ADP ®, a leading provider of HR, payroll and benefits
administration services, today released a joint research report
commissioned by ADP and the Human Resources Outsourcing Association
(HROA®) demonstrating that the Human Resource (HR) transformation
movement is maturing and proving its merit over time, reaching
deeper into mid-market and smaller companies. The report indicates
that over 80 percent of respondents are currently working on HR
transformation(1), and fully 95 percent of mid-market companies are
engaged in HR transformation.
This year's report, the sixth annual edition, examines trends in
HR transformation practices of organizations around the globe. The
report provides insights into market trends and changes,
particularly in light of the recent global economic situation, and
offers perspective on future plans. In addition to discussing
transformation status and strategy, the report addresses:
-- reasons organizations transform, and the barriers that limit their
transformation;
-- transformation timing, cost and satisfaction;
-- impact of recent global economic changes on transformation plans;
-- engagement of external resources and satisfaction with resources;
-- current and future transformation scope;
-- HR outsourcing and shared services strategy, including budget and
provider selection.
"In the six years that we've been engaged in this research,
we've seen HR transformation become an integral part of
organizations' ability to anticipate and react to change. This
year's research demonstrates that organizations are realizing the
benefits of HR transformation extend well beyond cost savings -- it
strengthens their ability to react favorably to market changes,"
says Hans Jansen, Vice President, Multinational Sales, ADP Employer
Services International.
Although the research has shown persistent stumbling blocks to
successful HR transformation -- including the skills of existing HR
staff, internal bureaucracy, lack of adequate technology, and
underestimation of resources required -- the report indicates a
reversal of a trend in recent years as those hurdles appear to be
declining.
"HR transformation has become a central component of HR
organizations, large and small. As this report reveals, there are a
wide variety of benefits that accrue to organizations that
undertake these efforts, and there is much to learn from those that
have been engaged in HR transformation over recent years," said
Richard Crespin, Global Executive Director of HROA. "The HROA,
through its varied membership of buyers, practitioners, providers,
and advisors, and their continued research and standards efforts,
helps HR executives find innovative ways to address challenges and
achieve success."
The research report is divided into four sections:
Transformation Status, Transformation Scope, Transformation
Outcomes to Date, and Outsourcing and Shared Services.
Additional key findings from the report revealed:
-- A hybrid approach of internal reengineering, shared services
and outsourcing remains the most common HR transformation strategy.
Although it remains the least likely sole strategy, outsourcing as
a predominant strategy has experienced a near double increase
between 2008 and 2009, from 7 to 12 percent, and is a more common
strategy amongst mid-sized than in larger or smaller
organizations.
-- The top reasons companies transform have remained virtually
unchanged over the past several years, although the order ranking
often varies. Cost topped the 2009 list, up from number three in
2008. Other top reasons include freeing internal HR staff to focus
on strategic issues, and to add or improve service for line
managers and employees.
-- HR transformation most often takes three years -- slightly
longer than anticipated. At the same time, transformation generally
generates savings in the 25 percent range, which is only slightly
less than anticipated.
-- HR transformation efforts have the greatest impact on
organizational management issues -- rather than service,
technology, or staff/manager job performance improvement; they have
less positive impacts in two areas that organizations say are key
reasons to transform: reducing/managing cost and freeing internal
HR staff to focus on strategic issues.
-- Outsourcing of HR processes saw a slight overall decline
between 2008 and 2009, but results show significant variations
among specific groups. For example, the smallest saw a decline in
HR outsourcing activity, whilst larger ones experienced a slight
increase.
-- The 2009 data continue a trend we've found since we started
this research: transactional HR processes -- payroll, benefits
administration, HRIS -- are most likely to outsourced, whilst
strategic processes -- performance appraisal, employee
communications, career & succession planning -- are least
likely.
-- Although American organizations are still more likely than
others to outsource, they indicated a significant decline in
outsourcing activity in 2009, whilst Asia Pacific organizations
indicated a significant increase.
-- Respondents most often budget less than US$1M annually for HR
outsourcing. The highest percentage of respondents say they
anticipate increasing their HR outsourcing budget; however, that
percentage has dropped from 55 percent in 2008. At the same time,
many fewer say they plan to decrease their HR outsourcing
budget.
Research Demographics
A total of 188 respondents completed the 2009 Global HR
Transformation Survey online. More than half (55 percent) of the
respondents are located in the Americas, 35 percent in
Europe/Middle East/Africa (EMEA), and the remaining 10 percent in
the Asia-Pacific/Australia region.
Just over half of respondent organizations (56 percent) have
revenues of less than US$1 billion; 19 percent have revenues of
more than US$10 billion. There was a broad mix of employee size,
with 60 percent at various sizes under 10,000 employees and the
remaining 40 percent larger than 10,000 employees. Respondents also
reflect a broad industry distribution including: manufacturing,
transportation & communication, finance, insurance and real
estate as well as other services.
Three-quarters (75 percent) of all survey participants hold HR
functions, 13 percent are in strategic planning and the remainder
are spread among a variety of functions. Most respondents (55
percent) hold the job title of vice president/director/C-suite, and
40 percent indicate a managerial role, with the remaining spread
among a variety of roles.
To download a copy of the 2009 Global HR Transformation Report,
visit www.hroa.org
About ADP
Automatic Data Processing, Inc. (NASDAQ: ADP), with nearly $9
billion in revenue and over 585,000 clients, is one of the world's
largest providers of business outsourcing solutions. Leveraging 60
years of experience, ADP offers the widest range of HR, payroll,
tax and benefits administration solutions from a single source.
ADP's easy-to-use solutions for employers provide superior value to
organizations of all types and sizes. ADP is also a leading
provider of integrated computing solutions to auto, truck,
motorcycle, marine and recreational vehicle dealers throughout the
world. For more information about ADP, please visit the company's
Website at www.ADP.com.
About the HROA
The HROA is the definitive independent organization for all
those who purchase, provide, or participate in HR transformation
and outsourcing. Its mission is to educate, promote research,
publish, recognize, and provide networking opportunities to foster
professionalism in HR transformation and HR outsourcing around. Its
membership encompasses over 7,500 HR executives, including the
largest 50 buyers, the top 30 providers, the leading sourcing
advisors and attorneys, and the best thought leaders in HR
Transformation. The HROA brings its diverse membership together to
set standards and practices, provide peer networking, and maintain
a robust curriculum.
For information about the HROA, visit www.hroa.org.
(1) For the purposes of this report HR Transformation is defined
as any concerted effort to change and improve HR operations,
whether through outsourcing, shared services, internal
reengineering or a combination of these strategies.
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