This year’s HR Service Delivery Survey — our 15th annual — reveals the HRSD and technology plans, goals and progress of more than 600 participating companies across North America, Europe and the Middle East, and the Asia Pacific region. The results show that HR has big plans to make structural changes, continue investing in technology and align the function with business goals.
All this change and transformation provides a wealth of opportunities to bring HR organizations greater flexibility and agility. Of course, change can also create rigorous challenges — from failing to establish good processes or adequately plan for implementation, to the pitfalls of inadequate governance. A critical key to successful transformation is to discern your organization’s most strategic needs and match them with the most agile service delivery solution available.
Key Survey Findings
As new technology options have emerged for effectively and efficiently delivering HR services, organizations are putting HR structure changes on the table. More than four in 10 (44%) of all organizations we surveyed — dramatically more than last year’s 26% — indicate they will change their HR structure in 2012 or 2013.
Advances such as software-as-a-service (SaaS) have become impossible to ignore. Those companies maintaining the same HR structure as five, or even three, years ago risk missing opportunities to realize new efficiencies. Additionally, among organizations planning HR structure changes for the year ahead, improving operations is a major theme. A significant majority (64%) want to realize further efficiencies, while others are looking to capture synergies among processes and investments (54%), improve quality (51%) and reduce costs (46%).
Shared services is emerging as the most valued (and most prevalent) practice for delivering HR services to the business, though outsourcing is gaining popularity for certain functions.
Organizations have come to realize there is no more accurate or effective solution than developing capabilities and resources in-house for many core services. Among large organizations, more than two-thirds (70%) operate in-house service centers, while 54% of midsize organizations do so. A significant majority (70%) of organizations making changes to their HR structure are focused on shared services as a primary initiative — and not one organization indicated a move away from shared services for 2012 or 2013.
Talent and performance management remain the primary HR service delivery issue — although the full story is much more complex this year.
Because of a confluence of issues — including demographic shifts around the world, a shortage of critical-skill employees and changing business priorities — savvy organizations will focus on talent management for some time to come.
Three priorities vie for second place behind talent management, including streamlining business processes, gaining more involvement in strategic business issues and recruiting, which 22% of respondents indicate will be a priority for the year ahead. These issues hint that the pendulum may swing further in the business process direction next year, as change continues, and HR organizations and technologies keep evolving.
HR technology spending remains steady and strong, and investments are directed mostly toward growth rather than new functionality.
Beyond the core costs of owning and operating technology, not only is technology still seen as needed to play, but organizations also understand they need to make investments to remain current, expand capabilities and continue to improve operations. More than half of organizations (53%) report that their spending will remain the same as this year’s; close to one-third (31%) will increase or significantly increase this investment, and only 16% expect a reduced HR technology budget for the year ahead.