Press Releases

"Optimization" key to getting results

WASHINGTON, DC, March 22, 2002 — Organizations that have made the biggest investments in HR technologies are not necessarily the ones getting the best results, according to a new study by Watson Wyatt. The study found that many companies have yet to realize significant gains in efficiency and employee satisfaction from extensive investments in eHR — a trend that is leading to a new emphasis on optimizing existing systems.

“During the economic and technology boom that preceded the current slowdown, a lot of companies adopted new technologies, hoping to keep up with the rapid transition to the web in particular,” said Steve McCormick, senior eHR consultant at Watson Wyatt. “The priority was to implement a lot of technology and to do it fast. But companies with the best results have now proven to be the ones with a pattern of sensible investments followed by optimization.”

Watson Wyatt’s 2002 eHR survey, based on responses from 649 companies, tracks how employers have invested in eHR initiatives and how each organization has benefited from those investments. Consistent with the findings of previous surveys, HR continues to move rapidly to technology-based self-service, or eHR.

The research identifies three “best eHR practices” consistently used by high-performing organizations that report better results on HR efficiencies and employee satisfaction levels. These practices include having a formal, documented eHR strategy that is supported by senior management and key stakeholders; a sound business case for eHR investments; and, a best-fit approach to selecting and integrating a mix of HR systems, applications and sourcing strategies.

Only two out of ten survey respondents reported having a formal eHR strategy, although six out of ten required a business case for new investments. The minority of companies that did have a formal, documented eHR strategy had 28 percent better HR cost efficiency than companies without a documented strategy — translating into lower HR operating costs as a percentage of company revenue. Those same companies also had an 8 percent superior staffing ratio, meaning each HR staff member supports more employees.

In addition, high performing HR organizations reported a 30 percent increase in time devoted to strategic activities, such as providing advice and counsel directly in support of company goals. They noted a 15 percent decrease in administrative time spent providing information and conducting transactional work for employees and managers.

“The HR organizations achieving the best performance results are enjoying significant gains in HR efficiency and employee satisfaction levels with HR service delivery,” said McCormick.

Overall, the survey found that the web continues to be the dominant platform for employee self-service. Large organizations (more than 10,000 employees) are supplementing web-based self-service with service centers as well as interactive voice response (IVR) systems. For smaller organizations that invested less in these earlier technologies, the web is firmly established as the most frequently used medium to reach employees.

“There’s really nothing surprising in the continued trend toward web technologies for HR service delivery,” noted McCormick. “What’s exciting is that for the first time, based on the metrics we included in this study, we are able to track not only HR’s progress toward technology-based self-service, but also draw conclusions about which particular eHR practices are achieving results for the organization.”

The eHR Journey Tool Using the data from the 2002 eHR Survey, Watson Wyatt built a web-based tool that allows individual organizations to identify the eHR practices that should positively impact their particular HR performance and employee satisfaction levels with HR services.

The eHR Journey Tool maps the results of the 649 survey respondents and allows users to explore the results, graph various eHR progression and HR performance measurements, learn about the eHR practices of the highest-performing companies, and map their own organization's eHR progress. The tool is accessible to the public for free at http://www.watsonwyatt.com/services/ehr.

To read more or to order a copy of the printed survey report, "eHR: Getting Results Along the Journey," click here.

Watson Wyatt is a global consulting firm specializing in human capital and financial management. The firm offers services in three areas: employee benefits, eHR and human capital strategies. Watson Wyatt has more than 6,200 associates in 87 offices in 29 countries.

For more information please contact Ed Emerman at (609) 452-5967 or Tricia Alvarez at (202) 715-7094.