BOSTON, January 10, 2006 - Although two-thirds of all corporate human resources (HR) departments surveyed still struggle to deliver more than basic administrative functionality, the tide may finally be turning for the HR profession. According to a new Fidelity survey of senior HR executives at more than 100 of the largest, U.S. corporations, an overwhelming majority (97 percent) are currently undertaking, or have recently completed, one or more HR change efforts, such as upgrading HR operations, implementing self-service technology or rolling out talent planning initiatives.

Designed to streamline and improve HR capabilities and service levels, HR change efforts have enabled one-third of survey respondents to shift their focus away from basic administration toward providing high performance HR services, or more strategic business functions, such as global workforce management or talent planning.

"This is a significant turning point for the HR profession," said Guy Patton, president, Fidelity Human Resource Services, a division of Fidelity Employer Services Company. "As recently as three or four years ago, very few large, corporate HR departments had the ability to provide more than basic administration. According to our survey results, however, significant progress has been made over the last two years, with 12 percent now reporting a level of functionality that suggests they currently play a strategic business role."

Multiple forces driving demand for better HR

In the wake of increasing global competition, escalating benefits costs, an aging workforce and a potential skills shortage caused by the impending retirement of the 78 million Baby Boomer generation, effective workforce management is increasingly being seen as a competitive advantage by business leaders.

"It is well understood that there is a direct correlation between employee behavior, customer actions and business results," said Patton. "As such, an increasing number of HR organizations are being asked to help boost corporate performance."

In response, large, corporate HR departments are rising to meet the challenge. According to the Fidelity study, over the last two years:

•		86 percent of survey respondents said they are in the process of completing, or have completed, improvements or upgrades to their HR operations by centralizing, standardizing or upgrading HR processes or systems,
•		75 percent indicated that they have implemented, or are in the process of implementing, self-service HR technologies, by either insourcing or outsourcing benefits or HR administration, and
•		82 percent reported working on rolling out talent management initiatives, such as succession, retention and/or career planning.

An additional 70 percent reported managing integration efforts related to mergers and/or acquisitions, while 34 percent indicated that they had been working on implementation of global workforce plans to facilitate managing multi-cultural issues or global compensation and benefits.

"HR transformation is still in the early stages," said Patton, "with the majority of change efforts still focused on improving basic operational functionality. As HR continues to expand its capabilities, however, this trend has the potential to help HR move beyond being a supportive corporate function to playing a more integral role in defining and executing against overall corporate strategy."

HR transformation delivers value despite often significant challenges

Not surprisingly, nearly all of the survey respondents found undertaking an HR change effort to be difficult, with insufficient human and financial resources cited as the most prevalent challenges faced. Technology issues, inadequate planning and internal resistance were other common barriers.

In fact, many survey respondents reported turning to outside providers for assistance, with 62 percent working with an outsourcer for self-service technology initiatives and 53 percent for upgrading HR operations. Talent planning initiatives, merger/acquisition-related integration and global workforce planning were also outsourced, but not as commonly.

Despite the often significant challenges, however, the majority of HR executives (90 percent) reported that improving or upgrading HR operations brought value to their companies. An additional 85 percent advocated the implementation of self-service HR technology, and a smaller, but still significant number (68 percent) reported that talent planning initiatives are providing solid return on investment.

"Technology is proving to be a real enabler for HR," said Patton. "Automation helps reduce some of HR's administrative requirements, while improved data integration and reporting capabilities allow companies to gain deeper insight about employee behavior. Ultimately, better information and better analytics are helping HR make better business decisions."

Trend leaders share best practices

Although the HR transformation trend is just beginning to gain traction, leading HR departments are already developing HR change best practices. When asked what key pieces of advice they would offer colleagues about to undertake an HR change effort, the majority of survey respondents stated that having the right transition team in place was the single most important success factor. Conducting extensive change management planning ahead of time and building executive and cross functional support were also noted as best practices.

About the Survey
"Driving Business Results through Effective Organizational Change" is the first annual nationwide study of senior HR executives conducted for Fidelity Investments by Richard Day Research, Inc. of Evanston, IL. Data was collected between September 6, 2005 and October 14, 2005 via a phone and/or email questionnaire sent to senior HR executives at large, U.S. companies with more than 10,000 employees. 106 executives responded, more than one-third of which were from companies with more than 25,000 employees. Survey respondents included senior vice presidents and higher (39 percent) as well as director or associate/assistant vice presidents (61 percent). Every major industry group was represented.

About Fidelity Employer Services Company
Fidelity Employer Services Company provides benefits and human resources administration, talent management, payroll solutions and stock plan services to approximately 20 million employees in the U.S. as of October 31, 2005.

About Fidelity Investments
Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $2.3 trillion, including managed assets of $1.1 trillion as of October 31, 2005. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to more than 20 million individuals and institutions as well as through 5,500 financial intermediary firms. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, one of the largest mutual fund supermarkets and a leading online brokerage firm. For more information about Fidelity Investments, visit www.fidelity.com.

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Fidelity Employer Services Company LLC
82 Devonshire Street, Boston MA 02119