In an effort to provide HR professionals with an external perspective on best practices, the ADP Research Institute conducted a survey to assess levels of HR process maturity and HR satisfaction around the globe.
10
Best
Human
ResouRces
Business
PRactices
About ADP
Executive Summary 2
The ADP HR Process Maturity Model 4
The Value of “Linked” HR 8
The Relationship Between HR and the Business 8
The “Linked” Organization 9
The Benefits of Formal HR Processes 11
Approach to HR Service Management 13
Service Philosophy 13
Sole-Sourced Organizational Desire versus
Multi-Sourced Service Provider Reality 14
HR Services in the Cloud 16
The Role of External HR Resources 18
The Impact of HR Outsourcing (HRO) on
HR Process Maturity and Satisfaction 18
HR Management Consulting Preferences 20
Looking Forward 22
About This Study 23
10 Best Human Resources Business Practices 24
contents
The Human Resources function was conceived to help manage the organization’s most precious resource: its people.
Over time, a discipline has emerged that gives form to HR and helps improve performance within organizations of all types and sizes.
As organizations refocus on growth after some difficult years, HR services are being scrutinized for the value they deliver:
• If you look within your own organization, how would you say your HR function rates, in terms of the value it delivers?
• Are your HR processes continuing to mature, both in terms of sophistication and in terms of meeting critical business needs?
• What steps can be taken to help ensure optimal HR performance?
In an effort to provide HR professionals with an external perspective on best practices, the ADP Research Institute conducted a survey to assess levels of HR process maturity and HR satisfaction around the globe. By “HR process maturity,” we mean the level to which individual HR processes are developed, in terms of their specificity and scope, which includes the extent to which they are proactive rather than reactive.
The ADP Research Institute is a specialized group within ADP that conducts studies on topics of current interest to human resources professionals. As part of this research, ADP developed an HR Process Maturity Model that covers seven separate HR process areas, ranging from recruiting and training to back-office metrics. Each HR process area was divided into five levels of maturity, and respondents used a 1-to-5 scale (from Preliminary to Best-in-Class/-Industry) to evaluate the maturity of HR processes within their organization. The ADP Research Institute surveyed 808 business and HR executives across North
America, Western Europe and China in small [fewer than 50 employees], medium [50 to 999 employees] and large [1,000+ employees] organizations, asking questions related to the degree to which HR process maturity is linked to organizational effectiveness, along with the HR strategies, tactics and best practices that result.
Figure 1 shows that, among North American survey respondents in medium and large organizations, there is a clear relationship between higher levels of HR process maturity and improved HR satisfaction.
In addition to demonstrating the positive relationship between HR process maturity and satisfaction, the survey revealed a set of HR strategies, tactics and best practices consistent with overall HR process maturity and satisfaction – ten of which will be addressed here.
executive summary
Looking across the survey, a picture of effective HR emerges where HR executives work hand in hand with the business. The partnership between HR and the business contributes to the organization’s ability to manage efficiently through economic turbulence and begin the early planning stages of the inevitable return to growth. Within this broad context, the question becomes: How can HR professionals improve HR process maturity and satisfaction, working with the business to manage through the current economic crisis and prepare for future growth?
The answer to this question can be found in two themes that appear repeatedly in the survey responses:
First, organizations benefit from a formal link between HR and the business. This is true regardless of geography or organizational size. A formal link implies a shared vision and associated strategies and tactics. It defines the relationship between – and the expectations of – the business and HR and creates opportunities for continuous improvement.
Second, efficiency is a central concern for both HR and business executives.
Organizations that survived the downturn did so at least in part by choosing to reduce business complexity and eliminate inefficiencies. As growth returns, organizations will continue to look for ways to reduce complexity and make sure that, as the business grows, new efficiencies are continually integrated into the business model.
This report covers North America; Western Europe and China will be included in a separate report. H r m aturity a verage Hr satisfaction Level
No Largely No Yes & No Largely Yes Yes
4 3 2 1
North America: HR Process Maturity versus HR Satisfaction (Medium/Large Org’s)
n=140 – medium/large n.a. organizations
To help executives make informed decisions regarding strategies and best practices that can make the HR function more effective, ADP has developed its HR Process Maturity Model. The goals of the model are to:
• provide a lens through which both business and HR executives can evaluate the maturity of their HR processes; and
• offer specific actions that HR and business executives can take, based on “peers” working in similar-size organizations in the same geography, to improve HR process maturity and satisfaction.
The model includes core HR processes, HR back office processes and HR outsourcing processes:
Core HR Processes
• Talent management includes the sourcing, screening, interviewing and hiring of employees
• Workforce planning links HR to business objectives by anticipating the size, type and quality of workforce necessary for an organization to achieve its objectives • Workforce management describes the day-to-day management of the workforce,
ranging from basic processes like time sheets to more complex processes like schedule optimization
• Workforce development promotes the workforce competencies required to achieve business goals and includes training and succession planning
• Pay for performance aligns compensation with individual and organizational performance and includes performance reviews and compensation plans HR Back-Office Processes
• Performance measures include key performance indicators (KPIs) and metrics the organization uses to monitor HR performance and align HR with business objectives HR Outsourcing (HRO) Processes
• HR outsourcing (HRO) includes the range of outsourcing services organizations use to increase the efficacy of HR
In each HR area, the survey respondents rated their organizations on a five-point scale, ranging from “preliminary” to “best-in-class”:
PROCESS
MATURITY
LEVEL
1
Preliminary
2
Competent,
but Behind
Peers
3
On Par with
Industry Peers
4
Ahead of
Industry Peers
5
Best-in-Class/
-Industry
CORE HR PROCESSES
1.
Talent
Management
Ad hoc/as needed
Formalized but
reactionary
Talent gaps are
identified and
efficiently filled
Anticipates business
needs; increasingly
seen as a source
of competitive
advantage
Fully integrated
with business
strategy; clear
source of competitive
advantage
2.
Workforce
Planning
Focuses on meeting
current needs
Forward-looking
but focuses on
the
rank-and-file workforce,
not executive
management
Forward-looking,
considers most
positions within the
organization
Optimized for future
need, but occurs in
bursts (e.g., as a
component of the
strategic plan)
Holistic approach;
current results are
used to constantly
fine-tune future
performance
3.
Workforce
Management
Focuses on basic
business functions
(e.g., labor
scheduling, time
sheets)
Spans the
organization, but
focuses on discrete/
stand-alone
activities with
minimal business
integration
Preliminary
integration across
business activities
(e.g., time data is
used to evaluate
productivity across
business processes)
Continually
monitored and
optimized (e.g.,
workforce schedule
optimization)
Integrated with
business goals (e.g.,
productivity metrics
are used by senior
executives when
crafting business
strategy and policies)
4.
Workforce
Development
Ad hoc and
reactionary (e.g.,
safety training after
an accident)
Consistent but
discrete (e.g.,
onboarding, work
skills certification)
Proactive (e.g.,
identifying
individuals for
succession planning
when the need
arises)
Extended and
augmented (i.e.,
new programs are
continually trialed
and evaluated)
Fully integrated
(i.e., looking at the
overall impact of
the program on the
organization rather
than simply on the
individual)
5.
Pay for
Performance
Focuses on
consistency
(e.g., on-time
payroll)
Consistent, but the
focus tends to be
on accuracy (e.g.,
reflecting PTO and
risk mitigation,
such as appropriate
withholding)
Accurately reflects
historical employee
performance
(e.g., performance
reviews are
consistently
applied)
Considers historical
performance, but
creates an incentive
to achieve future
goals
Provides a clear
incentive to achieve
future goals and
creates a sense of
accountability for
overall
organiza-tional excellence
PROCESS
MATURITY
LEVEL
1
Preliminary
2
Competent,
but Behind
Peers
3
On Par with
Industry Peers
4
Ahead of
Industry Peers
5
Best-in-Class/
-Industry
HR BACk-OffiCE PROCESSES
6.
Performance
Measures
Limited or no
KPIs/metrics in
use
Use of basic
process-based
KPIs/metrics
for simple and
measurable
activities (e.g.,
cost per hire,
completed
training)
Progressive use
of process-based
KPIs/metrics,
which may
include
harder-to-measure activities
(e.g., individual
performance
rating distribution)
Preliminary use
of strategic KPIs/
metrics (e.g.,
leave liability,
quality of hire)
Extensive use
of strategic
KPIs/metrics
(e.g., employee
satisfaction) that
are fully integrated
into the business
strategy
HR OuTSOuRCiNg (HRO) PROCESSES
7.
HRO Processes
No HRO or
discrete;
outsourcing
focuses on a
single discrete/
tactical/non-core
HR sub-process
(e.g., payroll)
Tactical;
outsourcing
focuses on
multiple discrete
non-core HR
sub-processes
(e.g., payroll
and background
checks)
Bundled;
outsourcing
focuses on
multiple tactical
HR sub-processes
in a specific
process area or in
multiple process
areas (e.g.,
candidate sourcing
and background
checks within
Talent Acquisition)
Optimized;
outsourcing
includes most of
the tactical HR
processes and
begins to focus
on processes that
used to be thought
of as strategic,
such as talent
management
Holistic;
outsourcing
includes all tactical
HR processes
and the service
provider(s) partners
with the client
within a broad
HRO program
that actively seeks
to outsource HR
processes that
do not create
competitive
advantage
As Figure 2 shows, the larger their organization, the more likely survey respondents were to rate their company as “best in class” or “ahead of industry peers” in the seven functional areas included in the ADP HR Process Maturity Model. Organizations of all sizes received their highest ratings on Pay for Performance and their lowest on HRO Processes.
Figure 2
North America: How Different Sized Companies
Rated on the ADP HR Process Maturity Model (1-to-5 Scale)
All
Companies
Small
(1–49
employees)
Mid-Sized
(50–999
employees)
Large
(1000+
employees)
Rated themselves as “5/best in
class” or “4/ahead of industry
peers” (top 2 boxes):
Pay for Performance
30%
22%
34%
35%
Workforce Management
26%
22%
19%
35%
Talent Management
22%
16%
20%
30%
Workforce Development
20%
15%
17%
28%
Performance Measures
20%
14%
14%
32%
Workforce Planning
20%
9%
22%
30%
HRO Processes
10%
5%
9%
15%
Overall HR maturity rating
on a 1-to-5 scale (average)
2.7
2.3
2.7
3.1
Yes Largely No No Largely Yes Yes & No Ave HRM
The Relationship Between HR and the Business
Misalignment is a familiar theme in the relationship between HR and business executives. In misaligned organizations, business executives have a tendency to see HR as enforcers of corporate policy, intent on creating unnecessary internal friction, while HR executives see the business as an unruly “black box” with a limited perspective on the true value that HR provides.
What tends to get lost in this dynamic is a true partnership between HR and the business, where both work together for the overall good of the organization and to execute the business’s strategic plan.
Figure 3 below shows a gap between HR and business executives’ perceptions of HR. HR respondents tend to be more optimistic than business executives regarding the perceived value of HR as measured by HR process maturity and satisfaction.
North America: Business versus HR Perception of HR Satisfaction and Process Maturity
In and of themselves, these findings simply confirm a gap in perception that HR executives have long understood. The issue then becomes: What can HR executives do to close this gap?
The stakes are high. Organizations that survived the economic crisis are, in many cases, leaner and more productive. As global economies return to growth, the ability of HR to effectively partner with the business, and help the organization efficiently scale, will continue to separate winners from losers.
tHe vaLue of “LinkeD” Hr
Figure 3
Business Hr 100% 80% 60% 40% 20% 0% 3.5 3.3 3.1 2.9 2.7 2.5 % respondents H r m aturity a verage HR Satisfaction n= 221 – total n.a. organizationsYes Largely No No Largely Yes Yes & No Ave HRM
North America (Medium/Large Org’s): HR Satisfaction/Maturity for unlinked/Linked Respondents
The “Linked” Organization
While misalignment between the business and HR is common, it makes sense that organizations would benefit from a formal link between these functions.
In organizations where the two are linked, HR and the business share a vision – one with formal goals and objectives, a clear understanding of roles and responsibilities, and a way to drive accountability, continuous improvement and recognition – that binds executives and employees together in a common purpose.
For medium and large enterprises, “linked” describes organizations where HR has a seat at the executive table; “unlinked” describes organizations where HR does not have a seat at the executive table.
As Figure 4 shows, in medium and large organizations where HR and the business are linked, both HR maturity and HR satisfaction are higher.
The “linking” of HR to the business by helping ensure that the HR function is included in executive decision-making is the first of 10 Best HR Business Practices identified in the survey:
Figure 4
HR plays an integral role
in executive decision-making.
1
unlinked Linked 100% 80% 60% 40% 20% 0% 3.5 3.3 3.1 2.9 2.7 2.5 % respondents H r m aturity a verage HR Satisfaction n=140 – medium/large n.a. organizationsYes Largely No No Largely Yes Yes & No HR Satisfaction Hr Business Hr Business 100% 80% 60% 40% 20% 0% % respondents Linked unlinked
Figure 5 shows that both HR and business executives benefit from a formal link. The advantages associated with linkage are a two-way street: When HR and the business work together as equal partners, both benefit from a shared purpose consistent with high levels of HR process maturity and HR satisfaction.
Survey respondents in medium and large organizations also were asked if there is an HR component in their organization’s strategic plan. In companies where there is, respondents reported higher levels of HR process maturity and satisfaction, yielding the second of our 10 Best HR Business Practices:
Figure 5
2
Make sure HR is a component of
your organization’s strategic plan.
These findings suggest that one of the most effective ways to improve HR performance and optimize HR processes is to create a relationship that formally links the HR function to the business.
n=221 – total n.a. organizations
North America: HR Satisfaction for HR / Business Respondents by Linked/unlinked Organizations
H r m aturity a verage
% of formally managed Hr Processes
<25% About 25% About 50% About 75% 100%
3.5 2.5 1.5
North America (Medium/Large Org’s): HR Process Maturity versus Percentage of formally Managed HR Processes
Figure 6
The Benefits of Formal HR Processes
The survey results clearly indicate that organizations that formally manage HR processes enjoy higher levels of HR process maturity and satisfaction (see Figures 6 and 7).
Respondents also were asked to identify the extent to which they use manual or automated methods to manage HR processes, and the results below are independent of their preferred methodology. This suggests that the benefit of formal HR is at least partially related to a simple commitment to actively managing HR processes, regardless of methodology.
% of formally managed Hr Processes
<25% About 25% About 50% About 75% 100%
HR Satisfaction % respondents 100% 80% 60% 40% 20% 0% Yes Largely No No Largely Yes Yes & No
North America (Medium/Large Org’s): HR Satisfaction versus Percentage of formally Managed HR Processes
The above findings suggest the third of our 10 Best HR Business Practices:
Figure 7
3
Increase the percentage of HR
processes that you formally manage.
Prefers Mgt Consulting Led HR Services Prefers Standardized HR Services
No Preference
aPProacH to Hr service management
Service Philosophy
The right approach to take in managing HR services is a source of ongoing debate.
Traditionally, many HR service providers have taken the approach that the more HR services an organization uses, the better off it will be. In the name of transforming HR, these providers suggested a not-too-distant future when most HR tasks would be outsourced to vendors that could do it all faster and more efficiently.
However, organizations have learned, through the trial and error of their own experience, that no one HR service philosophy fits all situations. While the effective outsourcing of specific services can certainly be advantageous, organizations still have the responsibility for overall HR management and optimization.
The “right approach” will be as individual as the needs of the organization that the HR function serves.
Figure 8 shows which type of HR services survey respondents prefer: • management consulting-led HR services [transformational]
• standardized HR services based on industry best practices [efficient], or • a flexible approach [no preference].
The significant percentage who chose “no preference” suggests a certain amount of market fatigue with a set approach to HR services. North American respondents clearly prefer flexibility and efficiency over transformational services.
North America: External HR Services Philosophy
Figure 8
26%
39%
Yes
Largely No No Largely Yes Yes & No All geographies: Vendor Satisfaction by HR Services Philosophy
Furthermore, Figure 9 shows that, while all three HR service preferences have comparable levels of overall [Yes, Largely Yes] vendor satisfaction, respondents with a flexible “no preference” approach have higher levels of complete [Yes] vendor satisfaction. Complete vendor satisfaction is the gold standard for service providers. Fully satisfied organizations become the voice of the market, enthusiastically endorsing service providers and creating marketing momentum for vendors.
The above findings suggest the fourth of our 10 Best HR Business Practices:
Figure 9
4
Maintain a flexible HR services philosophy.
HR Satisfaction
Prefers mgt consulting
Led Hr services Prefers standardized Hr services no Preference
100% 75% 50% 25% 0% % respondents
n=808 – total global organizations
* In this Figure 9, data for All Geographies, rather than North America-only, is shown. With North America-only data, the number of respondents in the “no preference” group is too small to provide meaningful data.
Sole-Sourced Organizational Desire versus Multi-Sourced Service Provider Reality
Within the broad context of HR services philosophy, there is also the issue of the value of sole- versus multi-sourcing of HR service providers.
The advantages of sole-sourcing seem self-evident: Organizations can reduce vendor management headaches and enjoy the benefits of service provider scale and efficiency, with one source for resolution if something goes wrong.
Sole-sourced organizations enjoy significantly higher levels of full vendor satisfaction than do multi-sourced organizations, which suggests the fifth of our 10 Best HR Business Practices:
North America: Sole-/Multi-Sourcing HRO Preference versus Number of Service Providers Actually used
75 50 25 0 n umber of respondents
Preference # of service Providers actually used
Sole-Source Multi-Source
n=113 – n.a. organizations that outsource any Hr processes/tasks
5
Consider sole-sourcing; that is, reducing
the number of HR service providers you use.
North America: Vendor Satisfaction by Sole- versus Multi-Sourced
Yes Largely No No Largely Yes Yes & No sole-source multi-source 100% 75% 50% 25% 0% % respondents HR Satisfaction
Figure 10 shows respondents’ preferences for sole- versus multi-sourcing of HRO vendors. The data shows a gap between respondents’ desire for sole-sourcing versus those who are actually utilizing a single vendor, which suggests an unmet market need specific to sole-sourcing capability.
Figure 11
Figure 10
North America: Sources of Vendor Dissatisfaction by Sole- versus Multi-Sourced
Figure 12 shows that, when respondents are not satisfied with their HR vendors, it is most often because it requires too many internal resources to work with the vendor and the vendor is not cost competitive. Those using multiple vendors are especially likely to complain about internal resources, non-responsive service, and lack of industry best practices.
If sole-sourcing improves full vendor satisfaction and mitigates certain other multi-sourced issues, the obvious question is: Why is there a gap between sole-sourcing desire and reality? It would appear to be a classic supply and demand issue: Sole-sourcing places requirements on vendors that few can consistently meet.
HR Services in the Cloud
While cloud services can be defined from a technology perspective, they also describe a business model where information technology (IT) is transformed from an asset into a service.
What this means is that, in addition to embracing Internet technologies, HR cloud services will move to transactional models where HR services are consumed “by the drink.”
Cloud services promise to realign the market for HR-related IT services in the future, as organizations move from up-front lump sum payment models to monthly pay-per-user agreements. In the cloud, organizations experiencing vendor issues will be able to move more freely among service providers.
While it is impossible to predict the precise timing of cloud services adoption, HR service providers have been making significant investments in cloud technologies and business models. Figure 13 shows that surveyed organizations that use HR cloud services enjoy higher levels of HR process maturity and overall HR satisfaction.
Figure 12
n=83 – n.a. organizations that are not highly satisfied with their Hr vendor(s) Multi-Sourced
Sole-Sourced 50 25 0 % respondents not cost
competitive Difficultto scale complex/rigidcontract need for
internal resources
inflexible not
North America (Medium/Large Org’s): HR Satisfaction / Maturity by Cloud usage
The above findings suggest the sixth of our 10 Best HR Business Practices:
Figure 13
Yes Largely No No Largely Yes Yes & No Ave HRMDon't use cloud use cloud
100% 80% 60% 40% 20% 0% 3.5 3.3 3.1 2.9 2.7 2.5 % respondents H r m aturity a verage HR Satisfaction
6
Embrace HR cloud services.
The survey findings suggest that high-performing HR organizations will increasingly adopt HR cloud services. In the cloud, it is expected that there will be a shift from the historical sellers’ market, where long-term contracts benefited vendors, to a buyers’ market where transactions-based models benefit organizations.
As the HR services market evolves into the cloud, organizations will want to consider how their current vendors are embracing cloud technologies and business models.
H r m aturity a verage
Zero HRO Use 1 HRO Svc Use 2-3 HRO Svcs Use 4-5 HRO Svcs Use 6+ HRO Svcs
3.5 2.5 1.5 2.0
North America: HR Process Maturity by HRO usage
North America: HR Satisfaction by HRO usage
Figure 15
Figure 14
n=221 – total n.a. organizations
n=221 – total n.a. organizations
%
respondents
u
sing H
ro
No Largely No Yes & No Largely Yes
80% 60% 40% 20% 0% HR Satisfaction
The Impact of HR Outsourcing (HRO) on HR Process Maturity and Satisfaction One of the common claims made by HRO service providers is that outsourcing certain HR responsibilities frees up the organizations’ HR professionals to focus on activities that add value to the business. At the same time, however, many organizations have experienced outsourcing relationships where vendors failed to meet expectations.
Over time, HRO vendors have made significant investments in their solutions and delivery models. Today, organizations can choose from any number of HRO vendors that provide a range of valuable services.
Figures 14 and 15 show that companies that outsource enjoy higher levels of HR process maturity and HR satisfaction.
The above findings suggest the seventh of our 10 Best HR Business Practices:
North America: HRO usage
n=221 – total n.a. organizations
% respondents recruitment other Payroll employee Benefits administration core Hr mgt compensation mgt employee
training Performancemgt successionPlanning
30% 20% 10% 0%
As Figure 16 indicates, in North America the two most popular HRO services are payroll and benefits administration, followed by recruitment and training.
7
Consider HR outsourcing (HRO) or
expanding your portfolio of HRO services.
Figure 16
tHe roLe of externaL Hr resources
Figure 17 shows sources of respondent dissatisfaction with HRO providers. The need to devote internal resources to the service provider relationship is a key issue for organizations, along with “not cost competitive,” “difficult to scale,” and “inflexible.”
Figure 17
30% 20% 10% 0% % respondents not cost competitive other need for internalresources to scaleDifficult inflexible not responsive Lack of ind.Best Practices complex/rigidcontract
n=83 – n.a. organizations that are not highly satisfied with their Hr vendor(s)
HR Management Consulting Preferences
HR management consulting historically has been associated with supplementing HR staff and organizational transformation.
In terms of supplementing HR staff, consultants can play a valuable role when HR executives need external expertise to meet a discrete need, like implementing a new HR process or assessing the risk associated with HR policies.
In terms of transformation, consultants have played a critical role in a recent wave of reengineering as organizations have worked to make HR processes more efficient. In North America, the three most popular HR consulting services are risk mitigation, implementation of HR applications/new processes and staff augmentation. This speaks to the ability of consultants to efficiently meet discrete needs, which leads to the ninth of our 10 Best HR Business Practices:
9
Consider HR consulting to supplement
HR staff and evaluate risk.
The data suggests that organizations need to make sure that service providers can deliver cost savings and scale within a flexible relationship that is mutually beneficial. There also is a need for service-level agreements (SLAs) that clarify the roles and resource requirements of the service provider and the organization.
The above findings suggest the eighth of our 10 Best HR Business Practices:
8
If you use HRO services, make sure your vendor
can deliver cost savings and support scale.
North America: use of HR Consulting Services
At the same time, defining HR processes, developing metrics and defining HR strategy are less popular, which may suggest that HR process reengineering is slowing.
Figure 19 shows the key sources of dissatisfaction with HR management consulting. Cost and the need to allocate internal resources to support the consulting project are the most important issues for organizations. This may suggest a need for contracts that specify roles and objectives, as well as the resource requirements for both the HR management consulting provider and the organization.
Figure 18
% respondents 40% 30% 20% 10% 0% mitigaterisk implementation supplementHr staff Hr maturityaccess Hr ProcessesDefine evaluateHro Hr metricsDevelop Hr strategyDevelop
North America: Reasons for HR Management Consulting Dissatisfaction
Figure 19
30% 20% 10% 0% % respondents not costcompetitive need for internalresources Best PracticesLack of ind. responsivenot others complex/rigidcontract Difficult
to scale
n=91 – n.a. organizations that are not highly satisfied with their Hr consultant n=103 – n.a. organizations that use Hr consultants
Looking Forward
The survey responses affirm that linking the HR function to the business, and focusing on efficiency, are critical. To stay competitive, however, it is not sufficient to keep pace only within your organization.
Look to see what growing organizations are doing right – or differently – that could be copied and/or adapted by your organization. Become aware of trends and practices that may be outside of your usual scope: for example, in other industries and in other types of businesses.
The ongoing globalization of goods and services also gives you access to best HR business practices outside your home geography. While this report focuses on North America, the survey included Western Europe and China, both of which face similar issues. Globally, organizations that thrive will be the ones that capitalize on all available resources – both internal and external.
10
To identify the next wave of HR best
practices, look outside your organization.
As noted earlier, the two primary themes expressed in the survey results were the need for a formal link between HR and the business, and for a focus on eliminating
inefficiencies. These two themes lead us into the future, and provide the tenth of our 10 Best HR Business Practices:
About the ADP
Research Institute
About This Study
The ADP Research Institute (ADPRI) is a specialized group of market research professionals within ADP that conducts studies on topics of interest to HR, benefits, and payroll professionals. Findings from the ADPRI’s studies are made public in a variety of ways, including press releases, white papers, webinars, and podcasts. Please visit www.adp.com to access findings from upcoming ADPRI surveys.
An online survey was conducted by the ADP Research Institute in the spring/summer of 2010. To minimize bias, ADP was not identified as the study sponsor. The study universe included: small [with 1-49 employees], medium [50-999 employees] and large [1000 or more employees] non-government companies and organizations in North America (U.S. and Canada), Western Europe (the U.K., France, Germany, the Netherlands, and Spain) and the Asia-Pacific region (predominantly China, also Australia). A total of 808 interviews were conducted (221 in North America, 390 in Western Europe, and 197 in Asia-Pacific). In companies with 1 to 99 employees, therespondents were the CEO/President/Owner. In companies with 100 or more employees, respondents included the senior decision-maker for HR policy changes and/or purchases of major HR systems/services, or a non-HR executive (Director level or above).
One goal of this research was for ADP to provide HR and business executives with a set of recommended HR business practices that are consistent with high levels of HR process maturity and HR satisfaction, and that can be applied in organizations of all sizes.
Based upon the survey results – and supplemented by its decades of workforce management experience – ADP has identified 10 best HR business practices that you may want to consider implementing to help ensure that your HR function provides optimal organizational support.
10 Best Human resources Business Practices
HR plays an integral role in executive decision-making.
• “Linked” organizations, where HR executives play an active role in the business, enjoy 15% higher levels of satisfaction with the HR function
• An active link between HR and the organization benefits both HR and business executives
Make sure HR is a component of your organization’s strategic plan
• Organizations where HR is a component of the strategic plan enjoy 15% higher levels of HR satisfaction
• Research findings suggest that the ability of a strategic plan to align business goals with HR at a process level in medium and large organizations is consistent with higher levels of HR process maturity
increase the percentage of HR processes that you formally manage
• Comparing organizations where fewer than 25% of HR processes are formally managed to businesses at 100%, organizations that formally manage all HR processes enjoy 45% higher levels of HR satisfaction
• The specific mechanism you use, whether automated software applications or manual tools, is less important than the commitment to formally managing HR processes
Maintain a flexible HR services philosophy
• Organizations with a flexible approach to HR services are twice as satisfied with their service providers as organizations that use either highly customized or standardized services
• Beware of vendors with a prescriptive approach to your needs; begin by determining where inefficiencies and gaps exist in your HR operation and select a vendor with a range of offerings that can meet your current requirements and scale to meet evolving needs
Consider sole-sourcing; that is, reducing the number of HR service
providers you use
• Significantly more HR executives want to sole-source than are actually doing it
• Sole-sourced organizations enjoy 50% higher levels of HR satisfaction with their service providers than multi-sourced organizations
• These dynamics suggest that organizations are having problems finding vendors that can meet sole-sourcing requirements; organizations interested in sole-sourcing should determine their needs, desired goals and metrics and then use them to evaluate potential service providers (while understanding that only a limited number will be able to provide sole-sourcing)
1
2
3
4
5
Embrace HR cloud services
• Organizations that use HR cloud services enjoy 20% higher levels of HR satisfaction compared to those that don’t
• Executives interested in HR cloud services should expect vendors to
deliver these services through web-based technologies that are simple to integrate and use, and via a flexible contract that emphasizes transactional pricing models
Consider HR outsourcing (HRO) or expanding your portfolio
of HRO services
• Organizations that use HRO services experience 25% higher levels of HR satisfaction versus those that use no HRO services; use of payroll, benefits administration, recruiting and training HRO services is consistent with businesses that have achieved high levels of HR satisfaction • Consider payroll and benefits administration HRO to address organizational inefficiencies;
consider recruiting and training HRO to support efficient scale as your business returns to growth
if you use HRO services, make sure your vendor can deliver
cost savings and support scale
• The top four sources of HRO vendor dissatisfaction are: “a need to allocate internal resources” and “not cost competitive,” which speak to an inability to deliver cost savings, and “difficult to scale” and “inflexible,” which speak to problems supporting scale
• Make sure you have a contract that reflects a clear understanding of cost-saving goals and the metrics required to evaluate HRO vendor performance
Consider HR consulting to supplement HR staff and evaluate risk
• For organizations that have achieved a high level of HR satisfaction, the most popular consulting services are those that mitigate HR risk (increasingly important as businesses return to scale), implement HR applications and processes, and supplement HR staff • Consider HR consulting services to supplement HR staff in situations where an extra set
of hands helps fill short-term resource gaps, and to help evaluate risk as your organization transitions from resource conservation to growth
To identify the next wave of HR best practices, look outside
your organization
• Make it a habit to look beyond your organization; become aware of trends and practices in other industries, in other types of businesses, and outside your geographic region. • Take a proactive approach to understanding any sources of HR dissatisfaction in your
organization and develop a remediation plan that makes the best use of internal resources combined with the broad range of HRO expertise available externally
6
7
8
9
10
About ADP
Automatic Data Processing, Inc. (Nasdaq: ADP), with nearly $9 billion in revenues and about 550,000 clients, is one of the world’s largest providers of business outsourcing solutions. Leveraging over 60 years of experience, ADP offers a wide range of HR, payroll, tax and benefits administration solutions from a single source. ADP’s easy-to-use solutions for employers provide superior value to companies of all types and sizes.