The HR function in the majority of organisations worldwide is lagging behind the C-suite’s plans for more change and support from HR, according to a recent research report, which found that the majority (93 per cent) of executives are planning an organisation redesign in the next two years with 41 per cent expecting to move support functions to shared services.
Just over a third of organisations worldwide employ an HR service delivery model that includes the three components of centers of expertise (COEs), HR business partners (HRBPs), and HR shared services (HRSS), and the successful operation of all three components is an attribute of high-performing HR functions, according to the Mercer report.
Moreover, few (17 per cent) of organisations plan to change from their existing model.
“Organisations are making changes in the interest of greater efficiency and increased agility, which requires a combination of technologies,” said Karen Piercy, a partner in Mercer’s HR transformation business.
“Those that have been expanding shared services and business partnering skills have had the best success aligning HR to business needs.”
The 2017 HR Transformation Study – How HR Needs to Change, found that 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.
“It is imperative for businesses to evolve their current HR delivery model and to build people and technology capability to support this transformation”
“The HR function has morphed into a role that is expected to drive the change for business, to anticipate the future of work and jobs, and develop the transformation path to that future in organisations,” said Ephraim Spehrer-Patrick, Mercer’s practice leader in talent strategy & organisation in Australia.
“It is imperative for businesses to evolve their current HR delivery model and to build people and technology capability to support this transformation.
“Technology is changing not only the way we work but also the skills required,” he said.
“We have transitioned from the traditional means of data collection and analysis to now utilising unconventional data sources, from social data to highly unstructured data, to better understand organisational drivers of performance, which means leveraging off, and investing in, technology to drive strategic value.”
In today’s digital environment, the right mix of technology is essential for HR to align with business needs, and the research revealed that high-performing HR organisations invested in technologies to procure metrics to drive strategic decisions.
Furthermore, just over two-thirds of high-performing HR functions have redesigned their HR structure within the last five years.
As a result, many are utilising a framework in which HR administration and decisions are made in a centralised manner, and processes and practices are consistent across the multiple locations.
“Clearly, there is significant opportunity for the HR function to grow its digital presence”
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 the research, more than two-thirds (69 per cent) of CHROs/executive HR leaders meet with the CEO or COO to discuss business and HR strategy at least twice a month to ensure that strategic alignment.
“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.”
“These meetings are important to strengthen the partnership between these leaders and help ensure that HR is aligned tightly with business strategies”
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 per cent) of CEOs believe their HR function provides a digital experience for employees.
Organisations with high-performing HR functions have embraced technology and have realised significant results assessing and applying analytics, according to the research.
Specifically, they achieved better business outcomes, such as delivering exceptional customer value (94 per cent), reacting proactively to disruptive change (83 per cent), and driving innovation (89 per cent).
Additionally, they are viewed as great places to work (86 per cent) and attract the talent needed to excel (91 per cent).
Despite organisations with high-performing HR functions using technology much more than others, it is still limited.
While 69 per cent have employee self-service in place, just 36 per cent have manager self-service and only 27 per cent have mobile talent applications.
“Clearly, there is a significant opportunity for the HR function to grow its digital presence,” said 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.”
Image source: iStock