The latest 2017 HR Transformation Study – How HR Needs to Change by Mercer has showed that 33% for companies in Asia employ a high-performing HR service delivery model that includes the three components of centres of expertise, HR business partners, and HR shared services. In comparison, the number stands at 35% worldwide.
Moreover, only a few worldwide (17%) and in Asia (15%) plan to change from their existing model.
The study, which was launched in March, also found that the majority (93%) of executives are planning an organisation redesign in the next two years with 41% expecting to move support functions to shared services.
Karen Piercy, partner in Mercer’s HR transformation business said: “Organisations are making changes in the interest of greater efficiency and increased agility, which requires a combination of technologies.”
“Those that have been expanding shared services and business partnering skills have had the best success aligning HR to business needs,” she added in the press release.
Meanwhile, Siddarth Mehta, leader, workforce planning and analytics, Mercer highlighted that more ‘hybrid’ models are being leveraged in APAC, even if ‘centralised’ models are more prevalent globally.
He said: “The good news is that companies in Asia Pacific are four times more likely to increase HR spend in the year ahead, than decrease it.”
According to the research, 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.
Additionally, Mercer’s study finds that 68% 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 – along with having processes and practices consistent across the multiple locations.
As service delivery models evolve, the release stated that 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.
It said: “By building alignment to key business performance initiatives, HR professionals are well-positioned for value-added roles.”
According to the study, more than two-thirds (69%) of CHROs/executive HR leaders in high performing HR functions meet with the CEO or COO to discuss business and HR strategy at least twice a month to ensure strategic alignment. In Asia Pacific, this number increases to 78%.
Denise LaForte, North American leader of Mercer’s HR transformation practice said: “These meetings are important to strengthen the partnership between these leaders and help ensure that HR is aligned tightly with business strategies.”
“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,” she said.
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Meanwhile, only 35% of CEOs believe their HR function provides a digital experience for employees. The study also found that organisations with high-performing HR functions have embraced technology and have seen significant results assessing and applying analytics.
Specifically, these firms achieved better business outcomes such as delivering exceptional customer value (94%), reacting proactively to disruptive change (83%), and driving innovation (89%). They are also viewed as great places to work (86%) and attract the talent needed to excel (91%).
While organisations with high-performing HR functions are using technology more, it is still limited. The study revealed that 69% of organisations have employee self-service in place, while only 36% have manager self-service, and only 27% have mobile talent applications.
Piercy believes that there is “significant opportunity for the HR function to grow its digital presence.”
“As HR functions adopt technology and advance their skills in data analytics, they are strengthening strategic decision-making, enhancing partnerships with business leaders and other functions, and providing a more digital and consumer-oriented manager and employee experience,” she said.
On that note, Mehta also commented: “In Asia Pacific where technology and innovation are paramount, it is important for companies to invest in the optimal mix of technology to leverage data for decision-making – a key trait of high performing HR organisations.”