Going Global with HR Technologies: 2013

Transcription

1 Going Global with HR Technologies: 2013 Highlights and Recommendations of Organizations Operating Globally Taken from CedarCrestone HR Systems Survey Results w w w.cedarcrestone.com/annual_surve y

2 Learning from the Best Global Organizations For the annual CedarCrestone HR Systems Survey, respondents are asked to report whether they operate in multiple countries and also to identify their organization type. This document begins by highlighting key characteristics of each type, the initiatives where they are spending time, and their level of automation. We then provide an assessment of how efficient and innovative these global organizations are with their HR technology adoption and associated practices. We conclude with the organization types that perform best and make recommendations from their results. We wish to acknowledge Jeitosa Group Internationals s ongoing research as a continuing source of inspiration to our research 1 on global organizations, particularly for its Efficiency/Innovation Model applied to how organizations go global with their payroll solutions. We have adapted the Jeitosa methodology as we look at the adoption of all the HR technologies covered in the annual CedarCrestone HR Systems Survey. Going Global with HR Technologies: 2013 Highlights and Recommendations of Organizations Operating Globally Taken from CedarCrestone HR Systems Survey Results Executive Summary... 1 Transnationals Have Highest Levels of Both Efficiency and Innovation and Outperform Financially; Globals Excel with Highest Levels of Efficiency; Internationals Excel with High Innovation...1 About Survey Respondents... 2 Organizations Operating Globally are Large and Complex...2 Explaining Organization Type... 3 Organization Types Vary by Strategy, Structure, Where Decisions are Made, and Level of Standardization of Processes...3 Spending and Initiatives... 4 Initiative Focus Varies by Organization Type...4 Level of Automation by Type... 5 Transnationals Have the Highest Level of HR Technology Adoption...5 Next Steps To Achieve Excellence... 6 Introducing Efficiency-Innovation Factors...6 Assessing Organization Types on Efficiency and Innovation... 7 Where Each Organization Type Excels...7 So Why Should You Care?... 8 Organizations with the Highest Levels of Talent Management, Business Intelligence and Strategic Social Tool Adoption Outperform...8 Next Steps with HR Technologies Adoption and Associated Practices?... 9 Step Right, Step Up...9 Information contained in this white paper was compiled and analyzed by CedarCrestone as part of our commitment to provide knowledge on workforce technologies, trends, and the impact their adoption has on the performance of the enterprise. CedarCrestone encourages customers, media, partners, analysts, and other readers to share the information found herein and to quote liberally from the white paper with appropriate credit to Cedar- Crestone. We request that all quotes and references are credited as Going Global with HR Technologies: 2013, Highlights and Recommendations of Organizations Operating Globally Taken from CedarCrestone HR Systems Survey Results. All CedarCrestone research reports are available for free at i

3 Executive Summary Global organizations are highly complex. For our research, we use an organization type framework that recognizes differences in organization structure, strategy focus, where decisions are made, and level of standardization of processes for analysis (Multinational, Global, International, and Transnational). Our analysis using this framework leads us to see that some organization types are more successful than others at mitigating the challenges of global operations as they go global with their HR technologies. Just as organizations mature as they move from an organization type of Multinational to Global to International to Transnational, we see a path of maturity associated with adoption of more HR technologies along with achieving higher levels of efficiency and innovation. Transnationals Have Highest Levels of Both Efficiency and Innovation and Outperform Financially; Globals Excel with Highest Levels of Efficiency; Internationals Excel with High Innovation Our 2013 going global research analysis leads us to propose that practicing the following efficiency and innovation approaches may enable organizations to improve their business outcomes. It has for the Transnational organizations. Become more efficient through: 1. Standardizing both administrative and talent management processes 2. Moving to consolidate human resource management systems (HRMS)s 3. Serving more workforce from a single HRMS and single payroll solution 4. Consolidating talent management automation support onto the HRMS platform 5. Reducing customizations. Become more innovative through: 1. Working to expand the percentage of the workforce using self service and adopt regional shared service centers 2. Adopting a software-as-a-service (SaaS) HRMS 3. Adopting an integrated talent management solution (consolidated on the HRMS platform) 4. Adopting business intelligence tools and rolling these solutions directly to managers 5. Adopting social tools strategically Looking at the combination of HR technology adoption, the associated practices, and value achieved through a lens of efficiency and innovation practices, we find the following: Multinationals are just beginning to adopt some efficiency practices. Globals more frequently excel with efficiency practices. Internationals excel with innovation practices. Transnationals have the highest level of HR technology adoption, more often are both efficient and innovative, and most often excel on financial metrics such as revenue per employee, operating income growth, and return on equity. 1

4 About Survey Respondents Organizations Operating Globally are Large and Complex This year s CedarCrestone HR Systems Survey had 1,246 respondents worldwide, the largest number ever. Of these, 46% (n=573) operate in countries outside their headquarter country, 342 of whom provided their organization type and responded to all questions necessary for this analysis. The typical respondent is at the intersection of Human Resources and Information Technologies with an overview of HR technologies in use and planned. The majority of respondents are director or manager level. On average, global organizations are almost five times larger than non-global organizations among our Survey respondents (35,419 vs. 7,832 employees). Global organizations operate in 27 countries on average. Thirty-five percent are manufacturing organizations, compared to just 21% among our overall Survey results. Their larger size, the number of countries in which they operate, and the predominance of manufacturing organizations with manufacturing locations vs. white collar locations result in a high degree of complexity that can be and has been successfully impacted by the use of HR technologies and related practices. This report covers organizations that operate in one or more countries outside their headquarter country. One of the organization types is called Global. To distinguish between all global respondents and the Global type, we use the following protocol throughout the report: A global organization is one that operates in one more countries outside its headquarter country. When we use the term global we refer to all 342 respondent organizations. A Global organization is one of our four organization types (Multinational, Global, International, and Transnational types). When we use the term Global, we refer to results just for that specific type. 2

5 Explaining Organization Type We use organization type 2 to characterize global organizations and provide the framework for analysis. Multinational: focused on flexibility and local responsiveness. The organization is highly decentralized with multiple, independent locations united primarily through financial reporting to corporate headquarters. Processes are highly localized. Organization Types Vary by Strategy, Structure, Where Decisions are Made, and Level of Standardization of Processes Internationals Strategy: learning and sharing Organization: decentralized Processes: hybrid localized and standardized Multinationals n=100 29% Level of Process Standardization Transnationals Strategy: networked and innovative Organization: centralized and decentralized Processes: hybrid standardized and localized Globals n=46 13% Global: focused on centralization and efficiency. The organization is highly centralized/standardized, with major decisions made at corporate and then rolled out to local operations. Processes are highly standardized. n=70 20% Strategy: localization and adaptation Organization: decentralized and independent Processes: highly localized n=126 37% Strategy: efficiency and standardization Organization: centralized Processes: highly standardized International: focused on learning and sharing. The organization is moderately centralized, leveraging competencies and sharing learning from both corporate and local operations. Processes may be both localized and standardized. Transnational: focused on efficiency, flexibility, and learning. The organization combines aspects of all of the above, leveraging efficiencies, maintaining flexibilities, and sharing learning/innovations worldwide. Processes may also be both localized and standardized. The Global cohort continues to be the largest, but declined from 43% in 2011 to 37% in 2012, while the percentage of Internationals has increased from 24% to 29%, suggesting there may be an evolution of organization type along a continuum, at least from Global to International. Reviewing earlier years Survey findings, we see that during poor economic times, more respondents indicate that their organization is the Global type. The focus on efficiency and standardization appears as the best strategy to gain control of costs, if not already done. But as the economy improves, organizations evolve towards either an International or Transnational organization type. 2 The typology used is defined by Christopher Bartlett and Sumantra Ghoshal, who are recognized as leading scholars on global strategy and organization design. Bartlett and Ghoshal s framework addresses the challenges associated with developing strategies, designing organization structures, and managing operations of global organizations. Bartlett, Christopher and Sumantra Ghoashal. Managing Across Boarders: The Transnational Solution, Harvard Business School Press. See also: Beaman, Karen and Alexia Martin, Leveraging HR Technology: From Global Savings to Transnational Value, a collaborative effort between CedarCrestone and Jeitosa Group International. 3

6 Spending and Initiatives Spending Multinationals (51%), Globals (54%), and Transnationals (49%) indicate that their budgets will increase in Just 42% of Internationals report an expected budget increase. This lower percentage may be accounted for by the fact that one of their key initiatives is still Service Delivery (moving more aggressively to employee/ manager self service and shared services and adopting HR help desk technology). Organizations that have not yet made these moves are considered late majority if not laggard-type organizations that find it difficult to justify spending on internal service delivery. One Key Recommendation For those that have not already handled service delivery issues, we recommend moving to shared services. The single-most helpful technology for them is often HR help desk technology, which we see most frequently capable of lowering administrative costs. Why? Organizations with the highest levels of service delivery technology adoption (employee and manager self service use and adoption of shared services with associated help desk technology) are able to serve 22% more employees (217 employees vs. 178 employees). Initiative Focus Varies by Organization Type Business Process Improvements How Respondents Spend TIme by Global Type Talent Management Business Intelligence/Metrics Service Delivery HR Systems Strategy System Integration Expanding HRMS to Global Operations 33% 40% 40% 66% 62% 64% 72% 53% 55% 50% 63% Business process improvement work tops the list of initiatives where organizations are spending at least 25% of their time, with more Transnationals working on this initiative than other types. Transnationals are also leading the way with talent management and business intelligence activities. International organizations are significantly more focused on both talent management and service delivery initiatives. Multinationals are focused on expanding their HRMS to global operations and are spending time on their HR Systems Strategy more frequently than the three other types. Multinationals on average have over 40% more HRMSs (5) than other types. In our work with Multinationals, we see them more often planning to consolidate multiple HRMSs to fewer or even to just one HRMS to serve their global operations. Internationals have an average of 4 HRMSs, Globals 3.1, and Transnationals have 3.3. We will see later that HRMS consolidation is a key efficiency measure. 36% 37% 39% 34% 31% 35% 29% 30% 21% 16% 22% 23% 35% 37% 34% 49% 56% Multinationals Globals Internationals Transnationals 4

7 Level of Automation by Type Transnationals Have the Highest Level of HR Technology Adoption Over the years of conducting our Annual Survey, we see organizations follow a path that leads them to achieve a level of excellence first through adopting Administrative systems, then Service Selivery solutions, then Workforce Management and Talent Management applications, followed by Business Intelligence and Workforce Optimization applications, and most recently with Social Media Used Strategically. At a glance, we see the Transnational type leading in the adoption of more applications than the other types. In fact, the view above plus the detail in each category leads us to see there is a path from less HR technology towards more by organizations as they mature their organization type, migrating from the Multinational where there is a lack of common solutions across the organization, towards Global where there is almost an overreaction that leads to greater standardization, towards International where organizations begin to share best practices (as evidenced towards high adoption of any learning- and development-oriented or collaboration technologies), towards the Transnational type that manifests the best aspects of the other types with its technology adoption stance. CedarCrestone provides benchmark services. Customers use this benchmark information to jumpstart their HR systems strategy, prioritize which applications to deploy next, and help make their business case for any needed investments. Some customers use this information to make the case for shifting to a SaaS HRMS away from a licensed, on-premise solution. Others use this information to expand their talent management, social media, or business intelligence/workforce analytics technologies. Still others use this information to transform their service delivery to a new stage of excellence. 5

8 Next Steps To Achieve Excellence Achieving global excellence is the next step on global organizations paths as they continue to adopt HR technologies. A way to assess how organizations are doing as they migrate towards global excellence is in terms of their level of efficiency and innovation. Karen Beaman, Jeitosa Group International, proposes an Efficiency Innovation Model (EIM) as a technique for assessing an organization s capabilities along two dimensions as they move to excellence with their payroll solutions: Efficiency the degree of centralization/decentralization of the organization; maximum efficiency is achieved through the right balance between localization and globalization. Innovation the ability to implement leading practices to increase effectiveness across the global organization both in local operations and global headquarters. Beaman uses this model 3 to assess an organization s structure, and from that determine the most effective HR/Payroll structure, services, processes, systems, and infrastructure. Introducing Efficiency-Innovation Factors CedarCrestone suggests our own set of efficiency and innovation factors associated with the adoption of the full array of HR technologies tracked by our annual HR Systems Survey. Efficiency Factors 1. Process Standardization for both a) administrative and b) talent management processes. Each of these factors is along a continuum from all processes done in common across all countries to processes being highly diverse among regions and/or countries. 2. System consolidation describes the number of HRMSs, with fewer being the most efficient. 3. Platform consolidation of HRMS and talent management. One of the seven practices of top performers 4 identified among overall Survey respondents is that those that are outperforming financially are more frequently using their HRMS platform for talent management. 4. Single global systems measures the extent to which the workforce is served by a) a single HRMS or b) a single payroll solution. Those organizations with the highest percentage on either a single HRMS or a single payroll system are most efficient. 5. Customization measures the level of customization. Those organizations with the lowest level of customization or none at all (i.e., they are able to configure their solution for variations) are the most efficient. Innovation Factors 1. Enhanced service delivery measures two aspects of service delivery: a) the level of adoption of employee and manager self service; and b) the number of shared service centers to serve regions. A higher number of service centers reflect the highest level of innovation. 2. SaaS HRMS adoption measures SaaS HRMS adoption. A SaaS HRMS has the highest level of best practice functionality. 3. Integrated talent management measures a) adoption level of an integrated talent management solution, defined as two or more talent management applications on the same solution provider; and b) talent management best practice levels where the higher levels are most innovative. 4. BI tool adoption and manager direct use measures the combination of adoption of various business intelligence tools such as a warehouse, scorecards, push technologies, and analytics along with the percent of managers using these tools directly to support decision making. This combination reflects the higher levels of innovation with business intelligence and analytics, enabling managers to make informed workforce decisions. 5. Strategic social use assesses whether organizations are using social media/tools for branding, recruiting, service delivery, learning, and collaboration. The highest levels of adoption of these tools are the most innovative The Seven Practices of Top Performing Organizations 6

9 Assessing Organization Types on Efficiency and Innovation From our global Survey respondents, we then identify the organization types that excel at efficiency and innovation factors. Where Each Organization Type Excels Efficiency Factors* Multinational Global International Transnational E1a Highest level administrative process standardization E1b Highest level talent management process standardizations E2 Fewest HRMSs E3 Highest level platform consolidation (HRMS and ITM) E4a Single HRMS serves highest % of workforce E4b Single Payroll serves highest % of workforce E5 Highest level of no or low customization Innovation Factors* Multinational Global International Transnational I1a Highest level of employee and manager self service I1b Highest number of shared service centers serving regions I2 Highest level of SaaS HRMS adoption I3a Highest level of integrated talent management adoption I3b Highest level of talent mgmt. best practice I4a Highest level of BI tool adoption I4b Highest level of manager direct use of BI I5 Highest level of strategic social tool adoption * indicates the type has the highest level; indicates the next highest. Metrics are available upon request. Contact HRSystemsSurvey@CedarCrestone.com. Transnationals lead on both efficiency and innovation. Internationals achieve first or second position on innovation factors. Globals are more frequently leaders on efficiency measures. Multinationals, perhaps hurt by so much decentralization and the associated duplicative costs from a lack of standardization, are beginning to show moves towards adopting the efficiency factors. 7

10 So Why Should You Care? Ideally, organizations adopt HR technologies and associated practices in order to impact key business outcomes. When making the business case for more technologies, it is often easy to build a business case on process efficiencies and resulting cost savings. However, it is important to not overlook that HR technology adoption can not only lower costs (for example, moving to shared service centers and adopting an HR help desk application to enable service delivery efficiency), but it can also impact sales and other financial metrics through improving various talent management processes automation, adopting business intelligence solutions, and even adopting social tools when used strategically. Organizations with the Highest Levels of Talent Management, Business Intelligence, and Strategic Social Tool Adoption Outperform Organizations with Higher than Average Technology Adoption Outperform on Two Key Financial Metrics $343,677 $216,719 Revenue per Employee Above Average Below Average $208,617 $108,009 Profit per Employee Average Talent Management adoption = 4.7 applications, average BI/Analytics application adoption is 3.98, average strategic social tool adoption is CedarCrestone has seen a consistent correlation between higher-than-average technology adoption and financial performance. Further analysis shows that the Transnationals outperform most frequently (on revenue per employee, operating income growth, and return on equity) while the Internationals outperform on profit per employee. 8

11 Next Steps with HR Technologies Adoption and Associated Practices? So what can your organization do to mature and further impact business outcomes as you go global with HR technologies? While changing organization type requires the strategic support of the entire leadership of an organization, we think that those involved in the adoption of HR technologies can achieve efficiencies and become more innovative in the organization with their approach to HR technologies and associated practices. Mapping the organization types on efficiency and innovation axis, we see at a glance that Multinationals are just starting to become efficient through platform consolidation and reducing system customizations (items in orange). On the innovation axis, the Internationals most often are at the highest level of innovation practices (items in blue). Step Right, Step Up I N N O V A T I O N International High level TM process standardization Single payroll serves high % of workforce Highest level of ESS and MSS High level of SaaS HRMS adoption Highest level of ITM adoption High level of TM best practices High level of BI tool adoption Highest level of strategic social tool use Multinational High level of platform consolidation (HRMS and ITM) High level of no or low customization EFFICIENCY Transnational High level of admin. and TM process standardization Fewer HRMSs serving high workforce % Highest level platform consolidation (HRMS and TM) Highest level of no or low customization High level of ESS and MSS Highest number of shared service centers Highest level of SaaS HRMS adoption Highest level of TM best practice and BI tool adoption High level of manager direct use of BI and social use Global Highest level of admin process standardization Highest level of TM process standardization Fewest HRMSs & HRMS serves highest workforce % Single Payroll serves highest % of workforce Highest level of ESS and MSS High number of shared service centers High level of ITM adoption and high level of TM best practices Highest level of manager direct use of BI The mantra of step right, step up summarizes the approach to take towards improvement. If your organization is a Multinational type, first address the efficiency areas; move your processes and systems towards the remaining efficiency improvements. If you are a Global organization, adopt more of the innovation approaches. If you are an International, review the efficiency areas and make sure these are in place at an appropriate level, and then continue to address additional innovation areas. If you are a Transnational, continue to innovate but also make sure your organization excels on efficiency approaches. Efficiency - Standardize both administrative and talent management processes - Consolidate HRMSs - Serve more workforce from a single HRMS and single payroll solution - Consolidate talent management onto your HRMS platform - Reduce customizations Innovation - Expand workforce using self service and adopt regional shared service centers - Adopt a SaaS HRMS - Adopt an integrated talent management solution, but remember to consolidate on your HRMS platform - Adopt BI tools and roll out solutions directly to managers - Adopt social tools strategically 9

12 About CedarCrestone CedarCrestone delivers industry-focused client success by providing consulting, technical, and managed services for the deployment, management, and optimization of next-generation applications and technology. CedarCrestone s Research and Analytics staff provide comprehensive benchmark services, an ideal starting point of any update to your HR systems strategy, to prioritize applications, or to support development of your business case. Contact HRSystemsSurvey@CedarCrestone.com for further information. Corporate Office 1255 Alderman Drive Alpharetta, Georgia