That was a key conclusion of Mercer Human Resource Consulting’s 2006 Global HR Transformation, according to a Mercer news release.
The study found that half of HR operations at companies around the world are in the midst of transforming themselves, while 12% finished a makeover in the past year. Another 10% plan to begin the process within 12 months.
According to the news release, the study reflected a clear shift in HR priorities. While 40% of survey respondents listed human capital strategy as a principal function of HR, 64% expect it to become a key objective within two to three years.
Meanwhile, also expected to grow in importance are leadership development and talent management while 46% of respondents listed operational excellence within the HR function as a priority. Only 32% see operational excellence as a key function in the next few years.
“HR transformation is clearly a continuous process,” said Karen Piercy, a principal and HR effectiveness expert in Mercer’s Human Capital business. “The first wave of transformation, which started five to 10 years ago, focused on improving technology and service delivery with the expectation that HR would transition to a more strategic role within the organization. Today, HR functions around the world are challenged with delivering on this expectation – to make human capital strategies a reality rooted in improving competitiveness and profitability.”
Changing demands on HR have given rise to new challenges. The top challenges cited by HR leaders around the world are:
- acquiring key talent (43%),
- driving cultural and behavioral change (40%), and
- building leadership capabilities (40%).
Organizations are also changing their perception of the HR function. According to Mercer’s survey, 67% of respondents said that HR leaders are viewed as a strategic partner participating in strategy discussions and decisions. The same percentage of HR leaders (67%) reports to the CEO, compared to 54% in a 2003 Mercer study.
Moreover, 59% have significant contact with the board of directors on issues beyond compensation such as:
- talent management,
- succession planning; and
- human capital implications of mergers, acquisitions and other transactions.
Survey findings show that the HR function spends almost three-fourths (70%) of its time on traditional HR activities, such as recordkeeping, compliance and delivering HR services. Similar to the 2003 survey results, respondents indicated that they would like to spend less time on recordkeeping (from 27% at present to 14%) and more time on strategic partnering (from 15% at present to 27%).
Mercer’s study includes responses from nearly 1,400 organizations in all industries across Asia,Australia, Europe, Latin America, New Zealand and North America.
Mercer has published a global Point of View paper and individual region reports on the new study. These documents can be downloaded at www.mercerhr.com/globalhrtransformation beginning June 21.