© Fujitsu Services Transforming the HR Function – December 2007 1

© Fujitsu Services1 Transforming the HR Function – December 2007

GLOBAL SOURCING MASTERCLASS6TH DECEMBER 2007

© Fujitsu Services 2007

HROTRANSFORMING THE HR FUNCTIONA Fujitsu Services PerspectiveDierdre HardyShaun Dunphy


Agenda

• Introduction• What type of HR function are you?• The outsourcing attitude gap• What makes a good HRO partnership• What processes?• Understanding the benefits• Defining and improving SLA’s• The retained organisation• Change challenge• Lessons learned


グローバル・プレゼンス

富士通グループ

概要• におけるｸﾞﾛｰﾊﾞﾙﾏｰｹｯﾄ IT ｼｽﾃ

・分野の、ﾑｻｰﾋﾞｽﾘｰﾀﾞｰ $432億 (€325 億 ) 規模

• ｺｱﾋﾞｼﾞﾈｽ :• ﾃｸﾉﾛｼﾞｰｿﾘｭｰｼｮﾝ　　 ( およびｼｽﾃﾑﾌﾟﾗｯﾄﾌｫｰﾑ　　ｻｰﾋﾞｽ )• ﾕﾋﾞｷﾀｽﾌﾟﾛﾀﾞｸﾄｿﾘｭｰｼｮﾝ　　 ( 、等ﾊﾟｿｺﾝﾊｰﾄﾞﾃﾞｨｽｸ )• 電子ﾃﾞﾊﾞｲｽｿﾘｭｰｼｮﾝ

• IT において、日本ｻｰﾋﾞｽﾏｰｹｯﾄでは第 1 位、世界では第 3 位のシェアを有する

• 世界 70 ヶ国以上でのセールスおよびサポート提供• 従業員数 161,000 人

ｱﾒﾘｶ10,000

EMEA*( ﾖｰﾛｯ

・中ﾊﾟ東・ｱﾌﾘｶ )25,000

・ｱｼﾞｱﾊﾟｼﾌｨｯｸ28,000

日本99,000

* EMEA 従業員数は富士通シーメンス・コンピューターズを除く


GLOBAL PRESENCE

Fujitsu Group

In summary• A $43.2bn (€32.5bn) leader in IT

systems and services for the global marketplace

• Core businesses of:• Technology Solutions (System

Platforms & Services)• Ubiquitous Product Solutions

(PCs, HDDs, etc.)• Device Solutions

• Fujitsu has the highest share of the IT services market in Japan, the 3rd highest worldwide

• Sales and support operations in over 70 countries• 165,000 employees worldwide

Americas10,000

Europe25,000

Asia-Pacific28,000

Japan99,000


HRO

Why do organisations consider HRO?

HRO providers resolve disparate approaches to delivering internal services, controls costs, improves quality and consistency of services and uses

technology to streamline the process.

It enables clients to concentrate their limited HR team on creating sustainable competitive advantage by getting the right people with the right

competencies in the right place at the right time.

Low impact, high volume non-core administration and employee support are moved to the BPO provider who concentrates on service delivery via economies of scale and automation.


DRIVERS

Key drivers stated by clients

2006 Survey (Aberdeen Group)•Better cost accountability and cost control (64%)•Free up valuable HR time and resources (59%)•Improve HR services to end users (33%)

Other drivers mentioned by clients•Overcome poor management information about people•Inconsistencies in internal HR practices•Industrialise or commoditize HR•Not core business•Facilitate integration after merger or acquisition•Looking for a global solution•Economies of scale / cost effective solutions•It has worked in the USA so wish to replicate•Remove bureaucracy / increase line management role•Integrated ERP business system•Better use of technology – intranet, telephony, email for self-service


What is HRO?

• Employees

• Management

• HR Professionals

• Applicants

• Pensioners

Tier 0

Tier 1

Tier 2Tier 3

Self Service Assisted Service ProfessionalService

Systems: Internet, Intranet, e-mail forms, workflow s/w

Employee

Advisors, Agents, Clerical, Administrators Case Workers

Systems:Helpdesk,Issue Ticketing

Systems:CRM

Centres of Expertise

SelfService

66% 28% 5% 1%100%>>

includes:• Policy Experts• Process Content

Owners• HR “Partners”

Outsourced as Core HR services

Outsourced as on Demand HR services

Retained within client HR Function

SharedServices


THE TRANSFORMATION ROADMAP & BENEFITS

What sort of HR function?E

ffec

tive

nes

s: T

rans

form

atio

n

Traditional HR

• Often unmeasured, or measuring irrelevant statistics• HR focusing on people issues• Fire fighting• HR generalists delivering local services

Streamlined HR• Reduce HR operating costs per FTE (Administrative

costs reduced 20-40%)• Decrease manager time per HR transaction • Decrease cycle time per HR transaction and person-to-

person inquiries,• HR have the fundamentals right:

Administrative excellence, Employee champion, Increasing service at reduced cost

Evolved HR• Reduce HR ops costs per FTE (Admin costs total of 30-40%)• Increase ability of HR to focus on strategic tasks • Increase customer satisfaction levels • Reduce cost per hire / Reduce time to proficiency• Lower influenced costs• HR building capability:

Developing talent, Linking performance mgt to business results, Engaging employees, Change leadership

High Performance

• Grow revenue per FTE, revenue per comp/benefit cost• Improve employee satisfaction• Reduce voluntary turnover• Increase retention of key talent• Improve workforce performance • HR leading change:

Proactive nature, Strategic business partner, Drive culture change, Help create the new business model

Efficiency: “Best Practices”

Driver: Productive & engaged workforce Driver: High performing workforce

Driver: Basic services to workforce Driver: Efficiently managed workforce


The outsourcing attitude gap

Fix my processes

Improve management information

Flexible approach

The client’s name / reputation

Regular income

Simple repeatable processes

The ClientThe Client The VendorThe Vendor

There is always a risk of outsourcing going wrong because the client and the vendor are driven by different needs


What makes a good HRO partnership

• Clarity of vision• Senior stakeholder champion• Evidence of rapid decision-making in the past• IT literacy of employees• Clearly defined HR policies – the “rules”• Clear ownership of HRO programme• Agreed benefits / outcomes / measures• Prepared to work as a partnership• Prepared to develop services over time• Understands potential impact on employees and line managers as

well as the retained HR organisation• Prepared to commit for at least 5 years


CHARACTERISTICS

What processes can we outsource?

Transactional

Independent of location

Not your core business

Process rather than project

Can be visualised as a service commodity

Relatively high volume

Rule-based

Time consuming


Rocket Science?

Route Map

It looks relatively straight-forward – just redesign for efficiency and effectiveness

It looks relatively straight-forward – just redesign for efficiency and effectiveness

““As is”As is”

““To Be”To Be”


But do we know how it really works?

Route Map

““As is”As is”

““To Be”To Be”

Often poorly captured – relies on tacit knowledge of the people who run the process

Often poorly captured – relies on tacit knowledge of the people who run the process

Often defined in terms of desired business outcomes (e.g. cost savings) rather than a shared vision of how it will work

Often defined in terms of desired business outcomes (e.g. cost savings) rather than a shared vision of how it will work


Example of an HR Process Taxonomy

EMPLOYEE EXIT processes

Involuntary exit

Voluntary exit

EMPLOYEE EVENTS

Personal information

Data changes

Temporary assignments

Pay changes Transfers Leave of absence

Unpaid leave of absencePaid leave of absence

EMPLOYEE ENTRYHiring

Failure to start work

Hiring a new employee

Hiring a temporary employee

Rehiring an ex -employee

Hiring an employees via

company acquisition

Taking paid maternity leave

Taking paid military leave

Taking paid long term disability

Taking unpaid maternity /paternity

leave

Taking unpaid military leave

Taking unpaid educational leave

Taking unpaid compassionate

leave

Taking unpaid long term disability

leave

Returning from unpaid leave of

absence

Returning from paid leave of

absence

Resignation

Mutual agreement

Voluntary redundancy

End of temporary employment

Compulsary redundancy

Outsourcing /transfer of

undertakings

Death in service

Failed pre-employment

No showChanging from temporary to permanent

employment

Promotion without a pay change

Changing between full-time and part -

time hours

Off-cycle market adjustment

Merit pay

Promotion with grade change

Demotion with grade change

Cost of living adjustment

Pay increase on transfer

Re-organisation

Cost centre (department )

change

Location change within country

Job change with no pay change

Temporary foreign assignment

Return from temporary foreign

assignment

Permanent transfer between

countries

Transfer to affiliate company within

country

Vacation / holiday tracking

Sickness reporting

Personal details update

Benefits enrolment

Benefits change

Benefits exit

Dismissal / Unsatisfactory performance

Employee Relations

Equal opportunities

Inefficiency

Disciplinary

Grievance

Performance

Learning & Development

Performance appraisal

Personal development


Rethink HR processes as business processesM8) Offer a foreign employee a temporary assignment with my team

Line manager

Resourcing (SSC)

HR Services (SSC)

Employee

Payroll Admin (SSC)

Internal service providers

Authorisers

Complete Transfer Request Form

Releasing MgrAuthorise temporary assignment

HR PoC Arrange temporary assignment

Send out temporary

assignment pack

Accept temporary assignment

Receive offer acceptance

Update HRMS If necessary, add to payroll

Update employee file

Add new employee to pay

run

Plan for new starter arrival

Notify manager of acceptance

Receive transfers report

Monthly pay run

Receive first pay

Successful processes are designed around desired outcomes

Successful processes are designed around desired outcomes

Always define

• Entry and exit conditions

• Intermediate inputs/outputs

• Controls and methods

Always define

• Entry and exit conditions

• Intermediate inputs/outputs

• Controls and methods

Express interest in an assignment

Identify a sutiable candidate


Cost control is a common theme

• Cost savings are not as large as expected base on whole life costs

• Only 30% of companies moving to BPO achieve their cost savings targets

• SLAs can drag the service down to the lowest acceptable quality

• Service providers are not good at managing customer expectations

• Every last minute change increases the risk of failure, even if the service provider agrees to it

• Service providers may promise services that are beyond their current capability

• You will discover stuff done by HR that isn’t documented and therefore is not in scope

What damages the cost savings?

• Major ERP solutions can be restrictive leading to a desire to customize (£££)

• Poor data moved form old systems is replicated in new HR system

• Timescales to “go-live” are often underestimated by both parties

• Resistance to change is badly managed


But some clients report benefits

• Reduction in HR operating costs of between 20% - 40%• Access to improved management information, and performance metrics• Improvements in HR service quality and introduction of e-HR service

models• Increase productivity within the HR department, e.g. reduction in number

of HR staff per employee• Enable internal HR staff to become “business partners” and move away

from spending the majority of their time on low impact administrative, transactional tasks

• More predictable cost base for service delivery• Improved and consistent HR vendor management• Consolidation of HRO function into regional (and potentially global)

shared service centres• Increase in organisations’ employee satisfaction with employee services


Improved cut off

submission timescale

Improved cut off

submission timescale

Single Pt. of contact for

transactions created

Single Pt. of contact for

transactions created

Absence levels

reduced

Absence levels

reduced

Quality of HR Service increased

Quality of HR Service increased

Case management installed in

SSC

Case management installed in

SSC

KPI

Staff absence

decreased

KPI

Staff absence

decreased

KPI

Percentage of approved vacancies decreased

KPI

Percentage of approved vacancies decreased

‘No show’ rates at training courses

decreased

‘No show’ rates at training courses

decreased

Implement Self-serviceImplement Self-service

Implement Electronic Handbook

Implement Electronic Handbook

Implement service regime

Implement service regime

Implement SLAs

Implement SLAs

Implement retained

organisation structure

Implement retained

organisation structure

Implement standard service

processes

Implement standard service

processes

Speed of HR Service increased

Speed of HR Service increased

Talented and Effective

Workforce

Talented and Effective

Workforce

Benefits identified and measured across the end to end service

Time taken to fill

vacancies decreased

Time taken to fill

vacancies decreased

Transformed Business

Processes

Transformed Business

Processes

Consistency of request handling created

Consistency of request handling created

Telephony within Shared

Service Centre (SSC)

installed

Telephony within Shared

Service Centre (SSC)

installed

Programme Enablers

Strategicoutcomes

‘Capability’ Outcomes

‘Operational’ Outcomes

‘Strategic’ Outcomes

HR Service & People Management Outcomes

Consistency of applying HR policy increased

Consistency of applying HR policy increased

Ratio of HR staff to total

staff decreased

Ratio of HR staff to total

staff decreased

Real Customer

Focus

Real Customer

Focus

Consistently Top

Performer

Consistently Top

Performer

Programme-led Delivery

Programme-led Delivery


Service Level Agreements

• Measuring for measurement sake?• Decide those that are important to you – understand

what will make an impact• What level of service do you need?• What timescales do you apply to achievement?• Long lists of SLAs and KPIs make for a lot of monitoring

and reporting work – is it adding value?


The retained organisation – getting it right

A large part of my work has disappeared – what

do I do now?

What exactly is a strategic HR

business partner?

As an HR professional how do I use the new service?

Maybe I should just check their

work when it comes back?


The change challenge

• Quality applied to understanding the client’s needs, process mapping, re-design, implementation, deployment, steady-state service management and future evolution of services

• Acceptance related to people involvement, communication, listening, gaining commitment, overcoming resistance to change

Quality of the Technology

Effectiveness of the solution = ……..multiplied by……..

Acceptance of Change


What have we learnt?

ServiceCost is an important driver but it cannot only be about cost savings. If HRO is to be successful, service and quality must be up there as one of your top priorities.

People

While high quality recruitment, training, rewards and targets are very important, these have become hygiene elements – essential to good performance but not a guarantee to outstanding performance. The differentiator is the presence of the appropriate skills – leadership, people skills, customer focus and an ability to build strong relationships with the business.

LocationLocation is a major decision – not least because of its labour arbitrage potential but also the right location will provide the right people, language skills, cultural awareness. It also provides the setting for delivering change which HRO is all about.

TechnologyIt is not enough to focus on standardised ERP systems. Enabling technologies such as scanning, workflow, self service and mobile devices are raising the performance bar to deliver a radical change in service levels. HRO provide the ideal platform to implement such technologies.

BenefitsIdentify the outcomes you are seeking across the end to end service and monitor benefit delivery by both provider and your own organisation. Very often, suppliers can enable benefits – only owning organisations can realise them!

InvestHRO is an investment. Doing it well requires a mix of different skills both during the project and deployment phase. Getting it right upfront reduces your costs long term.


Documents

© Fujitsu Services Transforming the HR Function – December 2007 1