The intersection between HR strategy and HR technology


Mellon HRMS Survey for 2005 – Immature HRO Industry

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Again, here’s another somewhat self serving HRMS survey, but Mellon actually surveyed a couple hundred HR and finance professionals, so it looks pretty good and objective. Also, Mellon was in the middle of trying to sell their HRO business while they were doing this survey, but that doesn’t mean anything.

You can download this report, but basically it says that outsourcing is on the way up. I might comment on this specific survey in a future post, but here are a couple of interesting observations:

  1. HRO service delivery is not excellent yet. Much room for improvement exists and HR vendors may not have technology or process to deliver yet. As the industry matures, this should get better.
  2. Over 50% of respondents thought their HR organization would be reduced in size by at least 15%. This is a large displacement of staff, and I have to assume that administrative functions of HRO are displacing administrative staff and skilled HR professionals are being retained.
  3. About 70% of organizations allocated less than 5% of the HRO budget to change management.

Basically, it’s not a surprise that HRO is not mature. However, the survey showed an incredible lack of focus by HRO clients. They are perhaps so focused on headcount reduction and “focusing on strategy” (same old mantra) that they are not implementing the critical employee and management acceptance plans that eventually make HRO successful. HRO has the potential to enable strategy enhancements, but maturity is needed on both the vendor and the client side.

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