2011 – 2012 HR Service Delivery Survey (Towers Watson)


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Nearly 450 organizations participated in the 14th annual Towers Watson 2011 – 2012 HR Service Delivery and Technology Survey. The results show respondents are well positioned to take advantage of enhanced talent management strategies, including integrated SaaS-based solutions, HR shared services organizations (HRSSOs) and new outsourcing opportunities.

The 17th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care tracks employers' strategies and practices, and the results of their efforts to provide and manage health benefits for their workforce. This report identifies the actions of high-performing companies, as well as current trends in the health care benefit programs of U.S. employers with at least 1,000 employees. Respondents were also asked about specific implications for their health care benefit programs attributed to the health care reform Patient Protection and Affordable Care Act (PPACA).

Visit Towers Watson at: http://www.towerswatson.com

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2011 – 2012 HR Service Delivery Survey (Towers Watson)

  1. 1. New Horizons, No Boundaries An Expansive Landscape of HR Service Delivery Opportunities2011 – 2012 HR Service Delivery and Technology Research Report
  2. 2. “We are seeing a shift from organizations throwing old technology at problems to looking at flexible new technologies that leverage self-service and shared services functions, deliver more streamlined capabilities and robust analytics, and orga- nize existing systems around enhancing HR service delivery more broadly.”
  3. 3. New Horizons, No Boundaries: An ExpansiveLandscape of HR Service Delivery Opportunities2011 – 2012 HR Service Delivery and Technology Research Report Table of Contents Executive Summary and Key Findings 2 About the Study 3 HR Initiatives and Issues for 2011 – 2012 5 Talent Management in Motion 7 Self-Service Overview 9 Service Delivery Strategies and Tools 11 SaaS: Steady Growth and Acceptance 13 HRSSOs: A Success Story 14 Web 2.0 Tools 15 Global Highlights 16 What’s Ahead for HR: Agility 18 Featured Figures Figure 1. Top HR service delivery issues 5 Figure 2. HR initiatives undertaken in last 18 months 6 Figure 9. Planned new HRMS 12 Figure 11. Is your organization using SaaS to support HR service delivery? 13 Figure 14. HR shared services: Extent to which results met expectations 15 2011 – 2012 HR Service Delivery and Technology Research Report 1
  4. 4. Executive Summary The landscape of HR service delivery and technology Indeed, talent management technology has never has proven both resilient and rewarding over the been more important in HR’s arsenal of tools. New past decade. Once a highly tactical, transactional integrated systems are now capable of providing consideration — a delivery afterthought once excellent support for performance management, workforce decisions were made — technology has learning and career development, and succession evolved to become a critical strategic support for planning, among many other areas. HR organizations HR today. It’s the engine that drives many business are identifying and implementing technology strategies, enables workforce processes and approaches that link together to serve the broader provides the backbone for delivering programs concerns of the business — people, growth and efficiently and effectively. globalization among them. As organizations have awoken to this reality — and discovered new and powerful ways to deliver HR “Once-discretionary HR services to managers and employees alike — the technology itself has likewise continued to evolve in technology spending is positive and meaningful ways. The result today is an ideal combination of organizational receptiveness now a needed-to-play to technology and advancements that make the expenditure and far less technology work more powerfully than ever before. Add to this a favorable external environment — subject to reduction when economic tides have risen somewhat, and cost the economy turns.” issues, at least for now, have ebbed — and opportunities to further increase the value of HR Also, approaching HR issues with a broader and technology have expanded. No longer pressured more sophisticated perspective delivers improved to govern service delivery decisions by cost alone, results for both HR and business. In terms of HR organizations can select from a broader, service delivery and technology, this means more integrated set of options now available for integration — systems whose components can talk streamlining and improving the effectiveness and to one another and whose whole is greater than the efficiency of HR. sum of their parts. What are organizations doing with these advances? We are seeing a shift from organizations throwing For starters, they’re improving their approaches to old technology at problems to looking at flexible talent and performance management. Regardless new technologies that leverage self-service and of economic conditions, talent is here to stay as an shared services functions, deliver more streamlined organizing framework for growth in the years ahead. capabilities and robust analytics, and organize After five years as the top HR service delivery issue existing systems around enhancing HR service in our survey, we can clearly see that managing delivery more broadly. In essence, it’s about taking talent remains critical to business success. Now a holistic look at the organization’s approach that HR technology offers increasingly effective, to service delivery and technology, and making innovative systems for doing so — and related decisions and investments that support loftier budgets are steadily increasing — companies can goals. When examined together, previously disparate explore new methods, expand tactics, and improve approaches and systems can provide exponentially overall results from their focus and investments in greater power. this area.2 towerswatson.com
  5. 5. About the Study Towers Watson’s 2011 survey of HR service Industry delivery, our 14th, details the plans, tools, 0% 5% 10% 15% 20% 25% 0% 5% 10% 15% 20% 25% tactics and technologies of 444 organizations Financial Services, including Insurance Food and Beverage across many industries. This year’s survey is 18 4 more global in scope than our past surveys: Of Health Care, including Pharmaceuticals Retail responding organizations, 59% are headquar- 15 4 tered in the United States, 15% in Europe, 13% Manufacturing, including Aerospace and Professional and Business Services in Asia Pacific, 11% in Canada and 2% in Africa. Defense, Automotive and Transportation 3 Equipment Property and Construction More than half (55%) are global or multinational 15 3 companies. High Tech, including Semiconductor Transportation Services Key industries include financial services (18%, 10 3 including insurance), health care (15%, including Utilities and Energy Chemical, Oil and Gas 7 2 pharmaceuticals), manufacturing (15%, including Public Sector and Nonpro t Other aerospace and defense, automotive, and transpor- 6 4 tation equipment), high tech (10%, including Media and Communications semiconductor), and utilities and energy (7%). 5 Fifty-seven percent of survey respondents n = 444 represent organizations of more than 5,000 employees. Twenty-two percent of responding Employee population companies have employee populations greater than 20,000; 35% are of medium size (5,000 to 20,000 employees), and 43% have fewer 22% than 5,000 employees. 22% Large — greater 43% than 20,000 For more information on this report, or to 35% Medium — learn about participating for 2012, please visit 5,000 to 20,000 towerswatson.com/hrsdsurvey. 43% Small — fewer 35% than 5,000 n = 424What’s driving these shifts? There are several thoughtful in ensuring that technology resourcesfactors. As the recession abated, HR organizations stay sound. For the short term, this is evidenced byredirected their primary focus from cost efficiency to a wave of planned human resource managementstrategy. Accordingly, the top initiatives undertaken system (HRMS) upgrades and new systemby HR over the last 18 months — reengineering key implementations for the next year.processes, refocusing the role of HR business What does the future hold? We can see that acrosspartners, and implementing and leveraging self- the new technology landscape, organizations haveservice — have supported the larger goal of enabling more and better choices in service delivery. AtHR to rethink and redesign its own role, ideally the same time, improved, integrated systems andbringing greater strategic value to the business. processes are helping to enable the transition fromAt the same time, once-discretionary HR technology basic manager self-service transactions to morespending is now a needed-to-play expenditure and complex, cross-domain functions. Together, thesefar less subject to reduction when the economy initiatives will improve the business and propel HR’sturns. Organizations now rely heavily on the benefits role toward more strategic support for the business.that technology provides and are much more 2011 – 2012 HR Service Delivery and Technology Research Report 3
  6. 6. Key Findings one integrated system. One in five respondents (20%) implemented a new HRMS in the last This report details the results of this year’s HR 18 months, and another 20% cite upgrading an Service Delivery Survey — our 14th. Key findings existing HRMS as a top service delivery goal include: this year. • While the top HR service delivery issues — talent • Within a dynamic HR technology market, software- and performance systems (41%), streamlining as-a-service (SaaS) is on an upward trend. More processes and systems (27%), becoming than half (54%) of the organizations surveyed more involved in strategic business issues are either using or planning to implement a (25%) — have endured, this year, organizations SaaS solution. Traditionally, these were siloed, are looking at a rich mix of ways to address best-of-breed solutions. Now Workday, the first them: implementing a new HRMS, leveraging comprehensive SaaS system, along with SAP lead, self-service, outsourcing, standardizing global the other HRMS vendors by a widening margin. data architecture, building shared services With nearly a quarter of respondents that plan organizations and refocusing the role of HR to implement a new HRMS still evaluating new business partners. options, we may be witnessing a significant shift • Organizations have shifted from a focus on cost toward newer technologies. reduction to putting more strategic goals first • A majority of respondents (59%) use internal once again. A majority (62%) have undertaken or external HR shared services organizations initiatives to reengineer key HR processes; less (HRSSOs), and of those companies changing than half (43%) are working to redefine the roles their current HR structure, 45% will be moving to of HR business partners, and more than a third a shared services environment. Organizations for (37%) are implementing new or leveraging existing which long-term cost was the primary driver for self-service functions. Seen as a whole, these implementing an HRSSO most frequently report initiatives work together to enable HR to rethink savings between 10% and 20% — with about a its own role in providing greater value to the third more reporting 20% to 40% savings. Fully business. 60% realized these savings within two years of • Technology spending is holding steady or on the implementing their HRSSO. rise for most organizations, and new technologies These issues are explored in more detail in the are available, including more agile solutions — following sections of the report. some flexible enough to fold all HR processes into4 towerswatson.com
  7. 7. HR Initiatives and Issues for 2011 – 2012In a year replete with choices and opportunities, Figure 1. Top HR service delivery issues (top three frequency)as well as greater means to act upon them, talent 0% 10% 20% 30% 40% 50%and performance management systems remaintop of mind for four in 10 survey respondents. Talent/performance systemsAs technologies have become more flexible, a 20 13 8 41%significant number of organizations have engaged in Upgrade HRMSsystem upgrades, implemented a new HRMS or are 13 3 4 20%currently evaluating new HRMS options. New HRMSOrganizations’ involvement in strategic, business- 10 2 1 13%driven issues, and streamlining processes and More involvement in strategic business-driven issuessystems, reflect a greater focus this year on 8 8 9 25%reporting and analytics (19%, up from 6% in 2010), Streamline processes/systemssystem integration (14%, up from 11% last year) 7 9 11 27%and accuracy of data (13%, up from 9% last year) Recruiting/staf ng services/systems(Figure 1). 7 9 6 22%Related to this, companies are employing a variety Costof strategies to obtain standardized, timely global 5 2 4 11%data — from data warehouses to new technology Trainingsolutions offering more cohesive processes. These 4 6 5 15%initiatives are aimed at increasing HR’s strategic Systems integrationvalue to the business through providing more solid 4 6 4 14%information for decision making. Accuracy of dataCost, which peaked as a priority in 2009, has 4 5 4 13%continued to decline in importance; only 11% of Compensation/bene t services/systemsrespondents, worldwide listed it in their top three 3 8 7 18%concerns. More organizations report that HR Reporting/analyticstechnology spending has increased rather thandecreased and has become a foundational element 3 7 9 19%of HR efficiency and effectiveness. Payroll/time management services/systems 3 6 3 12% Manager self-service 3 5 5 13% De ne human capital metrics and dashboards 3 3 8 14% Employee self-service 1 4 6 11% HR website/usability 1 2 5 8% First Second Third n = 441 2011 – 2012 HR Service Delivery and Technology Research Report 5
  8. 8. Accordingly, with the cost pressures of the recession abating, HR organizations have been able to look “With the cost pressures of the anew at their own priorities. In the last 18 months, recession abating, HR organi- organizations have focused on initiatives aimed at reengineering key HR processes, refocusing the role zations have been able to look of the HR business partners, and implementing and leveraging self-service technologies (Figure 2). anew at their own priorities.” Shared services is also seeing growth. More than half (54%) of the companies we surveyed use Finally, among companies that indicated cost internal shared services organizations, and these savings as a top reason to create an HRSSO, the are being implemented quickly. The majority of most frequent ongoing cost-saving result reported implementations were completed within 24 months was a significant 10% to 20%, while nearly a third (53% within 13 months). of respondents reported savings of 20% to 40%. It must be noted, of course, that these successes In addition to rapid implementation, many were not achieved through technology alone but companies that instituted an HRSSO created together with effective self-service processes and substantial improvements in service quality over the excellent change management. short term. Respondents that implemented HRSSOs reported improvements in the timeliness, accuracy and meaningfulness of workforce information that met or exceeded their expectations. Figure 2. HR initiatives undertaken in last 18 months 0% 20% 40% 60% 80% 100% Reengineered key HR processes 62 Refocused the role of the HR business partners 43 Implemented and leveraged self-service 37 Outsourced activities previously handled internally 21 Implemented a new HRMS 20 Implemented a shared services model 19 Sought to increase alignment in the delivery of HR with other selling, general and administrative functions 17 Developed a standard global data architecture for HR data 16 Brought back services previously outsourced to a vendor 7 None of the above 14 n = 4386 towerswatson.com
  9. 9. Talent Management in MotionOrganizations’ focus on talent management is borne Since last year’s survey, HR technology effectivenessout by their planned investments. Technology spending for some of the more complex talent managementis up again in 2011 — with 34% of survey respondents processes has increased markedly. Nearlyreporting higher spending for technology, a solid three-quarters (73%) of HR executives who use52% maintaining about the same levels as in 2010 onboarding technology rated it as effective orand only 14% decreasing (Figure 3). De-emphasis of very effective. Other technologies with improvedcost as an issue, along with the availability of new effectiveness scores include workforce planningtechnologies and upgrades, is driving significant and analytics, succession planning, and careeropportunities ahead. development and planning (Figure 4, page 8).Figure 3. HR technology spending vs. prior years60% 55 5450% 5240% 4330% 2520% 22 22 18 1510% 11 10 10 11 12 7 9 8 6 4 6 0% Much lower Lower About the same Higher Much higher ( > 20% reduction) ( < 20% reduction) ( < 20% increase) ( > 20% increase) 2008 Survey (n = 382) 2009 Survey (n = 331) 2010 Survey (n = 453) 2011 Survey (n = 437) 2011 – 2012 HR Service Delivery and Technology Research Report 7
  10. 10. Figure 4. Effectiveness of technology in helping meet talent management The complexity of succession planning is furtherobjectives evidenced by the fact that only about a third of0% 20% 40% 60% 80% 100% responding organizations have a clearly articulated succession plan (34%); significantly, 57% areCompensation - market analysis (n = 177) actively working to develop one. Change in these 31 53 12 3 1 areas is also indicated by companies implementingCompensation - design and survey management (n = 161) or exploring new technology vendors for performance 30 52 14 4 management (24%), succession planning (22%),Compensation - base pay (n = 249) onboarding (25%), career development (22%) and 33 46 12 9 workforce planning (21%).Compensation - global grading (n = 121) It is important to note that HR is shifting away from 26 53 16 4 1 relying on basic, siloed transactional functions andRecruiting/staf ng - external (n = 285) is moving toward using cross-domain tools and 25 50 10 14 1 capabilities such as those previously mentioned. HR is beginning to deliver a broader, more integratedCompensation - variable pay/bonus (n = 210) experience for employees and managers as it takes 25 49 17 81 a more holistic and connected view of various talentTotal rewards statements (n = 156) management programs. 32 41 20 52Compensation - sales/incentive (n = 149) 27 46 19 71Onboarding/joiner administration (n = 166) 25 48 14 11 2Performance management (n = 241) 24 49 15 10 2Recruiting/staf ng - internal (n = 288) 25 47 12 14 2Learning management and training (n = 249) 17 53 18 9 3Workforce planning/workforce analytics (n = 134) 18 45 23 12 2Succession planning (n = 129) 16 46 25 11 2Career development/planning (n = 135) 16 45 22 16 1 Very Somewhat Neither Somewhat Not at all effective effective effective nor ineffective effective ineffective8 towerswatson.com
  11. 11. “De-emphasis of cost as an Figure 5. Measurement plans for human capital metrics included on HR, talent management or balanced scorecard issue, along with the availabil- 0% 20% 40% 60% 80% 100% ity of new technologies and Retention (n = 366) upgrades, is driving significant Workforce demographics (n = 361) 81 7 3 9 changes in HR.” 72 9 6 13 Diversity (n = 362) 70 9 6 13 Another of the top service delivery issues of 2010 Engagement (n = 356) was defining human capital metrics (HCM). This year, 61 11 8 20 expansion of measurement plans ranging from 10% to Attraction (n = 362) 31% is planned for all of the areas we asked about 57 13 8 22 in our HCM data gathering. The greatest focus is Business performance (n = 362) currently on increasing measurement of leadership 50 9 10 31 and succession, development and manager performance (Figure 5). The real challenge, however, Development (n = 359) 47 15 14 24 is to improve the effectiveness of these metrics in helping meet talent management objectives. Leadership and succession (n = 351) 42 15 16 27 Self-Service Overview HR function ef ciency (n = 354) 42 15 11 32 With the availability of sophisticated new tech- nologies, organizations are adding more complex Mobility (n = 346) 41 12 12 35 self-service capabilities over the next 18 months, including onboarding new employees, succession- Manager performance (n = 346) planning activities, searching the existing population 37 12 16 35 for candidates, a scorecard of key human capital Customer performance (n = 352) and business performance, and workforce planning. 35 5 5 55 Employee and/or manager self-service (ESS/MSS) Merger integration (n = 337) capabilities are in place at nearly eight in 10 (79%) 20 7 9 64 of the U.S. companies surveyed (Figure 6). The other Measured now During 2011 In 2012 Beyond 2012 or no plans regions (Canada, Europe, Middle East/Africa and Asia Pacific) fall into a range from slightly above to slightly below half of companies providing MSS Figure 6. Availability of employee and/or manager self-service and ESS. However, nearly three-quarters of these by country/region respondents plan to provide self-service capability 0% 20% 40% 60% 80% 100% by 2012. United States (n = 288) 79 15 6 Canada (n = 167) 52 25 23 Europe (n = 181) 50 24 26 Middle East/Africa (n = 103) 48 24 28 Asia Paci c (n = 183) 46 24 30 Latin America (n = 113) 42 23 35 Have self-service Have plans to implement No plans to provide in place now self-service by the end of 2012 self-service 2011 – 2012 HR Service Delivery and Technology Research Report 9
  12. 12. In the United States, while ESS personal data tools We are seeing a growth trend in online offboarding such as those for viewing pay stubs, changing (or “leaver”) administration as organizations seek to personal data, and viewing vacation/sick time usage leverage their successes in other areas to further and balances are well established, we are seeing reduce administrative burdens. Our experience plans for substantial (18% to 20%) growth in 2011 shows that even as organizations deploy self-service and 2012 for setting up and making changes to technology at a fairly rapid pace, employees and line direct deposit, viewing total compensation and managers are interested in an even more aggressive benefit statements, and updating education/ pace for receiving these capabilities and the ability certifications (Figure 7). to access and control their own data. Meanwhile, 77% of respondents report that the HRFigure 7. Talent management self-service tools currently provided generalist and specialist transactional workload hasto managers in the United States declined — without affecting employee workloads0% 20% 40% 60% 80% 100% — and 69% of respondents reported HR service center and administration workload reductions as aReview/update employee performance (n = 243) result of ESS tools. 67 7 11 15 Results are similarly promising for MSS experiences.View applicant resumes (n = 241) Less than three-quarters (72%) of organizations 62 8 6 24 report less work for HR generalists, and two-thirdsInitiate/approve job requisitions (n = 239) report less work for the HR service center — with 61 8 7 24 six in 10 (61%) reporting less work or no change inPlan annual merit/base salary (n = 239) managers’ workload. 59 5 13 23 Across all countries and regions, more than three-View employee data history (n = 239) quarters (81%) of survey respondents said initiatives 56 9 10 25 undertaken in the last 18 months to implementApprove training classes for employees (n = 237) and leverage self-service had met or exceeded 55 4 8 33 expectations, with more than half (55%) exceeding expectations.Track status of applicants (n = 240) 53 10 9 28Post jobs (n = 238) 50 5 6 39Plan annual incentive pay (n = 240) 47 5 11 37Extend/make offers (n = 234) 34 9 8 49Onboard new employees (n = 233) 31 10 12 47Perform succession-planning activities (n = 235) 23 14 19 44Search existing employee population for suitable candidates (n = 233) 21 9 15 55View scorecard of key human capital and business performance metrics (n = 231) 16 13 13 58Workforce planning (n = 231) 9 6 18 67 In place now During 2011 In 2012 Beyond 2012 or no plans10 towerswatson.com
  13. 13. Service Delivery Strategies and ToolsSeveral service delivery issues have grown in Figure 8. Do you anticipate changing your current HR structureimportance since our last survey — including shared in 2011 or 2012?services, outsourcing, system integration andcore HRMS — as HR looks for new opportunitiesand methods to support business strategies and 28%integrate processes and information. 28% Yes 72% No changesMore than one-quarter of respondents (28%) anticipatedreported they anticipate changing their current HR n = 436structure in 2011 or 2012. Under half (45%) say 72%they will be moving to a shared services environmentsupported by HR centers of excellence. An additional34% are planning to either increase their use ofoutsourcing or move to a single HR function for their 0% 20% 40% 60% 80% 100%entire organization (Figure 8). Yes, we will be moving to a Shared Services environment with HR Centers of ExcellenceAbout one-fifth of HR executives reported currently and HR Businessworking on outsourcing activities previously handled 45internally (21%), implementing a new HRMS (20%) or Yes, we will be moving to a single HR organization for the entire organizationshared services model (19%), or seeking to increase 17alignment of HR delivery with business functions Yes, we will be outsourcing functions(17%). 17 Yes, we will be bringing outsourced functions back in-house 7 Yes, we will be separating HR, allowing HR to be run by business unit or geography 3 Yes, we will be moving away from a Shared Services environment 2 Yes, other* 31 n = 121 * Frequent entries to “Yes, other” included undergoing analysis on current HR structure and bringing additional services into their current Shared Service Organization. 2011 – 2012 HR Service Delivery and Technology Research Report 11
  14. 14. Figure 9. Planned new HRMS (for those implementing a new HRMS) A majority (59%) of our respondents now utilize an0% 10% 20% 30% 40% 50% internal or external HRSSO — 40% have internal centers; 14% use both an internal service centerSAP and an external service center provider, and 5% use 22 only an external service center provider. (For furtherWorkday details, see HRSSOs: A Success Story, page 14.) 18Oracle (legacy PeopleSoft) Evidence of the availability of new technology 9 solutions and HR’s momentum in addressingOracle (legacy Oracle HRMS) perennial talent and performance system concerns 6 can be seen in the wave of HRMS upgrades.Lawson For those on 8.9 or an earlier version of Legacy 6 PeopleSoft, close to half (44%) are movingMicrosoft Great Plains aggressively in 2011 to be as current as possible 4 on PeopleSoft by upgrading to 9.1 rather thanADP/EmployEase continuing to hold out for the long-awaited Fusion 3 release.Ultimate Software/Ultipro Streamlining business processes, deploying MSS, 3 utilizing additional modules, adding ESS functionalityNuView and deploying reporting analytics are the top HRMS1 application objectives for 2011, closely followedWill be provided by an HRO vendor by integrating HR modules, and upgrading and0 implementing a new HRMS. For those organizationsCurrently evaluating the new HRMS options implementing a new HRMS, the top choices are SAP 23 and Workday, an integrated SaaS-based system —Other HRMS and the gap between these two and the rest of the 5 vendor field is widening.n = 71Figure 10. Main HRMS application objectives for 20110% 10% 20% 30% 40% 50%Streamline business processes 39Deploy additional manager self-service functionality 36Utilize additional HR modules 35Deploy additional employee self-service functionality 35Deploy reporting analytics/KPIs, and/or strategic reporting functionality 31Integrate HR modules into one system/platform 24Upgrade to a new version 24Implement a new HRMS 17Create a global data warehouse 13Consolidate multiple HR systems globally 12Other 11n = 42512 towerswatson.com
  15. 15. SaaS: Steady Growth and Acceptance Figure 11. Is your organization using SaaS to support HR service delivery? 0% 10% 20% 30% 40% 50%The HR technology market of the last few yearsfunctioned as a catalyst for readdressing HR Yes, we are using SaaS extensively for HRprocesses — organizations often were forced to 9change by their choice of technology solution (or Yes, we use SaaS somewhat for HRvendor). But the increased configurability of SaaS 28systems has shown that older technologies have Not yet, but we are implementing a SaaS-based solutionbeen too rigid to provide the transactional capability 5and the strategic information needed for accurate No, but we plan to use SaaS in the futurereporting and workforce analytics. 12Starting with a focus on rethinking their data No, and we have no plans to use SaaSstructures and processes, organizations can now 46configure a SaaS solution to provide that information n = 396— an appealing opportunity, especially when pairedwith a quicker implementation of an HR-focusedSaaS system, rather than a drawn-out, heavilyIT-dependent and relatively costly update cycle.More than half (54%) of survey respondentsare currently using, implementing or planning a Sign of the Times: SaaS Has ArrivedSaaS-based solution. Quick implementation, better When SaaS solutions first arrived on the scene several years ago, theyfunctionality and ease of ongoing management were niche tools looking to fit into siloed HR system designs. But SaaSlead the list of benefits reported by users. has never stood still — it has continued to develop, and its acceptance,Respondents currently using SaaS also cite as by both the HR function and IT organizations, has grown.primary advantages lower and more predictableongoing and up-front costs, and no need to upgrade. For the last two years, Workday, a broadly integrated SaaS solution, hasRespondents that have not used SaaS, and don’t been one of the top two HR systems of choice for those companiesplan to, list inability to customize, lack of data buying new HR systems (Figure 9, page 12).ownership and data security as their perceived Workday’s ascendance is another indication that HR and IT haveconcerns. reached a comfort level with new technologies, including SaaS solutions. Organizations that are ready and willing to take advantage of the expanded range of HR capabilities and enhanced user experience offered by new technologies are moving toward the HR function of the future to help their businesses succeed. 2011 – 2012 HR Service Delivery and Technology Research Report 13
  16. 16. Figure 12. The most pressing/important issues for your HRSSO in 2011 HRSSOs: A Success Story0% 20% 40% 60% 80% More than half of survey respondents (54%)Ef ciency improvement currently have an internal HRSSO, and 45% of 59 organizations planning to change their currentQuality of service/user experience HR structure in 2011 or 2012 will be moving to a 38 shared services environment with HR centers of excellence and HR business partners.Accuracy of responses and transactions 30 Companies with an existing HRSSO are expandingExpanded service offerings services, leveraging even beyond HR, and taking on 29 more complicated processes such as relocation,Self-service implementation and/or promotion employee relations and expatriate services. The 29 most pressing HRSSO issues for 2011 include improving efficiency, the quality of service and theExpansion of shared services footprint 22 user experience, and the accuracy of responses and transactions (Figure 12).Building or improving the knowledgebase technology 22 More than half (53%) of HRSSO implementationsCost reduction were completed in less than 13 months. About one- 15 third were phased in by both population and service, but nearly as many (30%) were rolled out using theTraining of HRSSO staff “big bang” approach: to all services and populations 15 at once.Upgrade of HRSSO technologies 15 For organizations that cited cost savings as either a factor or the main reason for moving to sharedIntegration of HRSSO technologies 9 services, the majority of such initiatives (even for smaller companies with fewer than 5,000Consistency of user experience employees) produced cost savings of 10% to 20% 7 within 24 months — and more than a quarterImplementing Enterprise 2.0 tools (27%) reported 20% to 40% savings — largely due0 to streamlined processes and better-managedn = 69 resources. Respondents that did not achieve cost savings attributed the failure largely to poor change management resulting in lack of utilization by end users.Figure 13. Companies that indicated “ongoing longer-term cost savings” as a top reason to create an HRSSO Period of time to realize cost savings Actual Cost Savings 50% Targeted % 10% – 21% – 31% – No 47 of Cost Savings None <10% 20% 30% 40% >40% response 40% None (n = 3) 1 0 2 0 0 0 0 30% <10% (n = 4) 0 4 0 0 0 0 0 30 10% – 20% (n = 18) 0 2 12 4 0 0 0 20% 21% – 30% (n = 6) 0 0 0 5 0 0 1 10% 13 31% – 40% (n = 3) 0 0 0 0 2 1 0 7 >40% (n = 1) 0 0 0 0 1 0 0 0% 3 Within 13 – 24 25 – 36 37 – 48 Over Total (n = 35) 1 6 14 9 3 1 1 12 months months months months 48 months Above target At target Below target n = 3014 towerswatson.com
  17. 17. Overall, expectations for HRSSOs have been met Figure 14. HR shared services: Extent to which results met expectationsor exceeded by wide margins (60% to 100%). 0% 20% 40% 60% 80% 100%The greatest success has been substantialimprovements in the timeliness, accuracy and Substantial improvements in the timeliness, accuracy and meaningfulnessmeaningfulness of workforce information. of workforce information (n = 9) 44 12 44More than six in 10 (63%) respondents with a To drive globalization of HR service delivery (n = 7)shared services function measure customer 43 43 14satisfaction via a regular survey or in other ways. Substantial improvements in HR service quality (n = 29)For those organizations measuring customer 38 24 21 7 10satisfaction, their general perception — basedon case management surveys, live feedback and To standardize HR processes throughout the business (n = 26)end-of-call surveys — is that 98% of customers had 35 15 27 19 4their expectations met or exceeded, with 31% well As part of a move to a broader corporate shared services function (n = 6)above expectation (Figure 14). As shared services 33 17 17 33organizations evolve, we look forward to seeing the Ongoing, longer-term operational cost savings (n = 39)results of our next biennial HRSSO survey. 23 23 33 13 3 5 Substantial productivity improvements in HR (n = 14)Web 2.0 Tools 21 21 29 14 15HR organizations say they are using Web 2.0 tools To eliminate the distraction of administrative and transactional HR work to focusmost frequently for recruiting, HR communication, on more strategic work (n = 40)training, and affinity and alumni groups. Growth 20 22 32 20 3 3in the use of these tools has been slow, and To facilitate future growth (e.g., through mergers and acquisitions) (n = 5)respondents say this is because use of these tools 20 20 20 40is not a priority, HR is too busy to explore or consider To change the behaviors of HR (n = 20)them, or the business case for them is weak. 15 10 35 25 5 10Based on recent Towers Watson research, recruiters As part of a broader HR transformation effort (n = 22)ranked LinkedIn as the top source for quality 14 27 27 14 9 9applicants — two to six times better than traditionaljob boards. Savvy HR organizations are tapping into Well above expectations Slightly above expectations Met expectationsthis source by developing proactive recruiting plans. Slightly below expectations Well below expectations Too soon to tellWe will be watching this trend in surveys to come. Figure 15. Does your organization currently use Web 2.0 tools for HR purposes? 8% 37% 37% Yes 55% No 8% Don’t know n = 404 55% 2011 – 2012 HR Service Delivery and Technology Research Report 15
  18. 18. Global Highlights Globalization is driving an increasingly standardized The trend toward SaaS technology has helped approach for HR across geographies and businesses organizations harmonize their existing processes in a number of countries. Reflecting the need to to align with out-of-the-box templates without realize synergies across multiple geographies and expensive customization. Technology enables the businesses, this year’s survey included region- transformation of HR’s global role from a purely specific questions about the extent of and trends in administrative to a strategic one through the use of ESS and MSS capabilities. ESS and MSS. In addition, truly global reports can be produced across the organization, enabling value- As organizations standardize processes across added HR activities such as talent management and regions and continents, the goal is often to create workforce planning. a single HR function for the entire organization, utilizing shared services centers to achieve: The following summaries highlight some of the regional differences revealed in our survey: • A consistent employee experience across the enterprise Europe. HR challenges in Europe include a mix • Consistent expectations of line managers for of languages (both across and within countries), people management (a key element of employee multiple regulatory environments and complex engagement) employment legislation. EU data privacy concerns, • Expertise that’s leveraged as much as possible works councils, and differences in technology • Economies of scale and infrastructure also add to the complexity. • Stronger governance and change management Differentiated HR service delivery models are • Centralized control of policies common in Europe to help serve smaller and larger • Vendor consolidation as widely as possible (e.g., countries’ requirements. There is an increasing executive search and selection for global roles push to move more self-service transactions to and benefit providers) line managers and employees, especially across Northern Europe. “The high-growth environment in Asia creates a need for speed and flexibility. The emphasis is on pace and end results rather than HR structure.” A centralized HRMS is frequently used as an engine Most large global organizations in Europe have for globalization. Implementation of a global HR insourced shared services organizations in place, system can be easier to implement, for example, and the focus now is on getting the most out of than a global finance system. Increasingly, global them. We are seeing some organizations with organizations develop a common global template well-established shared services models beginning to assist with implementation. As a result, global the transition to outsourcing, especially when policies and processes can be more easily rolled out standardization has already been accomplished. across geographies. Asia Pacific. The high-growth environment in Asia creates a need for speed and flexibility. While Asian organizations have traditionally been highly controlled, requiring a detailed business case before accepting any change, once leadership is engaged and convinced, change can take root swiftly.16 towerswatson.com
  19. 19. Infrastructure, talent, cultures, legislation and Latin America. Rapid growth of self-service isworking practices in the Asia Pacific region are planned. The most ambitious expectations are fordiverse, and approaches to employee engagement personal data ESS tools (55% now, 73% duringand talent management vary from country to 2011), updating education certifications (36% now,country. The emphasis is on pace and end results 53% in 2011), and setting up and making changesrather than HR structure. Companies with fast- to direct deposit information (30% now, 47% ingrowing operations in Asia use outsourcing to scale 2011). The most prevalent talent managementup quickly. The rapidly growing economies of the tools currently in place are those that review andarea have resulted in examples of both innovative update employee performance (69%), and those thatpractices as well as underdeveloped HR functions, plan employee annual merit/base pay (57%) andwith high staff turnover. incentive pay (53%).Canada. The most prevalent employee personal The Middle East and Africa. Changing personaldata self-service tools currently provided are those data (57%) is the only ESS personal data toolto change personal data, view pay stubs, and currently in place at more than half of respondingview vacation and sick time usage and balances. companies, but five more self-service tools areRespondents say they are planning to expand slated for implementation this year by 12% to 23%these capabilities significantly by the end of 2011. of respondents in this region. The MSS talentThe most prevalent MSS talent management tool management tool most often in place in this regionis reviewing and updating employee performance, is reviewing and updating employee performancewhich is in place at six in 10 (63%) responding (60%), but double-digit growth in all MSS tools isorganizations, with plans to increase to 68% of expected this year.organizations by the end of this year. 2011 – 2012 HR Service Delivery and Technology Research Report 17
  20. 20. What’s Ahead for HR: Agility The pressures of the economic crisis demonstrated Expert teams will tend to be much smaller and that many HR functions were insufficiently agile, designed for human capital and business outcomes. unable to respond and adapt aggressively when HR staff may be in a flexible pool that can be needed. In a slow recovery, persistent concerns deployed across the HR function for various about risk and cost require organizations to initiatives. Business partners will be truly embedded become more flexible in managing the workforce. in the business, with a strong governance model Organizations are looking to develop analytically addressing multiple priorities. Reporting structure rigorous approaches to managing talent, accurate and budget ownership will be fluid, based on what business cases and realistic returns on investment. the business is ready to own. Design and delivery of talent management programs and technology remain the top priority for HR, with a focus on the value-added areas of employee engagement, succession planning and leadership “In a slow recovery, persistent development. concerns about risk and cost The HR function of the future will allow the demand now require organizations to for services to drive how HR develops solutions and deploys resources. In this model, complete be more agile in managing the accountability for administrative and transactional work may be transferred to a third party, another workforce.” part of the business or an entirely new function.18 towerswatson.com
  21. 21. “An agile HR model will allow the demand for services to dictate how HR develops solutions and deploys resources.” An agile competency architecture will connect all • Workforce planning, performance management talent management processes to ensure value and succession planning that is owned by across the talent management life cycle; establish managers and supported by integrated, easy-to- fair, uniform criteria and standards for excellence; use online tools identify hiring and selection criteria, and improve • Global HR portals with content owned and the quality of hiring decisions; and enhance the updated by HR functional experts organization’s ability to differentiate performance. • A single global HR system with web-based manager dashboards, and transaction and An agile organization will implement good modeling capabilities governance to address efficiency, effectiveness and return on investment. HR governance will prescribe Sometimes the best of times follows the worst of the discretion afforded managers, employees and times. Right now, there is a fortunate convergence local HR professionals, and will become less about — of organizations realizing HR technology is a “command and control” and more about “inform and nondiscretionary budget item, and the marketplace ask.” presenting an array of new and more effective technologies. This convergence creates an The HR technology of the future will be designed unprecedented opportunity for reengineering, to manage data and processes for employees, and leveraging and enhancing HR processes, programs also to maximize the people element as an input to and roles. business strategy — through a combination of best- fit tools and business-focused HRIT. Cost-effective Organizations that fail to seize this chance to rethink SaaS solutions configured by HR (rather than IT) HR functions and management systems, employ experts will be a growing trend. thorough communication and change management programs, and carefully select best-fit technology will Other features of the envisioned HR function of the have missed a great opportunity for strategic growth. future include: • Reporting that focuses managers’ attention on key business issues and provides meaningful prospective modeling to support business decisions 2011 – 2012 HR Service Delivery and Technology Research Report 19
  22. 22. About Towers WatsonTowers Watson is a leading global professional servicescompany that helps organizations improve performance througheffective people, risk and financial management. With 14,000associates around the world, we offer solutions in the areasof employee benefits, talent management, rewards, and risk andcapital management.Copyright © 2011 Towers Watson. All rights reserved.TW-NA-2010-18972towerswatson.com