Change is coming to HR… Are you ready?

Business transformation was previously driven by a focus on cost savings. It’s maturing at a rapid pace to focus on the customer, standardising functions where possible to drive efficiency and new service standards.

Any function involving transformation brings the people to the forefront – as a result, HR has become a strong voice in the boardroom.

Last week saw the return of APAC’s largest business transformation event. SSON’s Shared Services and Outsourcing Week really shone the spotlight on HR transformation throughout 2014 and into 2015.

Although we’ve seen a rapid change in the HR function of many organisations over recent years, there’s still plenty on the horizon. A few key areas stood out that I wanted to share with you. There’s also a practical look at some of the tips shared for the most common theme of the event… change management.

Process Standardisation

It’s going to be a tough balancing act between standardisation and specialisation – finding that balance is going to be critical to success.

Without standardisation it’s going to be nearly impossible to use KPIs to chart improvements as the HR function continues to become more strategic. It’s time to start thinking about:

  • How do you balance standardisation vs. specialisation?
  • What is the role of global process owners in standardisation?

Recruitment process

As it gets tougher and tougher to find the right skills to fit the right culture, organisations are starting to think outside the box when it comes to recruitment. With software engineering, energy and life sciences, mathematics, IT, and other technical skills in short supply, companies need to expand their sourcing and recruiting to a global level. That could mean locating work sites where the best talent can be found and building talent networks that attract people worldwide.

A couple of key questions are hot on the lips of many HR execs…

  • Should recruitment be kept in-house?
  • How do you select an RPO partner?

Culture

Long gone are the days when culture was just a nice add-on for organisations. Culture fit is going to have a big impact on recruitment; it’s no longer just about matching skills and salary expectations. This will no doubt be the make or break of many relationships for the organisations choosing to go down the outsourcing path for recruitment.

Enabling flexibility

There have been many studies demonstrating the focus on BYOD and flexible working. This is going to have a huge impact on HR, employees are going to get to choose how they want to work, and the business has to be agile enough to make it work.

Retention

Instead of making HR jobs obsolete, technologies will transform them, allowing HR professionals greater ability and more time to do their jobs and develop their skills improving recruitment and retention.

The key question: How can data be used to drive recruitment and retention practices?

A few of the case studies discussed how 99 per cent of the time on data has been spent looking for it, with 1 per cent left to analyse it and no time to action it. Data has some real potential to improve retention, offering insights to employees – something never before possible.. This won’t just be the fancy software; almost all speakers who have been through HR transformation spoke highly of employee surveys and implementing Employee Value Propositions (EVP).

Keeping momentum

The Hackett Group came armed with some statistics looking at where the focus was for continuous improvement over the next 12 months – talent management was a clear stand out.

Change management doesn’t end at installation; change leaders will have to embed the change principles into the day to day development of employees.

Change Management – The insiders tips.

Without doubt change management is still one of the biggest challenges any organisation faces. It’s clear to see why: process improvement, customer service, technology – it means nothing without happy staff driving it.

Here’s a summary of some key takeaways to consider in your organisation:

  • Drive it from the start. It’s a long term goal with the aim to be customer focused; all employees should respect and value each other and keep that front of mind.
  • Be firm. Don’t be afraid to send a message that if you’re not going to come on the journey for improvement, consider if it’s time to move on.
  • Culture sits next to strategy and operational excellence – build the values from the ground up and spend the time with the staff. All your service efforts are banking on it.
  • Don’t merely lift and shift when it comes to shared services or outsourcing – just because you’ve moved it, doesn’t mean the job is done. Take a look at exactly what the implication is for the business and the staff that work there. Change management and culture might be in the shared service centre, but what’s happening with the people left? The new challenge is to learn how to engage the shared service centre.
  • Be clear on the lines of reporting – your staff will get frustrated if they can’t get responses or outcomes.
  • Standardise where possible – simplify, standardise and leverage. Align the template to your own issues, take the methodology and link it to your own culture or environment. It’s about winning people’s hearts and minds and engaging them in what you’re doing. Using a template doesn’t always account for that – it’s just a starting point.
  • Look at what to use, when to use and how to use – there’s science to change management, and the art comes with how you use it.
  • Use analytics and insights – change can be hard to measure, but it’s not impossible. Use engagement surveys and indicators of satisfaction around sick leave, training, meeting participation and engagement rates. All can provide you with a benchmark to measure success – if that engagement goes up, you’re onto a winner.
  • Be flexible and adapt to your drivers – what drives your employees now might not drive them tomorrow.
  • Finally… Communicate, communicate, then communicate some more.

Outsourcing? Don’t trip up on customer experience…

We’re starting to see some real changes in the Shared Services industry. Whilst the earlier focus on delivery cost remains important, the all-in cost to the enterprise is more in focus.  SLAs are becoming less important as users are realising that green SLAs don’t feel green, cheap does feel cheap, and the lack of the ‘right’ service is spawning an increase of shadow services across the enterprise eating into the initial estimated business case benefits.

The earlier solution to cost pressures through increased scale is facing into the reality that there are two curves at work – benefits of scale versus cost of complexity, and as you scale out across processes the added complexity can cause your benefit case to turn negative.

There is a need to look at this again, and this time from a different direction; the customer perspective, rather than purely from a cost and efficiency perspective.    For the cost element, Shared Services need to be looking to manufacturing to learn new tricks.  Whilst lean has been a buzzword for years, the new focus on lean in the context of a component based service delivery model is gaining ground.

“View every process as if you’re a customer, and then apply learning from the manufacturing industries – when you start doing this you start moving your services away from products and to a customer centric process.” Explained Simen Munter, Group General Manager of Global Shared Services at ANZ when I recently caught up with him to discuss the changing nature of ANZ’s business.

Five years ago, ANZ embarked on a strategic transformation which recognised there was a unique opportunity to create value for shareholders by broadening its presence in Asia, whilst leveraging its strong foundation in Australia and New Zealand, to become a super regional bank.   The move recognised that a once-in-a-century shift was underway in the global economy as growth opportunities moved from the developed economies of the West to the Asia Pacific region.

“Instead of running 33 different banks, we want to be able to gain scale benefits and run as one bank across the 33 markets in which we operate. To do this we have significantly invested in our operations network across the region.

Our hubs network is expanding ANZ’s operations capability to support business growth in a way that is sustainable and cost effective. As a part of our super regional growth strategy we have operations in Australia, New Zealand, Manila (the Philippines), Chengdu (China), Bangalore (India) and Suva (Fiji).”

ANZ Operations

In Shared Services we aspire to operate  through a set of processes which are globally consistent, but able to handle local variations. We work to have the right people in the right locations to offer the best service to our customers.

Simen explained: “Specialist hubs help us build a super regional workforce, giving us access to capabilities that may be limited in our domestic markets. The Manila hub, for example, is a centre of excellence in voice based work. Our hubs are built around local talent pools and expertise.”

“Capability and capacity are the main drivers of a customer centric operating model. Staff in operating hubs provide additional capability to deal with increased volumes and allow in-country teams to focus on other activities that support business and customer outcomes. We work towards sharing products, platforms and processes across our geographies to give us the ability to build a ‘single production line’ and maximise re-use wherever possible.

“A key benefit of our approach is the ability to access ‘been there and done that’ talent, enabling us to leverage experience gained elsewhere. Take things like payroll and accounts payable, we have 33 markets to run this for. To find people who are experienced at running that kind of complexity is very difficult in Australia, whereas some global companies have done this for years. By being able to tap into a wider pool of skillsets across multiple locations we can leverage these learnings and operate more efficiently.“

“There is a real opportunity through blending highly skilled employees with low cost delivery so that we can be both locally competitive and cost effective. Nowhere is this as important as when you are competing in low cost locations.”

Looking for the extra edge

Looking at what you do from a customer perspective is challenging, as current best practice has been focused on SLAs and not based around the moving target of providing excellent customer service.   SLAs are typically set at the worst outcome your customer is willing to accept – meeting that consistently is hardly a good measure of success.

Simen explains: “The focus cannot be on these types of measures, the focus must be on solving the issue for your customer. My approach to shared services leverages skill and expertise across our regions to design, build and deliver services with the customer in mind.

“You’ve really got to focus on quality, as bad quality is a driver of resource requirements. The other focus is to ensure that the work being done is worth doing or is it work which exists as a result of failure in other processes.  We are seeing substantial opportunities in ‘turning off’ volumes by fixing things at source by looking beyond the current process and into what would have been ‘perfect’.

“We have seen a significant uptake in both external customer satisfaction and  internal customer satisfaction over recent  years.  It’s something we’re spending a lot of resources on as we see that as critical for our long term success.

“We focus on getting the customer service right and embed this  in our processes.

Also, when you have satisfied customers it gives you the room you need to further innovate and improve. If you are on the backfoot with quality you are spending all your time firefighting.  I don’t want great firefighters, I want superb ‘fire prevention officers’ – the people whom are able to look at things which are ‘not perfect’ and change them prior to issues becoming real service issues.”

Increased expectations

For outsourcers, these changes in approach can be quite complicated. Previously a product or transaction based approach was the norm, and you could meaningfully quote for particular parts of a business.  In a component based enterprise, the ‘end to end’ products disappear as many processes are identical across products and there is a new need to offer value beyond undertaking a particular type of ‘set in concrete’ work.

“This is similar to what happened in manufacturing decades ago, you can’t just aim to deliver to outdated SLAs, you have to own the outcomes in a very different way, as your element is integrated into the overall service delivery in a much more holistic manner.  The outsourcer needs to make sure they drive the innovation within their area, it isn’t only about the ‘run’ and meeting SLAs anymore.

“You need a competitive advantage beyond offshoring.  Outsourcers really need to bring something which adds value beyond the  added complexity of engaging with them, demonstrating they know what a business wants, they know what good output looks like and they know how to do it effectively.

“Overall, we’re seeing a strong growth in the industry towards work going to captives as they have proven to be more effective in driving adaptive change – it is difficult to outsource change. However, as organisations are increasingly process oriented, there’s a huge opportunity for outsourcers to provide large scale processes offering standardization while leveraging capabilities across multiple customers.” said Simen.

“I continue to see Global Shared Servicesas a key growth area in the corporate world, and an exciting area of opportunity for talent.  The specialist skill-sets required to effectively use a global delivery model, optimise skill-sets across talent pools and locations,  automation, organisation, production management is valued and there is a level of excitement about how the world of service delivery is changing.

“We are also seeing real opportunities in other areas, for instance, reporting and analytics is an important area for us.  We see that as a huge growth area, both in terms of offering the service to others across ANZ, but also in terms of using those insights into operating more effectively ourselves.

“There are two golden rules: quality cannot go down and price cannot go up. We don’t believe we need to compromise on quality to get the cost benefit when we do this right.

“Our customers need consistency, effectiveness and efficiency and that is what we aim to deliver,”said Simen.

“If you look at what’s successful from our perspective there’s only two metrics which really matter: customer satisfaction and cost.”

Join Simen during Shared Services & Outsourcing Week 2014 where he’ll be delivering the presentation Driving out Costs while Improving Internal Customer Service Delivery.

Inside Johnson & Johnson: Transforming the HR function across 14 countries

After working across the SSON portfolio for a couple of years now, I’ve seen few key trends starting to emerge.

One that really stands out is the heightened focus on the HR function. I first noticed the theme during the 2013 Shared Services and Outsourcing Week, which saw a huge increase of HR professionals in the room. Since then, it’s continued to be a hot discussion topic. So, what’s causing the spotlight to shine on HR? And, perhaps more importantly, how can this core function that affects every single employee help drive a smarter business?

To uncover some answers, I recently caught up with Cherrie Porter, Senior Human Resource Director at Johnson & Johnson. She’s responsible for ensuring the successful transformation of the Human Resource function in 14 countries across Asia Pacific. Cherrie is going to be kicking off our HR Transformation stream during Shared Services and Outsourcing Week Australasia 2014 and it’s looking set to be a packed room.

We discussed the changing role of HR, the importance of taking a staged, tailored approach and the pitfalls of change management during a transformation project.

SSO Week has seen massive growth in number of HR attendees, why do you think that is the case?

It’s one of those things where I don’t know exactly what’s caused it, but I think some of it is driven by the fact that HR is becoming more sophisticated as a function and the professional HR people now working in that function really do want to be part of the strategic activities, the more value-adding activities rather than the pure transactional piece.

HR wasn’t always seen as a profession that required qualified people in the role. In its own right, it’s now starting to be elevated to where it should be.

Why was the decision made to standardise processes at J&J over the 14 APAC countries? Did you face any integration issues?

We’ve approached it on a couple of different levels. Historically J&J has operated as a very decentralised company, meaning that in any one of those 14 countries there could be multiple operating companies.

In Australia there are four, in China 13, in Singapore nine, each with a different number of companies; it’s meant that there has never been a head of J&J in Australia.

Firstly, we standardised processes, not across Asia Pacific as a whole, but at a country by country level. From there we said: ‘OK Australia, here are your four ways of doing different transactions for HR, pick one. You can start with a fresh sheet of paper; just pick the one you think is the best option and build on that.’

The focus is currently on China, there are nine different ways of getting compensation information to Payroll, and there will soon be just one.

Technology also had an impact. Our aim has been to keep things as simple as possible, so we developed a template of how we thought a process should be. That template was taken to different countries to establish if it could work. Sometimes we’d have to change a few things depending on legislation, etc. For example, some countries would require paper copies of certain documents.

Aligning processes to fit the technology template was a challenge; we were faced with some real push back. These new electronic processes interfered with the way things had always been done for years and often required a few cultural shifts. We really had to challenge the value-add on each process and ask how we can become more efficient and effective in the way we’re operating.

Our mantra has been ‘simple, standard, global’ and we really just questioned if it doesn’t fit any of those three… Why not?

Using a phased approach clearly helps achieve success. How does your change management strategy fit in with this and how have you been ensuring continuity and support throughout?

Change management is always tricky, it’s relentless. I’ve been at J&J now for nearly eight years and I’ve been working on this transformation for all that time.

A few years ago we decided to move everybody onto a SAP platform, reengineering all the processes, harmonising all the policies, using an outsourced vendor. We went live with that in several markets.

It lasted three years, and in April 2013, we brought all those countries back into J&J. They’re still running on SAP but now they are under our control, we run them and don’t have our third party vendor doing the transactional work anymore; it’s set up internally.

In the meantime we had to deal with all those other countries that weren’t on SAP.  We had to be flexible enough to say, we made one decision and it’s not really working for us and it’s time to change course, but that doesn’t mean we’ve thrown everything out. We’ve tried to leverage the best of what we had before and revisit that strategy, the vision and the direction. Our vision and direction of the transformation was right (moving transactional work into one area so HR partners could focus on business strategy), we just needed to make some changes to our approach.

As a result, countries went backwards and forwards so they’d probably been on a bit of a rollercoaster. The more progressive HR operators in those countries have jumped on board and got on with it to see where it’s all going. There are still people that are clinging to the old way of doing things, or believing that this is just another fad and if they sit it out long enough it will all go away.

For us the key was to just bite chunks off and move at a pace people are comfortable with. Some of our staff have been here for over 25 years, so it was important to not rush in.

At a country level, China has always been the big challenge for us. It’s the fourteenth and last country that’s coming on board and it’s where we are currently. They’ve looked at the project and seen that it’s not going away and as a result are much more bought into it.

Success builds success; the momentum has led to people more willing to participate. The softer approach, the small steps rather than large leaps, has certainly helped us.  It wouldn’t work everywhere, but it’s something that is working for us, never lose sight of the big picture. We learn from each other and we listen.

Have you been faced with any unexpected obstacles on your journey? Are there any lessons learnt you could share with other organisations on the same route?

Some of them are a little bit sensitive as it’s our own internal doing, such as the battle between HR and Payroll (I’m sure we’re not the only ones that have that). It leads to a lot of politics and has definitely been one of our biggest obstacles, working cross-function, internally.

Change management has also been an obstacle in terms of how people react when things don’t go well. Looking back to the start of our journey, it wasn’t going well with our third party vendor and a brave call had to be made to bring it back in-house. Unfortunately after that, we were almost too scared to move, so we went into this 18 month period where not much really progressed. The countries that had been on the brink of going live were told to hold for two months, it turned into almost two years where nothing happened.

Choosing your external partners wisely makes a huge difference. Spend the time finding a really good fit and someone you can trust and really work with; that makes all the difference if they understand you and what you’re trying to achieve.

Finally, you’re delivering a case study presentation during the Australian SSO Week 2014, taking place in June in Melbourne. What will the audience be able to take away from your session?

If I put myself in the shoes of someone attending rather than facilitating that conversation, it’s those lessons learned that can help the journey. There’s no right and wrong to any of this, it’s just keep your eyes wide open. Ask yourself, if I’m about to embark on this journey what do I need to be on the look out for? It may not be exactly the same as what happened at J&J but it’s still a really good question to have on a checklist. Some of those watch-outs and some of the big ‘ah-ha’ moments, those are the things people will walk away with.

I know myself when I’ve sat in these sessions, it’s reassuring to hear that others are having a similar experience and that you’re not going crazy! It’s a great experience to be with like-minded individuals and take away a few things that are potential pitfalls and traps. I can hopefully help people avoid going far down the wrong path. I don’t know there’s any way to totally avoid it but the eyes wide open is a good way to describe it.