Global HR

Transformation

March 2016

kpmg.com
 HR Transformation

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 HR Transformation

Today’s world
Today companies operate in an increasingly complex global environment, defined by four key trends:

Growth Digitization
Now that economies, particularly developed economies, Although the talk for many years, digitization arguably
have largely rebounded from the late recession, companies reached a tipping point in 2014. The digital revolution is
are once again starting to look for opportunities for growth. now a huge driver of change across sectors and
With that, big projects such as product expansions and geographies as companies are trying to figure out what big
mergers and acquisitions are back on the table. data and the internet of things mean for their businesses.

“ The main driver of change is our growth

agenda. This is a very competitive
marketplace and there are lots of
changes in the industry.
“ We’re investing in digitization; we’re playing
catch-up in many areas. My area is sales and
marketing and certainly in those areas it is
impacting everything from customer and
consumer relationships, go to market
Sales director, Manufacturing sector strategy, and selling products – everything.
Sales director, Energy and resources
Our goal is to take out substantial sector
savings, but the intention is to use
savings to reinvest in the business and
Digital will grow exponentially in the next
fuel growth. We are looking at our
few years – it’s urgent that we act now.
product set to make sure that it meets
the current needs of consumers and we Finance director, Manufacturing sector
are reinvesting in some existing brands
to reposition them.
IT director, Manufacturing sector
“ “
Risk and regulatory compliance Talent – An enduring challenge
With an increasingly complex regulatory environment, The challenges differ across sectors; however, talent is a
particularly in Europe and the United States, companies are primary concern across the board. Some sectors that are
feeling the pressure to stay compliant and are facing high perceived as less attractive by millennials, like
costs if they do not. Furthermore, they are looking to manufacturing, find it difficult to attract young employees;
navigate the risks that the new digital economy poses others, like digital, although attractive, are fiercely
along with the opportunities. competing for the same pool of qualified candidates. Add
to that the fact that companies are facing the pressure of

“
baby boomers reaching retirement and it is easy to
Information security is a huge risk understand why talent is one of the biggest issues on the
– and this probably held us back from agenda.

“
exploiting options such as mobile
technology in the past. There are
technical issues to take into account The shortage of talent is being
and one of the biggest constraints is
information security.
“ compounded by what we’ve all seen
coming for a long time – baby boomers
retiring. If companies don’t address this
Operations director, Public sector issue, three years from now they’ll have
no bench to speak of.
CEO, Services sector
“
Source: Source for Consulting Complete 2015 Country Research

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 HR Transformation

The KPMG difference

Our brand promise
With passion and purpose, we work shoulder-to-shoulder with you, integrating
innovative approaches and deep expertise to deliver real results.

The client perspective The KPMG perspective

The market forces impacting our clients are varied and many. As a business composed of deep functional and industry
Top of mind for our clients are issues surrounding professionals, we are combining our services and bringing our
globalization, the changing workforce, uncertain economic capabilities together to best serve our clients’ complex needs.
forecasts, and regulatory complexity. Our clients tell us that Our value proposition is grounded collectively in our people – a
these forces, coupled with competing, and often contradictory, common way of thinking and a common way of working that
challenges drive the need to have trusted business advisers shapes our culture, our experience, and our clients’ experience:
that:
 We are passionate about what we do – We have high
 Bring the right teams and approaches ideals and integrity.
 Deliver consistently superior work and results that are  We are not “one size fits all” – Our people have wide-
impactful to their business ranging and diverse backgrounds; we do our best work
when we bring our collective strengths to our clients in a
 Have an informed perspective and are willing to challenge
unified and coordinated way.
the status quo
 We have a high devotion to our clients’ success – We
 Understand their business deeply
are tenacious advocates for our clients’ success and we
 Have their best interests at heart – and strive to make strive to leave behind capability so our clients can sustain
them successful value.
 Our working style is highly collaborative – We work best
with clients who want to team closely with their advisers to
create an approach that is finely attuned to the specific
needs and culture of their organization.
 We are practical and action-oriented – We are astute at
wading through complex issues to pinpoint root causes of
problems, swiftly driving forth realistic approached that can
exceed our clients’ expectations.
 We are specialists in what we do – We have equally deep
industry and functional knowledge in the three broad areas
we have chosen to specialize in – business transformation,
technology enablement, and analytics.
 We bring the breadth and scale of all our partners and
staff to bear for our clients – With sophisticated
knowledge around the globe and advanced research and
thought leadership, we strive to facilitate communication
and knowledge sharing globally across KPMG member
firms.

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 HR Transformation

KPMG’s People and Change (P&C) practice

What we do makes a fundamental difference to the way people
P&C are managed, led, and developed. This can result in a significant
Manifesto improvement in business performance.

No more HR for HR People as a strategic lever Holistic approach

We always start with the business We identify the people implications Our people methodologies are part of
strategy and the business outcomes of changes and strategies early on every KPMG transformation
and help clients achieve these and challenge our clients to consider proposition.
through better people practices. these as strategic levers for success.

We have a truly global capability of more than 1,100 P&C practitioners, supported by a
Center of Excellence (CoE) team of 12 full-time dedicated resources based in 3 key regions.

Europe
U.S. &
& ME Asia
Canada

270 420 120

KGS

Africa
35
Latin
80
Global COE America
Australia

12 90 110

Indicates the number of P&C practitioners only

Our global P&C practice transforms the performance of organizations across the world by changing the way people are led,
managed, and developed. We do this by focusing on two areas of the change agenda – delivering the people agenda on large
scale, complex, transformational change programs and transforming the HR function. We have 5 key offerings:

Behavioral change Talent Workforce Organizational HR

management management intelligence development transformation

A proactive, A holistic approach to A focus on strategic An approach to design A strategic

structured approach attract, develop, and workforce planning and redesign transformation of HR
to make complex retain talent and and HR analytics organizations to functions through
change happen capability to deliver a achieve specific process, technology,
competitive advantage performance objectives and operating model
innovation

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 HR Transformation

Our value proposition

Defining HR transformation
At KPMG, we define HR transformation as creating fit-for-purpose people functions by aligning HR and business strategy and
putting the appropriate structure, capabilities, and systems in place that enable HR to deliver real value to the business.

Our point of view – The case for evidence-based HR

We believe the HR function is at its best when its strategy, structure, tools, processes, and measures are configured to reflect
the unique characteristics of its wider organization – and when data and analytics are at the heart of the function. Evidence-
based decision making and workforce analytics can be the key to understanding where powerful connections in people
management can be made. In our experience, analytics bring the rationale for how and where HR should “place its bets.” It
brings the justification for moving away from a “me too” leading practice driven HR to one that is configured to the specific
needs of the organization to drive business value. This is the journey to what we call “My HR.”

Our capabilities
The primary objective of HR transformation is to successfully build HR capabilities that drive scalable and sustainable business
value. It requires a broad set of resources, skills, disciplines, experiences, and commitment from leadership to achieve a
successful outcome. KPMG’s HR advisory capabilities span the full life cycle of HR transformation and focus on six key areas:

HR Strategy alignment Service

assessment & planning delivery model
The HR assessment is the foundation HR strategy alignment and planning set The HR service delivery model is the
for decision making and justification for the expectations for project scope, underlying conceptual framework that
further investment. It is a review of the timing, resources, and outcomes. They supports the delivery of HR services.
current operating environment with the focus on defining an HR strategy that It creates the overall “game plan” for
objective to identify the issues and supports the transformation of an HR roles, responsibilities, span of control,
opportunities for improvement (i.e., size organization with the goal of driving and how work will be allocated across
of the prize). business objectives and maximizing three dimensions of the organization –
HR’s efficiency and effectiveness. operational, strategic, and consultative.

HR technology strategy Business case Detailed design

& implementation & roadmap & deployment
An HR technology strategy is an The business case is used to assess The detailed design and implementation
essential element of the service delivery alternatives and justify a final set of of the recommended approaches can
model and should be closely aligned recommendations to present to begin once the key stakeholders
with the overall IT strategy supporting management. It contains the required have aligned on the service delivery
the business. An objective level of economic and intangible detail to model and the business case has
understanding of the leading technology support the service delivery model. It is been approved by senior management.
practices and associated vendor a fact-based document and successfully The focus is on finalizing the approach,
solutions is critical to an effective demonstrates a value proposition for design, and procedures as well as
transformation of the HR function. senior management to make a decision implementing the technologies to
to move forward with a project. support the new operating model.

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 HR Transformation

Our approach
We focus on creating fit-for-purpose people functions by aligning HR and business strategy and putting the appropriate
structure, capabilities, and systems in place that enable HR to deliver real value to the business. Our services include HR
strategy, HR service delivery model development, HR process redesign, HR team effectiveness, HR team efficiency, and HR
value-added measures.

We believe . . . Our differentiator

Our accelerated, end-to-end approach that integrates
Focus should be on My HR, not Me Too HR

HR systems are there to support, not to drive,

the strategy and operating model

Firms should measure the impact of HR practices

and policies on the delivery of business benefits
strategic functional and technical
HR should align strategy and operating model to
business objectives requirements configured to deliver value.

KPMG Powered HR helps clients focus on what matters

What is it? What is the value to HR?

KPMG Powered HR is a cloud-based solution Creates an evidence-based HR
that puts HR professionals at the forefront of function via access to analytics
their business’s strategy. It offers:
— Pre-built operating models across several Improves HR decision-making ability
industries to help you standardize your HR
processes more quickly and more effectively
Increases efficiency and
— Integrated KPMG analytics dashboards to turn
effectiveness in HR process delivery
data into real-life insights
— Efficient travel and visa tools Helps demonstrate HR is not a sunk cost
but a function critical to profitable growth
— A single, consolidated system to maximize
speed to value
Enables future-focused change and helps
Along with those pre-built models, we bring ensure the talent is fit for the organization
our consultancy to the table and ensure that
the models are configured for you. Whether Provides business leaders with access
your focus is talent acquisition, efficiency or to people data across their enterprise
efficacy, KPMG Powered HR will demonstrate
the power of HR to enhance broader business Provides differentiation where desired,
goals and drive value in your organization.
and standardization where needed
And with options available for the
technological framework, you choose the
Establishes quickest route to
software. We provide the solution.
leading HR practice adoption

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 HR Transformation

Our methodology and tools

Our Next Generation HR methodology combined with a robust set of tools and
benchmarks allows us to quickly add value to our clients.

Our practitioners work alongside clients to design and implement strategically differentiated HR functions that can enable
sustainable competitive advantage for our clients. Our work is aligned to industry trends and informed by the insights from
the highly regarded HR Transformation Survey (formerly the Towers Watson HR Service Delivery and Technology Survey).

Maturity assessment HR benchmarking New operating model Implementation roadmap

t
What is the people agenda?

People agenda
Which roles drive the most value in
the value chain?
Which HR levers can be used to
enable this value creation?
How should value through people
be measured and tracked?

How does the organization's strategy

drive the HR function?

Strategic value proposition

What is the current business strategy
and what are the critical success factors
for delivering it?
2
What are the implications of the

1 S
business strategy and other corporate
initiatives on the requirements of HR?

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 HR Transformation

KPMG has been named a Vanguard Leader in HR transformation by ALM

Intelligence (formerly Kennedy). The prestigious ranking reflects KPMG’s
global leadership in the HR transformation consulting space. KPMG was one
of only two providers worldwide found to be “advancing service breadth or
depth” of its HR transformation services.

Powered HR is a fully integrated, end-to-end HR transformation methodology

that combines HR strategy, operations, and technology consulting in a
cloud-enabled environment.

KPMG has also advanced its thinking on building an evidence-based HR

capability in research (enhanced analytics) that shows the connection
between HR and business performance.
Recognized for strengths in “analytics
capabilities and the Powered HR
KPMG’s acquisition of Towers Watson’s HR Service Delivery practice platform that leverages cloud
makes KPMG a global leader in Workday-based HR service delivery
technology to accelerate HR
consulting. With this deal, KPMG also assumes ownership of Towers
transformation”
Watson’s renowned HR Service Delivery and Technology Survey and Forum.

HR value proposition
How does HR add value
to the organization and drive How is the value created by HR
enda? and be driven by the defined and measured?
business strategy?
How will HR use its key
levers to drive value?
How can HR support
HR design principles
differentiation and What are the goals and objectives the HR
excellence at each stage function is aiming to accomplish?
of the value chain? What are the critical scoring measures HR is
evaluated on?
What are the criteria against which design
options for the “to-be” state will be evaluated?

3
How can HR drive
and enable this value?

2 4 HR operating model
What are the different components
of the HR operating model and
how will they work together?
What are the boundaries and

5
accountabilities across the HR
Stakeholders organization?
How will the HR organization

/ customers
implement and manage
these changes?

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 HR Transformation

Our credentials
Case study: Financial services organization Case study: Consumer products organization

Client challenge Client challenge

— A global investment management organization required a — A family-led global consumer product organization required help
review of their HR function to increase efficiency, enhance to align its HR organization to leading market practices and
service delivery, and ensure the organization had a fit-for- optimize the services offered to the business and employees
purpose HR function for future global growth ambitions. while continuing to foster their unique culture.
— A key focus was vendor selection for a new HR system as the — They needed a service provider to evaluate alternative service
legacy system was highly manual and did not provide adequate delivery options supported by a high-level business case and
reporting functionality and managed information (MI) to support design a scalable and flexible HR infrastructure adaptable to the
business decision making. needs of the businesses.

KPMG’s response KPMG’s response

— Conducted an HR operating model assessment and high-level — Assisted in refining the HR vision/strategy and development of
review of current HR systems based on cost, functionality, guiding principles to direct design of the HR transformation
effectiveness, and risk — Performed an activity analysis survey of HR employees to
— Completed a benchmarking and external market assessment to determine how they spend their time compared to leading
highlight leading HR practices and compare performance practices and drafted recommendations for improvement
against similar organizations — Interviewed executive stakeholders external to HR and subject
— Produced a short list of potential HR system vendors that were matter professionals from within HR to understand leadership
assessed against cost, organizational fit, complexity to perception of HR strengths and improvement areas
implement, and alignment to business requirements; — Created and conducted an online stakeholder survey to identify
supported the RFP process for the HR system vendor short list employee perceptions of the relative importance of HR
— Developed a current cost model and high-level business case, processes and their level of satisfaction with each process
including a high-level implementation plan — Conducted workshops with key HR leaders to recommend
— Developed the people and HR strategies utilizing the output activities to be moved to a shared services operating model
from the opportunity assessment, helping to ensure alignment and help them to understand the benefits of transformation
to the overall business strategy — Developed HR service delivery recommendations, including a
— Designed detailed operating model including defining roles and new operating model with supporting cloud technology
responsibilities, ways of working, and number of full-time — Proposed sourcing alternatives with integration, service, and
equivalents (FTEs) financial implications

Benefits to the client Benefits to the client

— Global HR operating model that will enhance service delivery — Clear financial business case to support the proposed operating
— Enhanced MI and reduced administrative burden through new model enabling the transformation
HR system to enable focus on business partnering activity — Agreement on prioritized process and technology improvement
— Clear direction for the HR function, alignment of people and recommendations for both “quick wins’ and long-term initiatives
business strategy — Improved understanding of stakeholder perceptions and
requirements of HR

KPMG is a recognized HR transformation thought leader with a global CoE

Leaders in thought dedicated to creating leading insights, assets, and tools.

Designing Next HR as a Rethinking People are the

Generation HR driver for Human real numbers
organizational Resources in a
innovation Changing
World

Evidence-based Head in the Human Data, people

HR clouds or time resources and and profits
to be different? social media
From ‘Me too’
to My HR Tune in to Talent

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 HR Transformation

Case study: Government and public sector

Case study: Oil and gas EPC firm
agency

Client challenge Client challenge

— A global Tokyo-based Oil and Gas engineering, procurement, — A Defense agency launched an HR shared services (HRSS)
construction (EPC) firm needed to operate stand-alone after program to deliver a more efficient, effective, and connected
acquiring an asset that received shared services, including HR, people service to all of Defense. This initiative aimed to
from its former parent company. improve the way people services were delivered by examining
— The firm wanted to upgrade the existing shared services and refining business processes and practices.
function and create an organization that had the right processes — As part of the HRSS program, the Customer Access Channels
and capabilities in place to support the new business needs. (CAC) project aimed to improve and simplify access to the full
range of people services by reviewing and revising existing
channels and developing new ones.

KPMG’s response KPMG’s response

— Conducted a current state analysis of the HR, IT, facilities, and — Worked with Defense staff to gain an in-depth understanding
back-office functions to gain a clear understanding of current of customer access requirements and engage HR business
processes and practices owners to help ensure people services were readily accessible
— Developed alternative back-office and executive organization by individuals and their managers
structures and approaches for review with the president to — Convened and facilitated workshops involving HR business
select the organization best fit to the new company process owners, service delivery staff, Web site content
circumstances managers and other key stakeholders to identify the most
— Recommended a holistic framework for sourcing, interviewing, efficient and effective mechanisms for providing information
assessing, and selecting new employees based on behavior- — Developed and deployed People Connect, a new quick and
based questionnaire easy online gateway that enables military and civilian personnel
— Suggested list of competencies and behavioral interview to access the full range of people services, information, advice,
questions along with prevailing leading practices in behavioral support, and delivery
interviewing techniques — Helped standardize internet/intranet content management
— Developed detailed job descriptions for back-office roles, along applications to provide access to a “single source of truth”
with core competencies prerequisite for the given roles — Developed an ownership framework that identifies the
functional leads responsible for the development and
sustainment of documents and scripts

Benefits to the client Benefits to the client

— Agreement by senior leadership team on the back-office — Enhanced people services intranet site that provides a self-
structure going forward, including key position decisions, service environment for accessing people service information,
recruitment and assessment approach advice, support, and delivery
— Roadmap to implement upgraded, independent back-office — Enhanced operations of the customer service center, improving
organization responses to customers’ telephone enquiries
— Streamlined access to online forms and other artefacts

We have done this… many times before.

Investment Consumer Professional Telecommunications Financial services
company products company services company company organization

KPMG assisted in KPMG assisted in KPMG assisted in global KPMG assisted in the KPMG assisted in
transforming the HR evaluating alternative process design and development and redesigning the
function to drive service delivery options offshoring of HR and transformation employee experience to
efficiency, enhance service and designing a scalable payroll processes from of the international HR deliver a consistent,
delivery, and develop a fit- and flexible HR Australia, United State and service delivery model. mobile-enabled experience
for-purpose HR function to infrastructure. Canada to a shared service across the entire
support future global center in Malaysia. employment lifecycle.
growth ambitions.

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Contact us
Jean-David Aurange Philippe Valo
Partner, People and Change Director, HRIS
T: +33 (0) 1 55 68 88 61 T: +33 (0) 1 55 68 29 10
E: [email protected] E: [email protected]

The services detailed in this document are subject to the ethical rules of the profession, as we are
auditors or not your company or your group.

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without appropriate professional advice after a thorough examination of the particular situation.

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The KPMG name and logo are registered trademarks or trademarks of KPMG International
Cooperative (KPMG International).
Printed in France. Design: Advisory - OLIVER – May 2016.