The biggest barrier to transforming Human Resources is the lack of appropriate skills in HR, according to the 2008 Global HR Transformation Report (conducted by HROA in association with ADP). This is the 5th annual survey with 129 executives around the globe in varying stages of HR Transformation. DOWNLOAD 2008 GLOBAL HR TRANSFORMATION REPORT HERE
The survey defines HR Transformation as – “any concerted effort to change and improve HR operations, whether through outsourcing, shared services, internal reengineering, or a combination of these strategies”.
We use a broader definition. Successful HR Transformation needs to align all the components in the HR operating model including Business Partners, Service Centres, Centres of Excellence, HR Strategy, Managers and Employees. Sometimes there is too much emphasis on implementing Shared Services or HR Outsourcing at the expense of actually delivering the HR Strategy.
(see comments by Jason Geller “HRO does not equal HR Transformation”)
The survey points to some interesting trends in HR Transformation :-
“The biggest ‘chronic hurdle’ that impedes transformation is the skills of existing HR staff.”
This is cited by over 60% of respondents. The skills needed to manage HR are very different to the skills needed to transform HR. The survey doesn’t mention which skills, but experience is required in Change Management, Process Design, Organisation Design, Project Management, Business Case Management, and HR Technology. So what can you do? Consider these steps before starting your HR Transformation project, utilise transformation experience in other areas of your organisation and use HR professionals as ‘content’ owners.
“Most organisations are meeting or exceeding their cost savings targets.”
Sounds impressive, but of course this depends on what the cost savings targets are. Some projects aim to break even, but allocate a larger proportion of their cost to strategic objectives rather than administration.
“Past HR Transformation lessons don’t appear to filtering out.”
Each organisation will have different goals, a different workforce and different starting points. But there are themes and lessons learned – so why aren’t they being shared in this digital age of collaboration? Joining networks such as the HROA help. Conferences are dominated by vendor/sponsors rather than providing HR transformers with real ‘independent’ lessons learned. With more sharing and online networking things should improve, see for example initiatives such as our own HR Transformer Blog and DiscussHR.
“Only 48% engage consultants or sourcing advisors.”
Some organisations are getting external support which is an obvious solution to the skills gap. On business cases which involve large IT transformation and cost savings, a review from an experienced, independent consultant can be money well spent. There are still objections to using consultants who are perceived to push ‘pyramids’ of junior consultants and lack independence. Do advisors need to up their game or do they need to market their benefits more effectively?
“66% plan to outsource some HR processes.”
Payroll is outsourced in nearly 90% of cases. End-to-end HR Outsouricng contracts are being signed (see recent IBM Unilever deal) , and buyers do see the benefits of HR Outsourcing, however buyers are even more careful in this environment. With major economic change there is less appetite for 10 year contracts and more examples of tactical sourcing.
“Price is most significant in provider selection.”
It is interesting that Financial stability has risen up from 12th most important factor in 2006, to 6th in 2008. This will be Top 5 next year with much more detailed financial checking of potential vendors.
The ADP/HROA survey has provided a useful barometer of HR Transformation, it will be interesting to see whether more progress has been made on the barriers next year.