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The missing components of a high-performing HR service delivery model

Margaret Ruiséal

In today’s digital environment, the right mix of technology is essential for HR to align with business needs. Comment from Margaret Ruiséal, Partner in Mercer UK’s HR Transformation business.

According to Mercer’s 2017 HR Transformation Study – How HR Needs to Change, just more than one-third (35 percent) of organisations worldwide employ an HR service delivery model that includes the three components of Centers of Expertise (COEs), HR Business Partners (HRBPs), and HR Shared Services (HRSS). The successful operation of all three components is an attribute of high-performing HR functions. Moreover, few (17 percent) plan to change from their existing model. In a rapidly changing workplace, the HR function’s slow transformation does not align with the C-suite’s plans for more change and support. Mercer’s 2017 Global Talent Trends research finds that the majority (93 percent) of executives are planning an organisation redesign in the next two years with 41 percent expecting to move support functions to shared services.

“Organisations are making changes to boost innovation and increased agility, which requires a  significant culture change,” said Margaret Ruiséal, Partner in Mercer UK’s HR Transformation business. “HR needs to be well positioned to support these changes and ensure its priorities and practices are aligned to business needs.” Mercer’s HR Transformation research shows organisations with HR functions that continuously evolve their HR service delivery model, build capabilities among their HR team, and invest in technology perform significantly better than those that do not. See Figure 1.

Evolve the model, build capability
Mercer’s study finds that more than two-thirds (68 percent) of high-performing HR functions have redesigned their HR structure within the last five years. As a result, many are utilising a framework in which HR administration and decisions are made in a centralised manner, and processes and practices are consistent across the multiple locations. As service delivery models evolve, organisations with high-performing HR functions are aligning COE and HR practices with the overall business strategy, shifting transactions to shared services, and providing more learning and rotational career development opportunities for their HR team.

By building alignment to key business performance initiatives, HR professionals are well-positioned for value-added roles. According to Mercer’s study, more than two-thirds (69 percent) of CHROs/executive HR leaders meet with the CEO or COO to discuss business and HR strategy at least twice a month to ensure that strategic alignment. “These meetings are important to strengthen the partnership between these leaders and help ensure that HR is aligned tightly with business strategies,” said Denise LaForte, North American Leader of Mercer’s HR Transformation practice. “When business leaders see HR programs aligned to the business strategy, they understand the value and importance of those programs, which is particularly significant since less than half of CEOs recognise HR for its capability and competence.”

Invest in technology
Investing in human capital management technologies that provide workforce analytics to drive strategic decision-making and deliver a consumer-based HR experience for both managers and employees should be a top priority on HR’s agenda, especially since only one-third (35 percent) of CEOs  believe their HR function provides a digital experience for employees. Mercer’s study finds that organisations with high-performing HR functions have embraced technology and have realized significant results assessing and applying analytics. Specifically, they achieved better business outcomes, such as delivering exceptional customer value (94 percent), reacting proactively to disruptive change (83 percent), and driving innovation (89 percent). Additionally, they are viewed as great places to work (86 percent) and attract the talent needed to excel (91 percent).

Despite organisations with high-performing HR functions using technology much more than others, it is still limited. While 69 percent have employee self-service in place, just 36 percent have manager self-service and only 27 percent have mobile talent applications. “There is significant opportunity for the HR function to grow its digital presence,” said Ms Ruiséal. “HR Functions need to enhance their technology and data analytics skills in order to strengthen their strategic decision-making and enhance their partnerships with business leaders and other functions. Creating a more digital and consumer-oriented manager and employee experience is fundamental to this shift and requires significant change management to ensure success.”

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