towers watson: shaping the hr function of tomorrow…today

© 2010 Towers Watson. All rights reserved.

Shaping the HR Function of Tomorrow…TodayWebcast

Denise LaForte and James Millar

June 17, 2010

© 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

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Webcast series: Critical Issues on the Road to Recovery

The State of the Workforce — Fight or Flight?

Executive Compensation at the Crossroads

Revisiting Retirement for New Generations

Shaping the HR Function of Tomorrow…Today

To access previous events in this series, please visit:www.towerswatson.com/events


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Today’s experts:Shaping the HR Function of Tomorrow…Today

Thomas Keebler is the Global Practice Leader for Towers Watson’s HR Service Delivery and HR Technology practices, where he leads their product development, alliance strategies and marketing efforts. His areas of expertise include all facets of administrative and technology solutions, including HR transformation, service delivery design, HR technology strategy development, vendor selection, implementation assistance and project management. Mr. Keebler is located in the firm’s Philadelphia, PA office.

Denise LaForte is a Senior Consultant in the HR Service Delivery practice of Towers Watson. She has over 20 years of broad-based consulting experience in the HR area, with special expertise in HR functional design, process improvement, service delivery and global business process outsourcing. She also has experience in strategic change and total compensation design, administration and communication. Denise has a B.S. in finance from the University of Illinois at Urbana-Champaign and an M.B.A. with a concentration in human resources management from DePaul University in Chicago. She has also earned the Certified Employee Benefits designation.

James Millar is a Senior Consultant in Towers Watson's HR Service Delivery practice based in Philadelphia. He has considerable global experience in HR transformation, including HR structure, processes, people and technology. James has a broad range of experience assisting organizations with their HR service delivery model, global HR process model, HR systems strategy, HR transformation business case, and program and change management. Prior to joining Towers Watson, he was the Global HRIS Manager with a major chemical corporation, where he led the HRIS program of a significant HR transformation. James has a B.S. degree with Honors in mathematics and computer science from Edinburgh University.


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Setting the context

Businesses are going through significant changeIt has never been more critical that HR be highly effective at supporting business changes while simultaneously reducing its cost baseDespite strenuous efforts, HR needs to make a more fundamental shiftHR of the future must be more agile to keep up with changing business needs


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Presentation overview

Provide some evidence of what’s working/not working todayExplore how the new world of Agile HR differs from commonly accepted HR in a number of dimensions:

Organization Structure and RolesCompetenciesTechnology

Discuss our point of view on Agile HR and provide real-world examples of what that function looks likeHow to capitalize on the unique opportunity to shape HR of the future


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Why create Agile HR now?

Apply lessons learned from the recent economic crisis Continued shift in focus for HR — from transactional/operational to strategic and business-driven partnerThe prevailing HR model is not equipped to manage these new demands and has not worked as well as intended


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Understanding the requirements of the HR function requires starting with business talent strategies

Business Strategy

Talent Strategy

HR Function and Service Delivery Strategies

HR ProcessHR Talent HR TechnologyHR Structure

Governance, Measurement, PMO and Project Management, Change Management and Communications


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Top HR service delivery issues: Talent management still top

16%

12%

24%

18%

12%

17%

23%

35%

35%

16%

17%

18%

19%

21%

22%

27%

35%

42%

Top HR Service Delivery Issues (Top Three Frequency)

2010 n = 456

2009 n = 332Upgrade HR system

Talent/performance system

Manager self-service

Cost

Recruiting/staffing services/systems

Streamline processes/systems

Compensation/benefit services/systems

More involvement in strategic business-driven issues

Define human capital metrics and dashboards


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Who’s Been Doing What…

9%

9%

16%

20%

20%

26%

29%

43%

50%

68%

68%

Initiatives Undertaken in Last 18 Months

Reengineered key HR processes

Implemented and leveraged self-service

Outsourced activities previously handled internally

Brought back services previously outsourced to a vendor

Implemented a shared services model

Refocused the role of the HR business partners

Developed a standard global data architecture for HR data

Implemented a new HRMS

Sought to increase alignment of HR strategy with business strategy

Sought to increase alignment in the delivery of HR with other SG&A functions

None of the above


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…And What’s Working (Or Not)

30%

27%

45%

47%

37%

47%

35%

56%

54%

35%

35%

44%

35%

33%

45%

35%

48%

29%

33%

55%

22%

17%

5%

5%

6%

10%

4%

3%

4%

13%

12%

15%

15%

12%

8%

13%

12%

9%

10%

Initiatives Undertaken in Last 18 Months — Results Achieved(For Initiatives 76% or More Complete)

Above expectations Met expectations Below expectations Too soon to tell

Reengineered key HR processes

Implemented and leveraged self-service

Outsourced activities previously handled internally

Brought back services previously outsourced to a vendor

Implemented a shared services model

Refocused the role of the HR business partners

Developed a standard global data architecture for HR data n

Implemented a new HRMS

Sought to increase alignment of HR strategy with business strategy

Sought to increase alignment in the delivery of HR with other SG&A functions


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But HR is still transaction-focused

When Managers Initiate HR/Pay Transactions, Remaining Approvals/Reviews Required

47%8%22%23%10%12%26%23%29%20%35%34%11%Create a new position

HR Administrator/Service Center Reviews/Verifies Prior

to UpdateNone ↔ Comprehensive

46%16%17%21%10%16%22%25%27%14%38%37%11%Off-cycle salary change

30%18%24%28%4%9%28%29%30%14%31%40%15%Annual salary change

43%16%20%21%5%10%28%29%28%10%33%45%12%Promotion

32%15%27%26%5%9%28%29%29%10%28%40%22%Candidate selection

22%9%37%32%2%8%18%40%32%2%12%33%53%Voluntary termination

58%7%22%13%13%15%21%29%22%8%29%38%25%Involuntary termination

Event

Manager Approvals HR Generalist/Business Partner Role

Manager Notification

Only

Average Number of Additional

Manager Approvals

No Review

Receives Notification

Only

Approves Exceptions

OnlyApproves

All1 2 3 1 2 3 4 5


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The prevailing HR model has four components, each of which contributes to an efficient and effective function…

HR BusinessPartners

Centers of Expertise

HR Operations

HRLeadership

Team


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…though the model has had its challenges

How effective is HR Leadership at building a coherent HR agenda for the whole enterprise and managing to it?Is there real cooperation and trust between all parts of the model?Is there sufficient flexibility of HR resources to staff projects effectively (without having captive resources)?

HR Leadership Team

Is there an appropriate balance between cost and quality? Is there enough of a focus on continuous improvement?Do HR Operations still do things that are more appropriately owned by the line and employees (e.g., completion of performance reviews, checking employee licenses are updated)?Do HR Operations have operational excellence, customer focus and vendor management as core competencies?

HR Operations

Can the COEs actually provide best practice expertise at a market-competitive price?Do COEs respond to business need (or do they still operate from their “ivory tower”)?Do COEs build integrated, holistic solutions to business problems (or do they still think in silos)?

Centers of Expertise

Do business partners have the capabilities needed:To be credible advisors to the business?To equip line managers with the required skill and will?

Do Business Partners forsake the enterprise agenda for local/business agenda?Do Business Partners really collaborate with the rest of HR?

HR Business Partners


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Imagine the future — Key differences vs. the prevailing HR model

Pull vs. push: Intelligent customers who call on appropriate HR support when and how they need it (on-demand)Concentrated: Small, high-level, influential expertise clearly focused on what creates business valueFlexible, scalable: Adjustable skill and cost levels can respond to business needsStrategic and proactive: Leading indicators and insights keep HR’s finger on the organization’s pulse


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Key differences between the prevailing model and Agile HR: Organization Structure and Roles

Prevailing model Agile HROrganization Structure and Roles

Substantial permanent resources Mostly captiveTend to generate HR push COE teams organized around specialist areasResponsible and accountable for HR transactions

Fewer permanent resources Flexible to meet changing business needsScalable to meet changing business circumstances

COEs address, and organize around, business issuesNeither responsible nor accountable for transactions


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Key differences between the prevailing model and Agile HR: Competencies

Prevailing model Agile HRCompetencies

HR experts who understand business contextExperts in design and implementationFocused on designing and implementing great policies and programs

Business experts who understand how to deliver people solutionsExperts in broad change management and sophisticated workforce analyticsFocused on enabling line managers to produce great results


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Key differences between the prevailing model and Agile HR: Governance

Prevailing model Agile HRGovernance

“One size fits all”Command and controlFocus on decision rulesPrioritization based on best available evidence

Tailored services by business and workforce segmentPersonal authorityFocus on decision rules and associated behaviorsPrioritization based on demonstrable business value


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Key differences between the prevailing model and Agile HR: Technology

Prevailing model Agile HRTechnology

Transactional, administrative systemsERP-basedContinual license fees and upgradesUse of multiple systems

Knowledge-based systems and collaborative toolsSoftware-as-a-Service (SaaS)Single “best of breed” platform


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In the future, HR will be structured differently from prevailing models

ORG STRUCTURE AND ROLES

From To

HR responsible for operations, or responsible for the oversight of third party administrative outsourcers

Complete accountability for administrative and transactional work is transferred to a third party, another part of the business or to an entirely new function

Centers of Expertise are focused on traditionalprogram design and must work across “silos” to design and deliver integrated outcomes

Expert teams are much smaller and designed around human capital and business outcomes

HR resources are assigned to a specific part of the model and are managed vertically against specific functional objectives

Most HR resources exist in a flexible pool, and can be deployed horizontally against various initiatives

HR business partners have to balance business and HR demands and are often caught between HR objectives and business objectives

Business partners are truly embedded in the business, with a strong governance modeladdressing multiple priorities

HR business partner reporting structure is based on political realities and headcount management

Reporting structure and budget ownership are fluid, but are based on what the business is ready to own

In an Agile model, HR lets the demand for its services dictate how they develop solutions and deploy resources


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Org structure and roles


Head ofPeople

Strategy/Risk Management

Head ofLeadership/

Management Development

In-house Expert

In-house Expert

Contract Expert

In-house Expert

Business Support Resources

Head ofHuman Resources

Head ofTalent and Workforce Planning

Supervisor of Resourcing

Contract Expert

In-house Expert

Contract Expert

In-house Expert

Head of Engagement,

Employee Experience

and Rewards

HR Function “Sister Function”

Business Business Business

Business

CFOCIOCOO

HR Operations Function

Business Partner

Business Partner

Business Partner

Business support resources are pulled in from throughout the organization as needed for HR projects and initiatives


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Business

Business Partner Business PartnerBusiness Partner

Dotted line/solid line reporting relationships change depending on

involvement in HR initiatives


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HR Function

Head ofPeople


Head ofLeadership/


In-house Expert

In-house Expert

Contract Expert

In-house Expert



Supervisor of

Resourcing

Contract Expert

In-house Expert

Contract Expert

In-house Expert

Head of Engagement,

Employee Experience

and Rewards

Responsibilities and relative rank shift depending on organization

Initiative involvement indicated by color


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“Sister Function”

CFOCIOCOO



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Head ofPeople


Head ofLeadership/


In-house Expert

In-house Expert

Contract Expert

In-house Expert

Business Support Resources



Supervisor of Resourcing

Contract Expert

In-house Expert

Contract Expert

In-house Expert

Head of Engagement,

Employee Experience

and Rewards

HR Function “Sister Function”


Responsibilities and relative rank shift depending on organization

Business support resources are pulled in from throughout the organization as needed for HR projects and initiatives

Dotted line/solid line reporting relationships

change depending on involvement in HR initiatives

Business

Initiative involvement indicated by color

CFOCIOCOO


Business Partner

Business Partner

Business Partner


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What’s different?

Expert Areas (formerly Centers of Expertise)Expert Areas are focused on core HR outcomes that make a difference to the business, rather than the more conventional areas Expert Areas are tightly integrated, developing policies and programs that offer joined up solutions to address business issues, rather than operating in individual process silosThere is a heavier reliance on external specialist services — more scalable and cost-competitive than having a standing teamThere is a pool of flexible resources, who are experts in multiple disciplines and who support business partners with implementation work and special projects

Contract experts Will have a good knowledge of the business context and requirementsPlay an important role in HR governanceDeal directly with line leaders (i.e., without intermediaries); nevertheless, as with the prevailing model of the specialist role, they make recommendations — the line leader still decides on and approves recommended course of action



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What’s different?

Business PartnersFacilitate, enable and equip line managers to carry out their people management responsibilitiesBusiness Partners can have a dotted or a solid line relationship with HR — reflecting the business partner capability and the people management capability of the business line leaders

HR Operations are managed and report elsewhere (e.g., in a “sister” function)Operational excellence, customer orientation and vendor management are core competenciesThere is greater likelihood of getting an appropriate balance between cost and quality



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Agile HRHR talent working in virtual, cross-functional teamsPeople experts who understand how to deliver business solutionsFocus on enabling results achieved by people managersExperts in broad change managementBusiness partners deliver customized HR strategic services to their businessShare responsibility for business strategy development and implementation Advanced skills in change management and project management Balance the ability to envision strategic requirements with the discipline to implement realistic human capital solutions for the business

Expectations for HR professionals change in an Agile model

COMPETENCIES

How is this different from the prevailing HR model?The focus here moves from theory — knowing what they should do — to practice — actually doing what must be done


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In the future, HR technology will be managed differently from prevailing models

TECHNOLOGY

From To

Expensive in-house hardware and HR software with extensive IT support

Cost-effective Software as a Service (Saas) solution(s), configured by HR experts, not IT

HR integrates employee data from multiple HR and payroll systems across the globe and creates data reports for managers to analyze

One global system with web-based manager dashboards, transaction and modeling capabilities.

Reporting that lists masses of data, focuses on historical information or current snapshots

Reporting that focuses manager’s attention on key business items/issues; provides meaningful prospective modeling to support business decisions

HR drives performance management, workforce planning and succession management through intensive data mining and manual manipulation (e.g., succession planning books)

Managers own workforce planning, performance management and succession planning, supported by integrated, easy-to-use on line tools

Multiple HR Internets for each business or country and IT control over content and updates

Global HR portal with content owned and updated by HR functional experts

In an Agile model, HR functional experts configure technology without the need for IT support. Managers access and analyze human capital data without the need for HR administrative support.


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Summing up

Progress has been made, but there’s more work to doHR must identify the next HR evolution and formMultinational firms are under pressure to truly globalize their HR function and service deliveryHR functions must make the right decisions about structure, talent, governance, technology, roles/types of people needed and implementationLeadership essentials for change

Clarity of vision, purposeDiscipline, grip, momentumConvictionPatienceCourage


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Questions?Denise LaForte [email protected]

James Millar [email protected]

towers watson: shaping the hr function of tomorrow…today

Business

towers watson client

hr area

commonlyaccepted hr

hr service delivery

significant hr transformation

hr systems strategy

upgrade hr system18

global hr process model