Towers Perrin Survey Finds More Organizations Relying on Technology to Meet Workforce Management Goals

Employee Self-Service Systems Emerging as Effective Tool for Eliminating Inaccuracies, While Manager Self-Service Still Not Realizing Full Potential

Changes Occurring in Marketplace for PeopleSoft and SAP Platforms

STAMFORD, CT, NOVEMBER 9, 2006 — A new Towers Perrin survey shows that HR departments of major organizations throughout North America are rapidly embracing technology systems to deliver HR services more effectively and efficiently and, ultimately, improve the management of HR programs. According to the survey, 61% of HR generalists report reductions in workload as a result of employee self-service (ESS) systems — some as much as a 50% reduction — freeing them to focus on more strategic HR initiatives.

While they are adopting digital practices in almost every HR function, they are making the most significant investments in the talent and performance management systems that support employee retention and engagement. The survey also shows, however, that many organizations are not realizing the full potential of these investments because of the complex and time-consuming internal systems of manual checks, balances and validations that many HR departments still require.

“The human resource community is evolving from an all-paper approach to a more digital, more advanced strategy,” said Tom Keebler, principal and leader of the firm’s global Human Resource Delivery Services practice. “By applying technology where appropriate — to deliver or solicit information to and from employees, for example — HR teams are not only streamlining functions, but improving accuracy and better serving their employees. As a result, these tools are increasingly being recognized as necessary and critical to the ongoing effectiveness of the organization.”

The study, fielded earlier this year, surveyed 325 HR and HR Information Technology decision makers at organizations across multiple industries, including manufacturing and industrial (16%), financial services and insurance (16%), energy and utilities (11%), and health care (10%). Forty-seven percent of respondents were from companies with more than 7,000 employees.

Direction of the Human Resource Management Systems Marketplace

Survey respondents were polled on a variety of topics, including which technology platforms they were using or planned to use. A majority of legacy PeopleSoft customers said they would remain with that platform. Nearly a quarter (24%) of respondents said that Oracle’s acquisition of PeopleSoft had no effect on their plans, and another 21% of PeopleSoft customers said that recent events accelerated their move to updated releases of the technology. However, 38% of PeopleSoft customers agreed they were proceeding cautiously until they saw how Oracle merges the PeopleSoft product line into its new Fusion offering.

While 9% planned to use another vendor�s platform, an equal number of respondents were unsure of their plans for the future. Of the respondents who said they would be changing their current HR system, a third planned to move onto an SAP platform versus 10% planning to move to an Oracle platform. Twenty-eight percent were still evaluating vendors, and the rest are opting for a mix of other vendors’ platforms.

Talent and Performance Management Systems Continue to Grow in Importance

Because talent and performance management systems are top of mind for senior leaders today in many organizations, HR departments are focused on finding solutions to help motivate, retain and engage employees.

Among companies planning to change or purchase HR technology in 2007, more organizations plan to invest in a new performance management system (32%) than in any other HR domain. Other significant areas of investment also relate to workforce development activities: 31% of respondents plan to invest in staffing and recruiting systems, and 29% will invest in learning and development technologies in the next year.

Systems providers, too, are recognizing the need for better performance management systems and are more willing to meet it with new products and solutions. Both comprehensive and niche vendors have joined the race to design, develop and market more effective performance management systems.

ESS Applications Achieve Workforce Management Goals

ESS is fast becoming the norm for service delivery. By 2007, almost nine out of 10 companies will offer annual benefit enrollment on the Web, making ESS almost as ubiquitous as employees� access to the Web at work.

“ESS delivers measurable efficiencies to both employees and the organization,” Keebler explained. “It eliminates inaccuracies in data collection by offering a single point of entry — the employee — and immediate application of business rules. It also links information across the enterprise so that systems can ‘talk’ to each other and increases the speed at which a company can accomplish HR transactions. And ESS — by virtue of its ability to integrate transactions, communications and decision support tools — engages employees in understanding, appreciating and participating in the delivery of their benefit, pay and other programs — an important goal for many companies today.”

ESS is growing in breadth as well. By the end of 2007, nearly two-thirds (63%) of the organizations will offer an onboarding process through the Web to help bring new employees into the organization more efficiently and more effectively. And 54% will have ESS applications for career and competency planning.

Manager Self-Service Is Growing in Prevalence

The survey shows that line managers are generally receptive to the rollout of self-service applications across the HR spectrum. Among those using manager self-service (MSS), many reported reduced workloads as a result. An overwhelming majority of participants reported that MSS offers faster processing (81%), provides more accurate data (75%) and is generally a more effective process (76%) than prior means of delivering HR services. Across many of the basic MSS areas studied, the number of organizations planning to introduce various applications in 2006 and 2007 exceeds the number currently providing them.

“MSS provides the architecture and ability to help HR run more efficiently,” Keebler observed. “However, the system of manual checks, balances and validations still required by HR makes it virtually impossible for MSS to realize its full potential. For example, 45% of respondents reported that HR must still approve all routine salary changes, and nearly that many must approve routine promotions. In addition, the line manager’s manager must also approve many basic MSS transactions — with sometimes three or more levels of leadership involved beyond the initiation of even a basic activity.

“Organizations can improve their MSS ROI and offer more strategic support to the business by critically examining and modifying their internal processes,” noted Keebler. “This means lessening requirements for manual revalidation and approval wherever possible, and offering more effective guidance so that line management makes thoughtful and appropriate HR decisions.

“Broadly, to be successful with HR technology,” Keebler concluded, “organizations and their HR functions need to take a look at their structure, processes and roles, and evolve the function to achieve the maximum advantage that technology can bring.”

About Towers Perrin

Towers Perrin is a global professional services firm that helps organizations improve their performance through effective people, risk and financial management. Through its HR Services business, Towers Perrin provides global human resource consulting that helps organizations effectively manage their investment in people. Areas of focus include employee benefits, compensation, communication, change management, employee research and the delivery of HR services. The firm�s other businesses are Reinsurance, which provides reinsurance intermediary services, and Tillinghast, which provides management and actuarial consulting to the financial services industry. Together these businesses have offices and business partner locations in the United States, Canada, Europe, Asia, Latin America, South Africa, Australia and New Zealand. More information about Towers Perrin is available at