Global HR Transformation

“The definition of HR transformation has evolved out of a number of perceived and real pressures on the HR function. The function is expected to support the business, provide the right direction for the people management strategy and then execute the strategy. It also has to demonstrate an improvement in value, yet at the same time carry out cost-heavy administration.

In response to these challenges, the transformation process that many companies have embarked on involves examining the HR strategy and how it supports the business strategy, and then changing the HR operating model to achieve optimum delivery.”

According to the 2006 Global HR Transformation Study by Mercer Human Resource Consulting, half (50%) of organizations are in the midst of transforming their HR functions, while 12% completed a transformation within the past year and another 10% plan to begin the process within the next year.

HR transformation is the process of recreating or reinventing the HR function with the specific intent of enhancing HR’s contribution to the business.

Technology and service delivery improvements were the focus of the first wave of transformation activity, 5 to 10 years ago, coupled with an expectation that this would enable HR to transition into a more strategic role," says Mike Theaker, principal in Mercer's HR Effectiveness Business. "HR functions are now challenged with delivering against the expectations set--to deliver human capital strategies and initiatives that demonstrate a significant contribution to business operations and the achievement of business goals."

HR leaders reported that their top challenges are: acquiring key talent (43 percent), driving cultural and behavioral change in the organization (40 percent), and building leadership capabilities (40 percent).

Just as HR activities have remained traditional, so has its skill sets. According to Mercer’s survey, 53% of organizations worldwide list skills and competencies of the HR staff as one of the most significant obstacles to enhancing the overall role of the HR function. The capability of line managers to supervise staff and the business’ perception of HR’s value are other leading barriers holding back the development of HR.

“In order for the HR function to move forward with its transformation, organizations must implement a talent strategy that arms HR with a range of skills, especially those that relate to finance and business, so that they can be more effective business partners,” explained Ms. Piercy