Over the last few years, the delivery of HR services in Europe has evolved significantly, driven largely by a need to balance increased demand with the ability to manage costs – and improve quality.
European economies are more diverse than in any other region of the world and businesses are under tremendous pressure to be competitive in what amount to very different markets. This, in turn, acts as a challenge to HR departments to be both cost-effective and flexible.
To cope with the situation, HR functions have begun to invest in remodelling their capabilities along with their supporting infrastructure and technology. Such change is at various stages of maturity throughout the region as is the availability and adoption of new technology.
HR technology, which was once very tactical and transactional, has now evolved to become a critical, strategic enabler of activity. It drives many business strategies, underpins workforce processes and helps to deliver programmes efficiently and effectively.
At the same time as organisations have awoken to this reality and discovered new ways that they can use IT to provide HR services to managers and employees alike, the technology itself has continued to evolve to become more powerful and useful.
And it appears from our 2011 survey of 444 organisations that approaching HR issues in a more broad-based fashion has improved outcomes for both HR and the business.
Important trends
In general technology terms, this has meant integrating systems to provide users with a less siloed and more holistic experience. But it has also seen continued HR interest in implementing talent and performance systems (41%), streamlining processes and systems (27%) and becoming more involved in strategic business issues (25%).
Other newer preoccupations, however, include updating HR management applications. One in five respondents indicated that they had introduced a new system in the last 18 months, while another 20% said it was a top priority to do so over the year ahead.
Also on the agenda was enabling self-service systems to handle broader, more complex transactions, standardising global data architectures and refocusing the role of HR business partners.
Yet another important trend, however, has been the move to shared services. Just under three out of five respondents indicated that they were in the process of either creating or expanding internal or external shared services organisations.
Of those wanting to change their existing HR structure, some 45% said that they planned to move to a shared service model. The average savings generated by such a move were between 10% and 20%, although about a third claimed savings of between 20% and 40%. Around two thirds also said that they managed to cut costs within two years.
More strategic approach
But the study also revealed that many organisations had begun shifting their focus from cost reduction to a more strategic approach as technology expenditure started to rise again – or at least held steady.
For example, just under two thirds of respondents said that they were reengineering their key HR processes. Some 43% were redefining the roles of HR business partners, while just over a third were implementing new, or better exploiting existing, self-service functionality, the aim being to provide greater value to the business.
Interest in Software-as-a-Service offerings likewise continued to grow. Some 54% of the organisations questioned were either using or planning to go down this route, while another quarter were still evaluating their options. The two market leaders in this space by a widening margin are currently Workday and SAP.
But there was also a clear shift from HR departments simply throwing technology at problems to trying to make service delivery more effective – rather than just efficient. As a result, the focus was on taking an holistic look at the organisation’s approach and making decisions and investments to better support business goals.
What this all means is that the greater choice in terms of IT service delivery models and a general move to more highly integrated systems and processes is starting to create change.
But those organisations that fail to rethink their HR functions and management systems, undertake important communication and chance management programmes and carefully select best-fit technology risk being left behind and could end up missing opportunities for strategic growth.
Mike DiClaudio, EMEA practice leader for HR service delivery at professional services firm, Towers Watson.
