) anticipate savings of 6% – 25% (the achieve, a result we have found throughout the seven years highest portion anticipating savings of 16% – 25%), but 57% we have conducted this research. Across all actually achieve those savings. Whilst 14% anticipate the average number of years to transform respondents, those responsible for HR lowest level of savings (less than 5% savings), 20% say they transformation most often anticipate actually achieve savings in that range. On the other end of the 2-3 transformation taking one to two years (42% of respondents), whilst 32% actually achieve that scale, however, virtually the same proportion of respondents anticipate and achieve savings of more than 35% (8% result. Another quarter (25%) expect anticipate those savings; 7% achieve them). transformation to require three to four years, whilst 31% actually take that amount of time; and only 10% anticipate Again here, whilst organisations in different average cost savings taking more than four years, whilst more than a quarter (27%) regions generally follow similar patterns, there actually require that amount of time. The remaining 23% anticipate transformation taking a year or less; only 11% are regional differences. EMEA organisations tend to be most aggressive in their planning, with 16%- actually achieve transformation in the timeframe. just over a third (35%) anticipating savings of Organisations in different regions tend to follow similar more than 25% (versus 19% and 14% of Asia Pacific and Americas respondents, respectively, 25% patterns as the overall response, although Asia Pacific anticipating this level of savings). organisations appear to be more aggressive in both anticipated and actual transformation timing. Interestingly, whilst a higher proportion of EMEA respondents actually achieve savings of more than 25% (25% of EMEA The most common reasons respondents cite for taking longer respondents say they achieve that level of savings, versus 20% than anticipated to achieve HR transformation include: of Asia Pacific and 19% of Americas respondents), that means • Management/leadership/organisational changes impacted EMEA respondents are generally underperforming their transformation progress and timing. expectations, whilst Americas and Asia Pacific respondents • Transformation is/was more complex than expected. are outperforming their expectations, even if only slightly. • Staff turnover impacts(ed) transformation progress and timing. • The staff is/was too stretched to focus on transformation • Competing priorities impacts(ed) transformation progress and timing.[12] Conducted by SharedXpertise in association with ADP
  12. 12. research findings figure 9: actual versus expected time to transform, all respondents Less than 6 months Anticipated 4% 19% 42% 25% 10% 6 – 12 months 1 – 2 years 2% 3 – 4 years Actual 9% 32% 31% 27% More than 4 years figure 10: actual versus expected time to transform , by region Americas 5% 16% 41% 29% 9% Anticipated Asia Pacific 8% 24% 44% 24% Less than 6 months EMEA 3% 19% 45% 20% 13% 6 – 12 months 1 – 2 years Americas 3% 9% 30% 26% 32% 3 – 4 years Actual More than 4 years Asia Pacific 4% 21% 29% 38% 8% EMEA 5% 34% 33% 28% figure 11: actual versus expected cost savings resulting from HR transformation, all respondents Up to 5% 6% – 15% Anticipated 14% 29% 33% 15% 6% 2% 16% – 25% 1% 26% – 35% 36% – 45% Actual 20% 30% 27% 16% 5% 1% 46% – 55% More than 55% figure 12: actual versus expected cost savings resulting from HR transformation, by region Americas 16% 30% 41% 8% 3% Anticipated 3% Up to 5% Asia Pacific 9% 45% 27% 5% 9% 5% 6% – 15% EMEA 13% 23% 30% 27% 6% 2% 16% – 25% 26% – 35% Americas 21% 32% 28% 12% 7% 36% – 45% Actual Asia Pacific 14% 29% 38% 5% 10% 5% 46% – 55% More than 55% EMEA 20% 28% 27% 23% 2%Conducted by SharedXpertise in association with ADP [13]
  13. 13. research findings HR transformation outcomes, continued findings outcomes versus expectations Applying a 5-point scale to respondents’ performance (where performance that is far below expectations=1, and Similar to prior years, respondents report best results from performance that far exceeds expectations=5), on the whole their HR transformation efforts in organisational management respondents are not terribly happy with their performance. areas, including aligning the organisation around common The highest performing reported area, adding and/or objectives (79% of respondents say they exceed or meet improving service for line management and employees, expectations in this area) and responding to organisational achieves only 2.89 points on the 5-point scale. The changes (73% meet or exceed expectations in this area). performance band is fairly narrow, though, as the lowest Respondents say they most often exceed expectations in performing area, freeing internal HR staff to focus on strategic adding or improving service for issues, scores 2.62 points on the 5-point scale. best results in HR transformation line management and employees; organisational 22% of all respondents say they That said, organisations appear to be doing a reasonably good job of matching areas of importance (see the why management have exceeded expectations in that area. organisations are transforming section) to performance. Generally, organisations are performing best in the areas that On the other hand, respondents rate themselves worst at they deem important, with the single exception being the leveraging HR transformation to free internal HR staff to focus objective of freeing internal HR staff to focus on strategic on strategic issues (46% say the fall below expectations in this issues, which has the lowest reported performance of all key area) and benefiting from a new technology to empower line performance areas. management (42% say they fall below expectations in this area); 40% of respondents also say they are failing to access external sources of talent, expertise or technology. worst results in HR transformation freeing HR staff to focus on strategic issues[14] Conducted by SharedXpertise in association with ADP
  14. 14. research findings figure 13: performance versus expectations in key HR transformation performance areas, all respondents To align the organisation on common objectives 8% 71% 21% To respond to organisational changes 12% 61% 27% To add and/or improve service for line management and employees 22% 50% 29% To reduce cost or better manage the cost of internal processes 18% 51% 31% To facilitate reporting 17% 52% 31% To concentrate resources on core business 16% 53% 31% To access external sources of talent, expertise or technology 9% 51% 40% To benefit from a new technology to empower line management 10% 48% 42% To free internal HR staff to focus on strategic issues 11% 43% 46% exceeds meets falls below figure 14: importance of and performance in key HR transformation performance areas A B D C E F performance G H I importance Importance Performance Key Performance area (% of respondents (how organisations selecting as perform on a 5-point important) scale) A To add and/or improve service for line management and employees 60% 2.89 B To align the organisation on common objectives 59% 2.87 C To reduce cost or better manage the cost of internal processes 63% 2.86 D To facilitate reporting 29% 2.86 E To respond to organisational changes 59% 2.85 F To concentrate resources on core business 39% 2.83 G To access external sources of talent, expertise or technology 19% 2.66 H To benefit from a new technology to empower line management 38% 2.63 I To free internal HR staff to focus on strategic issues 59% 2.62Conducted by SharedXpertise in association with ADP [15]
  15. 15. research findings HR transformation outcomes, continued findings hurdles to HR transformation existing HR staff is virtually unchanged (62% in 2010; 63% in 2009). Underestimation of resources needed grew the most, Across all seven years we’ve been conducting this research, with 52% selecting this hurdle in 2010 versus 40% in 2009. the main hurdles to HR transformation have remained Difficulty in dealing with national/cultural differences grew by unchanged, with skills of existing HR staff at the top of the list 9 percentage points, from 20% in 2009 to 29% in 2010. every year. Other top hurdles continue to include Opposition from workers’ councils, never selected by many underestimation of resources needed (52% selected this respondents from the start, dropped the most, from 13% in hurdle), lack of adequate technology (41% selected this 2009 to 6% in 2010. Internal bureaucracy dropped by 6 hurdle), and internal bureaucracy (40% selected this hurdle). points, from 46% in 2009 to 40% in 2010. In 2009, we noted a reversal of a trend that we had seen in Regional differences in hurdles to HR transformation are fairly prior years: for the first time it appeared that some hurdles limited, with all three regions selecting the same two top were declining. In 2008 we noted that 7 of the 10 identified hurdles: skills of existing HR staff as the number one (55% of hurdles received higher responses between 2006 and 2008. In Americas respondents; 84% of Asia Pacific respondents; 64% 2009, all but one (opposition from worker’s councils – and of EMEA respondents), and underestimation of the resources that had only a very slight increase) experienced a decrease needed as number two (49% of Americas respondents; 56% of (meaning fewer respondents selected almost every hurdle in Asia Pacific respondents; 58% of EMEA respondents). 2009 versus what they noted in prior years). The 2010 results do not carry forward that trend; instead, we see a mixed bag, with some hurdles declining whilst others are increasing. Overall, the proportion of respondents who selected skills of[16] Conducted by SharedXpertise in association with ADP
  16. 16. research findings figure 15: importance of and performance in key HR transformation performance areas, all respondents, 2009 –2010 63% Skills of existing HR staff 62% 40% Underestimation of the resources needed 52% 40% Lack of adequate technology 41% 46% Internal bureaucracy 40% 36% Lack of employee and business line buy-in 36% 2009 20% Difficulty in dealing with national/cultural differences 29% 2010 23% Lack of senior management support 24% 17% Difficulty in building a justifiable business case 20% 15% Regulatory constraints 15% 13% Opposition from workers councils 6% % who select figure 16: importance of and performance in key HR transformation performance areas, all respondents, by region 55% Skills of existing HR staff 84% 64% 49% Underestimation of the resources needed 56% 58% 41% Lack of adequate technology 40% 41% 42% Internal bureaucracy 40% 39% 41% Lack of employee and business line buy-in 36% 32% 26% Difficulty in dealing with national/cultural differences 28% 30% 25% Lack of senior management support 16% 25% 19% Difficulty in building a justifiable business case 24% 22% 14% Regulatory constraints 20% 9% 7% Opposition from workers councils 4% 3% % who select Americas Asia Pacific EMEAConducted by SharedXpertise in association with ADP [17]
  17. 17. research findings outsourcing and shared services headlines • Across the last three years, the proportion of respondents who say they are currently outsourcing HR services or plan to outsource them has declined, from 65% (in 2008) to 54% (in 2010). • Whilst outsourcing remains more common in organisations in the Americas than in other regions, American organisations have experienced the greatest decline in percentage who say they are outsourcing or plan to outsource HR processes. • Although HR outsourcing is down as a whole, a few individual processes experienced an increase in outsourcing between 2009 and 2010; the highest increase is in assessment/performance appraisal, rising from 19% in 2009 to 26% of respondents in 2010 saying they are/are considering outsourcing. Payroll also saw an increase, from 80% in 2009 to 84% in 2010. • The greatest declines were in leave administration (52% in 2009; 34% in 2010) and recruitment/selection (47% in 2009; 37% in 2010). • Health and welfare benefits show the greatest variation amongst regions, with 82% of Asia Pacific organisations outsourcing/ considering outsourcing the process, versus Americas organisations (62% of respondents) and EMEA orgnisations (50% of respondents). • Nearly three quarters (73%) of all respondents say they develop and/or use their own process to identify and select their provider(s); the last three years has seen a decline in the use of consultants or sourcing advisors, from 49% in 2008 to 36% in 2010. • The issuing of both requests for information (RFIs) and request for proposals (RFPs) is down in 2010 over 2009 (RFIs: 65% in 2009 to 51% in 2010; RFPs: 76% in 2009 to 65% in 2010). • The top outsourcing provider selection criterion is proven ability to meet service levels, followed by functional coverage and expertise, then price followed by multi-country capabilities. Amongst the three regions, all rank the same criteria in the top three, although in different orders. • Organisations most often budget less than US$1M annually for HR outsourcing (41% of all respondents), followed by US$1M – US$10M (30% of all respondents). • Analysis of year-over-year HR outsourcing budgets indicates growth at both ends of the budget scale, with an expanding proportion budgeting either less than US$1M or more than US$11M. • Nearly half of all respondents (48%) say they expect to increase HR outsourcing budgets over the next three years, most often by up to 24%. That proportion of respondents shows an increase over 2009, when it was 42%, but still does not match 2008’s 55%. • In spite of the fact that a smaller percentage say they are currently outsourcing or anticipate outsourcing HR services, over the last two years we have seen a significant decline in the proportion of respondents who say they anticipate their HR outsourcing budgets to decrease, coupled with a significant increase in the proportion of organisations that anticipate their budgets to stay the same. • Just about two-thirds of all respondents (66%) say they manage one or more HR process(es) through a shared services model, a proportion that is essentially unchanged from 2009’s 68%.[18] Conducted by SharedXpertise in association with ADP
  18. 18. research findings outsourcing and shared services, continued findings outsourcing practices • The Americas has seen a precipitous and steady decline from 83% saying they are/are considering outsourcing in Across the past three years, the proportion of respondents 2008 to 60% in 2010; who say they are currently outsourcing or considering outsourcing HR processes has slowly declined, from 65% in • Asia Pacific experienced a sharp increase in 2009 over 2008 to 59% in 2009, and 54% in 2010. These declines in 2008, from 33% to 56% outsourcing/considering outsourcing do not appear to be impacted by organisation outsourcing, but then a fairly steep decline to 42% in size; various employee sizes experienced growth whilst others 2010; experienced decline, in no clear pattern. • EMEA has seen a steady but very slow decline from 60% HR outsourcing remains more common in the Americas (60% saying they are/are considering outsourcing in 2008 to of respondents say they outsource or plan to outsource HR 56% in 2009, and 54% in 2010. processes) than in either EMEA (54% of respondents) or Asia Pacific (42% of all respondents). However, HR outsourcing has predominantly experienced a decline across all regions in recent years: figure 17: outsourcing declining, all respondents and by region year all americas asia pacific emea 2008 % outsourcing HR processes 65% 83% 33% 60% 2009 % outsourcing HR processes 59% 64% 56% 56% 2010 % outsourcing HR processes 54% 60% 42% 54%Conducted by SharedXpertise in association with ADP [19]
  19. 19. research findings outsourcing and shared services, continued findings outsourcing practices, continued provider selection Transactional processes are more likely to be outsourced, internal and external resources whilst strategic processes are more often retained in house, a Nearly three quarters (73%) of all respondents say they finding that has been consistent across all years we have develop and/or use your own process to identify and select conducted this research. With HR outsourcing as a whole their provider(s), down from 2009’s 87%. (It appears now that down, a few individual processes experienced an increase in 2009, during which there was a significant jump over 2008’s outsourcing between 2009 and 2010. The highest increase in 70% figure, may have been an anomaly.)These numbers do outsourcing is in assessment/performance appraisal; although not vary significantly by region, although organisations in still uncommon, it rose from 19% in 2009 to 26% of EMEA are more likely to develop and/or use your own process respondents in 2010 saying they are/are considering to identify and select their provider(s) than are their outsourcing. Payroll, always the most commonly outsourced counterparts in other regions (78% for EMEA; 75% for Asia HR process, also saw an increase, from 80% in 2009 to 84% in Pacific; 70% for Americas). 2010. The last three years has seen a decline in the use of Leave administration saw the greatest decline, falling from consultants or sourcing advisors. A significantly smaller 52% in 2009 to 34% in 2010. Recruitment/selection also saw a percentage of respondents in 2010 say they engage a decline, down from 47% in 2009 from 37% in 2010. consultant or sourcing advisor than did in 2009 – down to Organisations in all regions are most likely to outsource/ 36% from 51% in 2009 (and a nearly equal 49% in 2008). consider outsourcing payroll, and least likely to outsource/ There is very little difference across regions in the use of consider outsourcing the entire HR function. Health and consultants and sourcing advisors; 38% of Americas welfare benefits show the greatest variation amongst regions, respondents, 42% of Asia Pacific respondents, and 35% of with 82% of Asia Pacific organisations outsourcing/ EMEA respondents say they use consultants and sourcing considering outsourcing the process, versus Americas advisors. organisations (62% of respondents) and EMEA orgnisations RFIs and RFPs (50% of respondents). EMEA organisations are more likely to outsource/consider outsourcing expatriate and relocation Just over half of companies (51%) issue requests for administration (62% of respondents) than are their information (RFIs) as a part of their provider selection counterparts in the other regions (55% for Asia Pacific process, down from 2009’s 65% and just about the same as organisations; 35% for Americas organisations). And, Asia 2008. Organisations in EMEA and the Americas are more likely Pacific respondents are more likely to outsource/consider to issue RFIs (56% and 51% respectively) than are their Asia outsourcing performance appraisal (42% of respondents) than Pacific counterparts (42% of respondents). are their colleagues in EMEA (34% of respondents) and the As we have found over time, the issuing of requests for Americas (14% of respondents). proposals (RFPs) is more common than the issuing of RFIs, with 65% of all respondents saying they do so. Here, too, the proportion is down from 2009, when 76% of all respondents indicated they issued RFPs. Again here, organisations in EMEA and the Americas are more likely to issue RFIs (68% of respondents from each region) than are their Asia Pacific counterparts (42% of respondents). figure 18: provider selection trends organisations that develop/use their year own process to organisations that identify/select engage consultants/ organisations that organisations that provider(s) advisors issue RFIs issue RFPs 2009 87% 51% 65% 76% 2010 73% 36% 51% 65%[20] Conducted by SharedXpertise in association with ADP
  20. 20. research findings figure 19: outsourcing practices by process, 2008 – 2010 Payroll 61% 23% Pensions administration 55% 13% Health & welfare benefits 47% 13% HRIS 36% 15% Expatriate and relocation 30% 18% Stock options administration 30% 12% Training/development 14% 23% Recruitment/selection 22% 15% Currently Outsource Leave 24% 10% Plan to Assessment/performance appraisal 15% 11% Outsource Compensation 10% 10% Career & succession planning 7% 6% Employee communications 4% 9% Entire HR function 5% 2% 0% 20% 40% 60% 80% 100% % who select figure 20: currently outsourcing/planning to outsource by process, by region Payroll Pensions administration Health & welfare benefits HRIS Expatriate and relocation administration Stock options administration Recruitment/selection Americas Training/development Asia Pacific Leave EMEA Assessment/performance appraisal Compensation Employee communications Career & succession planning Entire HR function 0% 20% 40% 60% 80% 100% % who selectConducted by SharedXpertise in association with ADP [21]

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