1. © 2012 Towers Watson. All rights reserved. Stories from the Market Towers Watsons 2012 HR Service Delivery Survey Results October 2012

2. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com All attendee phone lines are on mute. The Attendee Control Panel contains panes that can be expanded or collapsed +/- on the left side of each pane. Panes include the Audio Pane and Questions Pane. If you are joining the webinar using VoIP, please note that audio quality can vary based on your audio software/hardware manufacturer as well as your operating system. To switch audio formats during the webinar in the Audio Pane, select either Use Telephone or Use Mic & Speakers. If switching to the telephone, be sure to enter the Audio PIN noted in your Control Panel. The Questions Pane will allow you to submit questions. If you would like to ask a question please type it in via the Questions box. Please feel free to submit your questions throughout the presentation. Housekeeping Items 1

3. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com Todays Presenters Derek Beebe HR Technology, Sales and Marketing Leader, Americas Towers Watson JT Woodson Data, Surveys & Technology, Sales, Americas Towers Watson 2

4. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com 3 Introduction to Towers Watsons research HR Service Delivery Survey An annual survey of HR service delivery practices that includes trends in technology, shared services, employee/manager self- service and talent management, now in its 15th year Participants in the survey included HR and IT managers from more than 600 companies The results shown in this presentation are based on the global results

5. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com 4 Setting the context Businesses are going through significant change It has never been more critical that HR be highly effective at supporting business changes while simultaneously reducing its cost structure Despite strenuous efforts, HR needs to make a more fundamental shift HR in the future must be more agile to keep up with changing business needs Continued global expansion will require increased focus on key growth and emerging markets The evolving HR technology marketplace will be a key enabler of HRs agility

6. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com 5 Main trends in HR service delivery 2012 Shared services is viewed as the key to success for HR organizations looking to meet efficiency and cost-saving objectives HR is in restructuring mode to be more efficient and cost-effective: Matrix relationships provide a governance tool while still serving business unit and geographic needs Talent systems remain the top HR service delivery issue, and SaaS solutions are viewed as the most effective 2 1 3 Portals are prevalent and can tie it all together, but they still arent reaching their potential: Keeping pace with mobile devices, maintaining content and increasing personalization continue to challenge organizations HR technology spending remains steady with a mix of enhanced functionality, upgrades and new implementations and the HRMS market continues to shift toward SaaS Global payroll is challenging, but more global/multinational organizations are driving toward it 5 4 6

7. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com Towers Watsons 2012 HR Service Delivery Survey Results 6 Key Findings

8. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com While a single HR function is the most prevalent HR structure, geographic and/or business unit matrix relationships are popular for global/multinational organizations… 7 Current Structure of HR Function HR Business Partners tend to be aligned with the business unit and Shared Services align with geography KEY FINDING #1

9. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com Polling Question #1 Do you anticipate changing your HR structure in 2012 or 2013? Yes No 8

10. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com 9 … HR is in restructuring mode to be more efficient and cost-effective… Do You Anticipate Changing Your Current HR Structure in 2012 or 2013? n = 612 Reasons for Changing Current HR Structure 28% in 2011 KEY FINDING #1 No changes anticipated 56% Yes 44%

11. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com …And shared services is viewed as the key to success 10 Anticipated Changes to HR Structure in 2012 or 2013 Base: those anticipating making a change n = 271. The most common responses in the Other category include changes within existing framework (14 mentions), new structure yet to be determined (11 mentions), and increased centralization or regionalization (7 mentions). KEY FINDING #2

12. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com …For organizations of all sizes 11 Does your organization use HR Shared Services (HRSS)/ Contact Center to Deliver HR Services? KEY FINDING #2 The outsourcing movement has slowed: In 2010, external models were comprised of 15% onshore and 8% offshore

13. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com But the lines arent so bright, even in large organizations 12 Does Current or Soon-to-be-Implemented Delivery Model Include the Following Features? Hybrid roles continue to exist even in large organizations Communities of Interest, Shared Resource Pools and Virtual COEs are emerging features in service delivery models for organizations of all sizes Traditional HR services also may be delivered outside of HR KEY FINDING #2

14. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com Talent systems remain the top HR service delivery issue 13 n = 606 Top HR Service Delivery Issues (Top Three by Frequency) 6% 10% 40% 22% 19% 9% 5% 8% 1% 12% 7% 10% 22% 14% 8% 6% 4% 6% 19% 14% 13% 11% 10% KEY FINDING #3

15. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com …And fuel the growth and acceptance of globally deployed self-service applications 14 Employee Self-Service Functionality In Place Now Operations Located In: Asia PacificCanadaEurope Middle East/Africa Latin America United States Change personal data46%58%51%47%37%78% View pay stub/pay slip44%54%40%33%22%84% View total compensation and/or benefit statement 31%36%33%27%19%54% View vacation/sick-time usage and balances 55%51%46%40%26%73% Update skills, competencies, education, certifications 36%41%39%41%34%53% Update performance goals and results52%55%54%52%48%64% View career ladders/job-level definitions21%28%24%23%21%27% Identify/enroll in learning and development opportunities 41%45%43%41%38%64% Review career development possibilities and priorities 22%27% 23%25%31% Begin onboarding or joiner administration before start date by updating personal data, taxes, benefits, orientation, etc. via the Web 18%17%18% 13%32% Offboard or leaver administration as employees exit the organization 23%16%18%19%12%19% KEY FINDING #3

16. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com SaaS Best-of-Breed applications are viewed as most effective 15 FunctionManual vs. BoBHRMS vs. BoB Onboarding/joiner administration12 Competency models2 Compensation Sales/incentive34 Performance management (goal-setting, assessment) 4 Compensation Global grading/Job leveling55 Compensation Market analysis/survey management 1 Compensation Plan design and analysis 3 (-72%) (-64%) (-63%) (-56%) (-52%)(-19%) (-32%) (-28%) (-27%) (-30%) Top five largest gaps in effectiveness Percent fewer of organizations reporting effectiveness using Manual or HRMS compared to Best-of-Breed (BoB) solutions* It remains to be seen if recent HRMS investments will close the gap in key talent management functions KEY FINDING #3 * Best-of-Breed solutions used for this comparison are specifically SaaS/vendor hosted solutions.

17. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com HR technology spending remains steady… 16 HR Technology Spending v. Prior Years 2009 Survey n = 331 2010 Survey n = 453 2011 Survey n = 437 2008 Survey n = 382 2012 Survey n = 599 KEY FINDING #4

18. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com Polling Question #2 Do you think your HR technology spending will change in 2013? Increase significantly (>20%) Increase moderately (<20%) Stay about the same Decrease moderately (<20%) Decrease significantly (>20%) 17

19. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com …With a mix of enhanced functionality, upgrades and new implementations 18 Factors Accounting for Increased HR Technology Spend in 2012 Base: those expecting increased HR technology spending n = 189. KEY FINDING #4

20. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com … and the HRMS market continues to shift toward SaaS –new SaaS selections (34%) has doubled since 2010 (17%) … 19 Is Your Organization Currently Implementing or Planning to Implement a New Primary HRMS? New HRMS Chosen n = 618 KEY FINDING #4 No 72% 18% 10% Yes, new HRMS has been chosen Yes, currently evaluating options

21. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com 20 … Increasing the opportunity to streamline processes Approvals/Reviews Required When Managers Initiate HR/Pay Transactions Event Manager Approvals HR Administrator/Service Center Reviews/Verifies Prior to Update None Comprehensive HR Generalist/Business Partner Role Manager Notification Only Average Number of Additional Manager Approvals No Review Receives Notification Only Approves Exceptions Only Approves All 12312345 Creates a new position 12%24%40%24%49%22%13%3%13%17%22%8%53% Candidate selection 20%32%34%14%53%23%12%2%10%18%20%14%48% Promotion11%31%39%19%49%22%13%4%12%14%17%11%58% Annual salary change 10%27%35%28%46%22%11%5%16%20%16%13%51% Off-cycle salary change 9%29%41%21%43%22%17%5%13%15%11% 63% Voluntary termination 41%37%16%6%56%21%10%4%9%19%36%6%39% Involuntary termination 20%30%34%16%40%24%14%7%15%6%16%7%71% (n = 273 – 291)(n = 251 – 265)(n = 255 – 271) KEY FINDING #4

22. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com Portals are prevalent and can tie it all together… 21 What HR portal technology are you currently using? n = 355n = 599 Does your organization utilize an HR Portal? KEY FINDING #5 17% 20% Yes, we have an HR Portal that is available to HR only Yes, we have an HR Portal that is available to both HR and employees No, we have no plans to develop an HR Portal No, but we are working to develop an HR Portal 3% 60%

23. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com …But they still arent reaching their potential 22 Which of the following describes challenges with your existing HR portal? n = 328 Does your HR portal provide a personalized experience? n = 370 KEY FINDING #5 No 40% Yes 60%

24. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com Polling Question #3 Do you have an HR portal deployed within your organization? Yes – High utilization Yes – Moderate utilization No – Plan to deploy within next 6 months No – No current plans to deploy 23

25. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com Global payroll is challenging, but more global/ multinational organizations are driving toward it 24 Payroll Strategy n = 332 Does Your Organization Have a Single Payroll Vendor/System? n = 338 KEY FINDING #6 Yes, it is not part of our core HRMS 34% 12% 32% 22% No, with no plans to consolidate Yes, it is part of our core HRMS No, but we are working to consolidate them

26. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com 25 Why the need to change HR now? HR functions continue to evolve and change due to economic challenges and evolving business needs agility is key Leading HR functions are taking advantage of this economic cycle to re-establish themselves as strategic players in the business: Streamlining transactional work Increasing the skills of their HR professionals Working across traditional HR silos Capitalizing on SaaS technologies 2012 will continue to be challenging, and HR will be pressed to continue to refine its organizational model and drive more efficiency

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28. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com 27 Additional Information http://www.towerswatson.com/hrsdsurvey

29. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com http://core.ihrim.org 28

30. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com T 29 December 3-7 December 3 – Global Deployment Sponsored by: December 4 – Global Mindset December 5 – Global Payroll Sponsored by: December 6 – Global Compliance December 7 – Global Analytics 29

31. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com Wednesday, November 14, 2012 Highlights from the 15h Annual CedarCrestone HR Systems Survey Presented by: Alexia (Lexy) Martin, Vice President, Research & Analytics, CedarCrestone This is an IHRIM Members Only Webinar. Sponsored by: Upcoming Webinars 30

32. © 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. towerswatson.com This program, #10086, has been approved for 1 recertification credit hour toward IHRIMs Human Resource Information Professional Certification Program. Please visit www.ihrim.org for additional information. Credit Hours This program, ORG-PROGRAM-128690 has been approved for 1.0 (Specified – Business Management and Strategy) recertification credit hour toward PHR, SPHR and GPHR recertification through the Human Resource Certification Institute (HRCI). Please be sure to note the program ID number on your recertification application form. For more information about certification or recertification, please visit the HRCI homepage at www.hrci.org. 31