Centralizing HCM Systems Can Bolster HR’s People Strategy

By Kathy Gurchiek Apr 29, 2015
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The proliferation of payroll and HR systems at global employers hobbles the ability of human resource professionals to collect and analyze important data that can help their organizations expand into new markets and manage their workforce, according to new research from ADP.

ADP is a provider of global cloud-based human capital management solutions.

Multinational organizations were found to manage an average of 33 payroll systems and 31 HR systems—a 40 percent increase from the previous year. The number of systems is even higher among emerging markets. Global organizations in Asia-Pacific countries and Latin America typically manage 40 to 50 different systems each for payroll and HR, according to the paper “Harnessing Big Data: The Human Capital Management Journey to Achieving Business Growth.”

The paper’s findings are based on ADP’s survey of 725 senior leaders at global multinational organizations that have more than 5,000 global employees. The third annual survey was conducted December 2014 in the Asia-Pacific region, Europe and the Americas. Latin America was included among its respondents for the first time. The survey was conducted within the entire market, not solely among ADP clients.

The top five global business objectives of human capital management (HCM) reported have not changed from 2013. They are:

  • Expanding into new markets.

  • Maintaining global agility.

  • Building top talent and leadership.

  • Strategizing for risk management.

  • Developing workforce skills.

“In order to execute people strategy, building a strong HCM infrastructure is a must,” said Ahu Yildirmaz, Ph.D., vice president and head of ADP Research Institute, during an ADP video. “Think about the huge data fragmentation issues and the inefficiencies throughout these [disparate] systems,” she pointed out. Having all data in one system allows HR to compare compensation structures across different parts of the organization, for example, or determine before the company moves into a new geography if it has the right people in place in order to be successful, the report noted.

Hidden Advantage Revealed

The hidden advantage to centralizing all of a company’s workforce data—including benefits, payroll, turnover rates, the number of hours employees worked and succession planning—is that it “will enable you to start doing workforce analytics ... and also build predictive modeling,” Yildirmaz said. 

However, only 23 percent of business decision-makers purposely align strategy to data, SHRM​ Online reported in March 2015. Additionally, aDeloitte survey conducted during the fourth quarter of 2013 with 2,532 leaders in 94 countries found that 86 percent of companies do not have any analytics capabilities in HR and more than 40 percent reported that their companies were not ready to address the problem of talent and HR analytics. 

By using a unified data system, HR professionals can get a better sense of the workforce impact of the company expanding into new markets, for example. That allows HR to inform their chief financial officers that they have a “big data” strategy, Yildermaz noted.

“Big data strategy is not reporting the numbers,” she pointed out. “Big data strategy is ... being able to analyze those numbers.” 

One of the first steps in unifying an organization’s data systems starts with HR partnering with other areas of the company and having an audit performed of those systems. 

“To be able to do an original audit requires HR to reach out and partner [across the organization] and lead with a clear goal, to say ‘We’re going to try to get to a capital management strategy,’ ” said John Antos, a vice president at ADP who led the research for the paper.

“A lot of people [within the organization] may have ownership or a piece of different systems ... and trying to get them on the same page ... requires a bit of work and leadership. It’s a terrific opportunity for HR to have a big impact. A lot of [making use of analytics] revolves around having a data-driven strategy, having the tools and data at your fingertips,” he told SHRM Online.

In the absence of HR partnering to solve this problem, “other departments will step in,” he noted.

While diving into all that data may seem overwhelming, analysis should start with setting goals that connect to the company’s business objectives, Antos said.

Other survey findings:

  • Expanding into new markets is the most important global business objective of multinational companies with 10,000-74,999 employees.

  • 69 percent of HR executives rank talent acquisition and tracking as the workforce management strategy with the greatest impact on their organization's business objectives.

  • 49 percent said talent management is their top business challenge.

  • 62 percent of HR executives at multinational firms from North America said they will increase the number of employees outside their headquarters in the next one to two years.

  • Global agility and building/recruiting top leadership talent are multinational companies' second and third most important global business objectives after expanding into new markets.

  • Bridging cultural differences and compliance requirements round out the top global business challenges facing global employers.

  • Maintaining global business agility was the No. 1 objective of multinational organizations with more than 75,000 people.

Kathy Gurchiek is the associate editor at HR News. Follow her @kathygurchiek.

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