HR Transformation Delivers Solid Savings Of 25% According To Survey

According to the 2009 Global HR Transformation Report (conducted by HROA in association with ADP), HR Transformation generates cost savings of 25% over a period of around 3 years. This is the 6^th annual survey and you can download the fascinating 2009 report here.

Two main factors are driving HR Transformation programmes in various sectors:

- Every department is required to justify its existence with an eye to costs. Reducing those ongoing costs and managing them is vital for both the short and the long term.

- The right people are needed to transform organisations, enabling managers to perform more effectively. Allocating more resources to strategic HR is the key to making this happen.

At its best, HR Transformation re-aligns HR resources so that managers can manage their business and people more effectively.

Our observations on the 2009 survey are as follows:

- 76% of recipients in the survey achieved or exceeded their savings targets. 35% delivered cost savings of 6-15%. At Glass Bead Consulting we have seen a wide range of outcomes, but savings of 20-30% are certainly achievable with a well managed programme.

- Cost reduction is the main reason why organisations transform HR. Other main reasons include freeing up internal HR staff to focus on strategic issues.

- Having the right expectations in the planning stage develops credibility. Installing new HR systems and simplifying processes requires much effort, but the behaviours of line managers also require time to change. However the survey has found that companies are getting progressively better at estimating the amount of time required to make the necessary changes. They are also becoming better at anticipating the outcomes that will result from these changes.

- HR Outsourcing has increased from 7% in 2008 to 12% in 2009. However with that said, it is still the least popular strategy used at present. Single process outsourcing is by far the most popular process. 65% of organisations still use Request for Information (RFI) when selecting an HRO partner. A good HR Outsourcing Advisor should know the HRO vendors, their offerings and of course their strengths and weaknesses. Although the HR vendor market is complex and rapidly changing, (see our article HR Outsourcing – The Challenge of Picking Winners) we can usually short-list straight away, saving the time and expense of issuing an RFI.

- Skills remain the biggest hurdle to achieving a successful HR Transformation Programme. This is consistent with last year’s survey results. You can read more on our HR Transformer Blog article HR Survey Highlights Skills Gaps in HR.

The HR Director of a global bank recently told us that finding HR professionals with the right skills was very difficult. The skills in demand included commercial prowess, a project management mindset and the ability to think about delivering HR services on a consultancy basis.

A different skill set is required yet again in order to deliver an HR Transformation programme. Getting the right mix between internal team members and external consultants can be a real challenge.

The skills required for transformation include:

- HR technical architects

- Project/Programme management

- Process analysis, design and implementation

- Managing the business case for change

The message is clear – you should always plan skills transfer into your budget and programme. This will ensure new skills are utilised in after the dust has settled on the new HR Service Centre or HRO contract. We feel many people in HR departments would agree with this.

We would be interested to know your thoughts and comments. Does the 2009 Global HR Transformation Report reflect your own experiences of HR Transformation, or have you had different experiences?