Companies Aim to Transform HR Delivery Strategy to Meet New Employee Needs, Watson Wyatt Study Finds

WASHINGTON, June 27, 2007 – As companies change benefit and compensation
plans, they also are transforming the way they administer and communicate
these programs, with an emphasis on more fully engaging employees, a new
survey by Watson Wyatt Worldwide, a leading global consulting firm, has
found.

The 2007 HR Technology Trends survey of 182 companies found that one in
five expects to change its HR delivery structure in the coming year. Among
the most prominent changes companies expect to make in the next two years
are putting in place a health care portal that provides employees with
health improvement information (73 percent) and offering total compensation
information to employees via the Web (65 percent). In addition, one in four
companies is planning to change the way its traditional defined benefit
pension is administered and delivered, often to coincide with a broader
pension plan redesign.

“Compensation and benefits continue to become more complicated at most
companies,” said Richard Hubbard, director of Watson Wyatt’s U.S.
technology and administration solutions practice. “With the variety of
health plan choices and the number of changes in the pension arena,
employees constantly hunger for more information. As a result, there’s a
growing demand to put data at employees’ fingertips through Web-based
tools.”

In some HR programs, most transactions are already occurring over the Web.
Forty-six percent of companies report that all benefits enrollment takes
place via the Web, and 27 percent say all notification of life events, such
as the addition of a dependent, happens online. However, transactions
related to compensation and payroll decisions, promotion and transfers and
retirement still tend to occur the old-fashioned way. Fewer than one in
five companies report that all transactions in those programs take place
via the Web.

One area where this lag in Web-based administration is of particular
concern to companies is talent management. In these programs, which
typically include performance management, workforce planning and succession
planning, most transactions are still done via paper. Companies report
being less satisfied with HR delivery for talent management than with
retirement or health and welfare administration. Twenty-one percent of
companies are somewhat or very dissatisfied with the quality of talent
management service provided, versus 10 percent in the health and welfare
area and 6 percent in defined benefit administration. Many companies are
looking to add technology solutions to their talent management programs,
especially for succession planning, where more than 30 percent plan to
adopt technology solutions in the next two years.

“While companies have made considerable progress in harnessing technology
in the last few years, there are still plenty of areas where they haven’t
maximized their use of the Web,” Hubbard said. “Many feel they haven’t
appropriately leveraged the technology they have, that they’re not
achieving service improvements. Thinking more strategically about their
goals and putting the right internal processes in place will help companies
achieve better results.”

Other findings include:

* For most companies, the chief driver in deciding how to structure HR
service delivery is the desire to improve internal processes (49 percent).
This is followed closely by the goals of improving service (42 percent) and
employee satisfaction (38 percent) and leveraging technology (34 percent).
However, a sizable number of companies are not meeting their goals. Nearly
one-third say they have not achieved these desired results.
* Most companies (57 percent) use call centers inside or outside the
company to answer employee questions. However, the vast majority (86
percent) of employers are reluctant to use offshore call centers to handle
employee queries.
* A significant share (39 percent) of companies has not implemented a case
management system that helps them track employee calls to HR. Those that
have integrated their case management with benefits administration or IT
applications report high levels of satisfaction.

More information on Watson Wyatt’s 2007 HR Technology Trends survey can be
found at www.watsonwyatt.com/techtrends.

About Watson Wyatt Worldwide

Watson Wyatt (NYSE: WW) is the trusted business partner to the world’s
leading organizations on people and financial issues. The firm’s global
services include: managing the cost and effectiveness of employee benefit
programs; developing attraction, retention and reward strategies; advising
pension plan sponsors and other institutions on optimal investment
strategies; providing strategic and financial advice to insurance and
financial services companies; and delivering related technology,
outsourcing and data services. Watson Wyatt has 6,000 associates in 30
countries and is located on the Web at http://www.watsonwyatt.com/.