Breaking finance and business news, tax information, jobs and more for finance directors and senior finance professionals.

Management

HR departments striving to become more strategic

Thursday, 24 January 2008

HR departments are undergoing unprecedented change as they seek to align with changing business demands, according to PMP Research’s latest annual survey.

In the past year 35 per cent of HR departments have undergone a significant restructure - compared to just 17 per cent in the previous year. The research has been commissioned by the Evaluation Centre.

Respondents cite a range of reasons for the evolving structure of their HR department. The key drivers are the need to improve the services offered to the organisation (54 per cent), enabling HR to become a more strategic contributor (50 per cent) and repositioning the HR function to fit the wider organisational model (46 per cent).

HR activities and processes online

Against this background it is not surprising that a third of companies (33 per cent) are planning to replace their HR system and 29 per cent are planning major enhancements.

In addition, making HR activities and processes more widely available online is a major requirement for 49 per cent of companies as this can provide a way to reduce the administrative burden on the HR department.

Companies are also enthusiastic about the potential of self-service HR applications, whereby employees use a corporate intranet or the internet to make enquiries about topics such as holiday entitlement and to update contact details.

About a third (34 per cent) of organisations have to date adopted self-service applications, with nearly half (48 per cent) planning to do so in the future. Just 14 per cent have ruled out this option completely.

The primary advantage is in reducing the HR administrative burden, thus freeing up HR personnel to concentrate on other tasks. This is followed by the increased accuracy of the data provided and the empowerment of individuals.

Shared service centres

Employees now have much greater control over the data held on them and can easily access information online that would previously have required contacting the HR department.

Another increasingly popular approach for delivering HR services is the creation of shared service centres: 21 per cent of the companies interviewed have already implemented a shared service centre with a further 7 per cent planning to in the future and 14 per cent evaluating the option. The remaining 47 per cent have no plans to go down this route.

The key benefit of adopting this approach is the opportunity to cut administration costs in areas such as payroll, mentioned by 77 per cent, employees joining and leaving (60 per cent) and in the recruitment process (60 per cent).

Human Capital Management

For those companies who have adopted shared service centres the results to date seem fairly positive, with 20 per cent saying they have been ‘very successful’ and 47 per cent ‘somewhat successful’. For 20 per cent of the companies it is still too early to judge success.

The emphasis on investing in self-service applications suggests organisations are moving towards viewing employees as an asset to be managed, rather than as a cost to control.

This thinking is reflected in a new approach to HR called Human Capital Management (HCM) which sees HR professionals primarily as strategic consultants rather than operational dogsbodies.

So far only 7 per cent of organisations have implemented an HCM system with a further 13 per cent considering its implementation.

The largest number of companies, 38 per cent, has no plans to implement and nearly a quarter (24 per cent) are not familiar with HCM.

Related articles