We are witnessing HR at a turning point. In Towers Watson’s interactions with clients, it is charting HR professionals evolving to focus their energies on strategic endeavours rather than being bogged down with largely transactional tasks.
Our clients are increasingly running the HR function like a business; they are streamlining and re-balancing priorities in order to achieve greater efficiency and quality.
This is about empowerment and emancipation for HR as it continues to earn itself a louder voice in the boardroom. The mantra that people are a company's most valuable asset is well-used yet HR, as the part of the business that chiefly caters to the needs of those people, often finds itself without a seat at the table when it comes to transformational decision-making. However, it does seem that the tide is changing and HR is riding on the wave of the technological revolution.
HR technology – the facilitator
The latest Towers Watson HR Service Delivery and Technology Survey of over 1,000 organisations revealed a substantial spike in IT spend, with one in three organisations planning to increase HR technology budgets this year by up to 20% or more compared with the previous year. This is despite cost cutting in many other areas of HR as a result of the recent prolonged recession.
The research also revealed that companies are redirecting their HR technology spend as they embrace talent management solutions, employee communication portals and compensation management technology. The maturity of the Software-as-a-Service (SaaS) model (also known as HR in the Cloud), coupled with the availability of robust mobile application delivery infrastructure, have supported more comprehensive planning for modern HR services.
Towers Watson's findings indicate the transition of day-to-day responsibility for some disciplines and processes away from HR onto new best-of-breed IT platforms, which consequently improve line managers’ people management capabilities and enable employee self-service. This leaves HR with more time to concentrate on higher impact initiatives – adding value where it counts.
Concurrently, cloud technologies are becoming more flexible and providing a greater ability for end-users to configure applications to their needs while their company remains on the same and the most recent software release.
The SaaS model
The growth of the SaaS market is making HR technology increasingly more cost-effective to run. Since the SaaS model represents a form of cloud-based software rental, whereby HR teams gain access to the latest technologies by paying a subscription fee, but upgrades and maintenance requirements are overseen remotely by suppliers, they carry a lot of benefits. The top benefits include a continuous improvement and evolution of functionality, a quicker process-driven implementation, lower ongoing costs and greater ease of manageability.
Potentially as a result of the increased functional evolution driven by the SaaS model, the adoption of manager self-service tools has increased dramatically. Over half of the organisations that Towers Watson surveyed in Europe have deployed manager self-service in some form and want to expand its application to other areas of the business. This continued emphasis is freeing up HR resources by sharing the workload for once wholly HR-owned activities across the business.
For example, team leaders are often now responsible for ensuring the career development plans of those employees within their department are processed on a timely basis and filed in a cloud-based employee communication portal. HR then only needs to oversee the talent management system from a macro-level to ensure it is effective and fit for purpose, and then address any needed process adjustments that emerge. Indeed, talent management was the most popular allocation area of HR technology budgets according to the survey.
A portal into the future of HR?
Another key area of growth is the use of portals for HR purposes such as talent management, internal policy communications, onboarding new employees and overall employee communications. A portal is essentially a designated, secure online space which brings together information, systems and processes for any particular aspect of the business. Towers Watson's research showed that 60% of employers now have some kind of HR portal in place, up from 53% in 2013, with another 20% in the process of developing one.
HR portal utilisation and deployment
Organisations are now seemingly on a mission of discovery to drive more value from the portals they have in place. This type of technology can play a central role in facilitating greater consistency of communications within an organisation by acting as a gateway for employees to access the heart of their organisation. Portals allow employees to increase their understanding of a company’s mission and values, find up to date and relevant policy information, and keep informed about what is new or noteworthy in the business outside their immediate team. For middle to large-sized companies, portals or employee gateways are particularly useful in the communications of the corporate values, corporate employer branding, consistency of policy-related information, or simply catering to the individual need for information of hundreds of employees at any given time, which would require far more human resource than is feasible for most HR teams to give.
HR technology and structural design
As HR continues to identify what parts of its remit need to remain in its cabinet and what areas can be re-engineered in the interests of efficiency, we will see organisations experimenting with HR structural design to find the ideal service delivery model. Towers Watson’s research highlights HR shared services as the prevailing model for large and mid-sized organisations, while further companies, which are in the process of restructuring their HR, are choosing this delivery method and introducing Centres of Expertise and Business Partners. For global and multinational companies, the common model is to have separate HR functions by business unit/geography with corporate oversight. Less than 10% of these companies do not have this corporate oversight.
Of those HR organisations surveyed by Towers Watson that are making structural changes in the next 18 months, 22% will be outsourcing more. In the last 18 months, a quarter of HR departments have outsourced activities previously handled internally, up 9% from the 2013 survey.
But, if HR continues to re-assign its jobs to other internal teams and external suppliers, is it in danger of simultaneously taking its finger off the pulse? Is it foolishly giving away its exclusive access to people insights? Not so. Technology has given HR the keys to the kingdom of data and HR has taken them in hand. The Towers Watson report showed that data and analytics were the number two priorities for HR technology in 2014.
What's so big about big data?
'Big data' is the business buzzword of late and it is used to describe the vast quantity of facts and figures, in a variety of formats, now available as a result of the digital revolution – so huge that these statistics cannot be handled by traditional manpower. Harnessed correctly, big data can facilitate HR in providing more informed contributions to a business’s big decisions and changes.
In HR terms, big data means the wealth of information that companies hold about their employees. Not simply personal information and regular transaction records, but also the intelligence garnered from surveys and other feedback mechanisms. In addition, there is the data a company may unknowingly have access to, which results from the online journey that an individual takes in the course of doing their job. This information provides a huge opportunity for business analysts to gain valuable insights, with the potential to increase productivity and efficiency, as well as reduce risk -- ultimately driving up profits.
There are now software and analytics packages available to analyse data efficiently and cheaply. However, the importance of human interrogation of big data should never be underestimated and HR is uniquely positioned to bring the pieces of the puzzle together into a cohesive bigger picture.
Altering perceptions in times of change
The increase of HR analytical capabilities is serving to help it to change perceptions of talent management from art to science – a quantifiable discipline that affects the bottom line. By disassociating itself from the more process-driven aspects of talent management, HR can better engage itself in meaningful top-level investigation, forecasting and forward planning. Attracting, engaging and retaining high-performers should be a primary concern for any organisation and HR is now available and willing to take centre stage in directing this talent contest.
The mood of the times is one of change for HR – what it is, what it does and how valued it is by the C-suite. This will most certainly have talent implications for the HR function itself and HR Directors need to consider how they re-skill teams and recruit team members for the future needs of the organisation.
This period of change should be viewed as an opportunity rather than a threat by HR. The function has worked hard over the last decade to move away from the restrictive and limiting label of ‘personnel’, dodge misclassification as ‘miscellaneous’ and move positively towards the golden light as an agent of strategic change. Now that the stars appear to be aligning for HR, HR Directors must ensure they are primed and ready to respond to the call of the boardroom when it comes.