Wednesday, April 04, 2007
[IWS] Mercer: HR TRANSFORMATION in EUROPE--Survey [27 March 2007]
IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
Mercer
HR Transformation in Europe -- Survey
http://www.mercerhr.com/europehrt2006
Press Release
HR perceives itself as more of a strategic business partner but acknowledges barriers to change
UK
London, 27 March 2007
http://www.mercerhr.com/pressrelease/details.jhtml/dynamic/idContent/1262230
* More than 70 percent of European HR functions have undergone or are undergoing an HR transformation, mainly driven by changing business and organisational requirements.
* Restructuring of HR and technology investments are the most frequent HR transformation activities completed under the banner of HR transformation.
* HR functions increasingly see themselves as effective strategic business partners, but well over 40% of HR activity is spent on transactional and compliance-related activity.
* HR functions have made progress, but the skills and capabilities of HR remain the principal barrier, together with the ability of managers to address their people issues.
According to Mercer's recent European HR Transformation Study, more than 70% of European firms are transforming their HR function or have already done so. Changing organisation and business requirements are the principal drivers of the HR transformation process, which primarily seeks to align the HR function with business needs and increase its ability to support the overall management of people and improve business effectiveness.
For many HR functions, this transformation is a continuous process with no real 'end,' as the challenges of business alignment are ongoing. The top human capital challenges and the areas where organisations are asking HR to provide real value to the business are seen to be: talent acquisition and retention (60%), change management (40%) and leadership development (35%). "Transformation is clearly on the minds of Europe's HR executives," said Philip Vernon, principal for Mercer's HR Effectiveness business in Europe. "Many organisations have made enormous progress in the area of HR transformation and now have a function that truly leads and supports the business, backed up by a tremendous degree of specialism."
The survey responses indicate that transformation has been primarily about the relationships and approach to customer management, and about the way the basic HR service is delivered in terms of HR organisation structure, technology and service delivery strategy. There are other transformation initiatives such as process change, HR skills development and outsourcing, but HR transformation so far has consisted primarily of internal changes focused on how the HR operating model works.
"Through HR transformation in the past five to 10 years, a model of HR organisation has evolved. The survey results confirm this and suggest that 50% of HR functions in Europe are moving in some ways towards an HR organisation that is basically a three-legged stool, focusing on centres of expertise, HR service centres and HR business partners," observed Mike Theaker, principal for Mercer's HR Effectiveness business in Europe.
"Clearly there has been a lot of activity in the area of HR technology, but the degree to which these initiatives have delivered benefits remains to be established," added Mr Theaker. Contrary to 2003 survey results, technology is no longer seen by the function as a major barrier to transforming HR, which indicates that progress has been made in this area.
Engaging more with the business
Survey participants believe that there is a big shift in the perception the business has of the HR function. Well over half the surveyed organisations view human capital as a source of value not a driver of cost - and more than two-thirds say that business leaders view HR as making a full contribution to business performance. HR is now actively engaged with the board of directors on a wide range of issues well beyond just remuneration, with primary focus on leadership succession and development, workforce planning and organisational change. Sixty-two percent of HR directors now report to the CEO, a significantly increased figure since 2003.
"HR is now much more clearly seen as a partner to business leadership than inferred in the results of the HR transformation survey we conducted in 2003," said Mr Vernon. "The 2006 survey indicates that HR sees itself as having increasing influence and giving more value to the business a real positive product, at least on the surface, of the ongoing process of HR transformation," he said. This conclusion is evidenced by survey participants through: discussing significant business-wide issues (76%), being the owner of methodologies that drive change in the organisation (70%), and providing tactical support in translating business strategy into a human capital strategy (67%).
Barriers to effective HR transformation
However, for each organisation that has successfully driven transformation within its HR function, there are many that have not. "There are some contradictions in the survey results," added Mr Vernon. "HR leaders see a number of key barriers to HR's ability to contribute to the business, as 40% of HR's time is still spent on transactional and compliance-related activity whilst only 15% of time is spent on strategic partnering." These figures are exactly the same as in 2003.
One of the main barriers is the skills and competencies of the people in HR. The survey results indicate that HR is strong in its traditional functional skills and the related personal behaviours. However, there is a growing set of skills that now are seen to be required by HR that the function has yet to secure. Some of these skills address the ability to improve customer service, process and manage projects, and deploy technology. Additionally, there are a range of skills in terms of business and financial understanding and business alignment that are critical to HR's capacity to partner with the business. The survey results do not indicate that these are strong skills. In short, HR is weak in a lot of the skills needed to be an effective business partner.
"Europe's HR executives tend to agree that HR is exhibiting broader business and operational-management skills, but there's still a very strong emphasis on HR's traditional expertise, with its focus on recruitment, team and people skills. A greater integration between those skills and a wider business and operational command is essential for HR's strategic future," said Mr Vernon.
The survey clearly suggests that progress is being made, but that HR is concerned about both the capability and the attitudes of line management in its approach to people management and to executing the organisation's HR policies and processes. The function still has a significant challenge in working with operational managers to ensure an organisation's people management is improved in a way that really impacts business performance.
About the survey
Mercer Human Resource Consulting's 2006 European HR Transformation Study surveyed more than 300 senior HR executives in Europe, representing 20 industries and 25 countries. More than 56 percent of the responses were from Western Europe, 26 percent from Southern Europe, and 18 percent from the emerging markets of Eastern Europe and the Middle East. Building on a similar Mercer survey conducted in 2003, the study is part of a global research project on HR transformation. Participants were asked about their present situation as well as their expectations for the next tree years, so a six-year "data window" has been created, which offers powerful insights into the current realities, trends, barriers, and opportunities facing HR functions across the world. For more information on the 2006 European HR Transformation Study, please visit < http://www.mercerHR.com/europehrt2006> and for details on 2003 survey go to < http://www.mercerhr.com/globalhrtransformation>. Mercer will also be issuing a summary of the global 2006 HR Transformation survey results in late April-early May 2007.
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
Mercer
HR Transformation in Europe -- Survey
http://www.mercerhr.com/europehrt2006
Press Release
HR perceives itself as more of a strategic business partner but acknowledges barriers to change
UK
London, 27 March 2007
http://www.mercerhr.com/pressrelease/details.jhtml/dynamic/idContent/1262230
* More than 70 percent of European HR functions have undergone or are undergoing an HR transformation, mainly driven by changing business and organisational requirements.
* Restructuring of HR and technology investments are the most frequent HR transformation activities completed under the banner of HR transformation.
* HR functions increasingly see themselves as effective strategic business partners, but well over 40% of HR activity is spent on transactional and compliance-related activity.
* HR functions have made progress, but the skills and capabilities of HR remain the principal barrier, together with the ability of managers to address their people issues.
According to Mercer's recent European HR Transformation Study, more than 70% of European firms are transforming their HR function or have already done so. Changing organisation and business requirements are the principal drivers of the HR transformation process, which primarily seeks to align the HR function with business needs and increase its ability to support the overall management of people and improve business effectiveness.
For many HR functions, this transformation is a continuous process with no real 'end,' as the challenges of business alignment are ongoing. The top human capital challenges and the areas where organisations are asking HR to provide real value to the business are seen to be: talent acquisition and retention (60%), change management (40%) and leadership development (35%). "Transformation is clearly on the minds of Europe's HR executives," said Philip Vernon, principal for Mercer's HR Effectiveness business in Europe. "Many organisations have made enormous progress in the area of HR transformation and now have a function that truly leads and supports the business, backed up by a tremendous degree of specialism."
The survey responses indicate that transformation has been primarily about the relationships and approach to customer management, and about the way the basic HR service is delivered in terms of HR organisation structure, technology and service delivery strategy. There are other transformation initiatives such as process change, HR skills development and outsourcing, but HR transformation so far has consisted primarily of internal changes focused on how the HR operating model works.
"Through HR transformation in the past five to 10 years, a model of HR organisation has evolved. The survey results confirm this and suggest that 50% of HR functions in Europe are moving in some ways towards an HR organisation that is basically a three-legged stool, focusing on centres of expertise, HR service centres and HR business partners," observed Mike Theaker, principal for Mercer's HR Effectiveness business in Europe.
"Clearly there has been a lot of activity in the area of HR technology, but the degree to which these initiatives have delivered benefits remains to be established," added Mr Theaker. Contrary to 2003 survey results, technology is no longer seen by the function as a major barrier to transforming HR, which indicates that progress has been made in this area.
Engaging more with the business
Survey participants believe that there is a big shift in the perception the business has of the HR function. Well over half the surveyed organisations view human capital as a source of value not a driver of cost - and more than two-thirds say that business leaders view HR as making a full contribution to business performance. HR is now actively engaged with the board of directors on a wide range of issues well beyond just remuneration, with primary focus on leadership succession and development, workforce planning and organisational change. Sixty-two percent of HR directors now report to the CEO, a significantly increased figure since 2003.
"HR is now much more clearly seen as a partner to business leadership than inferred in the results of the HR transformation survey we conducted in 2003," said Mr Vernon. "The 2006 survey indicates that HR sees itself as having increasing influence and giving more value to the business a real positive product, at least on the surface, of the ongoing process of HR transformation," he said. This conclusion is evidenced by survey participants through: discussing significant business-wide issues (76%), being the owner of methodologies that drive change in the organisation (70%), and providing tactical support in translating business strategy into a human capital strategy (67%).
Barriers to effective HR transformation
However, for each organisation that has successfully driven transformation within its HR function, there are many that have not. "There are some contradictions in the survey results," added Mr Vernon. "HR leaders see a number of key barriers to HR's ability to contribute to the business, as 40% of HR's time is still spent on transactional and compliance-related activity whilst only 15% of time is spent on strategic partnering." These figures are exactly the same as in 2003.
One of the main barriers is the skills and competencies of the people in HR. The survey results indicate that HR is strong in its traditional functional skills and the related personal behaviours. However, there is a growing set of skills that now are seen to be required by HR that the function has yet to secure. Some of these skills address the ability to improve customer service, process and manage projects, and deploy technology. Additionally, there are a range of skills in terms of business and financial understanding and business alignment that are critical to HR's capacity to partner with the business. The survey results do not indicate that these are strong skills. In short, HR is weak in a lot of the skills needed to be an effective business partner.
"Europe's HR executives tend to agree that HR is exhibiting broader business and operational-management skills, but there's still a very strong emphasis on HR's traditional expertise, with its focus on recruitment, team and people skills. A greater integration between those skills and a wider business and operational command is essential for HR's strategic future," said Mr Vernon.
The survey clearly suggests that progress is being made, but that HR is concerned about both the capability and the attitudes of line management in its approach to people management and to executing the organisation's HR policies and processes. The function still has a significant challenge in working with operational managers to ensure an organisation's people management is improved in a way that really impacts business performance.
About the survey
Mercer Human Resource Consulting's 2006 European HR Transformation Study surveyed more than 300 senior HR executives in Europe, representing 20 industries and 25 countries. More than 56 percent of the responses were from Western Europe, 26 percent from Southern Europe, and 18 percent from the emerging markets of Eastern Europe and the Middle East. Building on a similar Mercer survey conducted in 2003, the study is part of a global research project on HR transformation. Participants were asked about their present situation as well as their expectations for the next tree years, so a six-year "data window" has been created, which offers powerful insights into the current realities, trends, barriers, and opportunities facing HR functions across the world. For more information on the 2006 European HR Transformation Study, please visit < http://www.mercerHR.com/europehrt2006> and for details on 2003 survey go to < http://www.mercerhr.com/globalhrtransformation>. Mercer will also be issuing a summary of the global 2006 HR Transformation survey results in late April-early May 2007.
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
# posted by SBasefsky : 8:36 AM
