HR Transformation Survey: A case for business driven HR  

18 December 2007:

Deloitte Consulting LLP (Deloitte Consulting) conducted a survey on HR transformation to better understand if and how some of our largest clients are bringing HR into the 21st century. It’s no secret that people issues are at the forefront of the CEO and Board agendas. Some of those drivers include the talent crisis, global workforce challenges, leadership development, and risk threats. Deloitte Consulting surveyed more than 150 global companies, each with more than $2 billion in revenue.

Overwhelmingly, the majority of respondents are currently involved in HR transformation. At the same time, most respondents have a very modest and traditional view of what HR transformation means. We fi nd that to be alarming. At most respondents, HR transformation is still about systems and processes. The business drivers are still cost savings and effectiveness. These are not “bad” or unimportant drivers; they are merely solutions in a vacuum. Transformation—despite the urgency, the competitive imperative, or the call to action from the C-suite—is still occurring slowly and is not occurring in the context of supporting a business strategy or helping a company meet its business objectives. Never before has there been more pressure on or opportunity for HR to step up. How HR addresses transformation is pivotal.

Key findings

The Deloitte Consulting survey of global companies highlights the fact that HR transformation is very much top of mind for C-suite executives. More than 84 percent of respondents are either currently transforming HR or are planning to do so.

At the same time, when asked to identify the current business drivers for HR transformation, the overwhelming majority of respondents, 85 percent, cited cost savings or effi ciency—the traditional hallmarks of the HR function. This suggests that most companies are focused on cost savings in an area that accounts for less than 1 percent of corporate revenue, rather than on determining how HR can help support business strategy.

As they have in the past, in our experience most HR improvement programs still center on tactical initiatives, such as standardization, system implementation, and HR organizational restructuring.

Very few respondents indicated they are transforming HR so that it can become a strategic business “partner” within the company. Only 35 percent cite building HR capability as a transformation driver, and even fewer (30 percent) said transformation is driven by the need to free HR to undertake a more strategic role. One could look at this data and argue that while a majority of respondents take a traditional view of transformation, some enlightened companies are focused on creating competitive advantage through HR. We would need to see if this is an emerging trend through future surveys.

At the same time, when they look to the future, C-suite executives in general, and HR leaders in particular, want the HR function to become a strategic business “partner” within the company.

When asked about future concerns, significant numbers of respondents cited the need for the HR function to address emerging strategic business issues. We see this as a call to action for HR.

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Source: Deloitte

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