MIAMI & LONDON--(BUSINESS WIRE)--World-class HR organizations embrace digital transformation and advanced analytics as key levers to drive improved results, including spending 23 percent less per employee than typical companies, operating with 32 percent fewer staff and demonstrating improved effectiveness, according to new research from The Hackett Group, Inc. (NASDAQ: HCKT). For a typical company with $10 billion in revenue, attaining world-class performance represents as much as $14 million in savings annually.
The research also identified five imperatives used by world-class HR organizations to achieve superior results: embrace digital transformation; leverage analytics-based decision making; reallocating resources from transactional focus to value adding; adopt customer-centric service design and delivery; and reskill the HR function. A complimentary version of the research is available with registration at this link: http://bit.ly/29jVeqP
HR is being asked to respond to a challenging business environment, with increasing competitive pressures, rising business risks and disruptive change from new digital technologies. At the same time, they face declining budgets and flat to decreasing head counts, making it more challenging to transform their service delivery model and respond with agility to shifting demands and opportunities.
In addition to spending less and operating with fewer staff, The Hackett Group’s research found that world-class HR organizations allocate their spend very differently than typical companies, spending 18 percent more on technology and nearly 40 percent less on labor.
“Many world-class HR organizations are investing in the new wave of cloud-based HR applications and services ranging from core human capital management to background checks, benefits administration and talent analytics and reporting,” said The Hackett Group’s Principal in Charge, Global HR Advisory Services Harry Osle. “This use of technology is key to how they are improving overall agility and achieving greater efficiency and effectiveness.”
The research quantifies some of the ways in which world-class HR organizations are more effective. For example, they see transaction error rates for various processes that are two to five times lower than those at typical companies. Fewer errors means higher quality process execution, and also has a bottom-line impact, as the cost to correct errors can be significant.
World-class HR organizations are also more effective at generating outcomes that impact on business performance. For example, they are much better at developing and moving people into new roles, with a majority of manager and a near majority of professional roles filled with internal candidates. Furthermore, turnover rates for first and second year hires are also better for world-class HR, enabling them to retain more organizational knowledge.
World-class HR organizations are those that achieve top-quartile performance in both efficiency and effectiveness across an array of weighted metrics in The Hackett Group’s comprehensive HR benchmark.
For each of the five imperatives of world-class HR transformation, the research detailed the gap between world-class HR organizations and typical companies, and steps that companies can use to enable the change, as follows:
Embrace Digital Transformation - Cloud-based infrastructure and applications, virtual business and technology networks and business analytics are coming together with rapidly transitioning employee and consumer bases, which are increasingly adept to new mobile technologies and business models. This convergence is creating tremendous new opportunities for HR organizations that can apply digital technologies to transform service delivery. Increasingly, this becomes the platform for delivering a whole new class of services, such as information and analytics to guide decisions. World-class HR organizations spend more on technology in part to drive levels of process automation that are two to four times greater than typical companies in key HR areas. This enables them to devote more time to talent management and other higher-value work.
The Hackett Group’s research reveals significant penetration of cloud-based services in HR organizations, with many planning greater adoption levels in the next 12-24 months. Talent acquisition and learning management applications have the highest adoption rates. Other notable areas of cloud-based applications adoption include onboarding, collaboration and social networking.
Leverage Analytics-Based Decision Making – Agile operations require a “sensory” system that monitors external conditions and analytical capabilities to put this data in a business context. World-class HR organizations build a sophisticated information/data architecture to enable capabilities that include: advanced data analysis; dynamic and information-driven planning and analysis; and performance measurement that is aligned with the business.
These capabilities enable HR to provide critical talent-related insights that drive better human capital decisions and outcomes. For example, HR organizations can analyze which skills and competencies actually drive high performance. To enable planning, they can look at what skills will be in demand in the future. To drive retention, they can examine which staff are at highest risk of leaving the organization. To improve recruiting, they can analyze information including the sources of quality hires. And to enhance leadership, they can look at what assignments and learning experiences are most beneficial to developing successful leaders.
Reallocate Resources from Transactional Focus to Value Adding – World-class HR organizations are over 5 times more likely than their peers to use a formal HR service delivery model, a basic step to improving efficiency and effectiveness which is critical if HR is to self-fund transformation efforts. In most cases this service delivery model includes global business services/shared services, centers of excellence and HR business partners.
Adopt Customer-Centric Service Design and Delivery – World-class HR organizations put the customers’ needs at the focal point of all key activities and functions. The way each service needs to support customers’ work influences the design of the delivery method or interface. The result is a far better customer experience using HR services. One good example of this is self-service. World-class HR organizations have significantly higher usage of both employee and manager self-service because they create capabilities with the customer experience in mind.
At one global consumer products company, the HR Global Business Services (GBS) organization has used service design concepts to create and introduce high-quality, customer-centric services to employees. The recruiting and candidate onboarding processes have been redesigned to be relevant, easy-to-use and accessible through digital channels. Emphasizing graphics and videos, the system design makes information easy to locate and digest and is optimized for viewing from either the user’s desktop or a mobile device.
Re-skill the HR Function – World-class HR are more effective at deploying people and skills with greater relevance to the core activities of the business. They bring advanced organizational skills to the table, with 20 percent more staff focused on leading business change. Additionally, they partner to a higher extent with business lines to enable organizational performance. World-class HR organizations also have a very different makeup and skill mix than their peers, with a far greater number of professionals and fewer managers. This indicates a staff with the ability to do more high-value work.
“Getting to world-class is a real challenge for even the most agile HR organizations. But the benefits are tangible,” said The Hackett Group’s Global Principal in Charge, People & HR Transformation Practice Scott Leuchter. “To jump start their journey, HR leaders can take steps like measuring baseline efficiency and effectiveness levels to gauge performance and test their service delivery model. They can evaluate and document the customer value they create, and find ways to reduce complexity. Technology is a key component, and they can look at their existing technology architecture and consider digital business transformation to improve how their systems enable efficient administration, transactional processing and ease of use. And finally they can adopt a service delivery model that enhances HR’s alignment with business objectives.”
The Hackett Group’s World-Class HR Performance Advantage Research is based on an analysis of results from recent benchmarks, performance studies, and advisory and transformation engagements at hundreds of large global companies.
About The Hackett Group
The Hackett Group (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and leading enterprise benchmarking and best practices implementation firm to global companies. Services include business transformation, enterprise performance management, working capital management, and global business services. The Hackett Group also provides dedicated expertise in business strategy, operations, finance, human capital management, strategic sourcing, procurement, and information technology, including its award-winning Oracle EPM and SAP practices.
The Hackett Group has completed more than 11,000 benchmarking studies with major corporations and government agencies, including 93% of the Dow Jones Industrials, 86% of the Fortune 100, 87% of the DAX 30 and 52% of the FTSE 100. These studies drive its Best Practice Intelligence Center™ which includes the firm's benchmarking metrics, best practices repository, and best practice configuration guides and process flows, which enable The Hackett Group’s clients and partners to achieve world-class performance.