The highest performing HR functions spend 26% less than their peers on HR and manage 32% fewer staff, according to benchmarking data from the Hackett Group.
Its report, “Forging a Digital Path to World-Class HR,” found that world-class organizations spent 28% less on labor and 29% on outsourcing per employee than typical companies. They often used outsourcing selectively, for example, on areas such as talent acquisition.
The analysis firm found that “world-class” HR organizations – those that achieve top quartile performance for efficiency and effectiveness according to its benchmark – invested in cloud-based HR technology so they could operate more effectively; designed their services around customer experience, and shifted their resources towards high value activities.
These high-performing HR functions also built and deployed sophisticated analytics capabilities and provided useful tools and insights to their business leaders.
Efficiency also means there are fewer mistakes, according to Hackett Group. Those in its top quartile had transaction error rates two to five times lower than other organizations, leading to major savings. In addition, they tended to be better at filling jobs internally, maintaining high productivity and reducing labor turnover costs.
The report also looked at organizations’ progress in digital transformation projects.
It reported that the majority of projects to have been completed so far were in payroll, workforce management and reward – areas that are “oriented towards transaction processing”. About a third of companies in its benchmark have completed digital transformation in these areas.
Further areas of focus include data management, data reporting and staffing services.
Max Caldwell, principal of Hackett Group’s people & HR transformation practice, said that world-class HR organizations are moving beyond exploration and adopting new technology and analytic tools to become leaner, smarter and more customer-focused.
“It’s the next chapter in transforming HR to operate as a true strategic partner to the business. Making the journey will require new skills in areas like data science, smart automation and user-driven design, and is predicated on organizational willingness to change. But it gives HR leaders a terrific opportunity to rethink and reinvent the HR function for the future.”
Hackett Group outlines three key recommendations for organizations looking to use technology to improve efficiency and effectiveness:
- Improve the fundamentals – from optimizing processes for automation to getting a handle on data;
- Develop advanced capabilities – target areas with high-value pay-offs to start off with and invest wisely in skills; and
- Support the enterprise strategy – digital transformation requires a huge culture change and shifts in behaviors.
Source: forbes.com
Author: Karen Higginbottom