HR outpaced by business and IT transformation: study

New analysis from human resources consultancy, Mercer, suggests corporate HR functions are not keeping up with leaders’ appetite for change.

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Mercer’s 2017 HR Transformation Study – How HR Needs to Change, finds only one in three organisations deploy the key components of a high-performing HR service delivery model.That is, one that includes centres of expertise (COEs), HR business partners (HRBPs), and HR shared services (HRSS), which Mercer notes that when in successful alignment are attributes of high-performing HR functions.With only 17 per cent of the 300 companies from around the world surveyed planning to change their existing model, Mercer believes HR’s slow transformation means the function will be ill-prepared to deliver the C-suite’s plans for more change.

All change for HR?

From a broader business perspective, Mercer’s 2017 Global Talent Trends – research based on responses from over 400 senior executives, 1,700 HR professionals and 5,400 employees,  20 industries and 37 countries – finds 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.“Organisations are making changes to boost innovation and increased agility, which requires a significant culture change,” said Margaret Ruiséal, partner in Mercer UK’s HR transformation business.“HR needs to be well positioned to support these changes and ensure its priorities and practices are aligned to business needs.”

Constant evolution pays off?

Mercer’s HR transformation study shows 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.Further, it finds over two-thirds (68%) of high-performing HR functions have redesigned their HR structure within the last five years.Many are using a framework where HR administration and decisions are made centrally, with processes and practices consistent across the multiple locations.As service delivery models evolve, organisations with high-performing HR functions are aligning centres of expertise 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.

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HR and the business in alignment

By building alignment to key business performance initiatives, HR professionals are well-positioned for value-added roles, says Mercer. More than two-thirds (69%) of CHROs/executive HR leaders studied for the research 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 programmes aligned to the business strategy, they understand the value and importance of those programmes, which is particularly significant since less than half of CEOs recognise HR for its capability and competence.”

Technology's role in high-performing HR models

Technology also has a role in delivering change and is a further aspect of Mercer’s vision of high-performing HR teams.Investing in human capital management technologies that provide workforce analytics to drive strategic decision-making and deliver a consumer-based HR experience should be a top priority for HR, says Mercer.A third (35%) of CEOs believe their HR function provides a digital experience for employees. Mercer’s study finds that organisations with high-performing HR functions have embraced technology and have realised significant results assessing and applying analytics.Specifically, they achieved better business outcomes, such as delivering exceptional customer value (94%), reacting proactively to disruptive change (83%) and driving innovation (89%). Additionally, they are viewed as great places to work (86%) and attract the talent needed to excel (91%).

Technology yet to establish itself in HR

Despite organisations with high-performing HR functions using technology much more than others, it is still limited. While 69% have employee self-service in place, just 36% have manager self-service and only 27% have mobile talent applications.“There is significant opportunity for the HR function to grow its digital presence,” said Ms Ruiséal. “HR functions need to enhance their technology and data analytics skills in order to strengthen their strategic decision-making and enhance their partnerships with business leaders and other functions.“Creating a more digital and consumer-oriented manager and employee experience is fundamental to this shift and requires significant change management to ensure success.”

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