HR Transformation

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HR Transformation

• Oscar Jackson, IPMA-CP, President, Neil
  Reichenberg, CAE, Executive Director,
  International Public Management Association for
  Human Resources (IPMA-HR)

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International Public Management Association for
Human Resources (IPMA-HR)

• Located in Alexandria, VA
• Website - www.ipma-hr.org
• Members are Human Resource professionals who work
  primarily in the public sector
• Over 8,000 members in more than 25 countries
• IPMA-HRWorking Together on Behalf of the Public
  HR Community
• Programs, Products Services include
• Publications
• Human Resource Center
• Professional Development Programs and Conferences
• Human Resource Certification Program
• Employment Examinations

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HR Transformation

• Research project launched in 2006
• Effort to obtain information from senior HR
  leaders
• Three surveys conducted with several hundred
  responses mostly from IPMA-HR members in the
  United States
• HR Transformation Overview
• HR Service Delivery
• Aging Workforce
• Results of the fourth survey on strategic
  recruiting and staffing available soon
• Results are on the IPMA-HR website,
  http//www.ipma-hr.org

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Public Sector HR Environment

• Today, Public Sector organizations face numerous
  challenges in attracting and retaining a quality
  workforce that can support and carry out their
  goals and mission.
• As the impact of the aging workforce increases,
  Public Sector organizations must focus on
  preventing the loss of important knowledge while
  developing new leaders and skilled professionals.
• Public Sector organizations are often less
  equipped to compete for talent with the private
  sector.
• The nature of Public Sector organizations and the
  political environments in which they operate can
  restrain the use of new tools such as outsourcing
  or shared services models to improve and
  transform HR service delivery and operations.
• Human Resources Information Technology (IT) is
  clearly a challenge as Public Sector
  organizations struggle with legacy systems and
  aging IT infrastructures.
• HR Directors and Managers struggle to gain the
  support of the organizations executive
  leadership and to establish HR as a strategic
  partner.
• Within organizations, efforts to transform and
  improve other areas may take precedent over HR
  yet another signal that executive leadership does
  not recognize the value of HR improvements or see
  the alignment with overall organizational goals.
• Cost remains a constant issue for HR operations
  in the Public Sector and HR professionals must
  balance conflicting agendas when pushed to
  improve and advance service levels while cutting
  costs and reducing budgets.

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Key Findings Survey 1

• The survey results and analysis resulted in
  several interesting points about HR
  transformation in the Public Sector
• HR Professionals recognize the connection between
  improved and upgraded Information Technology (IT)
  and HR transformation.
• Management support is a key factor in pursuing HR
  transformation.
• HR Professionals recognize the importance of HR
  being perceived as a strategic asset to an
  organization.
• HR Professionals understand the value in
  Workforce and Succession planning but clearly
  desire assistance in this area.
• Outsourcing is not the norm and is not readily
  recognized as a key tool for HR transformation
  and improvement.

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Information Technology in HR

• How would you characterize your use of
  Information Technology (IT) in HR?
• 26.7 Limited Use of IT in HR
• 42.7 Moderated Use of IT in HR
• 30.7 Comprehensive Integration of IT in HR
• For overall satisfaction in IT, on average
  respondents ranked systems and applications that
  support HR operations low (3.19 mean score).
• The low rank of systems and applications is
  consistent with other results indicating the need
  for upgrades and improvements in HR IT.

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Perception of HR

• When asked to rank on a scale from 1 (low/bad) to
  5 (high/good), respondents ranked leaderships
  satisfaction with HR service delivery as high
• 59.8 ranked satisfaction at a 4.
• 14.8 ranked satisfaction at a 5.
• This is the perception of senior HR leaders

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HR Quality

• When asked about quality within the HR
  department, on a scale of 1 (low/bad) to 5
  (high/good), respondents ranked
• People (HR Staff) Mean rank of 4.38
• Processes Mean rank of 3.76
• Success in performing as a strategic asset to the
  organization as a whole Mean rank of 3.65
• Perception of HR as not being a strategic asset
  can serve as a barrier to HR transformation.

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HR Strategic Planning

• When asked if they have an existing strategic
  plan,
• 55.1 of respondents do not have a strategic plan
  for HR.
• 44.9 do have a strategic plan for HR.
• For those organizations that do have a strategic
  plan for HR,
• 72.8 have a multi-year strategic plan.
• 27.2 do not have a multi-year plan.
• When asked if they have a multi-year budget,
• 78.5 do not have a multi-year budget.
• 21.5 do have a multi-year budget.
• Despite identifying the challenge of being
  perceived as a strategic asset to the
  organization, the majority of respondents do not
  have an existing strategic plan for HR.
• For those organizations that do have a strategic
  plan, this plan appears to be comprehensive and
  covers a longer time frame.

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HR Priorities

• The top three priorities in HR
• Manage benefit costs (i.e. workers compensation,
  pension, health care)
• Align HR and workforce with organizations
  objectives
• Workforce/Succession Planning
• Bottom three priorities
• Emulate advances in the private sector
• Reduce overall HR budget
• Reduce administrative costs/improve back office
  processes
• When asked to identify any other priorities,
  responses were varied and included improving
  safety, improving morale and implementing
  performance measurement.
• Respondents recognize the importance of
  workforce/succession planning, a point confirmed
  throughout the survey.

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HR Alignment With Organization

• 76.3 of respondents ranked at a 4 or 5 (closely
  aligned) when asked about HR priorities alignment
  with organization leadership priorities
• Respondents view HRs priorities as being aligned
  with leaderships priorities, but does leadership
  share this perception?

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Measuring Success

• How does your organization measure success in
  improvements in HR service delivery?
• 74.4 Respondents said higher customer
  satisfaction
• 40.9 Cost Reductions
• 39.8 Higher Retention
• 19.2 Other responses including
• Greater efficiency
• Greater accountability
• Speed of service
• Meeting strategic goals
• Employee complaints/comments
• No measurement at this time

• Customer satisfaction identified as an important
  measure of success.
• At the same time, when asked about internal
  customer satisfaction surveys,
• 63.2 do not conduct a survey.
• 36.8 are conducting surveys.
• Of those that are, 46.8 conduct surveys only as
  needed and 30.4 conduct surveys annually.
• How are organizations measuring customer
  satisfaction?
• What other measures are being utilized?
• Is measuring success a challenge?

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Brand Identity

• Does your organization have a brand identity as
  an employer in the marketplace
• 46.7 said NO
• 34.6 said YES
• 18.7 said Dont Know
• For those respondents that said YES, when asked
  about the primary elements of their brand
  identity the top three responses were
• 32.8 Pride Values of working in the public
  sector
• 21.9 Great Place to work
• 10.9 Job Security

• For those respondents that said NO or Dont
  Know regarding brand identity, when asked about
  the primary purpose of establishing a brand
  identity
• 60.5 said a brand identity could help with
  recruitment
• 18.4 Retain Talent
• 10.5 Workforce Succession Planning

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HR Transformation

• The following activities are important to
  improving HR effectiveness now in the future
• Process improvements
• Implementation of new IT
• Cut costs
• Shared services
• Outsource services

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Value of Transformation

• The majority of respondents see value in HR
  transformation for their organizations future
  plans.
• At the same time, when asked why transformation
  isnt important to their organization,
  respondents cited managements perception of HR
  not being a strategic partner (48.2).
• Managements support of transformation and
  recognition of transformation as having value is
  identified as a key enabler for transformation
  and a common barrier.

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HR Transformation

• When asked why organizations dont consider HR
  Transformation important, most common response
  was HR not being viewed as a strategic partner.
  As mentioned earlier, the majority of respondents
  indicated their HR department or area does not
  have a strategic plan despite respondents
  influence over strategy.
• Management support and executive apathy, in
  addition to the organizations culture, play an
  important role in transformation, a theme
  apparent throughout the survey.
• Cost appears to be a primary driver in decisions
  about pursuing transformation.

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Dangers of Unsuccessful Transformation

• When asked about the likely outcomes if HR
  transformation goals are not met, respondents
  indicated
• Inability to deliver core HR services (56.1) or
  core organizational services (46.5)
• Out of control costs (29.9)
• Inability to recruit new staff (28.7)
• Reductions to budget (15.9)
• Other responses (12.1) include loss of
  department credibility, less efficient/less
  quality services, duplication of efforts and low
  employee morale. Results reiterate respondents
  perception that transformation is important
  especially in service delivery.

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Outsourcing and Shared Services Survey 2

• Outsourcing and Shared Services remain often
  unrecognized but potentially effective tools for
  HR transformation within the public sector.
• Survey findings
• Satisfaction levels with Outsourcing and Shared
  Services seem overwhelmingly positive yet they
  are still not considered viable tools for
  transformation.
• Past success with these tools does not translate
  to future plans to shift additional functions
  towards these models. However, this may be more
  an issue of planning than a comment on the tools
  themselves.
• Performance measurement continues to be a key
  challenge. While many indicators of success are
  commonly identified, few seem to be actually
  measured.
• Cost is an interesting factor in the
  decision-making process. Internally, it is not a
  widely recognized measure of success but gains
  importance in the context of selecting or
  measuring a service provider or alternate
  solution.

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Outsourcing As A Tool for Transformation

• When asked to rank their perception of
  Outsourcing as a tool for transformation
• Mean response 2.8 on a 1 5 scale
• Outsourcing not recognized as viable tool for
  transformation.
• For those that ranked Outsourcing high, the
  following were named appealing factors
• Expertise of Vendors (90)
• Speed (69)
• Did not have the necessary expertise in-house
  (69)

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Shared Services As A Tool for Transformation

• Shared services involves a common provision of
  services available to a number of users.
  Activities are usually transferred to a shared
  services center.
• When asked to rank their perception of Shared
  Services as a tool for transformation
• Mean rank 3.1 on a scale of 1 - 5
• Ranked only slightly higher than Outsourcing.
• For those that ranked Shared Services high, the
  following were named appealing factors
• Access to advanced technology (67)
• Ease in management (54)
• Do not have the necessary expertise in-house
  (49)

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Outsourcing Trends

• When asked about their overall experience with
  Outsourcing
• 53 said the process to implement outsourcing was
  relatively easy and they were very satisfied with
  the results.
• 41 said the process was challenging but they
  were very satisfied with the results.
• Only 1 respondent said it was still too soon to
  tell.
• For those that have used Outsourcing,
  satisfaction appears to be overwhelmingly high.
• Sample size is small which was anticipated based
  on results of previous surveys.

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Future Outsourcing

• When asked about the likelihood the organization
  would outsource additional functions
• 53 said the organization is very likely to
  outsource other functions.
• 41 Neutral.
• Only 1 respondent said the organization was less
  likely to outsource additional functions.
• Functions most likely to be outsourced in the
  future
• Benefits
• Retirement Plan Management
• Training/Employee Development
• Workers Compensation Administration
• Only 29 have every brought an outsourced
  function back in-house

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Trends in Shared Services

• Shared Services is a more widely recognized tool
  for transformation and improvement in HR but is
  still not accepted as the norm.
• When asked about their overall experience with
  Shared Services
• 35 said the process to implement shared services
  was relatively easy and they were very satisfied
  with the results.
• 47 said the process was challenging but they
  were very satisfied with the results.
• 6 said the process was relatively easy but were
  unsatisfied with the results.
• 4 said the process was challenging and were
  unsatisfied with the results.
• 8 said it was still too soon to tell.
• Satisfaction with Shared Service is very high
  despite almost half identifying the process as
  challenging.

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Future Shared Services

• When asked about the likelihood the organization
  would move additional functions to a shared
  services model
• 57 said the organization is very likely to move
  additional functions to a shared services model.
• 36 Neutral.
• 6 said the organization was less likely to move
  additional functions to a shared services model.
• Functions most likely to be moved to shared
  services in the future
• Benefits, Payroll, Retirement Plan Management,
  Compensation Administration, Job Candidate
  Testing, Training/Employee Development, HR IT and
  Time and Labor Management.

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Service Provider Satisfaction

• When asked to rank overall satisfaction with
  service providers utilized for outsourcing or
  shared services solutions
• Mean rank 3.7
• Only 5 ranked satisfaction low at a 1 or 2.
• 30 ranked satisfaction at 3 (neutral).
• 65 ranked at satisfaction high at a 4 or 5.

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Outsourcing Shared Services Lessons Learned

• Based on past outsourcing and shared services
  decisions, what would these organizations have
  done differently?
• Established a service level agreement (36)
• Negotiated a better price (29)
• Conducted additional research on options (29)
• Stronger commitment to change management (26)
• Selected a different service provider (26)
• Most important attributes in selecting a service
  provider
• Cost/Pricing
• 33 ranked as most important 31 ranked as
  second most important
• Service Providers reputation demonstrated
  success
• 42 ranked as most important 19 ranked as
  second most important
• Specializes in the public sector
• 18 ranked as most important 24 ranked as
  second most important

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Measuring Success

• Most common indicators of success in Outsourcing
  or Shared Services
• Improved efficiency/speed of service (89)
• Improved customer satisfaction (76)
• Meeting strategic goals/targets (69)
• Despite the importance of measuring customer
  satisfaction
• More than half of all respondents (63) do not
  conduct an internal customer satisfaction survey.
• For those that do, for 45 the satisfaction
  survey is conducted annually.

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Aging Workforce Survey 3

• There has been much debate and speculation about
  the aging workforce in recent years and more
  specifically, on the potential impact on Public
  Sector organizations.
• Past research suggests that a high percentage of
  current Public Sector employees in some countries
  are likely to retire within the next five years.
  Many of these same employees often hold key
  leadership positions and have extensive
  institutional knowledge.
• This study seeks to better understand the
  potential impact of the aging workforce, while at
  the same time examining what, if anything,
  organizations are doing to prepare and position
  themselves for the future.

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Key Findings

• Most organizations report an adequate capacity to
  track employee eligibility for retirement.
• The majority of organizations report that
  approximately a quarter of their employees will
  retire in the next five years. In isolation, the
  retirement figure does not appear daunting, but
  coupled with average turnover rates, the aging
  workforce continues to present a challenge to
  these organizations.
• The aging workforce and its potential impact are
  not urgent concerns for organizations.
• More than half of responding organizations
  anticipate changes in demographics that will
  likely lead to increases in demand for services.
  Automation and advanced IT will play a key role
  in meeting increasing demands for service.
• The management of institutional knowledge and the
  capture of this knowledge also remain challenges
  for organizations.

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Potential Impact of the Aging Workforce

• Respondents were asked to rank their organization
  managements perception of the potential impact
  of the aging workforce on the ability to achieve
  overall mission.
• On a scale of 1-5, with 1 being low concern and 5
  being high/urgent concern, the average response
  rank 3.2
• Respondents were also asked to rank the level of
  concern about the following issues
• Managing Workforce, Recruiting, Hiring 3.6
• Achieving Mission Goals and Objectives 3.2
• Employee Development Training 3.4
• Succession Planning 3.4
• Capturing Institutional Knowledge 3.5

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Potential Impact of the Aging Workforce

• Top Three Concerns when thinking about the
  potential impact of the aging workforce
• First Concern Delivery of quality service
• Second Concern Attracting talent/Recruiting new
  hires
• Third Concern Identifying new leadership/filling
  management roles
• Other Areas of Concern
• Succession Planning
• Ability to achieve organizational goals and
  objectives
• Filling specialized positions
• When asked what organizations would like to be
  able to do, if they had the adequate
  resources/expertise, to prepare for the aging
  workforce
• Succession Planning
• Skills Gap Analysis
• Performance measurement, better ability to track
  important indicators
• Knowledge Transfer

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Knowledge Management

• For the purpose of the survey, Knowledge
  Management was defined as efforts related to the
  capture and maintenance of institutional
  knowledge.
• Respondents were asked to rank their
  organizations overall knowledge management on a
  1-5 scale, with 1 being low/no capacity and 5
  being high/complete capacity.
• Average Response Rank 2.8
• Only 10 of responding organizations have a
  Knowledge Management plan in place.
• For those organizations with a Knowledge
  Management plan, key components include
• Documentation of Policies and Procedures
• Cross-Training
• Maintained Archives or central repository of
  records
• Job Shadowing/Mentoring
• Organizations without a formal Knowledge
  Management plan indicate similar efforts.

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Risk of Knowledge Loss

• When asked if the organization was at risk of
  potential knowledge loss caused by retiring or
  exiting employees
• 65 of respondents said YES.
• 22 said NO and 13 said Dont Know.

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Conclusions

• Public HR professionals face a daunting task in
  managing its people with limited funds, limited
  influence on important decisions such as IT
  limited support from management.
• Cost is an important issue in transformation and
  HR professionals face the challenge of working
  towards improvements and advances while cutting
  costs.
• Improvements upgrades in IT are critical to he
  success
• The importance of workforce/succession planning
  is recognized, but assistance is needed.
• Many HR departments are struggling to be viewed
  as a strategic asset.

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Conclusions

• Outsourcing and shared services are not the norm
  within public sector.
• Satisfaction is high for those using these
  tools.
• The aging workforce may present a problem for
  public sector organizations.
• Succession planning the identification of new
  leadership remains a weakness.
• Knowledge management remains a critical
  challenge. Organizations need to improve efforts
  around identifying knowledge that is important to
  the organization.

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• Questions/Comments
• For additional information, please contact Neil
  Reichenberg, nreichenberg_at_ipma-hr.org
• Thank you!