The best way for an organization to reduce cost while minimizing long-term damage is through "responsible restructuring". A responsible restructuring positions an organization for success when it has to work through challenging times such as during an economic or organizational crisis. So when HR is under pressure to implement cost reduction measures, it is imperative that these measures are recommended and implemented thoughtfully and with a longer-term perspective.
As HR plans and investments are shelved until the good times come around again, HR needs to reassess and prioritize its investments which includes cutting back on lower-value services and less-critical talent, and focusing on maximizing the efficiency and effectiveness of its delivery in support of long-term sustainability. This means starting with an in-depth understanding of where the HR function is today. One of the key challenges is in assessing the current HR function cost structure due to the lack of a reliable system which can provide tangible data from a department level, all the way down to individual processes and activities.
How Mercer’s HR Operations Scanner™ can help – A powerful tool
Mercer’s HR Operations Scanner™ gathers the necessary data to assess your current HR operations and helps you make informed decisions about what to change to better support your business. The Operations Scanner™ is particularly helpful in identifying redundancies and inefficiencies, as well as ways to reorganize or consolidate HR operations and to redesign programs and services.
It captures critical, quantifiable insights about how HR functions day to day by administering a self-assessment online survey to key staff – both within and outside of HR. Through the survey, you will learn about the:
- Allocation of HR’s labor and non-labor resources
- Value your employees and managers place on the services the HR function provides, and how effective it is at delivering these services
- Complexity of the current structure and how it can be further enhanced to improve its service delivery to employees and managers
With a better understanding of the current state of HR operations and objectives, you can determine how to achieve cost savings through in-sourcing, outsourcing or some combination of the two. You can also model the HR service delivery to achieve optimal efficiency and effectiveness.
How the HR Operations Scanner™ works
As the HR function differs from organization to organization, Mercer can work with you to:
- Analyze the findings with benchmarks and highlight opportunities for improvements with a plan to address them
- Customize the standard self-assessment survey questions and identify participants
- Administer the surveys and capture all the information electronically
- Monitor and validate responses
Mercer bases its analysis on fundamental reports that allow you to evaluate your HR operations from several different angles. For instance:
- With the Function Snapshot, you can see at a glance how much time, money and people resources are spent performing each HR function.
Time allocations by HR function
- HR devotes the largest amount of labor hours and cost to the staffing function performing activities such as staffing customer service and candidate assessment.
- The second largest investment of time is spent on HR department management, which involves tasks such as HR department administrative support and HR department meetings.
*Sample client data
The Value and Effectiveness Report uses subjective data to help you prioritize process redesign and new technology implementation to achieve the greatest return on investment.
Value and effectiveness analysis - Most important processes
- HR staff and HR customers do not necessarily agree on the most important processes. However, both HR staff and HR customers identify employee data and employee salary adjustments as being some of the most important processes.
- In HR’s opinion, these processes are as important as they are effective. HR customers perceive these processes as ineffective. Both HR staff and customers agree that these processes will need to be even more important in the future.
*Note: Rating scale is 1-4 (4 being the most important and effective)
HR should consider streamlining these processes to improve services and thus, customers’ perception of the quality and effectiveness of HR in these areas.
The value and effectiveness analysis allows us to compare HR staff and customers perception and identifying what processes are significantly more important.
Further, analysis allow HR to focus on the processes that are deemed important in future for HR staff and customer.
*Sample client data
Combined with labor cost data, the combined report on time allocation, and value and effectiveness helps you focus or prioritize change initiatives.
Combined analysis on time allocation/value and effectiveness functional importance and performance with labor cost
Organization development is clearly important but not as effective as other functions. Client may want to consider spending more resources on this area.
Use this report to prioritize what areas require change by matching customer ratings versus labor cost.
*Sample client data
Benchmark comparisons show you how best-in-class HR functions are structured to deliver peak performance and what improvements you can make to create a winning team.
Using benchmark data in determining trends
- In the above example, while the time spent on Transacting and Recordkeeping is significantly lower than other health care organizations in the Mercer Scanner database (29 - 30 percent), it is still higher than the benchmark. Is technology fully implemented and utilized?
- Also as we have seen in some organizations, the higher percentage of time spent on Delivering Services and Transacting/Recordkeeping reduces the time to focus on more strategic activities. Companies are achieving the shift to a more strategic role by streamlining processes, eliminating manual or redundant activities and leveraging technology, (e.g. self service).
Reference - 2009 Center for Effective Organizations, Marshall School of Business, USC, USA.
Informed decision making
The data compiled from the Operations Scanner™ may be evaluated from a multiple lens perspective and when used with other research papers along with the expertise of Mercer consultants, it can help you build a business case and action plan for transforming your HR function to better support your business.