An Analysis of Current HCM Trends, Issues and Future Initiatives

Introduction
Leading edge companies are actively seeking ways of leveraging their "human capital" to develop a strategic advantage. Indeed, they are moving from a departmental focus on human resources to a far more strategic and expansive focus on human capital management (HCM).

Genesys, a provider of outsourcing services and software for human resources (HR) management, payroll, benefit administration and payments, self-service, learning, performance management, recruitment and time and attendance, issued a issued a survey to better understand which HCM trends and themes will be at the top of the list for enterprises in 2006. This study is based on the results of a January 2006 survey of nearly 200 companies with annual revenues ranging from $10 million to those exceeding $1 billion.

Overall, almost 25% of survey respondents are serving in an executive capacity, such as President, CEO, CFO, COO, CIO or VP of Human Resources. The survey tapped into a wide cross section of industries, including healthcare, manufacturing, financial services, high-technology, retail and food service, government and municipalities, services and education.

All findings and data in the report register the collective experience of survey participants and reflect the overall results of the study, not necessarily the views of individual companies or employees, unless otherwise specifically indicated.

Top HCM Priorities
According to respondents of the survey sponsored by Genesys, the top HCM priorities for 2006 include:

• Talent and leadership development combined with talent acquisition and retention – 45%
• Performance management – 21%
• Streamlining processes – 18%

In addition, 18% of respondents also indicated that aligning people and business goals would be an important priority in the coming year. Moreover, 38% of respondents indicated that budget expectations over the next 12 months for HR technology and outsourced solutions would increase, by as much as 9% in some cases, thereby enabling funding of the services and tools required to support these top priorities.

Most Popular Outsourced Functions
Of the many solutions in the human capital arena, respondents identified outsourcing the following functions as among the most predominant:

• Payroll processing – 32%
• Employee assistance programs – 29%
• Payroll tax filing – 25%
• Background screening – 24%

In addition, and consistent with the findings of The Outsourcing Institute's Annual Survey of Outsourcing End Users, were the results of the Genesys study which demonstrated the following benefits of outsourcing were most appealing to respondents:

• Streamline operations – 40
• Access to world-class capabilities and industry expertise combined – 40%
• Free-up internal staff – 32%
• Reduce labor costs – 25%
• Accurate and predictable monthly costs – 21%

When asked to describe the reasons for choosing an outsourcing vendor, Genesys survey respondents indicated price was key. Again, this is consistent with the results of The Outsourcing Institute's Annual Survey. Other important factors in vendor selection were breadth and depth of product line, financial stability and references/reputation.

Payroll Tax Filing Services
Survey respondents had a close split between their current payroll tax filing processes, 50% outsource all of their payroll tax filing operations while 43% choose to maintain the function in house. Once again when asked to describe the reasons for considering an outsourcing vendor for payroll tax filing services, Genesys survey respondents indicated cost was key. A close second to cost was compliance followed by functionality and quick implementation as main drivers.

The Role of Self-Service
With respect to self-service initiatives, when asked about adopting employee/manager self-service, 43% of respondents said it was not a priority. And yet respondents saw the greatest benefits of self-service as: employee ownership of general data, online open enrollment, reduction of calls placed to HR and overall cost savings, respectively.

When asked about the anticipated impact the 2006 economy will have on business in general, 59% of respondents indicated they expected a better economy, which would positively impact business. Furthermore, 35% felt an improved economy would cause employee turnover to increase, while 41% believe employee turnover would remain the same.

HRO has indeed proved to be more complex than industry veterans first thought. Nonetheless, vast business benefits can be gained by organizations that embrace the HRO model, said Ruth Ladner, Chief Operating Officer, Genesys. We are pleased to see the results of our survey confirm that organizations are embracing the need for strategic human resources outsourcing to streamline operations, reduce administrative overhead and gain economies of scale.

About Genesys
Founded in 1981, Genesys is a proven Human Capital Management leader, providing solutions that transform the workplace and accelerate growth. The Company's web-based suite, PeopleComeFirst®, streamlines human resources, benefit administration and payments, payroll processing, self-service, competency-based learning management, performance management, recruitment and time and attendance. Implemented as either HRO (human resources outsourcing) services or as licensed software, PeopleComeFirst is also available to third party service providers through the HRO Partner Program. A trusted advisor committed to superior customer service, Genesys provides unprecedented choice, flexibility, and satisfaction to its clients. For more information, visit www.genesysHCM.com or call 800-580-5450.