EquaTerra

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IPMA-HR Research Project Transformation in
Public Sector Human Resources Survey
Results April, 2006
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Transformation in Human Resources

• Today, Public Sector organizations face numerous
  challenges in attracting and retaining a quality
  workforce that can support and carry out their
  goals and mission.
• As the impact of the aging workforce increases,
  Public Sector organizations must focus on
  preventing the loss of important knowledge while
  developing new leaders and skilled professionals.
• Public Sector organizations are often less
  equipped to compete for talent with the private
  sector.
• The nature of Public Sector organizations and the
  political environments in which they operate can
  restrain the use of new tools such as outsourcing
  or shared services models to improve and
  transform HR service delivery and operations.
• Human Resources Information Technology (IT) is
  clearly a challenge as Public Sector
  organizations struggle with legacy systems and
  aging IT infrastructures.
• In the HR area, Directors and Managers struggle
  to gain the support of the organizations
  executive leadership and to establish HR as a
  strategic partner.
• Within organizations, efforts to transform and
  improve other areas may take precedent over HR
  yet another signal that executive leadership does
  not recognize the value of HR improvements or see
  the alignment with overall organizational goals.
• Cost remains a constant issue for HR operations
  in the Public Sector and HR professionals must
  balance conflicting agendas when pushed to
  improve and advance service levels while cutting
  costs and reducing budgets.

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Key Findings

• Against this backdrop, the International Public
  Management Association of Human Resources
  (IPMA-HR) partnered with EquaTerra Public Sector
  (EQPS) to explore the challenges surrounding
  Human Resources transformation.
• The research survey and analysis resulted in
  several interesting points about HR
  transformation in the Public Sector, including
• HR Professionals recognize the connection between
  improved and upgraded Information Technology (IT)
  and HR transformation.
• Management support is a key factor in pursuing HR
  transformation.
• HR Professionals recognize the importance of HR
  being perceived as a strategic asset to an
  organization.
• HR Professionals understand the value in
  Workforce and Succession planning but clearly
  desire assistance in this area.
• Outsourcing is not the norm and is not readily
  recognized as a key tool for HR transformation
  and improvement.
• This presentation features the results of the
  research survey and additional information on
  these and other key findings.

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Respondent Demographics

• Total Survey Response 224
• Overall Response Rate of 11.3
• Sent to 1,989 senior level HR professionals.
• Survey conducted over 13 days.
• March 8-20, 2006
• Most of respondents were local municipalities or
  cities serving lt499,999 constituents.
• Survey targeted senior level HR professionals and
  worked well 64 of respondents identified
  themselves as the HR/Personnel Director for the
  organization.

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Respondent Demographics
6
Breakdown of Respondents
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Respondent Demographics
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Chain of Command

• Other responses included Chief Financial Officer,
  Chief Operating Officer, the Organizations
  Executive Director and Civil Service Commission.

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Tenure
10
Influence on Decisions
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What areas does your decision making role include?

• Of 214 respondents
• 92.5 of respondents have influence on strategy.
• 88.3 on operations.
• 73.4 on sourcing for service needs such as
  contracting with an external entity.
• 58.9 on sourcing for operations purposes such as
  purchasing supplies or equipment.
• 59.8 on administration of labor contracts and
  negotiations.
• 43.9 on Information Technology (IT).
• While majority of respondents have influence over
  strategy, later results indicate most
  organizations do not have a strategic plan for
  the HR department/area.
• While a large number of respondents indicate
  influence over sourcing decisions, the nature of
  public sector decision making and the related
  internal processes may limit this influence.
• Less that half of the respondents have influence
  over IT decisions, despite the recognized
  importance of IT in improvement and
  transformation.

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HR Environment

• Size of HR Department or Area
• Of 217 Respondents
• 89.4 have 1-49 HR employees.
• 5.1 have 50-99 employees.
• 5.5 have 100-499 employees.
• 0 have 500 employees.
• Response consistent with the size of
  organizations.
• How would you best describe your HR environment?
• 39.7 Merit-based Civil Service System
• 35.5 At-Will Employment
• 5.6 Merit-based Civil Service System without
  formal protections
• 19.2 Other Responses included some
  combination of Civil Service At-Will
  Employment, Civil Service for Safety Forces only
  and some unionization.
• (N214)

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Unions Labor Agreements

• Interesting responses in that 39 of respondents
  have no employees covered by Union agreements
  while for 24, more than 76 of the
  organizations employees are covered by
  agreements.

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Organization Size Employees Served
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Current HR Operating Environment
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Current Outsourcing Shared Services
17
Current Outsourcing

• For Outsourcing, other responses included
• Cobra/SFA
• Insurance
• Employee Assistance Programs
• Executive Searches
• Risk Management
• Background Searches

18
Current Shared Services
19
Current Shared Services

• For Shared Services, other responses included
• Employee Assistance Programs
• Health Safety
• Risk Management
• Employee Relations
• Wellness Programs

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Information Technology in HR

• How would you characterize your use of
  Information Technology (IT) in HR?
• 26.7 Limited Use of IT in HR
• 42.7 Moderated Use of IT in HR
• 30.7 Comprehensive Integration of IT in HR
• N150
• For overall satisfaction in IT, on average
  respondents ranked systems and applications that
  support HR operations low (3.19 mean score).
• The low rank of systems and applications is
  consistent with other results indicating the need
  for upgrades and improvements in HR IT.

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Satisfaction in HR IT
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Leaderships Perception of HR

• When asked to rank on a scale from 1 (low/bad) to
  5 (high/good), respondents ranked leaderships
  satisfaction with HR service delivery as high
• 59.8 ranked satisfaction at a 4.
• 14.8 ranked satisfaction at a 5.

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Quality in HR

• When asked about quality within the HR department
  or area, on a scale of 1 (low/bad) to 5
  (high/good), respondents ranked
• People (HR Staff) Mean rank of 4.38
• Processes Mean rank of 3.76
• Success in performing as a strategic asset to the
  organization as a whole Mean rank of 3.65
• Other survey results indicate that management
  support is a key component of pursuing
  transformation in HR.
• Perception of HR as not being a strategic asset
  can serve as a barrier to HR transformation.
• While respondents recognize this challenge,
  survey results also indicate that most
  respondents did not have a strategic plan for the
  HR department or area.

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Strategic Planning in HR

• When asked if they have an existing strategic
  plan,
• 55.1 of respondents do not have a strategic plan
  for HR.
• 44.9 do have a strategic plan for HR.
• N187.
• For those organizations that do have a strategic
  plan for HR,
• 72.8 have a multi-year strategic plan.
• 27.2 do not have a multi-year plan.
• N81.
• When asked if they have a multi-year budget,
• 78.5 do not have a multi-year budget.
• 21.5 do have a multi-year budget.
• N177.
• Despite identifying the challenge of being
  perceived as a strategic asset to the
  organization, the majority of respondents do not
  have an existing strategic plan for HR.
• For those organizations that do have a strategic
  plan, this plan appears to be comprehensive and
  covers a longer time frame.

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HR Priorities

• When asked to rank the top three priorities in
  HR, respondents ranked
• Top three
• Manage benefit costs (i.e. workers compensation,
  pension, health care)
• Align HR and workforce with organizations
  objectives
• Workforce/Succession Planning
• Bottom three
• Emulate advances in the private sector
• Reduce overall HR budget
• Reduce administrative costs/improve back office
  processes
• When asked to identify any other priorities,
  responses were varied and included improving
  safety, improving morale and implementing
  performance measurement.
• Respondents recognize the importance of
  workforce/succession planning, a point confirmed
  throughout the survey.
• Despite reductions in cost being identified as an
  indicator of success, cost reductions were not
  identified as a priority.

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HR Alignment with Organization
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HR Alignment with Organization

• 76.3 of respondents ranked at a 4 or 5 (closely
  aligned) when asked about HR priorities alignment
  with organization leadership priorities
• Respondents view HRs priorities as being aligned
  with leaderships priorities, but does leadership
  share this perception?
• Later in the survey, responses indicate that
  management support is a key enabler for HR
  transformation and at the same time a key barrier
  to HR transformation.
• Likewise, earlier in the survey, respondents
  offered moderate rankings for HRs success at
  being a strategic asset to the organization.

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Recent Efforts to Improvement HR

• Other responses included Created process team
  focused on HR issues, Streamlined Hiring,
  Additional Training for Staff and Strategic
  Planning.
• In addition to Process Improvements, most
  respondents have undertaken efforts to improve or
  upgrade HR IT systems, further confirming the
  importance of IT In HR transformation and
  improvement.

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Measuring Success

• How does your organization measure success in
  improvements in HR service delivery?
• 74.4 Respondents said higher customer
  satisfaction
• 40.9 Cost Reductions
• 39.8 Higher Retention
• 19.2 Other responses including
• Greater efficiency
• Greater accountability
• Speed of service
• Meeting strategic goals
• Employee complaints/comments
• No measurement at this time
• N178

• Customer satisfaction identified as an important
  measure of success.
• At the same time, when asked about internal
  customer satisfaction surveys,
• 63.2 do not conduct a survey.
• 36.8 are conducting surveys.
• Of those that are, 46.8 conduct surveys only as
  needed and 30.4 conduct surveys annually.
  (N209)
• How are organizations measuring customer
  satisfaction?
• What other measures are being utilized?
• Is measuring success a challenge? A priority?

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Organization Brand Identity

• For those respondents that said NO or Dont
  Know regarding brand identity, when asked about
  the primary purpose of establishing a brand
  identity
• 60.5 said a brand identity could help with
  recruitment
• 18.4 Retain Talent
• 10.5 Workforce Succession Planning
• Other Responses included Dont know/understand
  brand identify, no purpose for a city, improve
  team/morale, enhance image, enhance customer
  service

• Does your organization have a brand identity
  as an employer in the marketplace
• 46.7 said NO
• 34.6 said YES
• 18.7 said Dont Know
• (N182)
• For those respondents that said YES, when asked
  about the primary elements of their brand
  identity the top three responses were
• 32.8 Pride Values of working in the public
  sector
• 21.9 Great Place to work
• 10.9 Job Security
• Other Responses included Progressive Community,
  Family-Friendly, City/Location of Choice,
  Reputation for high quality services

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Brand Identity Continued

• Responses indicate confusion around brand
  identity and its purpose for a public sector
  organization and as an employer.
• 40.4 of respondents said their organization had
  low to no interest in establishing brand identity
  as an employer in the marketplace.

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Mandate to Transform

• Of those respondents that are under some mandate
  to transform, they identified the following
  parties as those that gave the mandate
• 22.7 Elected official
• 20.5 City Council or County Commission
• 6.8 Legislature
• 50 Other Sources
• Other responses included HR/Personnel Staff,
  City Manager, Organization Executive Director,
  New/Current City Administration, Chief
  Administration Office and Internal Audit.

• 75.8 of respondents said they are under no
  mandate to transform their HR operations.
• 24.2 are under some mandate to transform.
• N182

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HR Transformation
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HR Transformation

• Benefits, Recruitment and Employee Orientation
  identified as the top three HR function areas
  already transformed.
• Most organizations have not already transformed
  Workforce Planning, a point that is consistent
  with later survey questions where respondents
  identify Workforce Planning as an area where help
  is needed.

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HR Transformation

• Respondents identified the following activities
  as being important to improving HR effectiveness
  and efficiency in the next two years
• Ranked in order of importance
• Process Improvements.
• Implementation of new IT.
• Cut Costs.
• Shared Services.
• Outsource Services.
• Union/Labor Support.
• N168
• Throughout the survey, respondents more readily
  identify shared services as a tool.
• Respondents also indicated that organizations
  are already engaging in process improvements and
  the implementation of new IT to improve HR.

• Respondents identified the following activities
  as being important to improving HR effectiveness
  and efficiency to date
• Ranked in order of importance
• Process Improvements.
• Implementation of new IT.
• Cut Costs.
• Shared Services.
• Outsource Services.
• N165
• In both cases, respondents recognize the
  importance of process improvement and new IT in
  improving HR service delivery.
• Shared Services consistently ranked as being of
  greater importance than Outsourcing.

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Value of HR Transformation
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Value of Transformation

• The majority of respondents see value in HR
  transformation for their organizations future
  plans.
• At the same time, when asked why transformation
  isnt important to their organization,
  respondents cited managements perception of HR
  not being a strategic partner (48.2).
• Managements support of transformation and
  recognition of transformation as having value is
  identified as a key enabler for transformation
  and a common barrier.

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Timeline for Transformation

• Transformation planned in the next year
• Most likely HR areas to be transformed in the
  next 12 months Recruitment, Orientation,
  Employee Development Training and HR IT
• Transformation planned in next 12-24 months
• Workforce Planning, Compensation Administration
  and Employee Development Training
• Transformation planned in 24 months
• Workforce Planning, HR IT and Compensation
  Administration

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Changes needed to consider Transformation
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Why is HR Transformation not considered important?

• Other responses included lack of time and
  management/community resistance.

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Value in Transformation

• When asked why organizations dont consider HR
  Transformation important, most common response
  was HR not being viewed as a strategic partner.
  As mentioned earlier, the majority of respondents
  indicated their HR department or area does not
  have a strategic plan despite respondents
  influence over strategy.
• Management support and executive apathy, in
  addition to the organizations culture, play an
  important role in transformation, a theme
  apparent throughout the survey.
• Cost appears to be a primary driver in decisions
  about pursuing transformation.
• If organizations had better information about
  transformation solutions and costs, would they be
  more likely to pursue transformation and
  improvements in HR?

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Barriers to HR Transformation

• Other responses included lack of time, lack of
  staff, resistance to change and other priorities
  taking precedent.

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Barriers to Transformation

• Lack of funds, lack of management support and
  poor IT systems identified as most common
  barriers to HR transformation all common themes
  throughout the survey.
• When respondents were asked why transformation
  was not important to their organization, 42.2
  indicated that transformation is too expensive.
• Cost is clearly a major issue in pursuing HR
  transformation.

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Key Enablers for Transformation

• Other responses included new leadership,
  motivated staff and mandate to transform.

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Key Enablers to Transformation

• Consistent with responses to questions concerning
  barriers to HR transformation, management support
  and appropriate funding are identified as key
  enablers.
• Strong internal skill sets and capacities are
  also recognized as being important for HR
  transformation.
• Respondents did not readily recognize Outsourcing
  as a potential tool for HR transformation.

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HR Areas Needing the Most Improvement

• Other responses included performance
  measurement, centralizing HR, health wellness
  programs and leadership development.

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HR Areas Needing the Most Improvement

• Top three responses Workforce Planning, IT and
  Training. Respondents also indicated these areas
  were priorities to transform within the next
  year.
• Respondents also ranked Workforce Planning high
  as an overall HR priority.

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Dangers of Unsuccessful Transformation

• When asked about the likely outcomes if HR
  Transformation goals are not met, respondents
  indicated
• Inability to deliver core HR services (56.1) or
  core organizational services (46.5),
• Out of control costs (29.9),
• Inability to recruit new staff (28.7),
• Reductions to budget (15.9),
• And Other responses (12.1) including loss of
  department credibility, less efficient/less
  quality services, duplication of efforts and low
  employee morale. (N157)
• Results reiterate respondents perception that
  transformation is important especially in service
  delivery.

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Conclusion

• Clearly, the HR professionals we surveyed face a
  daunting task in managing Public Sectors most
  critical resource - its people - with limited
  funds, limited influence on important decisions
  such as IT and limited support from organization
  management.
• HR leaders have influence on sourcing decisions
  but do not readily recognize outsourcing as a
  valuable tool for transformation.
• Cost is an important issue in transformation and
  HR professionals face the challenge of working
  towards improvements and advances while
  attempting to cut costs.
• Improvements and upgrades in IT are critical to
  the success of HR transformation.
• Survey responses lead to additional questions
  about measuring performance and success in HR
  operations, service delivery and transformation.
  Is measuring success important? Do most HR
  departments view performance measurement as a
  challenge?
• HR professionals recognize the importance of
  Workforce and Succession Planning but also
  recognize they need assistance in these areas.
• The results present an interesting paradox in the
  HR Depts struggle to be viewed as a strategic
  asset while not having a strategic plan. Does
  managements perception also play a role in
  hindering HR strategic planning?

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Transformation in Human Resources IPMA-HR
Research Study For additional information on
this research, please contact Elizabeth Newman,
Advisor Elizabeth.Newman_at_equaterra.com