May 6, 2013

As Budget and Staff Cuts Continue, HR Executives Face Pressure To Respond to New "Borderless Business Environment"

The Hackett Group's 2013 Key Issues Research Finds HR Leaders Focusing on Cost Reduction, Talent Management, Data Analysis, Technology, and Measurement

MIAMI & LONDON, May 6, 2013 - In the face of significant staff and budget reductions, HR executives face continuing pressure and new challenges in 2013, driven in part by the new "borderless business environment," according to new key issues research from The Hackett Group, Inc. (NASDAQ: HCKT).

According to The Hackett Group's research, leaders are focusing on several HR strategy issues for 2013: process improvement, including cost reduction and standardization of processes, data, technology and organizational culture; improving the effectiveness of talent management; obtaining more value from data to enable better decisions; and expanding the use of technology.

The Hackett Group's research also found that HR organizations have made little to no improvement over last year in terms of strategic workforce planning capabilities. Finally, the study reveals a "back to basics" trend in measurement, as HR organizations seek to find an appropriate balance of cost, quality, and effectiveness.

"While companies continue to set aggressive goals for growing revenue and profits, today's business world is extremely volatile, and HR is being asked to do more with less," said The Hackett Group's Global HR Transformation and Advisory Practice Leader Harry Osle.

"We're also seeing a dramatic shift in the business environment, creating new opportunities to roll out a flexible, virtual, data-enabled model for service delivery," said Mr. Osle. "Companies are realizing that growth is no longer limited by physical borders, and country borders are no longer a large obstacle when sourcing talent, capital, technology, goods and services. Internally, functional borders between business services operations are also coming down in the wake of cross-enterprise, end-to-end process ownership. Finally, there are dramatically fewer barriers to service delivery placement, with Global Business Services operations able to provide seamless support to internal customers."

The Hackett Group's research found that companies continue to focus on cost reduction in HR for 2013. Operating budgets are expected to drop by 0.79 percent on average, along with staff reductions of 1.89 percent. More than half of all companies said they expect to see HR budget reductions this year, while another 26 percent said they expect to see no change.

Talent management is clearly a top issue for HR leaders in 2013. Organizations are seeking to improve talent management capabilities to enable their companies to react faster to changes in the business environment, and also align more closely with business strategy to anticipate future staffing needs.

One of the most significant year-on-year increases in priorities seen in The Hackett Group study is improving the quality of HR data analysis and reporting capabilities for decision-making. This area has not been a historical strength for HR, and will require a formal strategy for better leveraging technology. Another item on the strategic agenda is building data analysis and business partnering capabilities within the HR workforce, which saw a 20 percent rise since last year's study in the ranking of "developing the future competencies/skills of the HR function." Data and analysis-related skills are a big part of making this happen.

Despite being a foundation of talent management, strategic workforce planning appears to be the Achilles' Heel of most HR organizations, The Hackett Group's research found. The research showed virtually no improvement over last year, and only 13 percent of organizations have fully defined and standardized capabilities in this area.

HR organizations have ambitious plans to expand their use of technology in 2013, despite budget restrictions. Rolling out Web-based and self-service tools continues to be a leading priority, along with improving the ability to access and analyze data. But HR organizations appear to be quite fragmented in the tools they are using. The Hackett Group believes that this smorgasbord approach is neither sustainable nor practical given HR's limited resources, and recommends that HR teams make careful and informed choices based on the profile and needs of their company.

Finally, The Hackett Group's research identified a "back to basics" trend in HR measurement. While cost remains the most common measurement across HR, there is a significant increase in the proportion of companies measuring employee engagement, as HR leaders try to document the value they add. At the same time, the proportion of companies measuring HR transaction errors increased significantly, showing greater efforts to balance cost and quality.

About The Hackett Group, Inc.

The Hackett Group (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and leading enterprise benchmarking and best practices implementation firm to global companies, offering digital transformation including robotic process automation and enterprise cloud application implementation. Services include business transformation, enterprise analytics, 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 and SAP practices.

The Hackett Group has completed more than 13,000 benchmarking studies with major corporations and government agencies, including 93% of the Dow Jones Industrials, 87% of the Fortune 100, 87% of the DAX 30 and 58% 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.

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