Human resources transformation

PwC’s Global CEO survey 2023 shows that CEOs in Asia Pacific are facing pressure to re-evaluate their operating models and reduce costs as they face uncertain environmental factors such as global economic turbulence, high inflation and geopolitical conflicts. They are cautiously seeking a balance between mitigating short-term risks and delivering long-term operational results. However, the vast majority of CEOs have decided not to freeze headcount, reduce salaries or lay off employees. Continuing to improve talent competitiveness remains a key measure for the long-term development of companies.

As a key link between business, organisation and talent, the HR function should consider ‘differentiation, servitisation and digitisation’ as an important direction and goal to effectively respond to business uncertainty.

Based on the differentiated management characteristics of different business units within the company, HR policies should be classified and implemented throughout the entire organisational life cycle. This will facilitate the effective implementation of corporate governance and management principles in different business organisations and ensure that differentiation can be adapted and executed in different business units. Meanwhile, change management and organisational effectiveness management should be strengthened to enable businesses to respond more effectively to their needs.

To meet the needs of different business units and groups, HR should focus on customer value and user experience. Key service scenarios and high-value service points should be analysed and identified in order to create differentiated HR services that are value- and ability-driven, facilitating the transformation of HR functions from functional service offerings to market-oriented services.

The sustainable strengthening of HR core operations and the innovative application of advanced digital technologies ensure further process integration and the maintenance of data consistency, completeness and accuracy. This, in turn, promotes the online, automatic and intelligent evolution of HR operations, enabling HR transformation from a state of ‘seeing’ and ‘understanding’ to ‘predicting’, ensuring the high-quality delivery of HR value and services.

Common challenges in transforming the HR function

How can HR transformation be facilitated by the head office with weak control over business units?

In a weak enterprise governance model, business units are given a greater degree of operational autonomy, while the head office retains only a few points of control, such as strategic guidance and organisational performance. The lack of clear and defined boundaries of rights and responsibilities for a variety of actions makes it difficult to achieve transformation objectives. Obstacles that will arise during the process include policy making, execution as a control lever and multiple resistances from the organisation or different employee groups.

How to better leverage digital technologies in HR transformation?

The implementation of human resource digitalisation faces many difficulties and challenges due to factors such as process differences, varying levels of functional maturity and inconsistent data standards across business units. The root cause is that overall top-level HR planning has not been systematically designed from the perspectives of business, application, data and technology architecture. This has led to challenges in aligning and connecting the business, its systems and its data.

How to utilise HR data analysis for informed business decision-making?

Exploring the value and application of HR data through data analytics to enable informed business decisions is another issue in the digitalisation of HR. During the digital transformation process, it is common to encounter system fragmentation, low levels of data standardisation and the emergence of data silos. In addition, global personal data privacy protection regulations are becoming increasingly stringent, further complicating the use of HR data due to demands for data privacy and confidentiality requirements, data storage and access permissions.

Our capabilities

Transformation of the HR function and application of digital technologies

To address the challenges of transforming HR functions and implementing digitalisation, PwC has developed four common models based on pragmatic experience to help clients do this efficiently.

This model involves the top-down formation of top-level human resource planning and the construction of digital HR system to ensure highly unified, consistent, and standardised business processes, employee experiences, data standards and interactions between systems. However, this model usually requires a higher level of control capabilities and management consistency from the company head office. The extensive planning and gradual construction also require a certain level of support from corporate resources. In addition, it can be challenging to make agile adjustments in response to rapidly changing business needs.

The independent construction of a digital HR system by each subsidiary achieves a high level of alignment with differentiated business needs. From the group’s perspective, there is no need to standardise system processes and data standards. Stability between systems is also unaffected as there is little interaction between them, avoiding the high costs of large-scale system reconstruction. However, the lack of consistent planning and design can lead to inconsistent employee experiences across the group, which can hinder talent development and internal transfers.

By partially connecting digital HR systems between the head office and subsidiaries, underlying problems can be identified, and management optimisation can be promoted during the construction process. The universality, scalability and operability of digital construction are balanced, while the depth and strength of transformation, and construction and management costs are flexibly controlled. However, the model is highly dependent on the underlying feedback and comprehensive control of the overall perspective of the project team. Inadequate improvement or repeated designs may occur due to weak feedback or insufficient overall perspective, which may not be the most cost-effective approach.

The HR process framework is built starting with process construction. Business solutions and system implementation are connected through detailed process design by prioritising key strategic capability modules. The top-level operating mode is designed by working backwards, gradually achieving the transformation of HR functions and digitalisation implementation stage by stage. During the process, the company requires strong process design and connection capabilities to effectively connect HR solutions with the implemented digital system. Meanwhile, top-level HR management can be gradually iterated and improved. This approach provides significant flexibility to adapt to rapidly changing business needs and makes it relatively easy to manage the challenges of a step-by-step transformation process.

New missions of Human Resources Shared Services Centre (HRSSC) in the digital era 

With the continuous deepening of the three-pillar model of HR (Centre of Excellence (COE), HR Business Partner (HRBP), and Shared Service Centre (SSC)), HR shared services are no longer limited to achieving efficiency and cost-effectiveness but have evolved into more diverse roles and functions. Based on deep insights into industry best practices and extensive service experience, combined with actual business scenarios, PwC has assigned new roles to HR shared services - facilitating governance and control, providing talent and enhancing experience - to help clients create new HR shared services.

1. Enhanced group management:

The human resource shared platform can be used as an ‘indirect and gentle’ control tool to mitigate conflicts during the process of upward power transfer and to achieve effective enhancement of group control capabilities in human resource management.

2. Efficient talent supply:

The creation of an efficient talent supply chain through the platform can be implemented to effectively meet the staffing and business capability demands of front-end businesses.

3. Enhance employee experience:

The platform can be used to establish an ‘emotional bond’ with employees, enabling continuous improvement and enhancement of the employee experience.

Contact us

Johnny Yu

Workforce Advisory Leader, PwC China

Tel: +[86] (10) 6533 2685

Jessica Pan

Partner , PwC China

Tel: +[86] (755) 8261 8881

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