Just more than one-third (35 percent) of organisations worldwide, and in Asia (33 percent), employ an HR service delivery model that includes these three components – Centers of Expertise (COEs), HR Business Partners (HRBPs), and HR Shared Services (HRSS).
The successful operation of all the three components is an attribute of high-performing HR functions, with a few worldwide (17 percent) and in Asia (15 percent) plan to change from their existing model. This is according to findings from Mercer’s 2017 HR Transformation Study – How HR Needs to Change.
In a rapidly changing workplace, the HR function’s slow transformation does not align with the C-suite’s plans for more change and support. Mercer’s 2017 Global Talent Trends research, launched this March, finds that the majority (93 percent) of executives are planning an organization redesign in the next two years with 41 percent expecting to move support functions to shared services.
“Organisations are making changes in the interest of greater efficiency and increased agility, which requires a combination of technologies,” said Karen Piercy, Partner in Mercer’s HR Transformation business. “Those who have been expanding shared services and business partnering skills have had the best success, aligning HR to business needs.”
“Although ‘centralised’ models – where administration and decisions made in a centralised manner – are more prevalent globally, in Asia Pacific slightly more ‘hybrid’ models are being leveraged, where some decisions and policies are deployed commonly across the organisation, and some locally,” said Siddarth Mehta, Leader, Workforce Planning and Analytics, Mercer. “The good news is that companies in Asia Pacific are four times more likely to increase their HR spend in the year ahead, than decrease it.”
Mercer’s HR Transformation research shows organisations with HR functions that continuously evolve their HR service delivery model, build capabilities among their HR team, and invest in technology perform significantly better than those that do not. See Figure 1.
Evolve the model, build capability
The study further finds that more than two-thirds (68 percent) of high-performing HR functions have redesigned their HR structure within the last five years. As a result, many are utilizing a framework in which HR administration and decisions are made in a centralised manner, and processes and practices are consistent across the multiple locations.
As service delivery models evolve, organisations with high-performing HR functions are aligning COE and HR practices with the overall business strategy, shifting transactions to shared services, and providing more learning and rotational career development opportunities for their HR team.
By building alignment to key business performance initiatives, HR professionals are well-positioned for value-added roles. According to Mercer’s study, more than two-thirds (69 percent) of CHROs/executive HR leaders in high performing HR functions meet with the CEO or COO to discuss business and HR strategy at least twice a month to ensure strategic alignment. In Asia Pacific, this number increases to 78 percent.
“These meetings are important to strengthen the partnership between these leaders and help ensure that HR is aligned tightly with business strategies,” said Denise LaForte, North American Leader of Mercer’s HR Transformation practice. “When business leaders see HR programs aligned to the business strategy, they understand the value and importance of those programs, which is particularly significant, since less than half of CEOs recognise HR for its capability and competence.”Invest in technology
Investing in human capital management technologies that provide workforce analytics to drive strategic decision-making and deliver a consumer-based HR experience for both managers and employees should be a top priority on HR’s agenda, especially since only one-third (35 percent) of CEOs believe their HR function provides a digital experience for employees.
Mercer’s study finds that organisations with high-performing HR functions have embraced technology and realised significant results assessing and applying analytics. Specifically, they have achieved better business outcomes, such as delivering exceptional customer value (94 percent), reacting proactively to disruptive change (83 percent), and driving innovation (89 percent). Additionally, they are viewed as great places to work (86 percent) and attract the talent needed to excel (91 percent).
Despite organisations with high-performing HR functions using technology much more than others, it is still limited. While 69 percent have employee self-service in place, just 36 percent have manager self-service and only 27 percent have mobile talent applications.
“Clearly, there is significant opportunity for the HR function to grow its digital presence,” added Piercy. “As HR functions adopt technology and advance their skills in data analytics, they are strengthening strategic decision-making, enhancing partnerships with business leaders and other functions, and providing a more digital and consumer-oriented manager and employee experience.”
“In Asia Pacific where technology and innovation are paramount, it is important for companies to invest in the optimal mix of technology to leverage data for decision-making – a key trait of high performing HR organisations,” added Mehta.
Feature image credit: mercer.com