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© 2012 Towers Watson. All rights reserved.

Stories from the MarketTowers Watson’s 2012 HR Service Delivery Survey Results

October 2012

© 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.towerswatson.com

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Today’s Presenters

Derek BeebeHR Technology, Sales and Marketing Leader, AmericasTowers Watson

JT WoodsonData, Surveys & Technology, Sales, AmericasTowers Watson

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© 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.towerswatson.com 4

Introduction to Towers Watson’s research

HR Service Delivery Survey An annual survey of HR service delivery practices that includes

trends in technology, shared services, employee/manager self-service and talent management, now in its 15th year

Participants in the survey included HR and IT managers from more than 600 companies

The results shown in this presentation are based on the global results


Setting the context

Businesses are going through significant change It has never been more critical that HR be highly effective at

supporting business changes while simultaneously reducing its cost structure

Despite strenuous efforts, HR needs to make a more fundamental shift HR in the future must be more agile to keep up with changing

business needs Continued global expansion will require increased focus on key growth and

emerging markets The evolving HR technology marketplace will be a key enabler of HR’s agility


Main trends in HR service delivery 2012

Shared services is viewed as the key to success for HR organizations looking to meet efficiency and cost-saving objectives

HR is in restructuring mode to be more efficient and cost-effective: Matrix relationships provide a governance tool while still serving business unit and geographic needs

Talent systems remain the top HR service delivery issue, and SaaS solutions are viewed as the most effective

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Portals are prevalent and can tie it all together, but they still aren’t reaching their potential: Keeping pace with mobile devices, maintaining content and increasing personalization continue to challenge organizations

HR technology spending remains steady with a mix of enhanced functionality, upgrades and new implementations and the HRMS market continues to shift toward SaaS

Global payroll is challenging, but more global/multinational organizations are driving toward it

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Towers Watson’s 2012 HR Service Delivery Survey Results

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Key Findings


While a single HR function is the most prevalent HR structure, geographic and/or business unit matrix relationships are popular for global/multinational organizations…

Single HR function for entire organization

Separate HR function by business unit with corporate oversight

Separate HR function by geography with corporate oversight

Separate HR function by a combination of geography and business unit with corporate oversight

Individual HR functions with no meaningful corporate oversight

Other

32%

13%

23%

28%

3%

1%

37%

16%

15%

26%

5%

1%

72%

13%

4%

8%

1%

2%

Single country n = 237Multinational n = 88Global n = 254

Current Structure of HR Function

HR Business Partners tend to be aligned with the business unit and Shared Services align with geography

KEY FINDING #1


Polling Question #1

Do you anticipate changing your HR structure in 2012 or 2013? Yes No

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… HR is in restructuring mode to be more efficient and cost-effective…

Do You Anticipate Changing Your Current HR Structure in 2012 or 2013?

n = 612

Realization of further efficiency potentials

Realization of synergies

Quality improvements

Cost savings

Globalization initiative

Change of business strategy

Business reorganization

Other

64%

54%

51%

46%

28%

27%

26%

8%

Reasons for Changing Current HR Structure

28% in2011

KEY FINDING #1

No changes anticipated

56%

Yes44%


…And shared services is viewed as the key to success

Anticipated Changes to HR Structure in 2012 or 2013We will be moving to a shared services environment with HR COEs and HR business

partners

We will be bringing additional services into our shared services environment

We will be outsourcing (some/more) functions

We will be moving to a single HR organization for the entire organization

We will be decentralizing HR, allowing HR to be run by business unit or geography

We will be combining our HR shared services with other corporate functions

We will be bringing (some/more) outsourced functions back in-house

We will be moving away from a shared services environment

Other

39%

31%

26%

10%

6%

6%

4%

0%

17%

Base: those anticipating making a change n = 271.

The most common responses in the Other category include changes within existing framework (14 mentions), new structure yet to be determined (11 mentions), and increased centralization or regionalization (7 mentions).

KEY FINDING #2


…For organizations of all sizes

Yes, we have an internal onshore service center(s)

Yes, we have an internal offshore service center(s)

Yes, we use an external onshore provider(s)

Yes, we use an external offshore provider(s)

Other

No

60%

10%

16%

10%

4%

29%

46%

8%

5%

1%

3%

43%

40%

2%

5%

0%

0%

57%

17%

3%

4%

0%

3%

75%

Very Small — Less than 2,500 employees (n = 200) Small — Between 2,500 and 4,999 employees (n = 83)Medium — Between 5,000 and 20,000 employees (n = 232) Large — Greater than 20,000 employees (n = 109)

Does your organization use HR Shared Services (HRSS)/Contact Center to Deliver HR Services?

KEY FINDING #2

The outsourcing movement has slowed:In 2010, external models were comprised of 15% onshore and 8% offshore


But the lines aren’t so bright, even in large organizationsDoes Current or Soon-to-be-Implemented Delivery Model

Include the Following Features?

Mixed Ownership

Double-Hatting

Communities of Interest

Shared Resource Pool(s)

Exporting HR Operations

Virtual COEs

69%

33%

12%

20%

18%

11%

60%

47%

20%

17%

10%

9%

42%

47%

21%

16%

5%

5%

Small — Less than 5,000 employees n = 205Medium — Between 5,000 and 20,000 employees n = 147Large — Greater than 20,000 employees n = 91

Hybrid roles continue to exist — even in large organizations

Communities of Interest, Shared Resource Pools and Virtual COEs are emerging features in service delivery models for organizations of all sizes

“Traditional” HR services also may be delivered outside of HR

KEY FINDING #2


Talent/performance systems

Streamline business processes

Recruiting/Staffing services/Systems

More involvement in strategic business-driven issues

Training

Implement a new HRMS

Improve line managers' people management capabilities

Compensation services/Systems

Cost reduction related to HR administration

Upgrade HRMS to a new version/System

Payroll/Time management services/Systems

Define/Deploy human capital metrics and dashboards

Introduce standard workforce planning process and tools

Systems integration

Accuracy of data

Deploy manager self-service functionality

HR website/Usability

Utilize additional HRMS modules

Deploy employee self-service functionality

Consolidate multiple HR systems globally

Benefit services/Systems

Create a global data warehouse

Enable mobile access to HR self-service applications

Other

24%

5%

7%

9%

4%

11%

4%

4%

5%

5%

4%

1%2%

3%

2%

1%

1%

2%

1%

1%

1%

1%

2%

9%

8%

8%

6%

9%

4%

5%

6%

4%

4%

5%

3%

3%

4%

3%

3%

3%3%

1%

2%

2%2%

2%

7%

9%

7%

7%

6%

4%

5%

4%

4%

3%

2%

6%

5%

3%

4%

4%

4%

2%

4%

3%

2%

1%

1%

2%

First mentionedSecond mentionedThird mentioned

Talent systems remain the top HR service delivery issue

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n = 606

Top HR Service Delivery Issues (Top Three by Frequency)

6%

10%

40%

22%

19%

9%

5%

8%

1%

12%

7%

10%

22%

22%

14%

8%

6%

4%

6%

19%

14%13%

11%

10%

KEY FINDING #3


…And fuel the growth and acceptance of globally deployed self-service applications

Employee Self-Service Functionality In Place Now

Operations Located In:

Asia Pacific Canada Europe

Middle East/Africa

Latin America

United States

Change personal data 46% 58% 51% 47% 37% 78%

View pay stub/pay slip 44% 54% 40% 33% 22% 84%

View total compensation and/or benefit statement

31% 36% 33% 27% 19% 54%

View vacation/sick-time usage and balances 55% 51% 46% 40% 26% 73%

Update skills, competencies, education, certifications

36% 41% 39% 41% 34% 53%

Update performance goals and results 52% 55% 54% 52% 48% 64%

View career ladders/job-level definitions 21% 28% 24% 23% 21% 27%

Identify/enroll in learning and development opportunities

41% 45% 43% 41% 38% 64%

Review career development possibilities and priorities

22% 27% 27% 23% 25% 31%

Begin “onboarding or joiner administration” before start date by updating personal data, taxes, benefits, orientation, etc. via the Web

18% 17% 18% 18% 13% 32%

“Offboard or leaver administration” as employees exit the organization

23% 16% 18% 19% 12% 19%

KEY FINDING #3


SaaS Best-of-Breed applications are viewed as most effective

Function Manual vs. BoB HRMS vs. BoBOnboarding/joiner administration 1 2Competency models 2

Compensation — Sales/incentive 3 4Performance management (goal-setting, assessment)

4

Compensation — Global grading/Job leveling 5 5Compensation — Market analysis/survey management

1

Compensation — Plan design and analysis 3

(-72%)(-64%)(-63%)(-56%)

(-52%) (-19%)(-32%)

(-28%)

(-27%)

(-30%)

Top five largest gaps in effectivenessPercent fewer of organizations reporting effectiveness using Manual or HRMS compared to Best-of-Breed (BoB) solutions*

It remains to be seen if recent HRMS investments will close the gap in key talent management functions

KEY FINDING #3

* Best-of-Breed solutions used for this comparison are specifically SaaS/vendor hosted solutions.


HR technology spending remains steady…

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Much lower (>20% reduc-tion)

Lower (<20% reduction) About the same Higher (<20% increase) Much higher (>20% increase)

6%9%

55%

22%

8%11%

25%

43%

15%

6%7%10%

54%

18%

11%

4%

10%

52%

22%

12%

6%10%

53%

21%

10%

HR Technology Spending v. Prior Years

2009 Survey n = 331 2010 Survey n = 453 2011 Survey n = 437

2008 Survey n = 382

2012 Survey n = 599

KEY FINDING #4


Polling Question #2

Do you think your HR technology spending will change in 2013? Increase significantly (>20%) Increase moderately (<20%) Stay about the same Decrease moderately (<20%) Decrease significantly (>20%)

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…With a mix of enhanced functionality, upgrades and new implementations

We will be deploying new modules/functionality from existing vendors

We will be upgrading/re-implementing our existing HRMS

We will be expanding our self-service offerings

We will be replacing older systems

We will be implementing new vendors to automate processes for the first time

We will be deploying new HR analytics/workforce planning capabilities

We will be expanding existing functionality into new regions and/or business units

We will be deploying or redeploying an HR portal

We will be deploying or redeploying a data warehouse

We will be implementing new call center support technology

We will be implementing mobile access

We will be moving to an internally deployed cloud-based architecture

We will be bringing services and/or techology formerly outsourced back in-house

We will be moving to an IT outsourcing approach

Other

38%

36%

34%

33%

29%

25%

22%

21%

12%

9%

7%

4%

3%

2%

4%

Factors Accounting for Increased HR Technology Spend in 2012

Base: those expecting increased HR technology spending n = 189.

KEY FINDING #4


… and the HRMS market continues to shift toward SaaS –new SaaS selections (34%) has doubled since 2010 (17%) …

SAP

Workday

Oracle (Legacy PeopleSoft)

Ultimate Software/Ultipro

Oracle Fusion

ADP EmployEase

Lawson

Oracle (Legacy Oracle HRMS)

ADP Globalview/Streamline

SuccessFactors Employee Cen-tral

Custom, In-house solution

Other

Will be provided by an HRO vendor

24%

24%

8%

4%

3%

2%

2%

2%

1%

1%

2%

19%

8%

Is Your Organization Currently Implementing or Planning to Implement a

New Primary HRMS?

New HRMS Chosen

n = 618

KEY FINDING #4

No72%

18%

10%

Yes, new HRMS has been chosen

Yes, currently evaluating options


… Increasing the opportunity to streamline processes

Approvals/Reviews Required When Managers Initiate HR/Pay Transactions

Event

Manager Approvals

HR Administrator/Service Center Reviews/Verifies Prior

to Update

None ↔ Comprehensive

HR Generalist/Business Partner Role

Manager Notification

Only

Average Number of Additional

Manager Approvals

No Review

Receives Notification

Only

Approves Exceptions

OnlyApproves

All1 2 3 1 2 3 4 5

Creates a new position 12% 24% 40% 24% 49% 22% 13% 3% 13% 17% 22% 8% 53%

Candidate selection 20% 32% 34% 14% 53% 23% 12% 2% 10% 18% 20% 14% 48%

Promotion 11% 31% 39% 19% 49% 22% 13% 4% 12% 14% 17% 11% 58%

Annual salary change 10% 27% 35% 28% 46% 22% 11% 5% 16% 20% 16% 13% 51%

Off-cycle salary change 9% 29% 41% 21% 43% 22% 17% 5% 13% 15% 11% 11% 63%

Voluntary termination 41% 37% 16% 6% 56% 21% 10% 4% 9% 19% 36% 6% 39%

Involuntary termination 20% 30% 34% 16% 40% 24% 14% 7% 15% 6% 16% 7% 71%

(n = 273 – 291) (n = 251 – 265) (n = 255 – 271)

KEY FINDING #4


Portals are prevalent and can tie it all together…

Microsoft SharePoint

SAP Portal

Oracle (Legacy PeopleSoft Portal)

ADP

Oracle (Legacy Oracle Portal)

Infor (Legacy Enwisen)

IBM WebSphere

Custom-developed portal

Other

31%

13%

10%

5%

4%

3%

3%

36%

16%

What HR portal technology are you currently using?

n = 355n = 599

Does your organization utilize an HR Portal?

KEY FINDING #5

17%

20%

Yes, we have an HR Portal that is available to HR only

Yes, we have an HR Portal that is available to both HR and employees No, we have no

plans to develop an HR Portal

No, but we are working to develop an HR Portal

3%

60%


…But they still aren’t reaching their potential

Site does not support mobile (tablet or phone)

Information is too generic or lacks enough personalization

Content is stale

Access is limited to work PC onlySearch capabilities are not effective enough or there are multiple search

engines for each site

Limited analytics or web site usage

Content is difficult or takes too long to maintain and update

Lack governance for content management

Multiple HR web sites with over-lapping or competing content

Sites have inconsistent branding, "look and feel" or navigation

Too many logins to HR systems

52%

48%

40%

38%

36%

35%

30%

27%

24%

16%

16%

Which of the following describes challenges with your existing HR portal?

n = 328

Does your HR portal provide a personalized experience?

n = 370

KEY FINDING #5

No 40%

Yes60%


Polling Question #3

Do you have an HR portal deployed within your organization? Yes – High utilization Yes – Moderate utilization No – Plan to deploy within next 6 months No – No current plans to deploy

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Global payroll is challenging, but more global/ multinational organizations are driving toward it

Payroll Strategy

n = 332

Does Your Organization Have a Single Payroll Vendor/System?

n = 338

KEY FINDING #6

Yes, it is not part of our core HRMS

34%

12%

32%

22%

No, with no plans to

consolidate

Yes, it is part of our core HRMS

No, but we are working to

consolidate them

We make an effort to use a single system/vendor within a country

We allow each location to determine its payroll strategy

We have selected a global system/vendor and only use other systems/vendors on an exception basis

We make an effort to use a single system/vendor within a region

We have identified a small number of systems/ven-dors and select the system/vendor based on number

of employees in the location/region

Other

32%

27%

16%

15%

4%

6%


Why the need to change HR now?

HR functions continue to evolve and change due to economic challenges and evolving business needs — agility is key

Leading HR functions are taking advantage of this economic cycle to re-establish themselves as strategic players in the business: Streamlining transactional work Increasing the skills of their HR professionals Working across traditional HR silos Capitalizing on SaaS technologies

2012 will continue to be challenging, and HR will be pressed to continue to refine its organizational model and drive more efficiency


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Additional Information

http://www.towerswatson.com/hrsdsurvey


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T

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December 3-7

December 3 – Global Deployment Sponsored by: December 4 – Global MindsetDecember 5 – Global Payroll Sponsored by: December 6 – Global ComplianceDecember 7 – Global Analytics

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Sponsored by:

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