ADP and HROA Report Reveals HR Transformation Continues to Gain in Popularity

Global Appetite for HR Transformation Is Stronger than Ever; Up from 75 Percent in 2006 to 90 Percent in 2008

ROSELAND, N.J. – ADP ® Employer Services, a leading provider of HR, payroll and benefits administration services, today released a joint report with the Human Resources Outsourcing Association (HROA®) revealing that the Human Resource (HR) transformation movement is continuing to gain momentum globally. The report uncovered that a full 90 percent of respondents are currently working on HR transformation , up from 75 percent in 2006. Additionally, 64 percent of respondents said that they intend to expand the scope of their HR transformation in the coming years.

Now in its fifth year, the 2008 Global HR Transformation Report studies trends in HR transformation practices in organizations around the globe. The report addresses key areas involved in the HR transformation process such as: reasons organizations transform and the barriers that limit their transformation; transformation timing; cost and satisfaction; engagement of external resources and experience; current and future transformation; and, HR outsourcing and shared services strategy, budget and provider selection.

“The steady growth in HR transformation practices on a global scale reinforces that organizations rely heavily on the business-critical services provided by HR. The underlying challenge faced by HR professionals to achieve cost savings and transformation goals persists, especially as pressure increases in today’s consistently shifting environment,” said Greg Secord, Division Vice President, Marketing & Strategy, ADP Employer Services International and National Account Services. “This report reinforces the need for ongoing HR transformation initiatives and offers valuable insight to help HR meet the challenges ahead.”

As in past years, the report underscores that there are still hurdles when it comes to HR transformation. For the last three years, the skills of existing HR staff have ranked as the number one impediment to HR transformation. Other impediments include internal bureaucracy, lack of adequate technology and change management issues.

1For the purposes of this report HR Transformation is defined as any concerted effort to change and improve HR operations, whether through outsourcing, shared services, internal reengineering or a combination of these strategies.

The research report is divided into four sections: Transformation Status, Transformation Scope, Transformation Outcomes to Date, and Outsourcing and Shared Services.

Additional key findings from the report revealed:

* Either buyers aren’t taking advantage of resources that are available in the market, or providers and advisors aren’t providing the resources that buyers need: 70 percent of respondents report that they develop their own processes for identifying and selecting a provider, and only 48 percent say they engage consultants or sourcing advisors.
* Satisfaction with HR transformation is highest in areas impacting organizational alignment, an important area as it ranks among the top five reasons organizations transform HR. Keys to success include: access to better tools/resources; change management and education; management support at both the top and line levels; and, alignment, focus and standardization.
* Nearly two-thirds of organizations that are transforming HR are meeting or beating their cost savings goals of 16 to 25 percent. Price is now the most significant criterion in provider selection, up from the third and fourth rank in 2007 and 2006, respectively. Multi-country capabilities and functional coverage and expertise round out the top three in 2008.
* The most commonly outsourced processes continue to be transactional in nature, including payroll, and pension and benefits administration. However, recruitment outsourcing, a “hot commodity” in the HRO arena, continues to grow.
* Although too soon to establish a firm trend, the report revealed a decline in the use of shared services across all HR processes between 2007 and 2008.
* The report also gauged the different methods organizations use to overcome HR transformation hurdles finding that just over two-thirds of respondents (65 percent) report that they are currently outsourcing or planning to outsource functions for one or more HR processes. The most commonly outsourced processes include payroll and pension and benefits administration.

Research Demographics

A total of 129 respondents completed the 2008 Global HR Transformation Survey online. More than half (55 percent) of the respondents are located in EMEA – 48 percent in Europe and 7 percent in the Middle East and Africa. 39 percent are located in the Americas – 37 percent in North America and 2 percent in South America. The remaining 6 percent are located in the Asia-Pacific/Australia region.

More than three-quarters of respondent organizations (77 percent) have revenues of more than US$1 billion; 36 percent have revenues of more than US$10 billion and half of all respondent organizations employ more than 25,000 people globally. Respondents also reflect a broad industry distribution including: manufacturing, transportation & communication, finance, insurance and real estate as well as other services.

Nearly three-quarters (73 percent) of all survey participants hold HR functions, 11 percent are in strategic planning and the remainder are spread among a variety of functions at multinational organizations that operate in 10 or more countries. Most respondents (51 percent) hold the job title of vice president or director, or manager (31 percent).