Improving business performance through the recession: Are your HR systems fit for the future?

Improving business performancethrough the recession:Are your systems fit for the future?

Chris MurrayAndrew Knight13 October 2009

PricewaterhouseCoopers LLP

Agenda

• What HR systems do you need to deliver your business strategy bothduring and after recession?

• Where is your organisation today and what should you be doing to getready to gain competitive advantage as you exit the recession?

• How do you maximise the return on your technology investment as youimplement improvements?

We will explore these themes across three key areas of HR:

• Talent management• Access to management information• Payroll effectiveness

Are your systems fit for the future


October 2009

HR technology: the business context

• CEOs believe access to talent is the most critical component of their longterm business strategy (PwC CEO Survey 2009)

• Only 30% of CEO’s say they have adequate employee information (PwC CEO

Survey 2009)

• HR functions spend 70% of their time on traditional HR tasks andtransactions, record keeping and delivery services (PwC Saratoga)

• Typically, HR accounts for 0.3% of business costs; people costs are 20%-50% (PwC Saratoga)

“Most CEOs stress the need to balance the immediate drive to cut costsand to reduce headcount against the retention of key talent that will help

the business capitalise on the recovery when it comes”



October 2009

Technology is critical inmanaging Complianceimproving Efficiencyproviding Insight.Strategic

PlanningTermination

Recruitment& Selection

Hire &Induction

Compensation& Benefits

Life & OrganisationEvents

PerformanceManagement

Training &Development

Time &Attend

Organisation &Management

Current State

Desired State

Role of HR in the delivering the business strategy

Technology plays arole in improving thedialogue betweenHR and the Board.

Evidence basedconversations deliverimpact on thestrategy.



October 2009

HR technology: key challenges

Compliance and Control

• How do we make sure we have one way of doing things?

• What are the biggest risks to my HR technology and transformation projects?

• How can technology ensure compliance with HMRC / FSA regulation?

Efficiency

• How do I compare to my industry benchmark?

• What is the right mix of technology investment and process improvement?

• Is ‘Software as a Service’ right for my business?

• How do we provide an optimum and accurate payroll service?

Insight and Strategy

• What do organisations like us do? How do we compare?

• How can I get the information I need in the format I need, and when I need it?

• How productive are our people?

• How do I track international talent / high performers?



October 2009

Managing HR costs in the downturn:shifting focus from survival to longer-term success

Reduce

Redesign

Transform

Scale of benefit / time to implement

Ma

gn

itu

de

of

ch

an

ge

• Demand management(e.g. leverageESS/MSS)

• Rationalise existingprojects

• Review existingsupplier contracts

• Conduct activityanalysis and simplifyprocess, leveragingbest practice.

• Rationaliseduplicate/redundantsystems

• Review opportunitiesfor outsourcing currentnon-core process toremove cost

• Align target operatingmodel to businessstrategy

• Re-engineer HRprocesses under newservice delivery model.

• Re-designed HRorganisation,leveraging shared-services and/oroutsourcing of non-core services.

Low High

Hig

hLo

w


Talent management



October 2009

Talent is a critical driver of long-term success

Access to and retention of key talent

Ability to adapt to change

Strength of your brand and reputation

High quality customer service

Customer / market intelligence

Technological innovation

Efficient sourcing / SCM

Access to Capital

Business partnerships success

Corporate responsibility

Access to affordablenatural resources



October 2009

What people strategies are organisations focused on for long-term success?

Over 50% of CEOs cited the following measures as important:

• Creating a more flexible working environment

• Redeploying pivotal employees within the organisation

• Creating opportunities for employees to engage in socially responsibleactivities

• Collaborating with networks of external specialists to attract talent

• Working with universities to tailor learning to your needs

• Hiring and developing talent from a more diverse pool (e.g., retirees,former employees, females etc)

• Outsourcing business functions



October 2009

How do organisations define talent management?

• Talent management covers an integrated set of HR functions including:

- workforce planning

- talent acquisition (e-recruitment and contingent workforce management)

- performance management

- career development

- succession planning

- learning

- compensation planning

• Talent is referred to under different groupings including:

- all staff

- top x% as defined by potential, grade, or performance

- graduates



October 2009

1st 5 years

Pe

rform

an

ce

Potential

High performanceHigh potential

Manager

Senior Manager

Director

Client ServiceDelivery

Market Leaders

Business Leaders

Technical Leaders

UKFD

Reviewing the talent pipeline

GRP

TechLeader

MarketLeader

BusinessLeader

People &ProcessLeadership

Networking/RelationshipBuilding

TechnicalExcellence

Market/IndustryUnderstanding



October 2009

What are the implications for systems?

HR

Strategy

Business

Alignment

CWS

Talent

Assessment

tool

BenchmarksGeneration

Differentiation

Strategy Solutions Accelerators

Infrastructure

Resourcing

Succession

Planning &

management

Learning

Talent

campaign

Employee

Centric

Value

propositions

Reward

remodelling

Individual

development

Performance

Management

Global

Talent pool

Global

Mobility

Knowledge

Org design Job design

Virtual

workplace

Social

networks

HR Servicedelivery Change

Culture

Chemistry

Leadership

Corporate

responsibilityDiversityCommunication Brand

Total

Reward

HR

Strategy

Business

Alignment

CWS

Talent

Assessment

tool

BenchmarksGeneration

Differentiation

Strategy Solutions Accelerators

Infrastructure

Resourcing

Succession

Planning &

management

Learning

Talent

campaign

Employee

Centric

Value

propositions

Reward

remodelling

Individual

development

Performance

Management

Global

Talent pool

Global

Mobility

Knowledge

Org design Job design

Virtual

workplace

Social

networks

HR Servicedelivery Change

Culture

Chemistry

Leadership

Corporate

responsibilityDiversityCommunication Brand

Total

Reward



October 2009

What are the key steps to success?

1. Determine the parameters- Talent for what?- What is ‘Talent Management’ in your organisation?

2. Test the underlying data quality- Consistency – applies across systems, geographies, and business units- Existence – appropriate competency structures in place- Relevance – personal development plan (PDP) ratings stored at a level of detail

that can be utilised- Accuracy – top rated performers are actually the top performers

3. Evaluate talent- Plot talent performance and talent potential and timeframe- Review HR talent for organisation- Communicate to relevant audience

4. Manage talent- Performance conversations- Succession planning



October 2009

Talent management: technology considerations

Short-term survival

• Have you enabled unusedESS/MSS features to reduceadministration costs?

• What are the opportunities foraligning systems to reduce cost(e.g. rationalising federatedperformance managementsystems)?

• Can you access the relevant data(who, what, where)?

Longer-term success

• Is there a defined talentmanagement strategy aligned withbusiness strategy?

• What does this strategy imply foryour system road map (e.g. socialnetworking, succession planning)?


Payroll effectiveness



October 2009

Changing times for payroll

• 31% of companies do not know how many of their employees are impactedby the £150,000 total taxable income limit. Do you?

• Are you ready for the 2010 changes in tax legislation relating to therequirements to account for PAYE accurately on a monthly basis?

• Are your payroll processes complicated and hard to manage?

• Are you paying your staff accurately and on time ?

• Can you easily get the information you need to make decisions to be bestprepared for recovery from the recession?

• Do you know the real cost of your payroll function?



October 2009

Payroll effectiveness

Common Risks

• Overpayments not recovered

• Non-compliance with FSA or other regulator

• Cost of service is higher than industry benchmark

• Real cost of payroll function is not transparent

• Quality of service delivery leads to unhappy employees

Why act now?

• Budget changes effective 2010

• Senior Accounting Officer legislation

• Out of date technology / contract

- When is it up for renewal?

- What are you doing to be prepared for it?



October 2009

Example key findings: payroll costs, volume andbenchmarking

Payroll Administration * Lehman's

Read on a line-by-line basis Result 25th 50th 75th

Headcount per Payroll Administration FTE 1,140 1,156 1,614 2,021

Payroll Administration Costs per Head (£) 65.7 36.1 40.1 60.0

Outsourced Payroll Admin Costs per Head (£) 14.9 0.0 6.7 15.9

Payroll Admin Outsource Rate (%) 22.7 0.0 18.2 28.1

Number of non-base pay elements administered 43 108 146 412

Number of Payrolls in the organisation 10 4 5 12

Payslip Error Rate (%) 0.03 0.06 0.13 0.20

% of over-payments recovered 61.1 45.2 90.0 91.9

Number of different currencies on the payroll (No.) 1 1 1 1

Financial Services Sample



October 2009

Payroll: gaining a competitive advantage

1. Complexity

2. Insight

3. Accuracy

4. Consolidation

Efficiency

1. Form 42

2. Expatriates

3. Salary sacrifice & flex arrangements

4. Terminations

5. Senior Accounting Officer

Compliance

• Improve payroll service and hence staff morale

• Reduce payroll costs by addressing overpayment causes

• Improve payroll accuracy

• Ensure compliance

• Raise payroll efficiency

Benefits



October 2009

Payroll effectiveness: technology considerations

Short-term survival

• Have you put plans in place to meet2010 compliance obligations?

• Do you know your current cost perpayslip and how this compares withyour peers?

• Have you reviewed existing supplierterms to identify potential costsavings?

• What is your payslip error rate andoverpayment value?

Longer-term success

• Have you completed an activityanalysis to identify performanceimprovements?

• What are the opportunities toreview organisation, sourcing andsystem arrangements to reducecosts and improve service levels?



October 2009

Management information



October 2009

The CEO’s perspective: the information gap

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Comprehensive

Critical

Informationgap

Customers Risks Benchmarking Brand Employees Financials R&DSupplyChain Climate



October 2009

Linking metrics to strategies



October 2009

Management information: gaining a competitive advantage

Getting the basics right

• Data accuracy, completeness, and cleanliness

• Single point of entry for each data item

• Reporting on the right information

Management reporting

• Live reports or Excel wonders?

• Dashboards

• Interpreting and understanding the information

• Benchmarking against peers/competitors

• Forecasting



October 2009

Start small and build for sustained success

Define metricsstrategy and

analyticsrequirements

Define analyticssystems

requirementsand build

Define andexecute

operating anddistribution plan

• Stakeholder assessment

• Business alignment

• Dashboard and reportpack definition

• Standardsimplementation / datadictionary

• Data and systemsvalidation/assessment

• Proof of concept

• Business andfunctionalrequirements

• Build, test and pilot

• Implement

• Sustain andimprove

• Analytics teamorganisation design andimplementation

• Distribution channelstrategy andimplementation

• Governance strategy andimplementation

• Training,communications andchange management

Scope of typical analytics project can be too narrow



October 2009

Management information: technology considerations

Short-term survival

• How do we get the information toreport on how much our people costby region, by business unit, or byperformance?

• Do we have consistent standardsfor people information?

• How do we leverage existinginformation sources most efficientlyto reduce the cost of generatingmeaningful MI?

Longer-term success

• What are the people metrics thatwe should focus on to create long-term competitive advantage?

• Can we use predictive modelling toimprove our business planning?

• Can we unlock our ERP data orshould we consider third partywarehouse solutions?



October 2009

Maximising returns on your HR Technology investment



October 2009

Maximising returns in HR technology investment

Not just about the implementation itself, but ‘making change stick’:

• Are the business benefits clearly defined and are all your decisions basedon these?

• Is there the right level of executive sponsorship?

• Are there compelling reasons for stakeholders to change?

• Is there a clear distinction between global and local?

• Are you applying an approach and style that has worked for othersuccessful projects?

• Have you tested your readiness for implementation?



October 2009

Adopting a sustainable approach to change



October 2009

Lessons learned from other organisations…

• “The benefit of implementing large technology platforms in small countriesor business units is not always clear”

• “Consider how a common platform can be supported by common HRshared services for IS processes.”

• “Have an informed view on outsourcing HR”

• “Develop a clear global governance model for HR IT investment andstrategy”

• “Assess the effectiveness of your HR organisation and determine whethertechnology alone will address the issues raised”

• “Your HR IT strategy should consider niche applications”

• “It’s about information not just enabling HR and self service transactions”



October 2009

Summary

• Organisations are shifting focus from the short-term cost savings to longer-term competitive advantage in order to be ‘fit for the future’. Areas include:

- Appropriate talent retention is vital to enable acceleration out of therecession

- Short-term compliance can be used as an opportunity for creating long-term efficiencies (e.g. payroll)

- Measurement of the right HR metrics is critical for longer-term decisionmaking

• HR technology implementation should be considered in the broadercontext of transformational change to create sustained success.

This publication has been prepared for general guidance on matters of interest only, and does not constituteprofessional advice. You should not act upon the information contained in this publication without obtaining specificprofessional advice. No representation or warranty (express or implied) is given as to the accuracy or completenessof the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP,its members, employees and agents do not accept or assume any liability, responsibility or duty of care for anyconsequences of you or anyone else acting, or refraining to act, in reliance on the information contained in thispublication or for any decision based on it.

© 2009 PricewaterhouseCoopers LLP. All rights reserved. 'PricewaterhouseCoopers' refers toPricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) or, as the context requires, thePricewaterhouseCoopers global network or other member firms of the network, each of which is a separate andindependent legal entity.

Questions?

Chris Murray [email protected] Knight [email protected]

Improving business performance through the recession: Are your HR systems fit for the future?

Technology

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