Dec 11, 2007

Revamping is more about cost-cutting

In not such an encouraging bit of news for HR globally
More than 84 percent of 150 global companies surveyed in a new Deloitte Consulting LLP study say they are revamping their HR functions, but many are missing an opportunity to build long-term value and make HR an integral part of the company's business strategy.

In fact, the survey results found that revamping HR is still mostly about savings, systems and processes, despite rising demands from the C-suite for HR function to support overall business objectives to meet the challenges of an increasingly competitive business environment.

Key drivers behind HR improvements continue to be cost savings or efficiency (85 percent) and effectiveness of service (75 percent). Only one-third of respondents cite building HR capability as a driver for the overhaul, and even fewer (30 percent) responded that they were making improvements to free HR to undertake a more strategic role.

More promising, the survey results show that some respondents are moving toward business-HR alignment and are identifying key business issues that are driving future HR improvements -- training the next generation of leaders (40 percent); building and managing a global workforce (33 percent); mergers and acquisitions (31 percent); and an aging workforce (27 percent). However, only 40 percent of respondents have structured processes for future HR planning. This is clearly an area that needs improvement, as HR will likely find it difficult to support business strategy without a formal mechanism to solidify this alignment.