September 26, 2017
Hackett: World-Class HR Spends Less, Achieves Higher Effectiveness; Digital Technology Can Help HR Improve Customer Experience, Enable Better Business Decisions, Dramatically Lower Process Costs
MIAMI & LONDON, September 26, 2017 – World-class HR organizations now spend 25 percent less than typical HR organizations and operate with 30 percent fewer staff while achieving greater effectiveness, according to the latest analysis of benchmark data from The Hackett Group, Inc. (NASDAQ: HCKT). For a typical company with $10 billion in revenue, attaining world-class performance in HR represents as much as $15 million in potential savings annually.
The Hackett Group’s research also found that digital technology provides an opportunity for HR organizations to improve their service delivery efficiency and effectiveness, enhance customer experience, focus more resources on high value activities and deploy sophisticated analytics capabilities to enable better decisions. Typical HR organizations can rely on digital technology to accelerate their progress towards world-class and achieve process cost levels similar to those seen by world-class HR organizations, while world-class HR organizations can further reduce their process costs.
A public version of the research, “Raising the World-Class Bar in HR Through Digital Transformation,” is available on a complimentary basis, with registration, at this link: http://bit.ly/2u59kYc.
World-class HR organizations dedicate a greater percentage of their total spend to technology, the research found, with many investing in the new wave of HR cloud-based applications and services in key areas such as human capital management, talent acquisition, learning and talent analytics and reporting. They also focus a greater percentage of spend on outsourcing, but do so selectively to tap into expertise, leverage vendor capacity and capability and increase agility in compensation, benefits administration and other areas.
In staffing, world-class HR organizations dramatically reduce staff dedicated to transactional work, enabling them to dedicate a greater proportion of professionals to higher-value talent management and strategic planning activities.
World-class HR organizations operate and deliver services more effectively, the research found. For example, higher quality process execution helps them achieve error rates for different transactions that are anywhere from two to five times lower than those of typical companies. They are much more effective at driving outcomes that improve business performance, filling 50 percent more manager roles internally and over 2x as many professional roles, a clear sign of organizational health. Turnover rates for first- and second-year hires are also significantly better.
This year, for the first time the research also quantifies the potential for typical HR organizations to use digital transformation to substantially narrow the cost gap seen by world-class HR. Proper implementation of digital technologies can enable typical HR organizations to cut process costs by 21 percent, reaching process cost levels only slightly higher than world-class HR currently achieve. World-class HR organizations can use digital transformation to reduce their process costs by 22 percent.
The Hackett Group’s key issues research from earlier this year found that while the large majority of HR leaders believe that digital technology will fundamentally change the way HR services are delivered, less than half have a HR digital transformation strategy in place, and only about a third have the resources and skills necessary for execution today.
Digital technology is poised to fundamentally transform HR, the research found, with six aspects of HR operations likely to see the greatest impact. It will impact on Talent Strategy, or the ability to align the characteristics of the workforce with key business goals and strategies, by helping companies identify skills and competencies to target in recruiting and training. Digital technology will also radically alter Service Delivery Models, changing the way HR services are offered and delivered and increasing the amount of information and insights directly available to managers and employees. Digital business transformation is changing the Workforce, including how work is performed and the skills required to be effective.
Analytics and Intelligence are enabling HR to better assess both itself and the workforce, prioritize actions, and gain stakeholder support for change. Digital transformation is also enabling HR to improve Customer-Centricity, enabling it to better serve employees, managers, and senior leadership. Finally, mobile computing, social media/collaboration tools, and advanced analytics are enabling Process Optimization, with robotic process automation, cognitive computing and other digital advances poised to change labor requirements and reduce time spent on transactional tasks.
“For years, best practices for successful transformation started with process redesign and then progressed to finding the right technologies to enable the new processes. Digital transformation is turning this model on its head,” said Harry Osle, principal and global HR practice leader, The Hackett Group. “It lets users look for opportunities to deploy technologies and create new processes around them that are more efficient and customer-centric, and lead to step-change in performance.”
“To jump-start their digital transformation to world-class levels, we recommend that companies begin by gauging performance, measuring baseline efficiency and effectiveness levels, and identifying gaps between stakeholder expectations and current ability of HR to deliver,” explained Osle. “Then HR can assess its capabilities and pinpoint how to use digital technology to close critical gaps. The most successful digital early adopters start with small, well-defined actions, and focus on improving the customer experience and overall HR performance. And building HR’s analytics capabilities are key, to identify where HR and human capital can have the most impact.”
“This may sound like a daunting task,” said Osle. “But the payoff can be huge. Given the challenges that HR faces today, and the opportunity digital technology offers, the effort is worth undertaking.”
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. The Hackett Group’s world-class HR research is based on an analysis of results from recent benchmarks, performance studies, and advisory and transformation engagements at hundreds of large global companies. Download a public version of this research on a complimentary basis, with registration, at this link: http://bit.ly/2u59kYc.
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.