HR Transformation Continues to Mature According to ADP and HROA Report

WASHINGTON, DC--(Marketwire - February 23, 2010) - ADP ®, a leading provider of HR, payroll and benefits administration services, today released a joint research report commissioned by ADP and the Human Resources Outsourcing Association (HROA®) demonstrating that the Human Resource (HR) transformation movement is maturing and proving its merit over time, reaching deeper into mid-market and smaller companies. The report indicates that over 80 percent of respondents are currently working on HR transformation(1), and fully 95 percent of mid-market companies are engaged in HR transformation.

This year's report, the sixth annual edition, examines trends in HR transformation practices of organizations around the globe. The report provides insights into market trends and changes, particularly in light of the recent global economic situation, and offers perspective on future plans. In addition to discussing transformation status and strategy, the report addresses:

-- reasons organizations transform, and the barriers that limit their
   transformation;
-- transformation timing, cost and satisfaction;
-- impact of recent global economic changes on transformation plans;
-- engagement of external resources and satisfaction with resources;
-- current and future transformation scope;
-- HR outsourcing and shared services strategy, including budget and
   provider selection.

"In the six years that we've been engaged in this research, we've seen HR transformation become an integral part of organizations' ability to anticipate and react to change. This year's research demonstrates that organizations are realizing the benefits of HR transformation extend well beyond cost savings -- it strengthens their ability to react favorably to market changes," says Hans Jansen, Vice President, Multinational Sales, ADP Employer Services International.

Although the research has shown persistent stumbling blocks to successful HR transformation -- including the skills of existing HR staff, internal bureaucracy, lack of adequate technology, and underestimation of resources required -- the report indicates a reversal of a trend in recent years as those hurdles appear to be declining.

"HR transformation has become a central component of HR organizations, large and small. As this report reveals, there are a wide variety of benefits that accrue to organizations that undertake these efforts, and there is much to learn from those that have been engaged in HR transformation over recent years," said Richard Crespin, Global Executive Director of HROA. "The HROA, through its varied membership of buyers, practitioners, providers, and advisors, and their continued research and standards efforts, helps HR executives find innovative ways to address challenges and achieve success."

The research report is divided into four sections: Transformation Status, Transformation Scope, Transformation Outcomes to Date, and Outsourcing and Shared Services.

Additional key findings from the report revealed:

-- A hybrid approach of internal reengineering, shared services and outsourcing remains the most common HR transformation strategy. Although it remains the least likely sole strategy, outsourcing as a predominant strategy has experienced a near double increase between 2008 and 2009, from 7 to 12 percent, and is a more common strategy amongst mid-sized than in larger or smaller organizations.

-- The top reasons companies transform have remained virtually unchanged over the past several years, although the order ranking often varies. Cost topped the 2009 list, up from number three in 2008. Other top reasons include freeing internal HR staff to focus on strategic issues, and to add or improve service for line managers and employees.

-- HR transformation most often takes three years -- slightly longer than anticipated. At the same time, transformation generally generates savings in the 25 percent range, which is only slightly less than anticipated.

-- HR transformation efforts have the greatest impact on organizational management issues -- rather than service, technology, or staff/manager job performance improvement; they have less positive impacts in two areas that organizations say are key reasons to transform: reducing/managing cost and freeing internal HR staff to focus on strategic issues.

-- Outsourcing of HR processes saw a slight overall decline between 2008 and 2009, but results show significant variations among specific groups. For example, the smallest saw a decline in HR outsourcing activity, whilst larger ones experienced a slight increase.

-- The 2009 data continue a trend we've found since we started this research: transactional HR processes -- payroll, benefits administration, HRIS -- are most likely to outsourced, whilst strategic processes -- performance appraisal, employee communications, career & succession planning -- are least likely.

-- Although American organizations are still more likely than others to outsource, they indicated a significant decline in outsourcing activity in 2009, whilst Asia Pacific organizations indicated a significant increase.

-- Respondents most often budget less than US$1M annually for HR outsourcing. The highest percentage of respondents say they anticipate increasing their HR outsourcing budget; however, that percentage has dropped from 55 percent in 2008. At the same time, many fewer say they plan to decrease their HR outsourcing budget.

Research Demographics

A total of 188 respondents completed the 2009 Global HR Transformation Survey online. More than half (55 percent) of the respondents are located in the Americas, 35 percent in Europe/Middle East/Africa (EMEA), and the remaining 10 percent in the Asia-Pacific/Australia region.

Just over half of respondent organizations (56 percent) have revenues of less than US$1 billion; 19 percent have revenues of more than US$10 billion. There was a broad mix of employee size, with 60 percent at various sizes under 10,000 employees and the remaining 40 percent larger than 10,000 employees. Respondents also reflect a broad industry distribution including: manufacturing, transportation & communication, finance, insurance and real estate as well as other services.

Three-quarters (75 percent) of all survey participants hold HR functions, 13 percent are in strategic planning and the remainder are spread among a variety of functions. Most respondents (55 percent) hold the job title of vice president/director/C-suite, and 40 percent indicate a managerial role, with the remaining spread among a variety of roles.

To download a copy of the 2009 Global HR Transformation Report, visit www.hroa.org

About ADP

Automatic Data Processing, Inc. (NASDAQ: ADP), with nearly $9 billion in revenue and over 585,000 clients, is one of the world's largest providers of business outsourcing solutions. Leveraging 60 years of experience, ADP offers the widest range of HR, payroll, tax and benefits administration solutions from a single source. ADP's easy-to-use solutions for employers provide superior value to organizations of all types and sizes. ADP is also a leading provider of integrated computing solutions to auto, truck, motorcycle, marine and recreational vehicle dealers throughout the world. For more information about ADP, please visit the company's Website at www.ADP.com.

About the HROA

The HROA is the definitive independent organization for all those who purchase, provide, or participate in HR transformation and outsourcing. Its mission is to educate, promote research, publish, recognize, and provide networking opportunities to foster professionalism in HR transformation and HR outsourcing around. Its membership encompasses over 7,500 HR executives, including the largest 50 buyers, the top 30 providers, the leading sourcing advisors and attorneys, and the best thought leaders in HR Transformation. The HROA brings its diverse membership together to set standards and practices, provide peer networking, and maintain a robust curriculum.

For information about the HROA, visit www.hroa.org.

(1) For the purposes of this report HR Transformation is defined as any concerted effort to change and improve HR operations, whether through outsourcing, shared services, internal reengineering or a combination of these strategies.