HR Project failure usually means increased cost to implement, reduced quality of final outcome, time delays and often leaves a huge dent in morale.

The list below are reasons why HR projects fail based on the number of sleepless nights they have caused HR Execs, and the more scientific approach of research and surveys. The good news is that they are all preventable – by following tried and tested methodologies such as Prince 2, brushing up on your Change Management skills and mixing all of this with a huge dose of common sense.

Typical HR projects can include change programmes, implementation of shared services, HR transformation projects, outsourcing and IT projects.

Top five reasons why HR projects fail include:

1. Lack of clear executive leadership. Any HR project needs a sponsor to help ensure that it is set up to succeed with the right resources. Having executive leadership comes into its own when the project has to traverse choppy waters. HR projects that have business (non-HR) sponsorship tend do well. Lack of leadership can lead to a lack of vision and people quickly forget why they are working so hard in the first place.

2. Skills of staff. It sounds obvious, but the key skill that is usually lacking is project management. There are simply not enough skilled project managers in HR with experience in successfully delivering complex projects. Many project management problems stem from inexperience, a common example is not breaking up the project into manageable pieces. Another key skill that is required for HR Project Managers is Change Management and unfortunately Project Management methodologies and courses do not emphasise this enough.

3. Governance not set-up properly. If the governance hasn’t been agreed formally at the beginning, it is amazing how initial enthusiasm can disappear when the going gets tough. This comes from not agreeing up-front how decisions will be made during the project. It is well worth investing time early on to establishing project governance. This helps ensure that issues are resolved quickly when they arise.

4. Not managing stakeholders effectively. For most projects, you will need to persuade human beings to change how they do things. This is very difficult and will require diplomatic and sometimes innovative methods to succeed. Not managing stakeholders can lead directly to other classic PM problems like not gaining employee buy-in, dealing with resource cuts, other projects getting priority and not dealing with genuine cultural differences. The key is to identify your stakeholders up front, work out how the project impacts them and what they will need to make the project work. Then ensure that you prioritise your time so you can work through any issues they may have.

5. Project complexity across multiple businesses and geographies. Complexity can be caused by working across different business units and geographies, each with potentially different drivers and cultures. To overcome potential problems, set up the project to gather all requirements, take time to understand your stakeholders and design your Governance to help resolve those tricky issues. Finally, use your sponsor to provide you with guidance where appropriate and watch out for barriers that are perceived rather than real.

The HR Outsourcing market has its problems like every other market right now. On the supply side, there are too many providers, with some running ‘loss-making’ HRO contracts over 7-10 years. On the demand side, a larger range of organisations urgently require HR solutions that allow them to provide better and more cost effective HR solutions. The HRO market is still maturing, 2009 will be interesting with large contracts signed and further HR provider consolidation. Why is there increasing demand from organisations to outsource their non-strategic, transactional HR processes? The benefits of HR Outsourcing include:-

1. To reduce the cost of HR, and to better manage the cost of HR. Many organisations have achieved savings greater than 20% by standardising HR processes, utilising self-service tools and outsourcing. The extent of savings depends on willingness to standardise and transformation of the “retained” HR function. When the HR cost base is more tightly controlled and better managed then decisions can be made about the relative allocation of resources. In sectors with mergers, acquisitions and rapid changes in employee numbers a goal is to provide more variable costs linked to employee numbers which can push clients towards using more specialist 3rd parties.
2. To avoid major investments required in HR technology. That multi-million dollar SAP/Oracle upgrade is much harder to justify in this economic environment. Some HRO providers can provide their own HR platform and offer the latest upgrades and services that your organisation probably can’t.
3. To realign HR to focus on delivering HR Strategy and support its core business. A typical goal of HR Transformation is to increase the proportion of HR cost allocated to strategic HR and reduce the proportion allocated to HR Administration. With non-strategic HR processes outsourced, HR is better able to respond more quickly and more effectively to organisational changes.
4. To improve the quality of HR Services delivered to employees and managers – using service management techniques, self-service tools or best-of-breed suppliers. To achieve this requires excellent change management skills with policy harmonisation, standardisation and changing HR customer interactions. This is difficult work, however the advantage of a legally binding contract and go-live date really can focus the mind.
5. Controlling the legal risks and improving compliance will be more rigorous when there are external contracts with providers – this will become increasingly important in an era of increased regulation.

See also HR Outsourcing – The Challenge of Picking Winners

If you are thinking about HR Transformation, then consider taking the following steps :-

1. Conduct a skills audit

Which HR Transformation Skills currently exist in your organisation, and are they available?

2. Complete a HR Current State Assessment

What is your current HR performance like? Do you have the key HR performance metrics such as HR FTE to Employee ratio and HR Cost to Serve, broken down by division and geography ? If not, then you will need to develop a current baseline as a starting point – facts are key in making your case for change and deciding whether to buy services from outside.

3. Check your appetite for change

Any transformation programme is long, challenging and can take between 1 and 3 years. The impact and effort for your staff to move an organisation through a series of step-changes involving process and technology is often underestimated.

4. Understand your organisation strategy

To gain “buy-in” to your HR Vision you will need to be aligned with your organisations strategy.

5. Start thinking about who your sponsors will be

For any large Transformation programme to succeed, it is essential to have visible leadership to push changes through and lead by example. It is worth considering a “non-HR” Transformation champion.

6. Set this up as a formal project

The general rules of project management apply here to, so brush up on your project management experience and consider seconding a qualified project manager. Establishing appropriate governance is essential to deliver on time and to budget.

7. What is the appetite for outsourcing ?

Do you currently outsource services in other areas such as IT and Finance? Do you currently use 3rd parties to deliver HR services in payroll or Learning and Development ? Would a move to outsource HR Administration be too large a shift for your organisation in experience and strategy ?

8. Speak to your customers

Ask your key HR customers for their view of current service performance and future requirements. Surveys and focus groups can be developed, or simply ask your key customers the direct question over a coffee?

9. Start developing your vision

The key to gaining buy-in and providing clarity to your team is a clearly articulated vision. Who needs to input and deliver your vision will depend on your organisation, but it needs to inspire your staff, the Board, and deliver your organisations strategy.

10. Consider working with a HR Transformation partner

If you find you have skills and experience gaps in HR Transformation, then consider partnering with a specialist HR Transformation consultant.