2016 uae hr transformation survey - kpmg | us · according to kpmg’s 2016 global hr...

2016 UAE HR Transformation Survey

Consulting

December 2016

Mergers and acquisitions, globalization, mobility, digital disruptions and transitions in workforce capabilities are significantly changing the workplace. To cope, and to meet the rapidly growing needs of the workplace, HR functions must also evolve.

Globally, HR technology is innovating and the regional HR technology landscape is transitioning. The regional market is awash with state-of-the-art HR technology solutions, and organizations are excited about adoption. Globally, cloud-computing has unleashed game-changing new capabilities to respond to an array of complex challenges such as technology disruption, information silos, low productivity and non-standardized processes. However, in the UAE, cloud computing is only being adopted slowly. Many regional organizations are still using basic in-house technology platforms to tackle business challenges.

Regional organizations that are keen to adopt centers of excellence (COEs) and shared service models often don’t have the necessary structural capability in terms of streamlined processes and skilled resources.

To propel organizations towards savings, higher efficiency, and evidence-based effective decision making, HR leaders need to re-envision what their functions should look like and what value they want to deliver. Organizations need to rebuild their structural foundations while redefining their strategic approach to generate digital transformational benefits.

Organizations are focusing on initiatives to improve processes and people management capabilities. UAE organizations are looking to consolidate and grow their HR functions, emphasizing business process re-engineering, according to KPMG’s 2016 Global HR Transformation Survey. HR leaders need to re-envision what their HR functions should look like and what value they want it to deliver to the business.

Organizations need to build their structural foundation and redefine their HR from a strategic perspective to generate digital transformational benefits.

KPMG’s 2016 Global HR Transformation Survey shows that re-engineering key HR processes has been the most popular (46 percent) HR initiative undertaken over the last 18 months. Improving line managers’ people management capabilities was also common with 36 percent of respondents citing it as a major HR initiative. To implement any of the key HR technology solutions, it is vital to streamline business processes, indicated as a top priority for key initiatives in the UAE for the next year.

© 2016 KPMG, KPMG LLP and KPMG Lower Gulf Limited, registered in the UAE and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Key HR Initiatives in the region

46% initiated re-engineering key HR processes

36% implemented initiatives to develop line managers‘ people management capabilities

33% initiated or further leveraged manager self-service

33% refocused the role of HR business partners

28% moved towards outsourcing HR activites

21% changed the scope of HR COEs

15% implemented a shared service model

15% implemented a new cloud based HRMS

15% built or further invested in an HR project management office (PMO) function

15% deployed or extended HR functionality on new HRIS

13% implemented a new on premise core HRMS

SELF SERVICE

INHOUSE

HR Transformation Survey Report 2016 - UAE 2


32.5%

Invest to excel

Digital human resources are on the verge of a global revolution. Irrespective of fluctuating oil prices and the current macroeconomic situation, UAE organizations are moving towards making technology-enabled decisions to improve performance. Smart HR leaders are keen on increasing returns on this investment. Spending outlooks for HR technologies continue to be positive - over 67 percent of respondents will continue to invest in technologies and are likely to increase their investment in the coming year.

The growing investment in talent management technologies is not the only focus area for HR technology reform. Cloud-based HR management system (15 percent of respondents) and in-house or on-the-premises HR management systems (12.5 percent of respondents) will also capture a chunk of

expected spending in 2017. Intelligent data analytics and payroll systems (both 7.5 percent of respondents) have a smaller share of expected spending. One reason for this could be the lack of the robust processes needed to capture performance measures, making it challenging to gather data for analysis. With payroll systems, most organizations do not anticipate a further investment in advanced tools, suggesting they already have a system in place.

Organizations across the UAE are using talent management systems to retain key talent, drive motivation and encourage high performance. Talent management systems are expected to secure most investment (32.5%) over the next 18 months.

Talent management

15% 12.5% 7.5% 7.5%

Cloud-based HRMS

In-house or on premise HRMS

Data analytics

Payroll

HR

tec

hnol

ogie

sR

espo

nden

ts

What HR Technology do UAE companies plan to invest in, in 2017?

HR Transformation Survey Report 2016 - UAE3


Organizations need to attract and retain their best talent to maintain frontrunner status. Growing talent wars and limited budgets are encouraging organizations to refocus their retention strategies and develop capabilities for critical roles. Leading organizations are leveraging key talent management technologies, making talent management and related technology a key spending area for 2016.

Talent management is a key priority for UAE employers

They are also seeking innovative strategies to manage, develop and retain key talent by motivating emerging leaders – who want easy-to-use, interactive learning approaches and resources for self-development - and engaging them in the growth journey.

Organizations are not only increasingly focusing on developing comprehensive talent management strategies, but are also investing in talent management technology. Aligning technology with a strategy focused on broader business goals and realities is essential to achieve success.

Talent management technology tools such as competency architecture and assessments, leadership management and effectiveness, performance management, succession planning and career management are becoming more popular across the region.

TA L E N T M A N A G E M E N T

Benefits of deploying talent management technologies include:

Streamlined hiring processes

Improved appraisal processes

More collaborative decision-making

Reduced employee turnover

Enhanced workforce efficiencies

Improved career management

Higher employee engagement

More transparent people practices



Cloud HR and other tools

While globally we are seeing significant investments in cloud computing, it is still in the early stages in the Middle East. Only 15 percent of survey respondents indicated a potential investment in cloud-based HRMS in the next 18 months.

Cloud computing provides enhanced capabilities and solutions to various business complexities. It offers significant opportunities to transform traditional HR functions by automating HR activities and processes, support talent management activities, and enable smarter decision-making through tools such as data analytics, positioning the HR function as a leader and strategic partner. When properly implemented and managed, cloud computing can lower costs and increase efficiency. Scalability makes adoption easier.

Regional HR managers tend to be excited about leveraging these new HR technologies. However, adoption offers challenges, such as costs and customization. Middle Eastern organizations, particularly in the UAE, have developed distinctive methods and business processes. These processes are often manual and vary across organizations, whilst cloud solutions tend to work best with standardized needs and processes. In addition, implementation of cloud solutions increases the need for the right capacity and capability of resources.

Simply adopting a cloud solution doesn’t guarantee success. Cloud HR demands a successful integration of technology, processes and people. In the UAE, digital transformation is a key step organizations need to take first in order to seamlessly migrate to cloud HR.

Apart from inherent challenges such as the difficulty of tailoring solutions, the absence of streamlined, standardized processes and the lack of skilled resources, there are other reasons which help explain the slow growth of cloud solutions across the region, such as data security, privacy and availability. Organizations are hesitant to migrate to cloud-based solutions unless they can be certain that the data is securely hosted within the country. There are very few local data centers hosting cloud services in the region. Most public and private sector organizations are skeptical about hosting data outside the country.

The reluctance to adopt cloud computing has boosted few other technological reforms and solutions. There are a myriad of business intelligence and analytics solutions in use by organizations globally. UAE organizations are adopting Big Data - large scale data collection, data mining and pattern recognition which can be leveraged to analyze workforce data. 7.5 percent of survey respondents expressed an interest in investing in data analytics.



While not currently positioned to replace humans, technology can assist in decision-making and streamlining processes. Analytics tools are becoming simpler and more affordable, fuelling their use. Solutions based on predictive analytics are an extremely powerful tool for business. They can provide insights into talent management and employee engagement while also assisting with deeper forecasting, such as measuring training efficacy, possible attrition, productivity and performance.

While very few UAE organizations are actively implementing analytics capabilities to address complex HR matters, the market is growing. One crucial aspect is the approach organizations use to implement and leverage these solutions. These tools provide insights, not decisions. HR

leaders need to build capability to drive decision making from this analysis and insight. HR leaders need to understand where the tools and their analysis can be used. How will this analysis affect the organization’s decision-making? Who will analyze what? Who will leverage the analytics across the organization?

People analytics has the potential to transform HR and its processes into a more strategically focused function, transitioning from retrospective to predictive analysis. Some UAE organizations are considering investments in leveraging data to advance towards their goals. Despite the tremendous opportunities and benefits people analytics solutions offer, very few UAE organizations are currently exploiting the full potential of these capabilities.



HRMS and their benefits

Whether in-house or cloud-based, HRMS are an emerging theme in the UAE. More than 25 percent of respondents indicated an interest in investing in HRMS solutions. ERP-based HRMS solutions are retaining market share.

An automated HRMS enables an organization’s HR function to be fully independent, sharing real-time and reliable HR information across the business, and turning data into critical management information. Benefits, typically more tactical in nature, include increased manager and employee self-service, ease of integration and maintenance (15 percent), improved processes and workflow management (9 percent), and reduction of HR involvement in administrative activities.

In terms of strategic benefits, improved access to management information (10 percent) was identified as key.

Globally, 69 percent of survey respondents said they looked forward to better functionality and 63 percent expected a greater ‘value-add’ to their business from HR as a result of implementing a new HRMS. In the UAE, 60 percent of respondents expected better functionality to be the key benefit while 40 percent expected quicker implementation and easier ongoing management.


Key benefits of existing HRMS

15%

Easy to maintain

15%

Increased usage of manager and employee self

service

Integrated with other applications

14%Inexpensive to

maintain

16%

10%

Improved availability of management information

9%

Improved processes and process

management, including workflows

Improved manager and employee self service

experience

8%

13%

Others (such as the ability to reconfigure

HR function and improved availability

of workforce analysis)

Existing HRMS



Key benefits of implementing new HRMS

look forward to better functionality

60%

expect easier ongoing implementation

40%

respondents seek quicker implementation

40%

respondents seekimproved value from HR

20%

respondentslook forward to scheduled upgrades to boost functionality

20%


Business process re-engineering and change management is pivotalTechnology is both a tool and an enabler. People, processes and structures need to be considered at least as carefully as the technology itself if organizations are going to maximize implementation benefits. New technology has cost, time and planning implications, leading to changes in people and process requirements.

While HR technology is a growing market, many expectations remain unfulfilled since, even in this era of automation and digitalization, most regional organizations still have a number of manual HR processes. In the past, many UAE organizations implemented technology without redesigning their processes or re-training and redirecting personnel. Organizations are now much more aware that they need to redesign and streamline foundational HR processes to achieve the desired benefits.

There has been a considerable growth in process improvement initiatives over the last year. Re-engineering key HR processes was cited by 32 percent of survey respondents as a key action to enable implementation.

To better steward HR initiatives, organizations have also identified success measures (24 percent) and changed the HR function’s roles and structure (21 percent). Consistent processes, well-defined structures and clear roles, as well as appropriate parameters to measure performance, are prerequisites for successful HR transformation, and will help organizations to prepare for change in a better way.

15 percent of survey respondents developed business cases as a key strategic action to support desired initiatives. This has helped organizations to look beyond the cost of ownership towards aspects such as agility, end user scalability, and the value added to the business as a result of implementing new initiatives.

Such actions, supported by effective management tactics such as communication, leadership, involving staff across all levels, appropriate performance measurement and sustaining reforms, are seen as key to implementation. These support new technology and initiatives and cultivate a culture of change, driving better results. Simply implementing technology without investing in change management won’t realize desired benefits. Change management helps ensure new technologies are embraced by employees and used without disruption.


12354

Re-engineer key HR Processes (32 percent)

Changed roles or structure (21 percent)

Achieve targeted ROI (7 percent)

Create a business case

(15 percent)

Identify measures of success (24 percent)

5 key strategic actions undertaken to implement key initiatives in last 18 months


The survey suggests that organizations struggling to generate effective

However, there are certain questions every organization needs to address to proactively manage change, including:


C H A N G E

M A N A G E M E N T

change appear extremely focused on simply deploying HR technology. Organizations which also focus on rollout and implementation have achieved higher levels of success and satisfaction.

27 percent of respondents indicated their organizations have limited change management capabilities while 23 percent said they had in-house change management capabilities which could enable them to drive and realize such initiatives.

Change management is the key for successful technology implementation. Adoption of an effective change management strategy and its efficient implementation helps minimize negative impacts on the organization’s performance during and immediately after a transformation.

— Are we – and how are we – managing this change?

— Who will manage the process - and for how long?

— Are change management activities being implemented correctly?

— How many initiatives do we need?

— What is the most appropriate change management approach?


Mobile HR technology is missing its markMobile is pervasive, particularly in the lives of the millennials who make up an increasing percentage of the workforce. Innovations and opportunities in the HR technology space include mobile-enabled HR service delivery, enabling service delivery anytime, anywhere in a more responsive and collaborative way.

However, this service delivery model is far from becoming the norm in the UAE with only 24 percent of respondents currently leveraging the model while 47 percent expressed no interest in using it anytime soon. A major challenge for many organizations is that these technologies are viewed as a delivery channel for an already existing and overwhelming set of communications. Mobile and other social platforms are efficient when they encourage and facilitate interactions across the workforce and are embedded in day-to-day processes. However, most UAE organizations are yet to embrace this technology.


do not intend to implement any mobile HR applications over the next 18 months

47%

are planning to leverage mobile HR applications over the next 18 months

12%

are leveraging mobile technology for HR purposes

24% respondents using mobile HR technology rate it as very effective

50%



ConclusionTo redefine the HR function as a strategic business partner which drives value, organizations need to clearly envisage the function’s role. Based on that vision, a strategic roadmap can be developed. A strategically aligned operating model will help smooth HR transformation.

However, before initiating HR transformation, organizations need to ask themselves:

— Is the HR function currently meeting the organization’s changing needs?

— Have we realized all of the promised benefits of prior HR investments?

— Do we really need to implement new HR technology now?

— Is technological complexity actually limiting HR performance?

Organizations must embrace the technology solutions that best fit their needs. To maximize benefits from technological tools and enablers, organizations also need to change their people and processes. While there is an increasing focus on revamping HR processes, HR capabilities and skills deserve attention since even the best technology won’t be able to deliver the desired results without skilled resources to operate the tools. Line managers and support teams need time to learn how to best adapt to these new tools. Strategic change management will streamline processes and HR function operating models.

To ensure vision is translated into reality, organizations need to focus on integrating all factors, from the initial vision to the future state, in order to drive maximum returns through digital transformation.


854 executives from 52 countries participated in the KPMG’s 2016 HR Transformation Survey. There were 40 respondents from the UAE - organizations of varied sizes, industry sectors, geographic footprints and growth models.

Approximately three-quarters of respondents were from organizations of less than 5000 people. 13.5 percent of the respondents were from large organization of more than 20,000 people.

Two-fifths of respondents were from organizations that operated largely in the Middle East and Africa. More than half of respondents were from organizations with footprints across Asia-Pacific, Europe or the Americas. A wide cross-section of industry sectors were surveyed, led by professional and business services (25 percent), industrial goods and services (15 percent), TMT (13 percent), energy and utilities (13 percent), and financial services (10 percent).

About this survey


25%Professional and Business Services

15% Industrial Goods/ Services

12%TMT

12% Energy and

Utilities

10%Financial Services

26% Others

Survey respondents by industry

72.50%< 5,000 employees

14.5%5,000 – 20,000

employees

13% > 20,000 employees

Organization size of respondents


The information contained herein is of general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation and circumstances.

© 2016 KPMG, KPMG LLP and KPMG Lower Gulf Limited, registered in the UAE and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the United Arab Emirates.

The KPMG name and logo are registered trademarks or trademarks of KPMG International.

kpmg.com/ae

@KPMG_LowerGulf

Ghassan QudahPartner | Management ConsultingT: +971 2 401 4800M: +971 50 624 5931E: [email protected]

Marketa SimkovaAssociate Director | Management Consulting T: +971 4 248 975M: +971 56 683 3097E: [email protected]

Contacts

Gunjan ShroffManager | Management ConsultingT: +971 4 424 8900E: [email protected]

Farhan SyedPartner | Management ConsultingT: +971 4 4248901M: +971 56 520 5377E: [email protected]

2016 uae hr transformation survey - kpmg | us · according to kpmg’s 2016 global hr...

Documents