Change on the horizon for HR structures

Some big changes may be in store for corporate HR functions within the next two years as companies around the globe face mounting pressure to improve the delivery and effectiveness of HR services.

Companies have been carefully examining both their HR structures and the way HR services are being delivered, and many believe firmly that the time is ripe for change, according to Mike DiClaudio, global leader of Towers Watson’s HR service delivery practice.

“Many organisations see new opportunities to increase HR’s strategic contributions to the business. What is really interesting is the continued trend toward replacing core HR systems, and a willingness to invest in new technology and partners with a growing shift toward software-as-a-service.”

Just over a third of companies globally plan on making a change to their HR structure before the end of 2014, according to a recent Towers Watson report.

“Without question, HR service delivery is in a state of change, and organisations need to embrace that change as the new constant”

Among companies changing their HR structure, nearly three-quarters are doing so to realise further operational efficiencies, while just over half are doing so to improve quality. Another 37 per cent are seeking to achieve cost savings or pursuing a change in business strategy (34 per cent).

Almost half are moving toward a shared services environment with HR centres of excellence and HR business partners, and other notable trends include outsourcing additional functions (17 per cent) or move to a single HR function for the entire organisation (12 per cent).

“Without question, HR service delivery is in a state of change, and organisations need to embrace that change as the new constant,” said DiClaudio.

“This means they can change the game by modifying their structure, rethinking long-held processes, adopting new HR technologies and processes, and extending capabilities to the organisation via manager self-service and shared services. In the end, it means using new concepts, approaches and technology to provide better HR services,” said DiClaudio.

The report also found that HR technology spending remains steady and strong despite cost reductions in other areas of HR.

More than half of organisations surveyed indicated their investment in HR technology this year will match last year’s investment levels, while more than an additional 27 per cent will either increase or significantly increase their HR technology investments.