ADP Survey - Global HR Transformation 2009

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					Global HR 2010
Transformation
  An ongoing journey




      Conducted by SharedXpertise in association with ADP
                                                                                            table of contents


                                                                  introduction                                                                       4


                                                                  about the survey                                                                   5


                                                               executive summary                                                                     6
                                                      introduction ............................................................................ 4

                                                              research findings
                                                      about the survey...................................................................... 5       8

                                                      executive summary.................................................................. 6
                                                                    HR transformation status                                                         8
                                                      research findings ..................................................................... 8
                                                                     HR transformation outcomes                                                     12
                                                            HR transformation status .................................................. 8

                                                            HR transformation outcomes .......................................... 12
                                                                     outsourcing and shared services                                                18

                                                            outsourcing and shared services ..................................... 18
                                                                     HR management practices                                                        28
                                                            HR management practices .............................................. 28
                                                              about the survey participants
                                                      about the survey participants ................................................ 30             30


                                                              about the sponsors sponsors
                                                      about the research research .................................................. 32             32




Conducted by SharedXpertise in association with ADP                                                                                                      [3]
introduction



               one glass, two ways to see it
               There are many ways to look at things, but a situation can usually be analysed by viewing it
               from one of two angles: the glass is half full or it’s half empty.

               In other words, look on the bright side of the story or let your less optimistic side take
               control.

               In fact the real choice is between the intent to get better at something or just maintain a
               situation as is. What do you think we chose for ADP, a company that has been in business
               for over 60 years? What could have led us to support the Global HR Transformation Report
               for so many years, if not the will to understand where room for improvement exists?

               What does this year’s report tell us? First of all, things are heading in the right direction. No
               revolution here but a movement that has been steadily gathering momentum. Companies
               around the world that embarked on HR Transformation years ago now reap the rewards of
               their efforts. Regional variances still exist but those of you who have been reading the
               report for several years will find concepts that were previously unfamiliar are now
               conventional wisdom.

               So, is HR Transformation over? It would be foolish to think so. There are in fact many
               aspects yet to be examined; ideas and actions to be carefully considered that could lead to
               fantastic opportunities. I am confident the HR Transformation journey is far from over.

               More than ever, companies have to deal with uncertainty and new forms of competition,
               and I invite you to listen carefully to how other HR professionals identify new challenges
               and bring innovations. Any component of a business has the potential to play a significant
               role in the changes that must be made for a company not just to survive, but to thrive.

               HR plays an important role in reaching this goal. It is in our interest, as solution providers
               and HR professionals, to strive to move forward together toward the goal of making HR
               more agile. We may then accurately assess the resources needed to manage change, deal
               with cultural differences, and define the appropriate breakout of processes to manage at
               the local, regional and global levels. These are but a few examples of how to solve the
               equation.

               This is how HR and, more specifically HR Transformation, should be viewed: a sophisticated
               equation. No one said it would be easy to figure out, nor that its components would remain
               the same, but mathematics is all about defining new possibilities and transforming them
               into real opportunities.

               New challenges lie ahead. It is up to us to leverage this report to find innovative ways to
               meet them.

               I wish you a rewarding read,

               Doug Cummings
               Senior Vice President, Global MNC Sales
               ADP Employer Services




[4]                                                                    Conducted by SharedXpertise in association with ADP
                                                                                                    about the survey

                                                      Our survey, now in its seventh year, examines trends in human resources (HR)
                                                      transformation practices (which we define as any concerted effort to change and
                                                      improve HR operations, whether through outsourcing, shared services, internal
                                                      reengineering, or a combination of these strategies) in organisations around the
                                                      globe. The 2010 report offers a view of market trends and changes in HR
                                                      transformation, as well as a perspective on future plans.

                                                      In addition to discussing transformation status and strategy, our report addresses:

                                                        •   Reasons organisations transform, and the barriers that limit their transformation
                                                        •   Transformation timing, cost and satisfaction
                                                        •   Engagement of external resources and experience
                                                        •   Current and future transformation scope
                                                        •   HR outsourcing and shared services strategy, budget and provider selection

                                                       The survey received responses from 225 executives around the globe in varying
                                                      stages of HR transformation. For a full breakdown of respondent demographics,
                                                      please visit the About the Survey Participants section of the report.




Conducted by SharedXpertise in association with ADP                                                                                             [5]
executive summary

      summary of 2010 findings
      Transformation is on the rise again. After a dip in 2009, HR        HR transformation continues to take longer than anticipated.
      transformation appears to be on the rise again with 85% of all      Organisations in all regions take slightly longer to transform
      respondents saying they are considering, in the process of, or      than they originally anticipate, a finding that has been
      finished with HR transformation. In fact, although the recent       consistent throughout the seven years of our research.
      economic recession does appear to have had some impact on
                                                                          On average, HR leaders say HR transformation requires two to
      HR transformation activity (many indicators were down in
                                                                          three years; more than a quarter of organisations take more
      2009 over 2008) there are signs of increased transformation
                                                                          than four years to transform HR. The top reasons
      activity improvement in 2010 (though generally not back to
                                                                          transformation is delayed are: management/leadership/
      2008 levels):
                                                                          organisational changes impacted transformation progress;
      •    Transformation efforts overall were down in 2009,              and, timing and transformation is/was more complex than
           reversing a years-long trend of growth, but on the rise        expected.
           again in 2010.
                                                                          And continues to generate less in savings than anticipated. At
      •    The proportion of respondents who say they are not             the same time, organisations often miss their transformation
           transforming due to cost pressures increased                   savings targets by a slim margin: whilst 62% of all respondents
           significantly from 2008 to 2009,but declined from 2009         anticipate savings of 6% – 25%, 57% actually achieve those
           to 2010.                                                       savings; another 14% anticipate the lowest level of savings
      •    Internal reengineering (versus engaging outsourcing,           (less than 5% savings), but 20% say they actually achieve
           shared services or some kind of hybrid approach) was up        savings in that range. Respondents in EMEA are more
           significantly in 2009 over 2008, but it stayed virtually the   aggressive than those in other regions in both their cost
           same in 2010.                                                  savings expectations and results.
      Regional shifts in HR transformation may be appearing on the        Organisations achieve the best transformation results in
      horizon. On a regional basis, organisations in the Americas are     organisational management areas. Survey respondents say
      slightly more likely than their counterparts in other regions to    they perform best in aligning the organisation around
      be engaged in HR transformation, but longitudinal research          common objectives (79% of respondents say they exceed or
      indicates there may be changes. Our results show an increase        meet expectations in this area) and responding to
      in HR transformation activity in Europe/Middle East/Africa          organisational changes (73% of all respondents exceed or
      (EMEA) (75% transforming in 2008 versus 87% in 2010), and a         meet expectations). Respondents rate themselves worst at
      decline in activity in Asia Pacific (93% transforming in 2008       leveraging HR transformation to free internal HR staff to focus
      versus 81% in 2010), whilst the Americas remain fairly steady       on strategic issues (46% say the fall below expectations in this
      at 89%.                                                             area) and benefiting from a new technology to empower line
      Transformation approaches vary by region. Americas-based            management (42% say they fall below expectations in this
      organisations are most likely to employ a hybrid approach,          area).
      Asia Pacific oranisations focus on internal reengineering, and      Organisations do a good job of matching areas of importance
      EMEA organisations are the most varied with nearly equal            to performance. Generally, organisations are performing best
      portions engaging hybrid, internal reengineering and shared         in the areas that they deem important, with the single
      services approaches.                                                exception being the objective of freeing internal HR staff to
      Top reasons organisations engage in HR transformation also          focus on strategic issues, which has the lowest reported
      vary by region. In a departure from prior years, our 2010           performance of all key performance areas.
      research indicates different top reasons for transformation by      HR transformation hurdles are becoming entrenched. Across
      region:                                                             all seven years we’ve been conducting this research, the main
      •    Americas: to align the organisation on common                  hurdles to HR transformation have remained unchanged, with
           objectives and to free internal HR staff to focus on           skills of existing HR staff at the top of the list every year.
           strategic issues (both selected by 56% of respondents)         Other top hurdles continue to include underestimation of
                                                                          resources needed (52%), lack of adequate technology (41%),
      •    Asia Pacific: to add and/or improve service for line           and internal bureaucracy (40%).
           management and employees or to respond to
           organisational changes (both are selected by 65% of            HR outsourcing appears to be declining. Across the past three
           respondents)                                                   years, the proportion of respondents who say they are
      •    EMEA: to reduce/better manage costs (62% of                    currently outsourcing or considering outsourcing HR
           respondents)                                                   processes has slowly declined, from 65% in 2008 to 59% in
                                                                          2009, and 54% in 2010.


[6]                                                                                                  Conducted by SharedXpertise in association with ADP
                                                                                              executive summary

             Even with changes across time, HR outsourcing continues to         The use of shared services for some transactional services
             be focused on transactional activities. Organisations in all       remains common. Just about two-thirds of all respondents say
             regions are most likely to outsource/consider outsourcing          they manage one or more HR process(es) through a shared
             payroll, and least likely to outsource/consider outsourcing the    services model. As with outsourcing, organisations are more
             entire HR function.                                                likely to manage transactional processes – such as payroll and
                                                                                HR information systems (HRIS) – in a shared services
             With HR outsourcing as a whole down, few individual
                                                                                environment than they are strategic processes. Respondents
             processes experience an increase in outsourcing between
                                                                                from the Americas are more likely than are their counterparts
             2009 and 2010. The highest increase in outsourcing is in
                                                                                in other regions to manage at least one HR process through a
             assessment/performance appraisal, which, although
                                                                                shared services model (71% of Americas respondents versus
             uncommon, rose from 19% to 26% between 2009 and 2010.
                                                                                56% of Asia Pacific respondents and 63% of EMEA
             Payroll, the most commonly outsourced HR process, also saw
                                                                                respondents).
             an increase, from 80% in 2009 to 84% in 2010.
                                                                                HR functional management may be becoming increasingly
             Most buyers develop their own processes for identifying and
                                                                                global. The HR function is most often centralised at a global
             selecting their provider(s). Nearly three quarters of all
                                                                                level, with 42% of all respondents selecting that option,
             respondents say they develop and/or use their own process
                                                                                versus domestic and regional centralisation, each selected by
             to identify and select their provider(s), down from a high of
                                                                                29% of respondents. This finding represents a change over
             87% in 2009, but nearly equally to 2008’s 70%. 2010 saw a
                                                                                2009 when the split was fairly equal amongst the three
             decline in the use of consultants or sourcing advisors, with
                                                                                options (35% domestic, 33% regional and 32% global).
             36% of respondents saying they engage a consultant or
             sourcing advisor versus 51% in 2009. The issuing of requests       Whilst HR functions are most often centralised on a global
             for information (RFIs) and requests for proposals (RFPs) is also   level, individual HR processes are most often managed on a
             down.                                                              local level. Nearly all HR processes are most likely to be
                                                                                managed locally, versus regionally or globally. Only stock
             The top four provider selection criteria remain ever constant.
                                                                                option management is just slightly more likely to be managed
             The top four provider selection criteria remain unchanged
                                                                                on a global level than a local level.
             over the previous four years, although they regularly change
             positions. In 2010, the top provider selection criterion is        Most organisations have a common HR information system
             proven ability to meet service levels, followed by functional      (HRIS). Amongst those organisations that have a common
             coverage and expertise, then price followed by multi-country       HRIS (80% of all respondents), over a third (35%) say it is
             capabilities. There are limited differences in the top criteria    managed at a global level; nearly as many (32%), though, say
             amongst the different regions.                                     their HRIS is managed at a domestic level. Least likely
                                                                                amongst those that have a common HRIS is management at
             Organisations most often budget less than US$1M annually
                                                                                the regional level (14% of all respondents).
             for HR outsourcing. The highest percentage of respondents
             (41%) budget less than US$1M annually for HR outsourcing;
             another 30% budget US$1M – US$10M, and the remaining
             29% budget more than US$10M. Analysis of year-over-year
             HR outsourcing budgets indicates growth at both ends of the
             budget scale, with an expanding proportion budgeting either
             less than US$1M or more than US$11M.

             Although HR outsourcing appears to be declining,
             respondents say budgets are rising. In spite of the fact that a
             declining percentage of respondents say they are currently
             outsourcing or considering doing so, the percentage of
             respondents who say their HR budgets are increasing is up:
             48% of respondents say they anticipate their HR outsourcing
             budgets to increase over the next three years versus 42% in
             2009 (although not up to the 2008 level of 55%). Most often,
             organisations say they expect budgets to increase by 10% –
             24% (20% of all respondents); 17% say they anticipate an
             increase of less than 10%.




Conducted by SharedXpertise in association with ADP                                                                                              [7]
research findings
             HR transformation status
             headlines
             •    HR transformation is on the rise again following a dip in 2009; 85% of all respondents say they are engaged in HR
                  transformation in some form, whether reengineering, outsourcing, shared services, or hybrid approach. Just over a third say
                  they have been engaged in HR transformation over a year.
             •    Whilst organisations in the Americas are still more likely to be transforming HR than are those in other regions, the most
                  significant year-over-year change has taken place in the Europe/Middle East/Africa (EMEA) region, with a 16-point increase in
                  organisations saying they are engaged in HR transformation in 2010 over 2009.
             •    Those that are transforming HR most often engage a hybrid approach (41%), combining internal reengineering, shared
                  services, and possibly outsourcing. Next most common is internal reengineering, with nearly a third engaging that strategy.
             •    Transformation strategies vary by region: organisations in the Americas are most likely to engage a hybrid approach; those in
                  the Asia Pacific region most often employ internal reengineering, and EMEA organisations are the most diverse, employing a
                  variety of approaches
             •    The reasons organisations engage in HR transformation has remained constant over years of research, the most common
                  being to reduce or better manage costs. However, there are variations by region: those in the Americas most often say their
                  focus is to align the organisation on common objectives and to free internal HR staff to focus on strategic issues; Asia Pacific-
                  based respondents most often say it is to add and/or improve service for line management and employees or to respond to
                  organisational changes; EMEA headquartered organisations most often say they are engaged in HR transformation to reduce/
                  better manage costs.
             •    Amongst those respondents who say they are not engaged in HR transformation, most say the reason is that they are satisfied
                  with their current organisation or strategy.




             findings
             who is transforming HR                                               Amongst those organisations that have chosen not to engage
                                                                                  in HR transformation, most often it is because they are
               After a dip in 2009, HR transformation appears to be on the        satisfied with their current organisation or solution (53%), HR
               rise again with 85% of all respondents saying they are             is not a priority (26%) or transformation is considered too
                         considering, in the process of, or finished with HR      costly (24%). The order and magnitude of these reasons are
        organisations
      transforming HR    transformation. HR transformation activity remains       largely unchanged between 2009 and 2010, although cost was
                         down from its highest (90% in 2008).                     significantly up in 2009 over 2008, and appears to be waning
      85%              On a regional basis, organisations in the Americas
                                                                                  in 2010. (Cost was selected as a reason not to transform by
                                                                                  0% in 2008, 40% in 2009, and 24% in 2010).
                       are slightly more likely than are their counterparts in
             other regions to be engaged HR transformation. However,              where organisations are in HR transformation
             survey results indicate activity is shifting by region.
                                                                                  The highest percentage of respondents (40%)                   organisations
             The most significant change has been in been in the Europe/                                                                  with more than 1 year of
                                                                                  have been transforming HR for one to two years,
             Middle East/Africa (EMEA) region, which has seen an increase                                                                       experience in
                                                                                  and 64% have been transforming HR for a year or             transforming HR
             in HR transformation activity: 87% of EMEA respondents say
                                                                                  more. Predictably, generally the larger the
             they are engaged in HR transformation, up from a low in 2009
             of 71%. On the other hand, the Asia Pacific region has
                                                                                  company, the longer they have been
                                                                                  transforming HR.
                                                                                                                                              64%
             experienced a decline in HR transformation activity, from 93%
             in 2008 to 81% in 2010. HR transformation activity in the
             Americas is virtually unchanged at 89% of all respondents.




[8]                                                                                                           Conducted by SharedXpertise in association with ADP
                                                                                                                                                                                                                       research findings
       figure 1: where organisations are in their transformation process, all                                                                                        figure 2: organisations engaged in HR transformation, 2006 – 2010
       respondents



                        15%                                                                                                                                                                                                                                          90%
                                    21%                                     Planning to transform                                                                                                                                                       85%                        85%
                                                                                                                                                                                                                                                                            81%
                                                                                                                                                                                                                 75%




                                                                                                                                                                       % engaged in transformation
                   7%
                                                                            In transformation

                                                                            Completed transformation

                                                                            No plans to transform
                              57%



                                                                                                                                                                                                                 2006                                   2007         2008   2009   2010




                                    figure 3: organisations engaged in HR transformation, by region, 2008 – 2010


                                                                         Americas                                                               Asia Pacific                                                                                                EMEA
                                     % engaged in transformation




                                                                                                                % engaged in transformation




                                                                                                                                                                                                                        % engaged in transformation
                                                                                                                                              93%
                                                                   89%     87%      89%                                                                                                                                                                              87%
                                                                                                                                                    83%        81%
                                                                                                                                                                                                                                                      75%
                                                                                                                                                                                                                                                               71%




                                                                   2008 2009 2010                                                             2008 2009 2010                                                                                          2008 2009 2010




                                                                           figure 4: reasons organisations are not transforming HR, all respondents


                                                                             Satisfied with current organisation/solution                                                                                                                                   53%
                                                                                                        HR is not a priority                                                                              26%
                                                                                                                       Cost                                                                            24%
                                                                                 Company currently under re-organisation                                             15%
                                                                                                            Company policy                                3%
                                                                                                                                                                                % who select




                                                                                      figure 5: how long organisations have been engaged in HR transformation,
                                                                                      all respondents


                                                                                                      14%                                                                                            <1 yea r
                                                                                                                24%
                                                                                                                                                                                                     1 – 2 years
                                                                                                22%
                                                                                                                                                                                                     3 – 4 years

                                                                                                                                                                                                     5+ yea rs
                                                                                                              40%




Conducted by SharedXpertise in association with ADP                                                                                                                                                                                                                                       [9]
research findings
                    HR transformation status, continued
                    findings
                    how organisations are transforming HR
                    Organisations are most often transforming HR through a
                    hybrid approach of outsourcing, centralised services and
                    internal reengineering (40% selected this option). Next most
                    common is internal reengineering (31%), followed by a
                    predominantly shared services approach (23%), then by a
                    predominantly outsourcing approach (6%).

                    This pattern is somewhat similar to the approach
                    organisations noted in our 2009 research, when, likely due to
                    the global economic recession, internal reengineering jumped
                    from 19% of all respondents to 33%. Whilst down slightly, to
                    31%, in 2010, that approach remains strong. At the same
                    time, outsourcing rose in 2009 over 2008, but is off again in
                    2010.

                    Transformation approaches vary somewhat by region.
                    Organisations in the Americas are the most likely to engage in
                    a hybrid approach (45%), whilst those in the Asia Pacific
                    region are most likely to engage in internal reengineering
                    (44%). Organisations headquartered in EMEA are much more
                    diverse in their approach, with nearly equal portions engaging
                    in hybrid (32%), internal reengineering (31%) and shared
                    services (29%) approaches. In all regions, a transformation
                    approach based predominantly on outsourcing is uncommon.

                    why organisations are transforming HR

                    The main reasons organisations transform HR have remained
                    fairly constant over the past several years, with reducing/
                    better managing costs the top reason (56% select this option
                    on 2010), as it has been for all but one year. (2008, when cost
                    reduction/management dropped to number three, appears to
                    have been an anomaly.) Other top reasons to transform HR
                    (also consistent across the years) are adding/improving
                    service for line managers and employees (52%), responding to
                    organisational changes (52%), aligning the organisation on
                    common objectives (51%), and freeing internal HR staff to
                    focus on strategic issues (51%).

                    Unlike in years past, this year’s results indicate some variation
                    in response by region. Respondents from organisations based
                    in the Americas most often say they are engaged in HR
                    transformation to align the organisation on common
                    objectives and to free internal HR staff to focus on strategic
                    issues (both are selected by 56% of respondents). Asia Pacific-
                    based respondents most often say they are engaged in HR
                    transformation to add and/or improve service for line
                    management and employees or to respond to organisational
                    changes (both are selected by 65% of Asia Pacific
                    respondents). EMEA headquartered organisations most often
                    say they are engaged in HR transformation to reduce/better
                    manage costs (62% of EMEA respondents).




[10]                                            Conducted by SharedXpertise in association with ADP
                                                                                                                                   research findings
                figure 6: approaches organisations are taking to transform HR, all                         figure 7: approaches organisations are taking to transform HR, 2008 – 2010
                respondents

                                                      6%
                                                                                                                 2008                44%                    19%             30%            7%
                                                23%
                                                              40%
                                                                                                                 2009             35%                      33%              20%           12%

                                                                                                                 2010                40%                        31%              23%       5%
                                                  31%



                                                                                                           Figure x: approaches organisations are taking to transform HR, by region

                                       Hybrid

                                       Internal reengineering                                               Americas                  45%                        27%               23%     5%
                                       Predominantly shared services                                            Asia
                                                                                                                                    36%                         44%                 16% 4%
                                       Predominantly outsourcing                                               Pacific

                                                                                                                EMEA             32%                      31%                29%           7%




figure 8: reasons organisations engage in HR transformation, all respondents and by region


                                     To reduce cost or better manage the cost of internal processes                                                             56%
                                To add and/or improve service for line management and employees                                                              52%
                                                                To respond to organisational changes                                                         52%
                                                     To align the organisation on common objectives                                                         51%
                                                 To free internal HR staff to focus on strategic issues                                                     51%
all respondents                                            To concentrate resources on core business                                    35%
                                   To benefit from a new technology to empower line management                                        33%
                                                                                To facilitate reporting                      25%
                                       To access external sources of talent, expertise or technology                17%
                                                                                                                                           % who select




                                                     To align the organisation on common objectives                                                                          56%
                                                 To free internal HR staff to focus on strategic issues                                                                      56%
                                     To reduce cost or better manage the cost of internal processes                                                                       53%
                                                                To respond to organisational changes                                                                     52%
                                To add and/or improve service for line management and employees                                                                         51%
         americas
                                   To benefit from a new technology to empower line management                                                   33%
                                                           To concentrate resources on core business                                             33%
                                                                                To facilitate reporting                               25%
                                       To access external sources of talent, expertise or technology                          18%
                                                                                                                                           % who select



                                To add and/or improve service for line management and employees                                                                                        65%
                                                                To respond to organisational changes                                                                                   65%
                                                  To free internal HR staff to focus on strategic issues                                                                      58%
                                                      To align the organisation on common objectives                                                                       55%
                                                           To concentrate resources on core business                                                                    52%
      asia pacific
                                     To reduce cost or better manage the cost of internal processes                                                                   48%
                                   To benefit from a new technology to empower line management                                                             42%
                                                                                To facilitate reporting                                                    42%
                                        To access external sources of talent, expertise or technology                                            32%
                                                                                                                                           % who select



                                     To reduce cost or better manage the cost of internal processes                                                                                 62%
                                To add and/or improve service for line management and employees                                                                       49%
                                                                 To respond to organisational changes                                                             47%
                                                      To align the organisation on common objectives                                                         44%
                                                  To free internal HR staff to focus on strategic issues                                                   42%
             emea
                                                        To concentrate resources on core business                                            30%
                                   To benefit from a new technology to empower line management                                             28%
                                                                                To facilitate reporting                        19%
                                        To access external sources of talent, expertise or technology               9%
                                                                                                                                           % who select




Conducted by SharedXpertise in association with ADP                                                                                                                                             [11]
research findings
          HR transformation outcomes
          headlines
          •    HR transformation takes slightly longer and generates slightly less savings than first anticipated, a finding that has remained
               unchanged across seven years of research.
          •    Organisations cite management/leadership/organisational changes as the top reason for slower-than-expected results.
          •    Organisations realise the best results from HR transformation in organisational management areas, and the worst results in
               leveraging HR staff into more strategic areas.
          •    On the whole, respondents do not appear terribly happy with their HR transformation performance overall. On a 5-point
               scale, the highest performing area (adding and/or improving service for line management and employees) achieves only a
               2.89 score.
          •    That said, organisations generally report performing better in areas that they deem important and less well in areas they
               deem unimportant, so it appears focus and resourcing are being thoughtfully applied.
          •    The main hurdles to successful HR transformation remain unchanged over the years, with skills of existing HR staff perpetually
               topping the list. In the 2010 research the next most common hurdle is underestimating the resources needed to transform.




          findings
          time and savings                                                     As with time-to-transform results, organisations often miss
                                                                               their cost savings expectations by a slim margin. A majority of
             HR transformation takes slightly longer than anticipated to       respondents (62%) anticipate savings of 6% – 25% (the
             achieve, a result we have found throughout the seven years        highest portion anticipating savings of 16% – 25%), but 57%
                         we have conducted this research. Across all           actually achieve those savings. Whilst 14% anticipate the
  average number of
  years to transform     respondents, those responsible for HR                 lowest level of savings (less than 5% savings), 20% say they
                         transformation most often anticipate                  actually achieve savings in that range. On the other end of the
       2-3               transformation taking one to two years (42% of
                         respondents), whilst 32% actually achieve that
                                                                               scale, however, virtually the same proportion of respondents
                                                                               anticipate and achieve savings of more than 35% (8%
                         result. Another quarter (25%) expect                  anticipate those savings; 7% achieve them).
             transformation to require three to four years, whilst 31%
             actually take that amount of time; and only 10% anticipate        Again here, whilst organisations in different
                                                                                                                                         average cost savings
             taking more than four years, whilst more than a quarter (27%)     regions generally follow similar patterns, there
             actually require that amount of time. The remaining 23%
             anticipate transformation taking a year or less; only 11%
                                                                               are regional differences. EMEA organisations
                                                                               tend to be most aggressive in their planning, with         16%-
             actually achieve transformation in the timeframe.                 just over a third (35%) anticipating savings of

          Organisations in different regions tend to follow similar
                                                                               more than 25% (versus 19% and 14% of Asia
                                                                               Pacific and Americas respondents, respectively,
                                                                                                                                          25%
          patterns as the overall response, although Asia Pacific              anticipating this level of savings).
          organisations appear to be more aggressive in both
          anticipated and actual transformation timing.                        Interestingly, whilst a higher proportion of EMEA respondents
                                                                               actually achieve savings of more than 25% (25% of EMEA
          The most common reasons respondents cite for taking longer           respondents say they achieve that level of savings, versus 20%
          than anticipated to achieve HR transformation include:               of Asia Pacific and 19% of Americas respondents), that means
          •    Management/leadership/organisational changes impacted           EMEA respondents are generally underperforming their
               transformation progress and timing.                             expectations, whilst Americas and Asia Pacific respondents
          •    Transformation is/was more complex than expected.               are outperforming their expectations, even if only slightly.

          •    Staff turnover impacts(ed) transformation progress and
               timing.
          •    The staff is/was too stretched to focus on transformation
          •    Competing priorities impacts(ed) transformation progress
               and timing.




[12]                                                                                                       Conducted by SharedXpertise in association with ADP
                                                                                                                                      research findings

             figure 9: actual versus expected time to transform, all respondents



                                                                                                                                                         Less than 6 months
                                  Anticipated     4%         19%                         42%                            25%               10%
                                                                                                                                                         6 – 12 months
                                                                                                                                                         1 – 2 years
                                                 2%                                                                                                      3 – 4 years
                                       Actual          9%                 32%                        31%                       27%
                                                                                                                                                         More than 4 years




             figure 10: actual versus expected time to transform , by region



                                    Americas      5%         16%                        41%                         29%                   9%
                    Anticipated




                                  Asia Pacific        8%            24%                         44%                             24%
                                                                                                                                                           Less than 6 months
                                       EMEA      3%          19%                         45%                        20%               13%
                                                                                                                                                           6 – 12 months
                                                                                                                                                           1 – 2 years
                                    Americas 3% 9%                        30%                    26%                          32%                          3 – 4 years
                    Actual




                                                                                                                                                           More than 4 years
                                  Asia Pacific    4%          21%                      29%                        38%                     8%

                                       EMEA       5%                 34%                         33%                          28%




             figure 11: actual versus expected cost savings resulting from HR transformation, all respondents

                                                                                                                                                             Up to 5%
                                                                                                                                                             6% – 15%
                                  Anticipated          14%                 29%                        33%                     15%         6%        2%
                                                                                                                                                             16% – 25%
                                                                                                                                               1%            26% – 35%
                                                                                                                                                             36% – 45%
                                       Actual              20%                   30%                       27%                 16%        5%        1%
                                                                                                                                                             46% – 55%
                                                                                                                                                             More than 55%



             figure 12: actual versus expected cost savings resulting from HR transformation, by region



                                    Americas           16%                  30%                             41%                     8% 3%
                    Anticipated




                                                                                                                                                    3%
                                                                                                                                                             Up to 5%
                                  Asia Pacific        9%                        45%                          27%              5%     9%    5%
                                                                                                                                                             6% – 15%
                                       EMEA           13%             23%                      30%                      27%               6%    2%
                                                                                                                                                             16% – 25%
                                                                                                                                                             26% – 35%
                                    Americas               21%                    32%                       28%                12%        7%                 36% – 45%
                    Actual




                                  Asia Pacific         14%                 29%                         38%                    5% 10%           5%            46% – 55%
                                                                                                                                                             More than 55%
                                       EMEA                20%                   28%                   27%                     23%                  2%




Conducted by SharedXpertise in association with ADP                                                                                                                             [13]
research findings
            HR transformation outcomes, continued
            findings
            outcomes versus expectations                                          Applying a 5-point scale to respondents’ performance (where
                                                                                  performance that is far below expectations=1, and
              Similar to prior years, respondents report best results from        performance that far exceeds expectations=5), on the whole
              their HR transformation efforts in organisational management        respondents are not terribly happy with their performance.
              areas, including aligning the organisation around common            The highest performing reported area, adding and/or
              objectives (79% of respondents say they exceed or meet              improving service for line management and employees,
              expectations in this area) and responding to organisational         achieves only 2.89 points on the 5-point scale. The
              changes (73% meet or exceed expectations in this area).             performance band is fairly narrow, though, as the lowest
              Respondents say they most often exceed expectations in              performing area, freeing internal HR staff to focus on strategic
                                            adding or improving service for       issues, scores 2.62 points on the 5-point scale.
       best results in HR transformation
                                            line management and employees;
  organisational                            22% of all respondents say they       That said, organisations appear to be doing a reasonably good
                                                                                  job of matching areas of importance (see the why
  management                                have exceeded expectations in
                                            that area.                            organisations are transforming section) to performance.
                                                                                  Generally, organisations are performing best in the areas that
            On the other hand, respondents rate themselves worst at               they deem important, with the single exception being the
            leveraging HR transformation to free internal HR staff to focus       objective of freeing internal HR staff to focus on strategic
            on strategic issues (46% say the fall below expectations in this      issues, which has the lowest reported performance of all key
            area) and benefiting from a new technology to empower line            performance areas.
            management (42% say they fall below expectations in this
            area); 40% of respondents also say they are failing to access
            external sources of talent, expertise or technology.


                                             worst results in HR transformation

                                        freeing HR staff
                                          to focus on
                                        strategic issues




[14]                                                                                                         Conducted by SharedXpertise in association with ADP
                                                                                                                                   research findings
                   figure 13: performance versus expectations in key HR transformation performance areas, all respondents

                                                   To align the organisation on common objectives       8%                          71%                                        21%
                                                             To respond to organisational changes       12%                         61%                                    27%
                              To add and/or improve service for line management and employees                 22%                      50%                                 29%
                                  To reduce cost or better manage the cost of internal processes             18%                    51%                                   31%
                                                                             To facilitate reporting         17%                    52%                                   31%
                                                        To concentrate resources on core business         16%                      53%                                    31%
                                       To access external sources of talent, expertise or technology    9%                 51%                                       40%
                                To benefit from a new technology to empower line management             10%                48%                                      42%
                                               To free internal HR staff to focus on strategic issues   11%               43%                                      46%

                                                                                      exceeds           meets       falls below




            figure 14: importance of and performance in key HR transformation performance areas




                                                                                                                                                        A
                                                                                                                                                    B
                                                                 D                                                                                          C


                                                                                                                                                    E
                                                                                                F
     performance




                                   G

                                                                                        H


                                                                                                                                                    I




                                                                                                importance

                                                                                                                                  Importance            Performance
                         Key      Performance area                                                                              (% of respondents        (how organisations
                                                                                                                                   selecting as         perform on a 5-point
                                                                                                                                    important)                 scale)
                          A       To add and/or improve service for line management and employees                                            60%                      2.89
                          B       To align the organisation on common objectives                                                             59%                      2.87
                          C       To reduce cost or better manage the cost of internal processes                                             63%                      2.86
                          D       To facilitate reporting                                                                                    29%                      2.86
                          E       To respond to organisational changes                                                                       59%                      2.85
                          F       To concentrate resources on core business                                                                  39%                      2.83
                          G       To access external sources of talent, expertise or technology                                              19%                      2.66
                          H       To benefit from a new technology to empower line management                                                38%                      2.63
                          I       To free internal HR staff to focus on strategic issues                                                     59%                      2.62




Conducted by SharedXpertise in association with ADP                                                                                                                                  [15]
research findings
       HR transformation outcomes, continued
       findings
       hurdles to HR transformation                                         existing HR staff is virtually unchanged (62% in 2010; 63% in
                                                                            2009). Underestimation of resources needed grew the most,
       Across all seven years we’ve been conducting this research,          with 52% selecting this hurdle in 2010 versus 40% in 2009.
       the main hurdles to HR transformation have remained                  Difficulty in dealing with national/cultural differences grew by
       unchanged, with skills of existing HR staff at the top of the list   9 percentage points, from 20% in 2009 to 29% in 2010.
       every year. Other top hurdles continue to include                    Opposition from workers’ councils, never selected by many
       underestimation of resources needed (52% selected this               respondents from the start, dropped the most, from 13% in
       hurdle), lack of adequate technology (41% selected this              2009 to 6% in 2010. Internal bureaucracy dropped by 6
       hurdle), and internal bureaucracy (40% selected this hurdle).        points, from 46% in 2009 to 40% in 2010.
       In 2009, we noted a reversal of a trend that we had seen in          Regional differences in hurdles to HR transformation are fairly
       prior years: for the first time it appeared that some hurdles        limited, with all three regions selecting the same two top
       were declining. In 2008 we noted that 7 of the 10 identified         hurdles: skills of existing HR staff as the number one (55% of
       hurdles received higher responses between 2006 and 2008. In          Americas respondents; 84% of Asia Pacific respondents; 64%
       2009, all but one (opposition from worker’s councils – and           of EMEA respondents), and underestimation of the resources
       that had only a very slight increase) experienced a decrease         needed as number two (49% of Americas respondents; 56% of
       (meaning fewer respondents selected almost every hurdle in           Asia Pacific respondents; 58% of EMEA respondents).
       2009 versus what they noted in prior years). The 2010 results
       do not carry forward that trend; instead, we see a mixed bag,
       with some hurdles declining whilst others are increasing.

       Overall, the proportion of respondents who selected skills of




[16]                                                                                                    Conducted by SharedXpertise in association with ADP
                                                                                                                                     research findings

              figure 15: importance of and performance in key HR transformation performance areas, all respondents, 2009 –2010



                                                                                                                                                                         63%
                                                   Skills of existing HR staff
                                                                                                                                                                  62%

                                                                                                                                             40%
                              Underestimation of the resources needed
                                                                                                                                                     52%

                                                                                                                                             40%
                                              Lack of adequate technology
                                                                                                                                     41%

                                                                                                                                                     46%
                                                       Internal bureaucracy
                                                                                                                                     40%

                                                                                                                                       36%
                              Lack of employee and business line buy-in
                                                                                                                             36%
                                                                                                                                                                               2009
                                                                                                                20%
                  Difficulty in dealing with national/cultural differences
                                                                                                                  29%                                                          2010

                                                                                                                  23%
                                     Lack of senior management support
                                                                                                          24%

                                                                                                          17%
                          Difficulty in building a justifiable business case
                                                                                                    20%

                                                                                                     15%
                                                     Regulatory constraints
                                                                                              15%

                                                                                                    13%
                                        Opposition from workers councils
                                                                                      6%



                                                                                                                      % who select




              figure 16: importance of and performance in key HR transformation performance areas, all respondents, by region



                                                                                                                                                     55%
                                                                Skills of existing HR staff                                                                                84%
                                                                                                                                                            64%
                                                                                                                                               49%
                                              Underestimation of the resources needed                                                                56%
                                                                                                                                                      58%
                                                                                                                                    41%
                                                            Lack of adequate technology                                            40%
                                                                                                                                   41%
                                                                                                                                     42%
                                                                    Internal bureaucracy                                           40%
                                                                                                                                  39%
                                                                                                                                    41%
                                              Lack of employee and business line buy-in                                         36%
                                                                                                                             32%
                                                                                                                       26%
                                  Difficulty in dealing with national/cultural differences                              28%
                                                                                                                          30%
                                                                                                                      25%
                                                    Lack of senior management support                      16%
                                                                                                                      25%
                                                                                                                19%
                                         Difficulty in building a justifiable business case                       24%
                                                                                                                 22%
                                                                                                          14%
                                                                  Regulatory constraints                        20%
                                                                                                  9%
                                                                                                 7%
                                                      Opposition from workers councils         4%
                                                                                              3%

                                                                                                                                     % who select


                                                                                                                       Americas              Asia Pacific         EMEA




Conducted by SharedXpertise in association with ADP                                                                                                                                   [17]
research findings
       outsourcing and shared services
       headlines
       •   Across the last three years, the proportion of respondents who say they are currently outsourcing HR services or plan to
           outsource them has declined, from 65% (in 2008) to 54% (in 2010).
       •   Whilst outsourcing remains more common in organisations in the Americas than in other regions, American organisations
           have experienced the greatest decline in percentage who say they are outsourcing or plan to outsource HR processes.
       •   Although HR outsourcing is down as a whole, a few individual processes experienced an increase in outsourcing between 2009
           and 2010; the highest increase is in assessment/performance appraisal, rising from 19% in 2009 to 26% of respondents in
           2010 saying they are/are considering outsourcing. Payroll also saw an increase, from 80% in 2009 to 84% in 2010.
       •   The greatest declines were in leave administration (52% in 2009; 34% in 2010) and recruitment/selection (47% in 2009; 37% in
           2010).
       •   Health and welfare benefits show the greatest variation amongst regions, with 82% of Asia Pacific organisations outsourcing/
           considering outsourcing the process, versus Americas organisations (62% of respondents) and EMEA orgnisations (50% of
           respondents).
       •   Nearly three quarters (73%) of all respondents say they develop and/or use their own process to identify and select their
           provider(s); the last three years has seen a decline in the use of consultants or sourcing advisors, from 49% in 2008 to 36% in
           2010.
       •   The issuing of both requests for information (RFIs) and request for proposals (RFPs) is down in 2010 over 2009 (RFIs: 65% in
           2009 to 51% in 2010; RFPs: 76% in 2009 to 65% in 2010).
       •   The top outsourcing provider selection criterion is proven ability to meet service levels, followed by functional coverage and
           expertise, then price followed by multi-country capabilities. Amongst the three regions, all rank the same criteria in the top
           three, although in different orders.
       •   Organisations most often budget less than US$1M annually for HR outsourcing (41% of all respondents), followed by US$1M –
           US$10M (30% of all respondents).
       •   Analysis of year-over-year HR outsourcing budgets indicates growth at both ends of the budget scale, with an expanding
           proportion budgeting either less than US$1M or more than US$11M.
       •   Nearly half of all respondents (48%) say they expect to increase HR outsourcing budgets over the next three years, most often
           by up to 24%. That proportion of respondents shows an increase over 2009, when it was 42%, but still does not match 2008’s
           55%.
       •   In spite of the fact that a smaller percentage say they are currently outsourcing or anticipate outsourcing HR services, over the
           last two years we have seen a significant decline in the proportion of respondents who say they anticipate their HR
           outsourcing budgets to decrease, coupled with a significant increase in the proportion of organisations that anticipate their
           budgets to stay the same.
       •   Just about two-thirds of all respondents (66%) say they manage one or more HR process(es) through a shared services model,
           a proportion that is essentially unchanged from 2009’s 68%.




[18]                                                                                                  Conducted by SharedXpertise in association with ADP
                                                                                                       research findings
             outsourcing and shared services, continued
             findings
             outsourcing practices                                                •   The Americas has seen a precipitous and steady decline
                                                                                      from 83% saying they are/are considering outsourcing in
             Across the past three years, the proportion of respondents               2008 to 60% in 2010;
             who say they are currently outsourcing or considering
             outsourcing HR processes has slowly declined, from 65% in            •   Asia Pacific experienced a sharp increase in 2009 over
             2008 to 59% in 2009, and 54% in 2010. These declines in                  2008, from 33% to 56% outsourcing/considering
             outsourcing do not appear to be impacted by organisation                 outsourcing, but then a fairly steep decline to 42% in
             size; various employee sizes experienced growth whilst others            2010;
             experienced decline, in no clear pattern.
                                                                                  •   EMEA has seen a steady but very slow decline from 60%
             HR outsourcing remains more common in the Americas (60%                  saying they are/are considering outsourcing in 2008 to
             of respondents say they outsource or plan to outsource HR                56% in 2009, and 54% in 2010.
             processes) than in either EMEA (54% of respondents) or Asia
             Pacific (42% of all respondents). However, HR outsourcing has
             predominantly experienced a decline across all regions in
             recent years:



              figure 17: outsourcing declining, all respondents and by region

                    year                         all                   americas   asia pacific           emea
                    2008
              % outsourcing HR
                 processes
                                              65%                         83%         33%               60%
                    2009
              % outsourcing HR
                 processes
                                              59%                         64%         56%               56%
                    2010
              % outsourcing HR
                 processes
                                              54%                         60%         42%               54%




Conducted by SharedXpertise in association with ADP                                                                                             [19]
research findings
       outsourcing and shared services, continued
       findings
       outsourcing practices, continued                                 provider selection

       Transactional processes are more likely to be outsourced,        internal and external resources
       whilst strategic processes are more often retained in house, a   Nearly three quarters (73%) of all respondents say they
       finding that has been consistent across all years we have        develop and/or use your own process to identify and select
       conducted this research. With HR outsourcing as a whole          their provider(s), down from 2009’s 87%. (It appears now that
       down, a few individual processes experienced an increase in      2009, during which there was a significant jump over 2008’s
       outsourcing between 2009 and 2010. The highest increase in       70% figure, may have been an anomaly.)These numbers do
       outsourcing is in assessment/performance appraisal; although     not vary significantly by region, although organisations in
       still uncommon, it rose from 19% in 2009 to 26% of               EMEA are more likely to develop and/or use your own process
       respondents in 2010 saying they are/are considering              to identify and select their provider(s) than are their
       outsourcing. Payroll, always the most commonly outsourced        counterparts in other regions (78% for EMEA; 75% for Asia
       HR process, also saw an increase, from 80% in 2009 to 84% in     Pacific; 70% for Americas).
       2010.
                                                                        The last three years has seen a decline in the use of
       Leave administration saw the greatest decline, falling from      consultants or sourcing advisors. A significantly smaller
       52% in 2009 to 34% in 2010. Recruitment/selection also saw a     percentage of respondents in 2010 say they engage a
       decline, down from 47% in 2009 from 37% in 2010.                 consultant or sourcing advisor than did in 2009 – down to
       Organisations in all regions are most likely to outsource/       36% from 51% in 2009 (and a nearly equal 49% in 2008).
       consider outsourcing payroll, and least likely to outsource/     There is very little difference across regions in the use of
       consider outsourcing the entire HR function. Health and          consultants and sourcing advisors; 38% of Americas
       welfare benefits show the greatest variation amongst regions,    respondents, 42% of Asia Pacific respondents, and 35% of
       with 82% of Asia Pacific organisations outsourcing/              EMEA respondents say they use consultants and sourcing
       considering outsourcing the process, versus Americas             advisors.
       organisations (62% of respondents) and EMEA orgnisations         RFIs and RFPs
       (50% of respondents). EMEA organisations are more likely to
       outsource/consider outsourcing expatriate and relocation         Just over half of companies (51%) issue requests for
       administration (62% of respondents) than are their               information (RFIs) as a part of their provider selection
       counterparts in the other regions (55% for Asia Pacific          process, down from 2009’s 65% and just about the same as
       organisations; 35% for Americas organisations). And, Asia        2008. Organisations in EMEA and the Americas are more likely
       Pacific respondents are more likely to outsource/consider        to issue RFIs (56% and 51% respectively) than are their Asia
       outsourcing performance appraisal (42% of respondents) than      Pacific counterparts (42% of respondents).
       are their colleagues in EMEA (34% of respondents) and the
                                                                        As we have found over time, the issuing of requests for
       Americas (14% of respondents).
                                                                        proposals (RFPs) is more common than the issuing of RFIs,
                                                                        with 65% of all respondents saying they do so. Here, too, the
                                                                        proportion is down from 2009, when 76% of all respondents
                                                                        indicated they issued RFPs. Again here, organisations in EMEA
                                                                        and the Americas are more likely to issue RFIs (68% of
                                                                        respondents from each region) than are their Asia Pacific
                                                                        counterparts (42% of respondents).


        figure 18: provider selection trends


                            organisations that
                            develop/use their
           year              own process to     organisations that
                              identify/select  engage consultants/ organisations that                         organisations that
                                provider(s)         advisors           issue RFIs                                issue RFPs

           2009                        87%                   51%                         65%                           76%
           2010                        73%                   36%                         51%                           65%

[20]                                                                                                Conducted by SharedXpertise in association with ADP
                                                                                                                                  research findings


              figure 19: outsourcing practices by process, 2008 – 2010

                                                      Payroll                                  61%                                 23%
                                   Pensions administration                                 55%                            13%
                                 Health & welfare benefits                               47%                       13%
                                                        HRIS                       36%                       15%
                                 Expatriate and relocation                    30%                           18%
                              Stock options administration                    30%                     12%
                                     Training/development              14%                      23%
                                     Recruitment/selection                  22%                 15%                                              Currently
                                                                                                                                                 Outsource
                                                       Leave                 24%               10%
                                                                                                                                                 Plan to
                      Assessment/performance appraisal                 15%          11%
                                                                                                                                                 Outsource
                                              Compensation            10%         10%
                             Career & succession planning         7%         6%

                               Employee communications            4%     9%
                                         Entire HR function       5%        2%


                                                                 0%                 20%                40%            60%          80%   100%
                                                                                                                   % who select




              figure 20: currently outsourcing/planning to outsource by process, by region


                                                       Payroll

                                    Pensions administration

                                  Health & welfare benefits

                                                          HRIS

                  Expatriate and relocation administration

                               Stock options administration

                                      Recruitment/selection
                                                                                                                                                Americas
                                      Training/development
                                                                                                                                                Asia Pacific
                                                        Leave
                                                                                                                                                EMEA
                       Assessment/performance appraisal

                                               Compensation

                                 Employee communications

                              Career & succession planning

                                          Entire HR function

                                                                 0%                 20%                40%             60%         80%   100%

                                                                                                                   % who select




Conducted by SharedXpertise in association with ADP                                                                                                            [21]
research findings
       outsourcing and shared services, continued
       findings
       provider selection, continued
       provider selection criteria

       The top four provider selection criteria remain unchanged
       over the previous four years, although, as we noted last year,
       they regularly change positions. In 2010, the top provider
       selection criterion is proven ability to meet service levels,
       followed by functional coverage and expertise (these two
       were in the reverse positions in 2009), then price followed by
       multi-country capabilities (each of which were in the same
       position in 2009). The only notable change between 2009 and
       2010 is that size and market position has moved up in
       importance; whilst still not in the top of the list, that criterion
       moved from thirteenth position in 2009 to ninth in 2010.

       Amongst the three regions, all rank the same criteria in the
       top three, although in different orders. The Americas and Asia
       Pacific respondents rank the same top three as the overall
       rankings: proven ability to meet service levels ranks first,
       functional coverage and expertise ranks second, and price
       ranks third. EMEA respondents, however, rank price at the
       top, followed by functional coverage and expertise, then
       proven ability to meet service levels. Other significant
       variances amongst the three regions are that respondents in
       the Americas and EMEA rank size and market position in the
       middle of the criteria set (eighth and seventh respectively)
       whilst Asia Pacific respondents rank it near the bottom,
       thirteenth. Likewise, Asia Pacific and EMEA respondents rank
       cultural match in the middle of the criteria set (sixth and
       eighth respectively), whilst Americas respondents rank it
       closer to the bottom, in the twelfth position.




[22]                                                                         Conducted by SharedXpertise in association with ADP
                                                                                                       research findings

              figure 21: provider selection criteria ranking, all respondents

              CRITERION                                                         2010       2009         2008       2007     2006
             Proven ability to meet service levels                                1         2               4          1     2
             Functional coverage and expertise                                    2         1               3          2     1
             Price                                                                3         3               1          3     4
             Multi-country capabilities                                           4         4               2          4     3
             References/reputation                                                5         6               5          5     6
             Specialisation in the relevant functions                             6         5               8          7     7
             Financial viability                                                  7         9               6          9     12
             Guaranteed cost savings                                              8         7               7          6     5
             Size and market position                                             9        13               11         12    11
             Cultural match                                                      10         8               12         8     9
             Flexible contract terms                                             11        10               9          10    8
             Existing relationship                                               12        11               10         14    13
             Unique provider (consulting, implementation, processing)            13        12               14         13    10
             One stop shop (functions other than HR)                             14        14               13         11    14




              figure 22: provider selection criteria ranking, by region

              CRITERION                                                         Americas     Asia Pacific        EMEA
             Proven ability to meet service levels                                    1           1               3
             Functional coverage and expertise                                        2           2               2
             Price                                                                    3           3               1
             Multi-country capabilities                                               4           8               4
             References/reputation                                                    5           4               5
             Specialisation in the relevant functions                                 6           7               11
             Financial viability                                                      7           12              9
             Guaranteed cost savings                                              10              5               6
             Size and market position                                                 8           13              7
             Cultural match                                                       12              6               8
             Flexible contract terms                                                  9           11              10
             Existing relationship                                                11              14              13
             Unique provider (consulting, implementation, processing)             13              10              14
             One stop shop (functions other than HR)                              14              9               12




Conducted by SharedXpertise in association with ADP                                                                                [23]
research findings
       outsourcing and shared services, continued
       findings
       budgeting for HR outsourcing                                                        Most often, organisations say they expect budgets to increase
                                                                                           by 10% – 24% (20% of all respondents); 17% say they
       Organisations most often budget less than US$1M annually                            anticipate an increase of less than 10%, and another 11%
       for HR outsourcing (41% of all respondents), followed by                            expect their HR outsourcing budgets to increase by more than
       US$1M – US$10M (30% of all respondents). Another 13%                                25%. Just over a third, 35%, anticipate their HR outsourcing
       budget US$11M – US$20M annually, and the remaining 16%                              budgets to stay the same. The remainder of respondents
       budget US$21M or more annually.                                                     anticipate a decrease, most often of less than 10% (10% of all
                                                                                           respondents), followed by a decrease of 10% – 24% (5% of
       Predictably, annual budgets generally correlate to
                                                                                           respondents) and a decrease of 25% – 50% (2% of all
       organisation size, with organisations with fewer employees
                                                                                           respondents).
       budgeting less than those with more employees;
       organisations with 25,000+ employees make up virtually all of                       In spite of the fact that a smaller percentage say they are
       the respondents who say they budget US$21M or more                                  currently outsourcing or anticipate outsourcing HR services
       annually.                                                                           (see the outsourcing practices section), over the last two
                                                                                           years, we have seen a significant decline in the proportion of
       Analysis of year-over-year HR outsourcing budgets indicates
                                                                                           respondents who say they anticipate their HR outsourcing
       growth at both ends of the budget scale, with an expanding
                                                                                           budgets to decrease, coupled with a significant increase in the
       proportion budgeting either less than US$1M or more than
                                                                                           proportion of organisations that anticipate their budgets to
       US$11M. (Employee sizes within our sample have remained
                                                                                           stay the same.
       fairly similar over time.)
                                                                                           EMEA organisations are more likely than their counterparts in
       Organisations in the Americas are likely to budget on the
                                                                                           other regions to anticipate an increase in their HR outsourcing
       lower end of the scale when compared to their counterparts
                                                                                           budget, with 56% saying they expect an increase, versus 46%
       in other regions, with nearly half (47%) saying their HR
                                                                                           and 45%, respectively, for Asia Pacific and Americas
       outsourcing budget is less than US$1M.
                                                                                           organisations. On the other hand, organisations in the
       Nearly half of all respondents (48%) say they expect to                             Americas, where HR outsourcing is generally more common
       increase HR outsourcing budgets over the next three years.                          and more entrenched, are least likely to expect a decrease in
       That percentage shows an increase over 2009, when it was                            budget (10% for Americas organisations; 23% for Asia Pacific
       42%, but still does not match 2008’s 55%.                                           organisations; 17% for EMEA organisations).




        figure 23: organisations intending to increase annual HR outsourcing budgets, by year

                                                 2008                             2009                         2010
       organisations that expect to
            increase their HR
          outsourcing budgets
                                                55%                              42%                          48%




[24]                                                                                                                  Conducted by SharedXpertise in association with ADP
                                                                                                                          research findings

              figure 24: HR outsourcing annual budgets, all respondents                                   figure 25: HR outsourcing annual budgets 2010, by region



                              16%                                   Less than $1 M                          Americas            47%              23%        17% 13%          Less than $1 M

                                                    41%             $1 M – $10 M                                                                                             $1 M – $10 M
                                                                                                               Asia
                        13%                                                                                                   38%              31%        15%     15%
                                                                                                              Pacific
                                                                                                                                                                             $11 M – $20 M
                                                                    $11 M – $20 M
                                                                                                               EMEA           36%              36%        10% 18%            >$20 M
                                                                    >$20 M
                               30%




             figure 26: HR outsourcing annual budgets, 2008 – 2010



                2008          27%                   51%            6% 16%             Less than $1 M

                                                                                      $1 M – $10 M
                2009           38%                    35%          16% 11%
                                                                                      $11 M – $20 M

                2010               41%               30%          13% 16%             >$20 M




             figure 27: anticipated change in HR outsourcing annual budgets, all respondents              figure 28: anticipated change in HR outsourcing annual budgets, by region



             Increase          17%                    20%           6% 5%              +/- by < 10%         Americas            45%                   45%            10%
             Stay the                                                                  +/- by 10% – 24%                                                                      Increase
              same                         35%                                                                 Asia
                                                                                       +/- by 25% – 50%       Pacific           46%                31%          23%          Stay the same
            Decrease         10%     5%        2%                                      +/- by > 50%
                                                                                                                                                                             Decrease
                                                                                                               EMEA                 56%                27%        17%
                                                                                       Stay the same
                        0%         10%         20%         30%      40%         50%
                                                 % who select




             figure 29: anticipated change in HR outsourcing annual budgets, 2006 – 2010


                2006                 54%                  14%      32%
                2007                     58%              12%       30%               Increase

                2008                 55%                  13%      32%                Stay the same
                2009               42%                    41%             16%
                                                                                      Decrease
                2010                48%                     35%           17%




Conducted by SharedXpertise in association with ADP                                                                                                                                      [25]
research findings
       outsourcing and shared services, continued
       findings
       shared services                                                 Respondents from the Americas are more likely than are their
                                                                       counterparts in other regions to manage at least one HR
       Just about two-thirds of all respondents (66%) say they         process through a shared services model (71% of
       manage one or more HR processes through a shared services       Americas respondents versus 56% of Asia Pacific          organisations
       model. (This proportion is essentially unchanged from 2009’s    respondents and 63% of EMEA respondents). That          using a shared
                                                                                                                               services model
       68%.)                                                           represents a change from last year, as well as a
       As with outsourcing, organisations are more likely to manage
       transactional processes – such as payroll and HR information
                                                                       significant drop for Asia Pacific respondents, when
                                                                       74% of Asia Pacific respondents said they managed          66%
                                                                       or more HR processes through a shared services
       systems (HRIS) – in a shared services environment than they
                                                                       centre.
       are strategic processes. As such, processes like career/
       succession planning and assessment/performance appraisal
       are considerably less likely to be managed through a shared
       services model. There have been no notable differences, by
       process, in likelihood to manage processes in a shared
       services model across the years of the research: whilst we
       may find that individual processes are more or less likely to
       managed through shared services year-over-year, those
       processes generally rank in the same place within the overall
       list of HR processes.




[26]                                                                                              Conducted by SharedXpertise in association with ADP
                                                                                                          research findings

              figure 30: outsourcing declining, all respondents and by region

                    year                   americas                    asia pacific   emea
                    2009
              % engaging shared
              services model for
                                              67%                          74%        65%
                HR processes

                    2010
              % engaging shared
              services model for
                                              71%                          56%        63%
                HR processes




              figure 31: HR shared services, by process, all respondents


                                                             Payroll                                                                   55%
                                                                HRIS                                                                   55%
                                          Pensions administration                                                                47%
                        Expatriate and relocation administration                                                                 47%
                                        Health & welfare benefits                                                              46%
                                     Stock options administration                                                              45%
                                                              Leave                                                      41%
                                                     Compensation                                                       40%
                                            Training/development                                                    39%
                                       Employee communications                                                    37%
                                            Recruitment/selection                                           35%
                             Assessment/performance appraisal                                         33%
                                                Entire HR function                            29%
                                    Career & succession planning                             27%

                                                                                                   % who select




Conducted by SharedXpertise in association with ADP                                                                                          [27]
research findings
       HR management practices
       headlines
       •    The HR function is most often centralised at a global level (42% of all respondents), versus domestic (29%) or regional (29%)
            centralisation. Headquarters location appears to have some impact over where the HR function is centralised, with American
            and EMEA respondents most likely to centralise at a global level, and Asia Pacific respondents are most likely to centralise on
            a domestic level.

       •    Whilst HR functions are most often centralised on a global level (as noted above), individual HR processes are most often
            managed on a local level. The only process not most likely to be managed on a local basis is stock option management, which
            is just slightly more likely to be managed on a global level.

       •    A majority of organisations (80%) have a common HR information system (HRIS). Of those organisations, over a third say it is
            managed at a global level; nearly as many say it is managed at a domestic level, and 14% say it is managed at the regional
            level. The remaining 20% of respondents do not have a common HRIS.


       findings
       centralisation of the HR function                                      There are no significant differences in centralisation of HR
                                                                              process management by region, either versus the overall
       The HR function is most often centralised at a global level,           figures or amongst regions.
       with 42% of all respondents selecting that option, versus
       domestic and regional centralisation, each selected by 29% of          Common HRIS
       respondents.
                                                                              A majority of organisations (80%) have a common HR
       Headquarters location appears to have some impact over                 information system (HRIS). Amongst those organisations that
       where the HR function is centralised. Respondents in the               have a common HRIS, over a third (35%) say it is managed at a
       Americas are most likely to centralise at a global level (45% of       global level; nearly as many (32%), though, say their HRIS is
       respondents), followed by a domestic level (31% of all                 managed at a domestic level. Least likely amongst those that
       respondents), then a regional level (24%). EMEA respondents            have a common HRIS is management at the regional level
       follow the same pattern, but in different proportions (42% at          (13% of all respondents). The remaining 20% of respondents
       a global level; 40% at a regional level; 19% at a domestic             do not have a common HRIS.
       level). Asia Pacific respondents, on the other hand, are most
                                                                              Asia Pacific organisations are slightly more likely than are their
       likely to centralise the HR function on a domestic level (46% of
                                                                              counterparts in other regions to have a common HRIS (87% of
       respondents) followed by a global level (31% of respondents),
                                                                              Asia Pacific respondents; 79% of Americas respondents; 82%
       then a regional level (23% of respondents).
                                                                              of EMEA respondents). Asia Pacific respondents are also much
       Centralisation of HR process management                                more likely to centralise their HRIS at a domestic level than
                                                                              are their counterparts. At the same time, EMEA organisations
       Whilst HR functions are most often centralised on a global             are much more likely to centralise their HRIS at a global level.
       level (as noted above), individual HR processes are most often
       managed on a local level; all HR processes are most likely to
       be managed on a local level, with the exception of stock
       option management, which is just slightly more likely to be
       managed on a global level.




            figure 32: centralisation of the HR function, all respondents      figure 33: centralisation of the HR function, by region




                                                                                   Americas             31%             24%               45%
                                                      29%
                                   42%
                                                                                  Asia Pacific              46%                 23%           31%


                                                                                        EMEA        19%              40%                   42%
                                                  29%


                  Domestic level         Regional level        Global level                  Domestic level         Regional level       Global level




[28]                                                                                                            Conducted by SharedXpertise in association with ADP
                                                                                                                                       research findings
              figure 34: centralisation of the HR process management by process, all respondents

                     Assessment/performance appraisal                               50%                                          20%             30%
                            Career & succession planning                            50%                                      17%                33%
                                           Compensation                           45%                                        23%                33%
                              Employee communications                               51%                                              23%          27%
                Expatriate and relocation administration                          42%                                     23%                  35%
                               Health & welfare benefits                                                                                                               Locally
                                                                                              62%                                                  26%     12%
                                                                                                                                                                       Regionally
                                                    HRIS                           45%                                     20%                 35%                     Globally
                                                   Leave                                        68%                                            19%        14%
                                                  Payroll                                      64%                                            21%         15%
                                 Pensions administration                                        69%                                            18%         13%
                                  Recruitment/selection                                  57%                                           26%               18%
                            Stock options administration                          43%                             13%                        44%
                                  Training/development                                  53%                                          22%             24%




              figure 35: centralisation of HRIS, all respondents, and by region



                                                                          Common
                                                                            HRIS                    32%         13%                  35%                         Domestic level

                                                                                                                                                                 Regional level
                                                                             No
                                           all respondents                common               20%                                                               Global level
                                                                            HRIS
                                                                                                                                                                 No common HRIS
                                                                                         0%           20%         40%            60%         80%         100%
                                                                                                                      % who select




                                                                          Common
                                                                            HRIS                    29%         18%                  32%                         Domestic level

                                                                                                                                                                 Regional level
                                                                             No
                                                     americas             common               21%                                                               Global level
                                                                            HRIS
                                                                                                                                                                 No common HRIS
                                                                                         0%           20%         40%            60%         80%         100%
                                                                                                                    % who select




                                                                          Common
                                                                            HRIS                          50%             4%           33%                       Domestic level

                                                                             No                                                                                  Regional level
                                                  asia pacific            common              13%                                                                Global level
                                                                            HRIS
                                                                                                                                                                 No common HRIS
                                                                                         0%           20%         40%            60%         80%         100%
                                                                                                                      % who select




                                                                          Common
                                                                            HRIS                26%         11%                 45%                              Domestic level

                                                                             No
                                                                                                                                                                 Regional level
                                                            emea          common              18%                                                                Global level
                                                                            HRIS
                                                                                                                                                                 No common HRIS
                                                                                         0%           20%         40%            60%         80%         100%
                                                                                                                      % who select




Conducted by SharedXpertise in association with ADP                                                                                                                                 [29]
about the survey participants

               total survey
               respondents



               225

             figure 36: headquarters location



                                                      Americas
                     38%
                                                47%   Asia Pacific


                                                      Europe, Middle East, Africa
                                                      (EMEA)
                              15%




             figure 37: breadth of operation


                             12%                           1 country
                                           28%
                                                           2-4 countries
                     15%
                                                           5-9 countries
                                                           10-49 countries
                                           13%             50-99 countries
                        23%
                                                           100+ countries
                                      9%




             figure 38: revenues (US$)

                              10%
                                           27%              Less than $50 M
                      13%                                   $50 M – $499 M
                                                            $500 M – $999 M
                                                            $1 B – $5 B
                     11%                                    $6 B – $10 B
                                           17%              $11 B – $50 B
                                                            More than $50 B
                           15%
                                     7%




             figure 39: number of employees

                              9%                             Fewer than 500
                                           27%               500 – 2,999
                       11%
                                                             3,000 – 9,999
                                                             10,000 – 24,999
                    13%
                                                             25,000 – 49,999
                                           13%
                                                             50,000 – 99,999
                        10%
                                                             100000+
                                    17%




[30]                                                                                Conducted by SharedXpertise in association with ADP
                                                                          about the survey participants
                                                figure 40: industry
                                                CRITERION                                                                               %
                                                Consulting/Professional/Legal Services                                             20%
                                                IT, Technology, Software                                                           13%
                                                Manufacturing                                                                      11%
                                                Finance, Insurance & Real Estate                                                        9%
                                                Health Care/Health Sciences/Pharmaceuticals                                             8%
                                                Other services                                                                          6%
                                                Public Sector/Nonprofit/Education                                                       6%
                                                Consumer Goods, Electronics                                                             5%
                                                Retail trade                                                                            4%
                                                Media/Entertainment                                                                     3%
                                                Telecommunications                                                                      3%
                                                Construction/Engineering                                                                2%
                                                Travel & entertainment/Hospitality                                                      2%
                                                Agriculture, Forestry & Fishing                                                         1%
                                                Mining & metals                                                                         1%
                                                Transportation, storage and delivery                                                    1%
                                                Automotive sales & service                                                              1%
                                                Aerospace/Aviation                                                                0.5%
                                                Biotech/Medical Equipment/Pharmaceuticals                                         0.5%
                                                Chemicals                                                                         0.5%
                                                Utilities/Power, Oil, Energy, & Water                                             0.5%




                                                figure 41: function

                                                                             HR General                                                       46%
                                                                       Strategic Planning                          18%
                                                                   HR Shared Services                         15%
                                                                General management                    5%
                                                                                   HR IT          3%
                                                              Executive management                3%
                                                                              Consultant          3%
                                                                 Finance and Treasury             3%
                                                      Procurement/Strategic Sourcing              2%
                                                                         HR Ooperations          1%
                                                                       Other, unspecified        1%
                                                                             Compliance          0.5%
                                                                                                                         % who select




                                                figure 42: job title

                                                          Vice President/Director                                                            33%
                                                                           Manager                                             26%
                                                           If other, please specify                          12%
                                                        Owner/Principal/Partner                         8%
                                                   President/Managing Director                        6%
                                                                General Manager                  4%
                                                                   Chairman/CEO              3%
                                                               Other, unspecified           2%
                                                                          Consultant        2%
                                                                              CHRO          1%
                                                                  Senior manager            1%
                                                      Chief Administrative Officer          1%
                                                                                COO         1%
                                                                                                                         % who select



Conducted by SharedXpertise in association with ADP                                                                                                 [31]
about the research sponsors
       ADP                                                              SharedXpertise
       Who We Are                                                       Who We Are

       Automatic Data Processing, Inc. (Nasdaq: ADP), with nearly       SharedXpertise is a leading provider of forums, media and
       $9 billion in revenue and about 550,000 clients, is one of the   summits that develop professional practices in corporate
       world’s largest providers of business outsourcing solutions.     responsibility, HR and financial management. SharedXpertise’s
       Leveraging over 60 years of experience, ADP offers a wide        goal is to provide its readers, attendees and members with
       range of HR, payroll, tax and benefits administration            data, industry trends, best practices and networking
       solutions from a single source. ADP’s easy-to-use solutions      opportunities to excel in their professional endeavors, and to
       for employers provide superior value to companies of all         help expand knowledge, improve business practices and foster
       types and sizes. ADP is also a leading provider of integrated    the responsible globalization of business.
       computing solutions to auto, truck, motorcycle, marine and
       recreational vehicle dealers throughout the world.
                                                                        What We Do

       What We Do                                                       SharedXpertise produces a variety of strategic, highly
                                                                        interactive conferences and webinars for executives, managers
       ADP Employer Services, part of ADP, Inc., serves clients in      and practitioners in the HR and financial services
       more than 60 countries worldwide. As a leading provider of       transformation and process outsourcing, and corporate
       HR services, ADP Employer Services’ offerings – from basic       responsibility communities.
       payroll processing to being your payroll and personnel
       administration department – are fully compliant with             Through its research programs, SharedXpertise acts to improve
       languages, currencies, social regulations, and adapt             the practice of HR, financial management and corporate
       seamlessly to companies’ structural and business needs.          responsibility by researching, overseeing and accelerating the
       With its suite of HRO solutions, ADP is well positioned to       development and adoption of effective industry standards and
       serve the needs of multinational companies that are looking      practices. As part of this process, the SharedXpertise gathers
       for outsourcing services from one source.                        broad-based input from across industries and works to develop
                                                                        lasting industry consensus and to arrive at conclusions that
                                                                        balance the various commercial interests of all participants.
       More Information                                                 More Information
       Additional information on ADP at: www.adp.com.
                                                                        To learn more, please visit www.sharedxpertise.com.




[32]                                                                                              Conducted by SharedXpertise in association with ADP
                                                                                                  notes
                                                                          about the survey participants
                                                figure 40: industry
                                                CRITERION                                                                               %
                                                Consulting/Professional/Legal Services                                             20%
                                                IT, Technology, Software                                                           13%
                                                Manufacturing                                                                      11%
                                                Finance, Insurance & Real Estate                                                        9%
                                                Health Care/Health Sciences/Pharmaceuticals                                             8%
                                                Other services                                                                          6%
                                                Public Sector/Nonprofit/Education                                                       6%
                                                Consumer Goods, Electronics                                                             5%
                                                Retail trade                                                                            4%
                                                Media/Entertainment                                                                     3%
                                                Telecommunications                                                                      3%
                                                Construction/Engineering                                                                2%
                                                Travel & entertainment/Hospitality                                                      2%
                                                Agriculture, Forestry & Fishing                                                         1%
                                                Mining & metals                                                                         1%
                                                Transportation, storage and delivery                                                    1%
                                                Automotive sales & service                                                              1%
                                                Aerospace/Aviation                                                                0.5%
                                                Biotech/Medical Equipment/Pharmaceuticals                                         0.5%
                                                Chemicals                                                                         0.5%
                                                Utilities/Power, Oil, Energy, & Water                                             0.5%




                                                figure 41: function

                                                                             HR General                                                       46%
                                                                       Strategic Planning                          18%
                                                                   HR Shared Services                         15%
                                                                General management                    5%
                                                                                   HR IT          3%
                                                              Executive management                3%
                                                                              Consultant          3%
                                                                 Finance and Treasury             3%
                                                      Procurement/Strategic Sourcing              2%
                                                                         HR Ooperations          1%
                                                                       Other, unspecified        1%
                                                                             Compliance          0.5%
                                                                                                                         % who select




                                                figure 42: job title

                                                          Vice President/Director                                                            33%
                                                                           Manager                                             26%
                                                           If other, please specify                          12%
                                                        Owner/Principal/Partner                         8%
                                                   President/Managing Director                        6%
                                                                General Manager                  4%
                                                                   Chairman/CEO              3%
                                                               Other, unspecified           2%
                                                                          Consultant        2%
                                                                              CHRO          1%
                                                                  Senior manager            1%
                                                      Chief Administrative Officer          1%
                                                                                COO         1%
                                                                                                                         % who select



Conducted by SharedXpertise in association with ADP                                                                                                 [31]
                                                                                                                                                    [33]
notes the research sponsors
about
       ADP                                                              SharedXpertise
       Who We Are                                                       Who We Are

       Automatic Data Processing, Inc. (Nasdaq: ADP), with nearly       SharedXpertise is a leading provider of forums, media and
       $9 billion in revenue and about 550,000 clients, is one of the   summits that develop professional practices in corporate
       world’s largest providers of business outsourcing solutions.     responsibility, HR and financial management. SharedXpertise’s
       Leveraging over 60 years of experience, ADP offers a wide        goal is to provide its readers, attendees and members with
       range of HR, payroll, tax and benefits administration            data, industry trends, best practices and networking
       solutions from a single source. ADP’s easy-to-use solutions      opportunities to excel in their professional endeavors, and to
       for employers provide superior value to companies of all         help expand knowledge, improve business practices and foster
       types and sizes. ADP is also a leading provider of integrated    the responsible globalization of business.
       computing solutions to auto, truck, motorcycle, marine and
       recreational vehicle dealers throughout the world.
                                                                        What We Do

       What We Do                                                       SharedXpertise produces a variety of strategic, highly
                                                                        interactive conferences and webinars for executives, managers
       ADP Employer Services, part of ADP, Inc., serves clients in      and practitioners in the HR and financial services
       more than 60 countries worldwide. As a leading provider of       transformation and process outsourcing, and corporate
       HR services, ADP Employer Services’ offerings – from basic       responsibility communities.
       payroll processing to being your payroll and personnel
       administration department – are fully compliant with             Through its research programs, SharedXpertise acts to improve
       languages, currencies, social regulations, and adapt             the practice of HR, financial management and corporate
       seamlessly to companies’ structural and business needs.          responsibility by researching, overseeing and accelerating the
       With its suite of HRO solutions, ADP is well positioned to       development and adoption of effective industry standards and
       serve the needs of multinational companies that are looking      practices. As part of this process, the SharedXpertise gathers
       for outsourcing services from one source.                        broad-based input from across industries and works to develop
                                                                        lasting industry consensus and to arrive at conclusions that
                                                                        balance the various commercial interests of all participants.
       More Information                                                 More Information
       Additional information on ADP at: www.adp.com.
                                                                        To learn more, please visit www.sharedxpertise.com.




[32]
[34]                                                                                              Conducted by SharedXpertise in association with ADP

				
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Description: Are we really able to change before we have to? This question is probably on many people’s minds as we confront more and more transformations and crises that have major impacts on the way we do businessand, most important, on our everyday lives.