Global Business Driven HR Transformation The Journey Continues Preface See farther down the line You can turn to the TV talking heads to hear opinions about the future. Or you can turn to the people in the trenches for an informed view of what really lies down the track. Global Business Driven HR Transformation is a crosscurrent of rapid changes in culture, technology, law, and leading practices. There’s no such thing as an organization that’s arrived at its destination — there are only ones that keep evolving and ones content to stand still. In our new book, Global Business Driven HR Transformation: The Journey Continues, Deloitte has mined the experience and vision of its leading field professionals to explore the many future trends that are shaping the way companies relate to their people. The Global Business Driven HR Transformation journey is different for every global organization. From established disciplines like payroll, compensation, and benefits to emerging ones like cloud computing, analytics, talent operations, and the effects of globalization, Global Business Driven HR Transformation: The Journey Continues provides a spectrum of resources decision-makers will want to keep by their sides. Because the question is not whether you’re going to move into the future — the question is how. Jason Geller Principal Global and U.S. Human Resources (HR) Transformation Leader Deloitte Consulting LLP 2 3 Solution integration Change analytics 1 What is truly 5 6 Governance and decision rights meant by global HR Business Partner and Centers of Expertise Global Business Driven 4 The HR Chief HR Transformation: Operating Officer Benchmarking Workforce The Future Starts Now 7 8 HR shared services analytics Cloud HR and Outsourcing 9 10 Global privacy 13 14 and Security Talent Social 11 12 Payroll media Compensation 16 15 Global Contingent Benefits mobility workforce 17 18 Setting the global HR Transformation strategy HR organization Numbers behind HR Enabling HR service delivery HR functional perspectives Global Business Driven HR Transformation: The Future Starts Now The global business environment is experiencing Next generation HR Transformation unprecedented change, and human resources (HR) should In the past, HR Transformation mostly focused on making develop new capabilities if it wants to remain relevant. existing HR services more efficient, effective, and compliant. The unspoken assumption was that HR was already doing all Our world’s social and economic center of gravity is steadily of the things that needed to be done; it just needed to do shifting from west to east. Many developing countries are them more effectively, faster, and cheaper. facing a ‘new normal’ characterized by ongoing economic uncertainty, lingering underemployment, excessive debt, and Now, the rules of the game are changing. Basic HR stagnant consumer demand. At the same time, emerging capabilities — such as efficient and effective service countries are flourishing as their expanding populations delivery, integrated HR systems, employee self-service, and and growing middle classes give rise to a new and powerful timely access to relevant/correct workforce data — are as pool of consumers and workers. And all of this is happening important as ever. But today, they are merely table stakes: against an unpredictable backdrop of natural disasters, basic building blocks that each HR function should possess. political upheavals, dwindling global resources, and wildly fluctuating commodity prices. Looking ahead, what businesses should really consider are HR capabilities that do not just support the business strategy These forces have significant implications for the future of — but enable it. For example, HR can enable business business and HR. And the future starts now. growth by developing standard, repeatable systems, processes, and capabilities that make it fast and easy for the company to enter new geographic markets and integrate new acquisitions. HR can also enable business growth by developing new staffing models that fit a modern workforce, increasingly based on offshore talent, contingent workers, and global mobility. Transforming HR to deliver forward-thinking capabilities like these can help companies respond more timely and effectively to changes in the business environment, expand their global footprint, and increase revenue and margins. The results? Improved competitiveness, profitability, and growth. 4 Global Business Driven HR Transformation: The Future Starts Now Business drivers that affect HR Globalization and emerging markets. As business In order to develop HR capabilities that can enable a becomes increasingly global, companies should improve company’s business strategy, it is important to understand their ability to build and manage a global workforce — the critical drivers that are shaping that strategy. This section often in places they have not operated before. Many highlights some of the market forces and trends that are companies are seeing their global footprint shift from west likely to influence business strategy (and HR Transformation) to east as they pursue opportunities for accelerated growth in the months and years ahead. in emerging markets. By 2050, the global population is expected to grow by 50 percent — primarily driven by This should not be viewed as a broad list, since the actual India and China. Yet 70 percent of the world’s corporate drivers are particular to each business, industry, and management is currently located in Europe and North region — and generally change over time. However, the America. To thrive in this new environment, companies need drivers presented here are likely to have a significant impact HR capabilities that can enable them to effectively realign on the business environment for the foreseeable future, their workforces with their changing global footprint. They and are factors that each company should consider. They should also consider creating an operating environment in also provide the foundation for a broad set of examples to which global and virtual teams can thrive. Critical capabilities illustrate the types of issues businesses are wrestling with, include improved global mobility programs that make it and how companies can proactively develop HR capabilities possible to move employees between countries efficiently to support and facilitate their business strategies. and easily; standardized and repeatable HR processes and systems for entering new markets; and new staffing models Growth. Revenue and market growth are essential for that use outsourcing, contingent workers, and strategic competitiveness and long-term shareholder value. In fact, partnerships to improve scalability and flexibility. growth is so important and pervasive that most of the other business drivers listed here are in some way related to it. Cost pressure. Many companies are under constant Until recently, businesses primarily grew by hiring additional pressure to reduce costs. And while HR has made in-house staff. But these days, the formula for growth has tremendous strides to manage its costs and improve its become far more complex — involving acquisitions, new operating efficiency over the past two or three decades, staffing models, new technologies, and new approaches there is usually room to improve. That said, it is important for finding, attracting, developing, and managing talent. to remember that HR must not only be efficient, but also Moreover, today’s companies aren’t just looking for growth; effective and compliant. The direct impact of improving HR’s they are looking for profitable growth, which significantly internal efficiency is relatively low. To have a greater impact increases the challenge. For HR, the key is to develop new on costs, HR should focus its specialization on people-related capabilities that can enable the business to expand as timely costs that are outside of the HR budget, such as pensions and efficiently as possible. and health care. Another way for HR to contribute is by helping the business reduce the ‘cost of work’ through improvement initiatives that focus on things like worker productivity and management of contingent workers. Global Business Driven HR Transformation The Journey Continues 5 Global Business Driven HR Transformation: The Future Starts Now Talent. Most savvy business leaders know that having Emerging technologies. New technologies such as cloud the required talent is critical to business performance computing, social media, and mobile devices affect HR in and growth. But putting that insight into action can be two ways. First, they help enable HR to deliver services more a significant challenge — especially in the midst of a efficiently and effectively. For example, cloud computing changing talent landscape. Around the world, jobs are can reduce the cost and time required to develop new moving from mature markets where talent is expensive and HR solutions, and can improve scalability, enabling HR to scarce to emerging markets where talent is cheaper and effectively and efficiently grow or shrink its capacity and more plentiful. This fundamental shift requires companies capabilities in response to changing business needs. Second, to consider developing new HR capabilities for managing and perhaps even more significantly, new technologies raise a global supply chain for talent — just as manufacturing the bar on what HR’s customers expect. For example, thanks companies have had to learn how to manage a global to smart phones and the Internet, today’s employees