As employers are experiencing increased pressure to perform human resources services more efficiently and effectively, more employers intend to modify their HR structures over the next couple of years, according to an annual survey conducted by global professional services company Towers Watson.
The survey also reveals that respondents believe "shared services" are now considered the most valued and prevalent process for delivering HR services to organizations, and investment in HR technology is believed to hold strong and stable this year.
Forty-four percent of respondents report that they will alter their HR structures this year or in 2013, a jump from 28 percent in 2011. Nearly two-thirds of respondents that are anticipating changes say they want to increase efficiencies, and approximately half of respondents say they hope to capture synergies among processes and investments, improve quality and lower costs.
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"After several years of relative stability in the HR function, the way HR services are delivered is changing," says Tom Keebler, global leader of Towers Watson's HR service delivery and technology practices. "Technological advances are pushing organizations to take advantage of much that the constantly changing technology and delivery landscape has to offer. Further, HR is pushing change by either growing into or being led to a more savvy approach. The bottom line is that HR is changing, with an eye toward delivering services more effectively and efficiently."
Of the respondents that intend to change their HR functions, 39 percent say they expect to move or revert to a shared services environment, 31 percent say they plan bring more services into an existing shared services organization, and 26 percent say they expect to outsource some or additional HR functions.
"Large-scale HR business process outsourcing was all the buzz for nearly a decade," Keebler says. "But organizations now realize that it pays to develop capabilities and resources in-house for many core HR services. Shared services allow companies to maintain better quality control and create and adapt to new processes more quickly. This model also enables organizations to allocate resources according to functional need and business cycle, although this can be both a blessing and a curse since the process often suffers at the hand of speed."
Fifty-three percent of respondents say their investments in HR technology in 2012 should equal last year's investment levels, and 31 percent of respondents say they plan to either increase or significantly increase their HR technology investments. Only 16 percent of respondents say they anticipate spending less on HR technology in 2012.
For respondents that expect to increase their investment in HR technology this year, 38 percent say they plan to arrange for more functionality from existing vendors, and 36 percent say they intend to upgrade or re-implement their existing HRMS. Another 34 percent of respondents say to anticipate growing their existing self-service offerings while 33 percent of respondents say they expect to replace older systems.
"It is encouraging to see a consistent level of increased HR technology spending over the past several years, especially in the wake of difficult economic times," Keebler says. "Beyond the core costs of owning and operating technology, it seems that not only is HR technology seen as 'needed to play' but also that organizations recognize that investment in it is needed for them to remain current, expand capabilities and continue to improve operations."
The top service delivery issues are talent and performance management systems at 40 percent and streamlining business processes, recruiting and staffing systems, and greater involvement in strategic business-driven issues at 22 percent. Sixty-percent of respondents report implementing HR portals to HR and employees while 20 percent of respondents are now developing HR portals.
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