Mercer HR survey EMEA

1. Survey report
HR Transformation in EMEA
A Mercer study

2. 1

3. Table of contents
Transformation 2010 .............................................................................................................................1
Why does HR transformation remain of such interest? ...........................................................1
HR’s evolving significance ....................................................................................................................2
Engaging with the business .................................................................................................................4
HR perceives itself as a strategic partner...................................................................................4
Day-to-day realities: a different story .................................................................................................6
HR’s role in a post-recession economy .......................................................................................7
HR’s strengths and weaknesses..................................................................................................8
Measuring HR effectiveness .......................................................................................................9
A closer look at ‘transformation’ .......................................................................................................10
HR organisational structure ......................................................................................................11
HR technology initiatives ..........................................................................................................12
HR processes ..............................................................................................................................13
HR capability ..............................................................................................................................13
Enhancing the HR role: barriers and opportunities ................................................................14
Maximising HR’s potential as a strategic business partner .............................................................17

4. About this survey*
Responses were collected in 2010 from over 500 organisations representing more than 15 industries
and 39 countries across the Europe, Middle East and Africa (EMEA) regions – this was the highest
response rate since the survey began in 2003. Among the respondents, 61% were from Western
Europe (UK and Ireland included), 23% were from Eastern Europe and 16% were from the Middle
East and Africa.
Twenty percent of the participating companies were global headquarters, 14% were regional
headquarters and 31% were country subsidiaries of a foreign multinational. An additional 27%
were domestic private companies and 9% were domestic public sector/government organisations.
Thirty-three percent of respondents were from organisations with 5,000 or more employees,
27% were from organisations with 1,000 to 4,999 employees and 41% were from organisations
with less than 1,000 employees.
The survey was completed by HR professionals from a wide breadth of industries, including:
■ Manufacturing, durable and nondurable (17%)
■ Services, for-profit (16%)
■ High-tech/Telecommunications (12%)
■ Finance/Banking/Insurance (8%)
■ Retail/Wholesale (7%)
■ Transportation (7%)
■ Chemicals (6%)
■ Energy (5%)
■ Health care (5%)
■ Holding company (3%)
■ Government/Public sector (3%)
■ Entertainment/Hospitality (3%)
■ Construction/Real estate (2%)
■ Services, nonprofit (1%)
■ Agriculture/Forestry/Fishing (1%)
The collected experience and views of these HR executives present a number of key findings
and commonalities that should be useful as your company assesses its HR function.
* Note: Percentages in this report may not total 100 due to rounding.

5. Transformation 2010
This report presents the results of Mercer’s 2010 Europe, Middle East and Africa (EMEA) HR
Transformation Survey, which is conducted on an ongoing basis by Mercer, and is a follow-up
to the 2003 and 2006 surveys. Participation in the 2010 edition of this survey has nearly doubled
since 2006, demonstrating that this subject remains high on the agenda of HR practitioners in
the region.
Each survey we have conducted illustrates how HR functions are responding to external
market pressures and business needs; as businesses adapt to market shifts, HR transfor-
mational efforts also continue to evolve. This 2010 report indicates that, in the wake of the
recession, HR is focusing its efforts on business and workforce alignment while continuing
to enhance its own service delivery model through more efficient and effective processes.
Why does HR transformation remain of such interest?
The increased participation rate in this year’s Transformation Survey confirms that HR
transformation remains a priority for HR practitioners in the EMEA. In particular,
a significant rise in participation (almost 40%) was noted in the region’s emerging markets.
Most functional transformations typically begin with a need that develops into a future-
orientated vision focused on enhancing its contribution to the business. For the HR function,
the key driver for transformation efforts is based on the requirement to partner strategically
with the business by establishing a best-practice approach to service delivery and by
demonstrating value in areas of HR that contribute to improved business outcomes.
Recognising the critical importance of human capital management practices to business
success, business leaders are asking their HR functions to play an increasingly strategic role in
achieving business objectives. At the same time, they are looking to wring excess costs from
HR service delivery, as well as manage programme spend, in order to redirect those funds to
other business imperatives.
The HR function has been in a process of transformation for nearly 20 years, with varying
levels of success. The 2010 survey results show that HR transformation is still a process that
organisations are undertaking at similar levels to the 2003 and 2006 surveys.
The desire to transform remains high, with organisations either planning to transform or
already undertaking steps to transform in Western Europe (54%), Eastern Europe (49%) and the
Middle East and Africa (52%).
Exhibit 1
Status of HR transformation
10% Currently in the midst of a transformation process
No current plans to transform HR
22% Completed an HR transformation more than
12 months ago
42%
Completed an HR transformation in the past
12 months
10% Plan to begin a transformation within the next year
16%
1

6. HR’s evolving significance
Over the years, respondents have transformed their HR functions to varying degrees and at
different paces. Survey results show that some transformation initiatives are now complete;
however, where transformation efforts are still underway or launching, two primary reasons
are cited:
■ An increased focus on performance monitoring and continuous improvement
■ Post-recession re-evaluation of HR’s role in the business
The desire to transform HR is typically driven by a number of factors, including:
■ A change in business strategy that requires HR to react by providing new or different services
to the organisation, such as globalisation of the workforce, M&A activity, product offerings
that require new employee skill sets, etc.
■ HR’s own awareness of the need to elevate its role in partnering with the business
■ As a response to the substantial increase in financial management constraints
Exhibit 2
HR transformation drivers
Part of a broader organisation-
27%
wide transformation process
Response to changes
19%
in the organisation
HR awareness to transform itself, to subsequently
14%
drive change across the organisation
Company-wide cost
14%
reduction mandate
Leadership changes
10%
in the HR function
CEO/business leader mandate for change
5%
in the HR and/or other staff functions
HR not adding value
4%
in its existing role
Change in domestic market
2%
environment or regulation
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
2

7. HR transformation is therefore embedded in the changing context and demands of the business.
In our experience, many triggers for transformation programmes are driven by complexity
and/or technology. For example:
Complexity-driven transformation programmes tend to focus on helping the
HR function address:
■ Inadequate involvement in the execution of the business strategy
■ Failure to devote sufficient effort to align HR strategy with business strategy
■ Inability to deploy programmes and policies adapted to different business areas,
geographies and other considerations
■ The current efficiency of HR operations not following market standards
Technology-driven transformation programmes tend to focus on:
■ Leveraging technology to eliminate cost from the current delivery model
■ The technical and functional instability of the current technology platform
■ A need to provide the business with key human capital information and insights that
require more access to data
■ Providing more integration, automation or flexibility in the execution of HR processes,
eliminating excessive manual interventions in routine administrative transactions
2010 key themes
■ HR’s strategic intent: The self-perception of HR’s strategic contribution is diminished
by the focus of its efforts and the reality of the transactional activities it still undertakes.
■ Talent and culture of performance: Management of key talent and embedding a culture
of performance remain a priority for HR.
■ HR service excellence: There is a commitment to continuous improvement, renewal and
performance monitoring.
■ HR effectiveness evaluation: In light of business and workforce changes in this
post-recession environment, organisations have a renewed focus on evaluating HR.
■ Capability-driven success: To bridge existing gaps in people-management skills, HR staff must
be appropriately trained or, if this is not possible, managed out of the organisation; HR must
make tough decisions about its own talent and how it can most effectively be deployed to
meet business needs.
3

8. Engaging with the business
HR perceives itself as a strategic partner
Unsurprisingly, debate continues over the term “strategic partner”. Some will regard the term
as a cliché, but it remains a primary focus of HR and an area of high interest. Approximately
66% of respondents said their HR function views itself as a strategic partner, yet only 38% said
HR fully participates in strategy decision making. Twenty-eight percent of those who completed
the survey said that although HR participates in strategy discussions, it does not have decision-
making responsibilities. Just over 25% of respondents indicated that although HR isn’t yet a
strategic partner, it is increasing its influence in this area. Finally, only 8% said that HR is not
seen as a strategic partner.
The view that HR is perceived as a strategic partner is evidenced through its contribution
to strategic business-led discussions such as:
■ Discussing significant business-wide issues (73%)
■ Translating business strategy into a human capital strategy for the business (68%)
■ Driving and developing methodologies to drive change in the organisation (63%)
■ Participating in business operations planning (57%)
■ Being brought in early to significant business issues and opportunities (55%)
Compared with the survey results of 2006, these findings indicate a slight decline in the
proportion of respondents focusing on the above activities. We apportion this to the increase
in the representation of Eastern European and Middle Eastern organisations within the
respondent profile. Functions in these locations appear to be more concerned about managing
talent shortages than are their Western European counterparts, where establishing strategic
partnering is a higher priority. Western European counterparts have largely put in place
talent management practices and are more focused on moving the HR function forward
through strategic partnering. Even so, findings indicate companies across the region appear
to be making inroads in HR’s strategic contribution by building relationships with business
leadership and positioning HR and human capital as a source of value.
The data also show that in Western Europe, HR is seen more as a strategic partner, while
in Eastern Europe and the Middle East, HR is increasing its influence as a strategic partner.
4

9. Exhibit 3a
Top human capital challenges
Top challenges % of participants
Retaining key talent 51%
Acquiring key talent/lack of available talent 39%
Developing an environment that drives and supports a culture of performance 33%
Increasing workforce productivity 31%
Driving cultural and behavioural change in the organisation 30%
Identifying and building leadership capability 30%
Aligning HR strategy and programme design with the organisation/business strategy,
30%
operating model and customer requirements
Increasing line-manager capability to handle people-management responsibilities 25%
Aligning workforce plan/requirements with organisation and business needs 24%
Increasing workforce profile to align with organisational performance requirements 22%
Exhibit 3b
Top regional human capital challenges
Retaining key talent 58%
46%
Acquiring key talent/lack of available talent 44%
35%
Developing an environment that drives 26%
and supports a culture of performance 39%
0% 10% 20% 30% 40% 50% 60% 70%
Eastern Europe, Middle East and Africa Western Europe
In Western Europe, after retaining key talent, the second top priority is developing an
environment that drives and supports a culture of performance.
5

10. Day-to-day realities: a different story
A closer examination of the work and activities undertaken by HR does not fully corroborate HR’s
self-perception. Our survey found that the amount of time HR devotes to direct strategic activities
is only 15%. However, respondents also indicated the function would like to be able to allocate even
more time – up to 25% – to strategic activities. This suggests that, while some organisations
have achieved their strategic alignment goals, others feel there is room to expand this further.
Encouragingly, compared to previous surveys, the most prominent shift has occurred in the
allocation of overall time for transactional and recordkeeping activities, dropping from 28%
of total responsibilities in 2006 to only 18% in 2010. This is a promising indication that HR is
making a concerted effort to pull away from time-intensive transactional activities to instead
focus on more value-added contributions. Interestingly, HR’s growing focus on internal
management (14%) could point to a desire to “get their house in order” and focus on developing
internal skills and capabilities.
Exhibit 4
Percentage of HR staff’s time currently spent performing HR activities
12%
Delivering HR services
27%
Transacting/recordkeeping
14%
Strategic partnering
Designing HR programmes or systems
Internal management
14%
18% Compliance/auditing
15%
We believe that over time, as HR capabilities grow and HR service delivery models evolve,
organisations will increasingly invest in developing line managers’ people-management skills
to ensure this key workday interaction is appropriately managed.
Mercer’s view is that HR should partner with the business on human capital issues. Employees
are owned by the business – not HR. HR therefore needs to continue to work through the top
human capital challenges with the business in order to bolster the perception of HR as a
strategic partner.
6

11. HR’s role in a post-recession economy
A salient difference from previous surveys is HR’s perception of its role. The 2010 responses
indicate a greater focus on the role that HR plays in leading organisation-wide change initia-
tives. In our view, this can be explained by a requirement from the business for HR to deal
with the aftermath of the restructuring and redundancy programmes that companies were
forced to implement as a result of the recession. As businesses slowly begin to emerge from
the economic downturn of 2008 and 2009 and respond to shifting market demands, HR has
maintained a strong focus on retaining and acquiring key talent. This will be key to business
success as companies grapple with dips in employee engagement resulting from harsh
cost-cutting initiatives.
Exhibit 5
Top roles for HR in the post-recession economy
HR leading organisation change initiatives 54%
Strategic focus on retaining key talent as
well as opportunistic talent acquisition 47%
Understand market conditions to react quickly
and help organisation differentiate its 42%
capabilities to influence the bottom line
HR owner of leadership development 31%
Aligning talent to roles and driving
productivity via workforce planning 26%
Establishing transparency in
employee communication 23%
0% 10% 20% 30% 40% 50% 60%
7

12. HR’s strengths and weaknesses
Mercer’s previous HR transformation surveys explored HR’s performance and ability in
traditional areas such as interviewing, customer service and recordkeeping. This time,
the 2010 survey sought to also capture emerging areas of HR’s capability, reflecting the
evolution of the scope of HR responsibilities. A contradiction in the findings is that, while
most organisations believe their HR capabilities are sufficient to meet the needs of today’s
business environment, respondents also indicated that a key opportunity for improvement
is the enhancement of the skills and competencies of HR staff.
HR’s ability to be a partner in terms of consulting and labour relations is the strongest area
for improvement. The three weakest areas reported are:
■ Leadership
■ Talent management
■ Organisation development and effectiveness
Exhibit 6
Skills within the HR team that tend to be viewed as only sufficient
Partnering (e.g. consulting,
21% 66% 13%
labour relations)
Work-enabling competencies
14% 68% 19%
(e.g. adaptability, communication)
Leadership 12% 56% 32%
Technical – learning
14% 66% 19%
and development
Technical – talent management 11% 63% 26%
Technical – compensation
11% 67% 22%
and benefits
Technical – organisation development/
8% 68% 24%
organisation effectiveness
0 10 20 30 40 50 60 70 80 90 100
Strong Sufficient Weak
8

13. Measuring HR effectiveness
At the core of any HR transformation is the ability of the function to measure its activities.
Recognising the changing role of HR and evolving business needs in the new economic
and business landscapes, Mercer introduced several new HR effectiveness measures to
the 2010 survey.
Exhibit 7
HR effectiveness measures
How do you measure the effectiveness of the HR function? % of respondents
Employee satisfaction 76%
Line-manager feedback on effectiveness of HR programmes and service delivery 69%
HR cost management 55%
HR programme effectiveness 55%
Meeting stakeholder requirements 42%
HR operational measures 42%
Line-manager effectiveness as people managers 39%
Impact on business operations/outcomes 38%
HR staff/employee ratio 36%
Workforce productivity 35%
Processes in place to lead/facilitate organisational change 34%
Customer satisfaction 34%
Increased customer usage of HR staff for more strategic interventions
(rather than using external providers or building capability outside of HR) 32%
Communication of workforce expectations 30%
Shift in staff time spent on higher value-added activities 20%
No specific measures 5%
Following are some of the overarching themes that surfaced from the survey results:
■ Cost management and programme effectiveness remain consistent, which, given the
current economic climate, is to be expected.
■ There is a changing focus away from employee satisfaction and towards engaging with line
managers – this indicates a bolder outlook on customer satisfaction.
■ HR is focusing less on benchmarking – as evidenced by the decline in the prevalence of HR
staff/employee ratios as targets – and more on measuring the effectiveness of the function,
demonstrating the function’s greater awareness of the importance of evaluating its contribution
to the business, rather than implementing a metric with little regard for context.
■ Now that HR is aligning itself with the business to help drive productivity and influence
the bottom line, it is relying substantially less on employee satisfaction as a measure
of effectiveness.
9

14. A closer look at ‘transformation’
This survey shows that the assessment of HR effectiveness remains steady with trends in the
past. Transformation is still clearly on the minds of most executives. Plans for transformation
were fairly consistent across Western Europe, Eastern Europe, and the Middle East and Africa.
More than half of the survey participants indicated that they continue to engage in transformation
efforts or are planning to commence efforts within the next year. Approximately one-third of
respondents indicated that they had completed their transformation. Only 16% of respondents
said they had no current plans to transform HR.
Exhibit 8
Initiatives undertaken during HR transformation
Redesign of HR work processes 42% 21% 36%
Design of a new strategy
39% 27% 34%
for delivering HR services
Talent development strategy
39% 13% 48%
for improving skills within HR
Assessment of HR
37% 19% 44%
function effectiveness
Implementation of new HR roles,
35% 27% 38%
responsibilities and competencies
Implementation of a new
32% 29% 39%
HR organisational structure
Evaluation/implementation
32% 16% 52%
of new HRIS technology
Assessment of HR customers’
29% 25% 46%
needs/requirements
Strategy for attraction/retention
24% 11% 65%
of HR staff
Audit of current HRIS technology 24% 23% 54%
Identifying environment, market, business
22% 22% 56%
and organisational implications on HR
Changes in reward
22% 9% 69%
strategy for HR staff
Review of external vendors
19% 9% 72%
or sourcing strategy
Decentralisation of selected
18% 14% 68%
programmes in the business
Outsource any part
15% 9% 76%
of the HR function
0 10 20 30 40 50 60 70 80 90 100
Planning to complete (short/medium term)
Completed
No actions planned
10

15. Based on 2010 responses to the survey, fewer transformation activities are planned compared
with 2006. Before embarking on the next phase of the transformation journey, organisations
may be pausing to let the impact of previous initiatives take effect or to realise the benefits or
returns on previous investments. The ramifications of the recession should also be considered –
in a cost-sensitive environment businesses will tend to shed investments in “non-core”
functional areas such as HR.
Regardless of rationale, the nature of activities planned implies that HR is committed to
continuous improvement and performance monitoring, particularly in the areas of HR
strategy processes and talent. The top plans cited in the 2010 survey included a redesign
of HR processes (42%), new strategies for delivering HR services (39%), talent development
strategies for improving skills in HR (39%) and assessment of HR effectiveness (37%).
HR organisational structure
The survey responses indicate that the majority of organisations in the EMEA region are
continuing to adopt the three-pillar model, which consists of HR business partners, HR
shared services and HR centres of expertise. Sixty percent of respondents are now using
a centre-of-excellence model, which leverages and centralises critical talents.
Exhibit 9
HR centres of expertise 60%
■ Appointment of an
HR programme aligned HR controller (40%) or
56% specialist transformation
HR functions
implementation teams
HR service centre/shared (51%) emerged across
52% all regions
service operations
■ Equal number of
HR business partners reporting participants indicated
52%
to the business unit leader business- vs. HR-driven
decision-making protocols
HR business partners
51%
(reporting to corporate HR)
0% 10% 20% 30% 40% 50% 60%
However, today’s HR service delivery model is failing to deliver on its promise to the business.
Mercer has found that the reasons for this include:
■ Flawed implementation relating to how individuals within HR will support the newly
transformed landscape
■ Insufficient HR skill set
■ Failure to provide top-notch transactional services
■ Limited satisfaction in self-service by employees and managers
■ Lack of support for line managers
■ Insufficient geographic focus
11

16. HR technology initiatives
Survey responses show very little difference between 2006 and 2010 in the rate of HR technology
initiatives undertaken by HR. A wide range of initiatives has been under way, and for good
reason: the efficient and effective use of technology enables HR functions to do more with
less – for example, by automating transactional processes and minimising costs associated
with manual intervention – an important advantage in these uncertain economic times.
For instance, 51% of companies use an intranet for the online publication of HR policies and
processes, providing employees and managers alike with easier and more immediate access.
And 46% have implemented entirely new HR systems.
As with transformation, we see the implementation and deployment of technology as a
journey of continuous improvement. Companies have implemented technology to a greater
or lesser extent depending on multiple factors, ranging from availability of resources to
organisational appetite to business priorities. Some companies are focusing on “getting the
basics” right – for example, by implementing HRIS or revamping intranet sites/HR portals or
by seeking to expand existing functionality. In the next study we will seek to explore this
continuum further and more closely examine where organisations find themselves on
this journey.
Exhibit 10
Main technology initiatives in the previous three years
60
50 51%
46% 46%
40
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36% 35%
30
28%
20 21%
16%
10 13%
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12

17. HR technologies have been implemented with varying degrees of success. More than three-
quarters of survey participants indicated that previous HR technology implementations did
not entirely meet expectations. The main reasons cited for the lack of success in this area
included:
■ Insufficient planning
■ Functionality not meeting expectations
■ Limited collaboration between IT and HR
■ Poor implementation
■ HR managers’ continuing involvement in transactional work
Too often, organisations overlook the functionality required of technology to match their
vision. Technology is not a panacea, but a tool to deliver on business strategy. Successful
selection of HR technology is achieved by appropriately scoping the functionality needed to
optimise the HR service delivery model and by looking critically at the role technology can
play in assisting HR with the flawless delivery of operational activities (for example, through
automation). This will help inform decisions on whether to use the functionality offered by
core HR technology vendors or if best-of-breed systems are needed to support key people
processes (such as talent management).
It is also crucial not to underestimate the change-management effort required to successfully
deploy HR technology and shared services, for it has ramifications not only for how HR
operates (for example, where resources are deployed to support administrative processing),
but also for how employees and managers interact with the function via online “self-service”.
HR processes
Approximately one-third of respondents have completed major work on the redesign of their
HR processes. Emerging from the recession, in 2010 the rate of completion doubled from 2006.
More than half of respondents (52%) are currently in the midst of an HR process redesign or
see it as a requirement for the next 12 months. HR process redesign is essential to continuous
improvement and renewal of the HR function – rather than a one-off exercise. HR processes
must be revised regularly, taking into account any changes to the operating model, and are
subsequently an integral step to any HR transformation initiative.
HR capability
As HR looks to the future and considers how to change the business perception of HR’s value
and its ability to influence the workforce, it forecasts a dramatic increase in capabilities
required to achieve this goal. But rather than look externally for these capabilities, HR
transformation plans are relying heavily on training existing HR staff, according to the
survey responses. The top three plans to improve HR capabilities are:
■ On-the-job structured training for existing staff
■ Assessment of current HR staff skills to identify improvement opportunities
■ Face-to-face training for existing staff
13

18. Exhibit 11
On-the-job structured
40% 43% 18%
training for existing staff
Assess current HR staff skills to
36% 45% 19%
identify improvement opportunities
Face-to-face training for existing staff 34% 52% 14%
Use outsourcing/external suppliers
18% 34% 48%
to supplement internal capability
Rotate HR staff to line roles 13% 38% 50%
Rotate line staff to HR roles 13% 33% 54%
Replace or augment
12% 32% 56%
current staff with new hires
0 10 20 30 40 50 60 70 80 90 100
Major intent Moderate intent Little or no intent
Enhancing the HR role: barriers and opportunities
As all practitioners know, good people management can be achieved only through the presence
of an effective HR function informed by high-quality inputs from operational line managers.
Ultimately, the results show that the business perception of the value that HR can bring to the
organisation is both a barrier and an opportunity to enhancing HR’s performance.
Leadership capabilities are often cited among the core issues relating to HR barriers and
opportunities – survey respondents identified the capability and skills/competencies of both
line managers and HR as the two most critical barriers to success. Addressing these issues
may prove a challenge in an age of organisation-wide cost constraints, limited resources and
other day-to-day service delivery challenges, all of which restrict the time HR has to manage
capabilities and undertake internally focused performance management.
In response to a similar question about the major barriers and opportunities for the function
going forward, respondents also noted that the skills/competencies of HR staff are of chief
importance, as is the business perception of the value HR can bring to the organisation.
Technology investments and HR leadership are other major parts of the opportunities equation.
14

19. Sk % respondents Ca % respondents
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Exhibit 13
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4%
15

20. Next-generation HR: how the HR operating model needs to change
For HR to be successful in its transformation, the human capital and HR strategies need to be aligned
with the overall business strategy. The strategy will need to encompass the following:
■ People strategy – How will the organisation manage and motivate a workforce that can execute
the business strategy?
■ HR function strategy – How will the HR function support the people strategy, deliver expected
value and contribute to the organisation in support of the business priorities?
– What HR programmes and initiatives (for example, talent management, rewards, learning
and recruiting) are required?
■ HR operating model
– Sourcing – What activities will the function do itself versus outsource?
– Infrastructure – What internal capabilities are needed to fulfil the HR function strategy?
– Governance – How will the function be led, and how will related investments be managed?
How will success be measured?
The new model will require several key changes. First, HR will need fewer business partners playing
different roles. Next, centres of expertise must shed transactional services to drive new thinking.
And shared services and outsourcing will be key to achieving the strategic model. Ultimately, business
success will depend on line managers, and HR will need a different set of skills and capabilities to ensure
success as well.
Several key changes:
HR
business
HR needs fewer business partners
partners playing different roles
Centres of expertise must shed HR centre
transactional services to drive new thinking of expertise
HR
leadership
Shared services and outsourcing Tier 0
Tier 1
are key to achieving the strategic model Tier 2
HR case
Business success manager People
development
depends on line managers HR geography managers
manager
Line managers
A different set of HR skills HR es
sha ic
and capabilities is critical r e d serv
H RIS
16

21. Maximising HR’s potential as a strategic business partner
Based on our survey findings, we can conclude that, in the wake of the recession, the HR
function needs to focus on both efficiency and effectiveness in order to develop its maximum
potential contribution.
HR operations must be as efficient as possible in order to contribute to business results. While HR
seeks to set the strategic tone for people management and shape business decisions, it can only do
this effectively once operational aspects of delivery are in order. It can do this by:
■ Where possible, deploying homogeneous, measurable and predictable HR processes throughout the
organisation that appropriately balance the workload and the responsibilities of all players
■ Maintaining a low “cost of ownership” of the necessary technology to reduce operative risk
(including technical risk), increasing efficiency and realising the benefits of past technology invest-
ments. This is also a key factor in developing the business case for future technology investments.
Having a more efficient management of day-to-day service delivery operations will free up HR’s time
to focus on the more value-added activities that define its strategic business contribution.
HR services, programmes and policies must be closely linked to the business strategy in order to
be as effective as possible and develop a productive and engaged workforce. This will allow HR to:
■ Create programmes and policies that contribute directly to the business strategy, taking into
account the diverse needs of various business units
■ Prioritise its efforts on deploying those services and programmes that provide the most impact
and value to the organisation
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22. Mercer’s concept of HR transformation is that it is a never-ending journey that must be supported
by a culture of continuous improvement and that sometimes needs new impulses in the form
of transformation programmes – whether motivated by technological changes to give a major
boost to efficiency or motivated by the urgent requirement to handle more complex practices
for people management.
Our main recommendation, in view of the data in this report, is for organisations to simply
take the time to reflect on two fundamental aspects of management of the HR function:
1. Assessing the contribution the function makes to the business, the efficiency of operations
and the effectiveness of HR programmes. This will allow practitioners to detect early on the
eventual arrival of “burning platforms” that might impair HR’s strategic contribution.
2. Focusing on the development of internal capabilities that will enable the function to drive
continuous improvement. This will allow the function to be appropriately equipped with the
skills it needs to transform the HR function, at the required speed, and to provide a suitable
response to changing business needs and thought leadership on HR service delivery.
Finally, we encourage organisations to reflect on these items through the lens of the entire HR
operating model, taking a holistic view to examine the following interconnected factors: sourc-
ing of activities, infrastructure (including processes, technology, talent and organisation) and
governance.
Creating a strategic partnership between HR and executive management is not an organic
process; rather, it is the result of defined goals that reflect HR’s awareness that the first busi-
ness of HR is the fulfilment of the organisation’s business objectives.
The organisations that achieve successful HR transformation are those that have secured a
commitment upfront to travel this new path.
For more information, please visit www.mercer.com/HRTransformationEMEA.
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Arabia
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Singapore
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Korea
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contact your local Mercer office
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Malaysia
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