Big Change Close to Home, by the Numbers

An HR function sheds 30 percent of its costs and takes on a more strategic role

By Eric Krell May 2, 2011
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The cobbler's wife and children go barefoot. All the knives in the blacksmith’s house are wooden. Since the early days of human endeavor, the challenge of applying professional expertise close to home has been considerable. Just ask HR executives responsible for leading major changes within their own functions. Well, ask most HR executives.

“It was the fastest and probably the easiest business case proposal I have ever made,” noted Jim Reid, vice president, global human resources and organizational development, for Husky Injection Molding Systems, a global supplier of injection molding equipment and services to the plastics industry.

However, the change the business case called for “was not easy” to execute, Reid admitted. The nature of the effort was complicated and vast: a multistage, three-year HR transformation designed to shed 30 percent of global HR costs while greatly strengthening recruiting effectiveness, enhancing HR technology and efficiency, and establishing the function as a true business partner.

“We recognized that we had a significant undertaking on our hands,” Reid noted. “And, to make this happen it was imperative that we had supportive leaders.” Having an armful of benchmarking data and highly specific performance targets helped bring about the desired change.

Catalyst for Change

Husky, which is based near Toronto, operates more than 40 worldwide sales and service offices that support customers—including some of the world’s best-known beverage, packaging and consumer products companies—in 100 countries. In December 2007, Husky was purchased by Onex, Canada’s largest private equity company. Joining Onex “was a catalyst for change for the entire company,” said Reid, who was hired into the company in 2008. “There were no areas of the company that were untouched.”

During his first 100 days on the job, Reid met with the company’s top 50 executives as well as board members during numerous site visits. He then launched a comprehensive benchmarking effort, guided by The Hackett Group, a global strategic advisory firm headquartered in Miami. The analysis, which was complemented by interviews with a variety of senior executives, returned results that were sobering, illuminating and motivating. Among the eye-opening highlights:

  • Husky’s HR costs per employee were 82 percent higher than peer companies—and 110 percent higher than the world-class companies in Hackett’s database.
  • Husky greatly outspent peer companies on recruiting, which represented 40 percent of total HR process costs.
  • Husky’s HR technology investment was less than one-third what peer companies spent on HR technology.

“Our goal was simple,” said Reid. “We wanted to achieve a world-class benchmark level of [HR] performance in three to four years.”

When these and related figures went into the business case, Husky’s executive leadership team saw an opportunity to remove up to 30 percent from the HR cost structure. To achieve this and make other improvements, Reid formed an “HR Council,” a global HR team responsible for managing the transformation—an effort that included working with Hackett to redesign core HR processes.

Five Initiatives at Once

The HR Council designed five “independent but related” initiatives, including the following:

Improve HR Technology: To move away from manual processing—for example, compensation planning previously required the use of 500 different spreadsheets across the company—and toward more automated tasks and self-service delivery, the HR function essentially re-implemented and upgraded its PeopleSoft (Oracle) HR system. Standardized processes with built-in efficiency targets for compensation, performance management, data management and other HR activities were configured within the HR system, along with many other improvements. The effort eliminated those compensation spreadsheets, which were replaced with automatically distributed reports. Reid projected that these improvements in HR transaction processing will generate $3 million in savings during 2011.

Improve Global Recruiting: The HR council created a position charged with exerting more rigorous oversight of the company’s worldwide recruiting agencies and streamlined the processes for requisitions and offer approvals. These improvements reduced the time required to fill positions, increased the internal fill rate and reduced the amount of money Husky spends on recruiting agencies. In all, Reid estimated that the recruiting-improvement initiative will save $4 million in 2011.

Simplify and Standardize High-Cost HR Processes: Husky’s HR Council applied similar process redesign work throughout the HR function, an initiative that Reid said was at the heart of the entire change effort. The work focused on HR transactional processing, soft-skills training and compensation and benefits. It included a heavy element of simplifying and standardizing processes across all global locations. In compensation and benefits, for example, the HR team audited relationships with external consultants and vendors and then renegotiated agreements as part of a global service delivery model.

The other initiatives involved moving HR from a “transactional data shop” to a more strategic business partner and redesigning the organizational structure of the function so that it operated as a cohesive, global team. These initiatives required leadership development improvements, organizational effectiveness work, strategic workforce planning and internal marketing.

First Who, Then What

Reid described the results to-date as “dramatic.” He credited a global HR team effort for the success. Global HR costs have been reduced by 30 percent. A self-service performance and compensation system was launched. Many other HR processes have been redesigned and improved.

“The net result is a company that has significantly improved profitability, margins and results, Reid reported. “And the global HR team is now sitting around the management table with line executives.”

The benchmarking effort, as well as Reid’s outreach efforts to company leaders after joining Husky laid the groundwork for success, but Reid prefers to point to another factor. “Most of all, you need to get the right people into the right seats,” he said. “Successful change begins with answering the question ‘who?’ first, then ‘what?’ At Husky, approaching the change in this way has yielded a huge payoff.”

Finally, Reid believes that HR “can and should” be a role model in organizational change efforts. Filling this role requires HR leader to make sure that everyone in the department is equipped with clear guidance, specific performance targets, new shoes and real knives.

Eric Krell is a freelance writer based in Austin, Texas.

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