JUNE 2019

A Forrester Consulting Thought Leadership Paper Commissioned By ADP

Elevate Your Business With A People-Centric HR Approach

A Global Study On What People-Centric Organizations
Do Differently To Drive Success

Executive Summary

A people-centric organization lives by a fundamental operating philosophy that focusing on people is critical to business success. This type of organization invests in its people to create an employer brand, a team-oriented culture, an engaging work environment, and a digital employee experience to drive critical business outcomes like revenue growth and customer success. More traditional organizations, by contrast, that manage human capital as a cost center will not only fail to foster happy, engaged employees, but will also underperform their people-centric competitors.

In September 2018, ADP commissioned Forrester Consulting to evaluate the concept of people-centric organizations, discovering how mature companies are in their creation of a people-centric operating model and what elements of that model are important drivers of success. To do this, Forrester conducted an online survey of 500 HR/ human capital management (HCM) professionals at global enterprises from a variety of industries. We found that there is indeed a subset of mature, people-centric organizations that have been able to both find value in and reap rewards from their employees beyond traditional cost-management measures. This makes these people-centric organizations leaders in their fields.

Table Of Contents

Key Findings

  • People-centric maturity is built on five competencies.

    Organizations can gauge their level of maturity based on criteria within five basic sets of competencies: culture of individual empowerment, work and team arrangements, technology, employee-feedback processes, and clarity of expectation setting.

  • Mature organizations prioritize their people.

    People-centric leaders place their employees at the heart of everything they do from the initiatives their prioritize and the KPIs they track to CEO mandates and the tools teams employ. These leaders also extend this same mindset to their contract workforce. Though organizations at every maturity level use contractors in about equal measure, people-centric organizations procure, interact with, and engage these workers in very different ways.

  • People centricity benefits the business as well as the employee.

    Unsurprisingly, employees enjoy a people-centric environment, with high-maturity organizations seeing higher employee satisfaction, higher productivity measures, and better career pathing than those that lag behind. But it is not just the employees who benefit. The business itself, when committed to a people-centric philosophy, can expect to see lower costs, better retention rates, and stronger revenue growth as a result of its efforts.

Defining A People-Centric Maturity Model

In this study, we broke our respondents’ organizations into three people-centric maturity groups based on an evaluation of 20 measures of people-centric maturity (see Figure 1). Forrester prompted survey respondents to place themselves on a five-point scale for each maturity measure across five categories, described below. The overall maturity score was based on an aggregate score across those 20 measures.

We then placed respondents within one of three maturity groups — low, medium, or high — depending on where their score fell along the distribution curve. The maturity assessment is an accurate predictor of where the average firm stands in relation to people-centric excellence.

We defined maturity using the following criteria:

Digital Transformation
People-centric maturity can be gauged by organizations’ prowess across five basic competencies.
  • Culture of individual empowerment.

    One of the five criteria is the extent to which the organizations have developed a culture of individual empowerment. What does this mean in practice? Career pathing should be clearly defined and employees encouraged to regularly check in with their managers for coaching and guidance. Workers should be encouraged to challenge conventional thinking, and organizations should tolerate mistakes and use them as a source of learning and growth.

  • Work and team arrangements

    Another critical component of people-centric maturity is consistency in building effective work and team arrangements. Cross-functional teams of employees provide flexibility to adapt based on what’s required to achieve goals. Organizations should have the tools and technology necessary to formally document these indirect reporting relationships, and teams should be able to evaluate employees based on these same structures. Workers should have autonomy to work in the locations and on the schedules that best suit their needs as long as they meet work commitments.

  • Utilization of technology.

    The adoption and use of technology to empower the workforce is another important marker of maturity. Employees should be equipped with the tools they need to be effective and productive and should be encouraged to use those tools to promote innovation, collaboration, and mobility. While employees should have a choice of tools to conduct their work, a broader tool ecosystem aligned to a corporate strategy should guide those choices. Additionally, all applications and data that employees need should be accessible across desktop and mobile devices.

  • Employee-feedback process.

    Efficacy of the employee-feedback process is also an important contributor to people-centric maturity. Organizations should have an always-on feedback program while also conducting periodic surveys to explicitly understand employees’ work styles and needs. Organizations should use the feedback received through these processes to inform specific decisions and actions; this feedback should also be reported back to and celebrated by the broader organization.

  • Clarity of goals and expectations for employees.

    The final criterion for people-centric maturity is an organization’s ability to deliver clear goals and expectations to its workforce. This involves setting employee, team, and organization-level objectives and key results so that every employee knows exactly what is expected of them and what they are working toward. These personal, team, and organizational objectives must also be aligned with the company’s stated values.

Figure 1: The Levels of People-Centric Maturity

figure1

Base: 500 global HR/HCM decision makers
Source: A commissioned study conducted by Forrester Consulting on behalf of ADP, October 2018

For this paper, we will mostly focus on the differentiation between the high and low maturity groups to examine the extremes of people-centric organizations. Those with “medium” maturity generally fell somewhere in between their high and low-maturity peers. We call out when this doesn’t hold true.

Mature Organizations Put The Employee At The Heart Of Their Strategies

Mature firms consistently prioritize and deliver on initiatives that benefit their employees.

What makes a people-centric leader? We found:

  • People are a top priority for high-maturity organizations.

    People- centric leaders consistently place a higher priority on people-centric initiatives than low-maturity firms. For example, 53% of high-maturity organizations prioritize enabling employee productivity compared with just 27% of low-maturity organizations. The same is true for improving employee experience and engagement (47% vs. 22%), cultivating talent (45% vs. 24%), and continuous learning (45% vs. 29%). This emphasis on working smarter while allowing employees to reach their full potential serves high-maturity firms well. Mature companies aren’t just prioritizing people-focused initiatives; they’re also delivering on them. High-maturity firms are far more confident in their ability to successfully carry out these same initiatives than their low-maturity counterparts.

  • High-maturity organizations see people as more than just dollars and cents.

    The KPIs that organizations track are a window into how they view their people-centric transformation. High-maturity firms are more focused on creating a positive working environment and therefore more often measure employee satisfaction (69% vs. 56%) and employee engagement (42% vs. 29%). They also transcend people centricity in terms of mere satisfaction and are, in fact, moving toward social awareness: High-maturity firms are far more likely than their low-maturity peers to focus on pay equity (44% vs. 27%) and diversity and inclusion statistics (37% vs. 25%). But of course, high-maturity organizations still never lose sight of the necessary job at hand: They are also measuring their employees’ productivity more often (64% vs. 52%) than low-maturity organizations (see Figure 2).

  • Low-maturity firms still manage human capital as a cost center.

    Low-maturity companies are more likely to track KPIs like retention and cost savings, indicating a fundamental difference in how they see their employees (see Figure 2). Low-maturity organizations are missing the forest for the trees when it comes to people centricity: 61% of them say that a heavy focus on short-term financial goals or aggressive deadlines is a top challenge in creating a people-centric working environment compared with just 49% of their high-maturity counterparts. (Note: This number represents respondents who selected either of these top two challenges). But as we will see, this heavy focus on the short-term bottom line does not serve them well.

  • A people-centric strategy must be supported and enabled at the top.

    For organizations to be effective in creating a people-centric environment for their employees, the initiative has to start at the executive level. For 47% of low-maturity firms and 43% of medium- maturity firms, a lack of executive support or investment is a key issue in preventing them from creating people-centric workplaces — compared to just 28% of high-maturity companies

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DID YOU KNOW?

More than two-thirds of mature organizations track employee satisfaction and productivity.

PEOPLE CENTRICITY ALSO EXTENDS TO CONTRACTOR USE

A people-centric philosophy does not just apply to full- or part-time employees. It’s also important when working with contractors. We found:

  • All firms, regardless of maturity level, use contractors in equal measure.

    We found that, on average, high-, medium-, and low-maturity firms are employing virtually the same number of contractors: 19% of the employees at high-maturity organizations are contractors compared with 19% at medium- and 20% at low-maturity organizations. In fact, the proportional makeup of a workforce seems to have no bearing on whether or not an organization is people centric. All firms employ salaried employees and hourly employees in roughly the same proportions as well.

  • But people-centric firms view their contractors as essential, skilled workers...

    Although they use contractors in similar numbers, the reasons that high- and low-maturity organizations engage contractors are fundamentally different. High-maturity organizations see contractors as an opportunity to expand and improve their capabilities. The top reasons they employ contractors are to access specialized talent, to fill skill gaps, and to get higher-quality work (see Figure 3). For low-maturity firms, contractors are thought of as cost- effective labor to fill in when needed. The top reasons low-maturity organizations hire contractors are to reduce costs, to complete seasonal work, and to help with an accelerated pace of work.

  • ...and treat them as an extension of their workforce.

    The mindset of high- and low-maturity firms when it comes to contractors is also reflected in the ways they find and engage them. High-maturity firms most often have the HR department engage contractors (65%), a sign that they think of their workforce holistically. And because they value these contract employees like their full-time staff, they more often find these contractors through employee recommendations (48% vs. 37%), freelance marketplaces (44% vs. 23%), and peer-to-peer communities (32% vs. 10%). Low-maturity organizations mostly use a corporate procurement process (61%) to hire rapidly and find contractors through staffing agencies (73% vs. 63%) and recruiting firms (77% vs. 55%). Medium-maturity organizations are generally closer to high-maturity firms when it comes to what they utilize contractors for, but their hiring practices are much closer to those of low-maturity firms.

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Base: 472 global HR/HCM decision makers — 142 high maturity and 169 low maturity
Source: A commissioned study conducted by Forrester Consulting on behalf of ADP, October 2018

DID YOU KNOW?

37% of low maturity firms are simply looking to reduce costs when hiring contractors.

WHEN IT COMES TO TOOLS, LEADERS OPT FOR QUALITY OVER QUANTITY

Workforce management technologies are a key part of people centricity. Unsurprisingly, high- and low-maturity organizations approach their use of these solutions in very different ways. We found:

  • Low-maturity organizations take a shotgun approach to workforce management tools.

    Our research showed that, interestingly, low-maturity firms actually use more tools in general than their high-maturity peers. Many low-maturity organizations are seemingly attempting to solve their workforce deficiencies by piling on a multitude of new tools and technologies. But as is so often the case, more doesn’t necessarily equal better. High-maturity firms, on the other hand, are pickier with their tool selection, opting to use a smaller selection of tools — and using them more effectively. High- maturity firms are also better equipped to utilize advanced tools that are best suited to meet the needs of organizations further along the people-centric maturity scale — like interoperable platforms and AI (see Figure 4).

  • But high-maturity organizations are seeing the benefits.

    Though they use fewer tools, high-maturity organizations are far more satisfied with the tools they do use. This is particularly true with tools that they use at higher rates than low-maturity firms, like big data (60% satisfied vs. 27%), flexible platforms (55% vs. 23%), and container technologies (59% vs. 17%). But even when it comes to the tools that low-maturity organizations use at far higher rates, high- maturity organizations are still more satisfied. This satisfaction likely stems from the fact that they are seeing considerably more benefits from their tools (see Figure 4). They are achieving more productivity (57% vs. 47%), increased revenue (54% vs. 20%), and better employee satisfaction (53% vs. 34%). These leaders even experience stronger decreases in employee turnover (35% vs. 31%), which was a top driver for low-maturity organizations. Medium-maturity firms are stuck in the middle. While they have matured past the shotgun approach of low-maturity organizations, they have not yet progressed to the satisfaction and benefit levels of the high-maturity firms. This underlies the fact that tools in and of themselves are not the way to people centricity. Firms must take a balanced approach across the five competencies to drive a people-centric organization.

Figure 4: "How satisfied are you in the outcomes produced by each of these tools and methodologies to date?"

figure4

Base: 474 global HR/HCM decision makers — 156 high maturity and 160 low maturity
Source: A commissioned study conducted by Forrester Consulting on behalf of ADP, October 2018

Figure 4 Cont.: "What are the main business outcomes that these tools and methodologies have produced for your organization?"

figure4

Base: 474 global HR/HCM decision makers — 156 high maturity and 160 low maturity
Source: A commissioned study conducted by Forrester Consulting on behalf of ADP, October 2018

People Centricity Benefits The Employee And The Bottom Line

The majority of high-maturity firms see increased employee productivity because of their people-centric programs.

What are the benefits of being a people-centric organization? We found:

  • Emphasizing people leads to a multitude of benefits for the organization.

    People-centric leaders see benefits across the board from their efforts (see Figure 5). High-maturity organizations see greater employee satisfaction (65% vs. 43%) and better career pathing (60% vs. 29%). Perhaps most importantly, they get more productivity out of their employees (60% vs. 38%). Surprisingly, even in the areas that low-maturity organizations emphasize the most — cost savings and retention — high-maturity companies see more benefits from their efforts (51% vs. 33% for cost savings and 45% vs. 33% for retention). This shows that an employee strategy that focuses on simply preventing employees from leaving not only hurts long-term aims but doesn’t even produce better results for savings and retention in the short term. The medium-maturity cohort shows us that organizations need to build a comprehensive people-centric program to see dividends in all areas. As such, these medium organizations are seeing good benefits in employee satisfaction (52%) and productivity (58%) but are not yet seeing cost savings (32%), indicating that though they are on the right path and are getting important benefits for their employees, their programs are not yet cost-efficient.

  • High-maturity firms are much more likely to report revenue growth.

    We found that our high-maturity organizations are not just leaders when it comes to people centricity; they are also leaders in their industries. In terms of revenue, 75% of leaders are considered leaders in their industries, and nearly a quarter are the fastest growing (see Figure 6). Low-maturity firms, on the other hand, are more likely to be on par with their competitors in terms of growth. Only 4% of low-maturity organizations are the fastest growing in their industries. It’s clear: A people-centric approach leads to revenue growth and growth of the company as a whole.

Figure 5: “Of the KPIs that you are tracking, what impact have you seen from your people-centric efforts?”

figure5

Base: 500 global HR/HCM decision makers — 147 high maturity and 164 low maturity
Source: A commissioned study conducted by Forrester Consulting on behalf of ADP, October 2018

Figure 6: "How does your revenue growth rate compare to your competitors?"

figure6

Base: 500 global HR/HCM decision makers — 147 high maturity and 164 low maturity
Note: Percentages may not total 100 because of rounding.
Source: A commissioned study conducted by Forrester Consulting on behalf of ADP, October 2018

Key Recommendations

This study revealed that people-centric companies have strong capabilities in five key competencies. This framework is based on research and tied to business outcomes, so you can use them to guide your approach, too. People centricity requires changing mindsets and habits. But similar to exercise, there are no shortcuts, and it requires a sustained effort over time for the results to appear. Forrester recommends:

  • user roles
    Enable your workforce with the information and tools they need to succeed.

    Employees’ ability to make daily progress in their work is vital for building ongoing engagement, and autonomy is the strongest predictor of engagement. Prioritize investments that will make it easier for them to find the information they need and give them the flexibility to decide where and how they will work.

  • integration
    Promote cross-functional collaboration and sharing.

    Enabling collaboration and sharing requires developing two distinct capabilities: providing collaboration technologies that are easy to use and accessible and aligning goals and metrics to foster information sharing instead of hoarding. Burned-out people are less willing to collaborate and share, so develop ways to assess your organization for both engagement and burnout, and invest in capabilities that can reduce workload, such as automation, AI, and robotics.

  • gears
    Invest in tools and training to make goals and expectations clear.

    People need to know what their organization and manager expect of them before you can evaluate their performance. Yet they also need autonomy in their roles. Invest in tools and processes that help them understand the aims of the organization and what their roles are in achieving them, empower them to make decisions about how to achieve them, and then enable them with the information and resources they need to execute. This capability is fundamental to people-centric organizations.

  • user roles
    Give people effective, safe ways to provide feedback to leaders.

    One of the hallmarks of people-centric organizations is that they actively engage their people in key decision-making processes and make sure that their voices are heard. Invest in employee-feedback mechanisms and voice-of-the-employee (VoE) programs. Ensure that there is a transparent process for how feedback is handled, a way to prioritize which ideas will be implemented, and a closed-loop communication process to show people how their feedback is being used.

  • user roles
    Empower people with a career path and develop their managers.

    Ensure that they clearly understand what behaviors and achievements are necessary to advance their careers. Do it with a system that makes the process both transparent and auditable so that roadblocks to their progress can be detected and removed. Develop a training program for managers and ensure they understand the behaviors they need to demonstrate if they want to be promoted.

We hope you enjoyed this study conducted by Forrester Consulting on behalf of ADP. For additional insights to help you achieve growth and ensure an optimal customer experience, please visit our website or contact ADP today.

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Appendix A: Methodology

In this study, Forrester interviewed 500 organizations in the US, Canada, Mexico, Brazil, the UK, Germany, France, Singapore, India, China, and Australia to evaluate the maturity of the market in terms of adopting a people-centric philosophy. Survey participants included HR and HCM decision makers at enterprises of at least 500 employees. Respondents were offered an incentive as a thank you for time spent on the survey. The study began in September 2018 and was completed in October 2018.

Appendix B: Demographics/Data

Appendix C: Supplemental Material

“Introducing Forrester’s Employee Experience Index,” Forrester Research, Inc., February 14, 2019.

“Assess Your Workforce Maturity To Deliver A Better Employee Experience,” Forrester Research, Inc., April 13, 2018.

“Transform The Employee Experience To Drive Business Performance,” Forrester Research, Inc., February 12, 2018.


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