How do the world’s best human resources organizations manage to spend less, operate with fewer staff, yet deliver greater value to their companies? A discussion of key findings from our new Digital World Class® Human Resources research, Franco Girimonte, a Principal in our Executive HR Advisor Practice, and Maggie Rutz Senior Manager in our HR Benchmarking Practice.
Welcome to The Hackett Group’s “Business Excelleration Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. This episode is hosted by Gary Baker, Group Global Communications director at The Hackett Group. In today’s episode, Gary talks with Franco Girimonte, principal in Executive HR Advisory, and Maggie Rutz, senior manager in HR Benchmarking. They discuss findings of Digital World Class research from the recent human resources benchmark.
To begin, Maggie starts off explaining how The Hackett Group defines Digital World Class. This is terminology to measure processes with benchmarks and HR clients. The Digital World Class are organizations that achieve top-quartile performance across a composite of business metrics, including termination rates, error rates, operational excellence metrics and digital technology processes. They use hundreds of these metrics and find the top ones across each of those – those companies define the Digital World Class. These companies are doing a lot of things right – they have good service and good use of their budget.
Next, they talk about the six core capabilities for Digital World Class companies, including line to talent, operating model, data and analytics, customer-centric design, technology, and modern digital architecture. In the area of talent in Digital World Class companies, 64% of employees are skilled professionals compared to 55% of their peers. Instead of constant administrative tasks, Digital World Class companies give employees tasks they are actually hired for and allows them to focus on more value-added activities. In terms of the operating model, HR in Digital World Class companies has evolved, and they use more outsourced surfaces for administrative and transactional activities. They use more technology for these automated or administrative tasks. The technology cost per FTE is 85% more in Digital World Class companies than that of other companies. They spend less on labor and optimize processes and structure. This allows people to focus on what they were hired to do and share services to a much further degree. The Digital World Class companies have much greater automation levels of 99% to 71% of peers. The payroll process is 98% electronically for Digital World Class companies in comparison to 52% with peers. It is imperative to think about these core capabilities and use these Digital World Class companies as examples for how they lead the way.
Also, they discuss the next generation of HR, including how Digital World Class companies have teams put together for employee and talent experience, along with strategic assets that drive more insights and better decision-making. They are two times more likely to have the tools in place to support strategic workforce planning and think through how HR is looking at the human capital for the organization. There is a demand for talent, which comes from business partners, and a supply of talent, which is contained within the employee profile, including skills, certifications and education. HR identifies the gaps and gives leaders of these groups plenty of lead time to plan for what they need for the future.
Lastly, for the customer-centric design, this comes from the technology world and applications. The reason why applications fail is because they’re not easy to use, don’t solve a problem and are not intuitive. Digital World Class companies are 94% more likely to have a hire-to-retire process owner, which means they care and want to understand design consistency and what’s not working. This includes other HR processes as well – in addition to hiring, which includes pay. If you look at companies and the number of people working across those processes, it’s more streamlined, and peer companies have a lot of HR people who are involved in other work. It is never ending for the number of things people have to work on.
- 0:57 – Welcome to this episode hosted by Gary Baker.
- 1:51 – What does The Hackett Group mean by “Digital World Class?”
- 3:45 – The six core capabilities.
- 7:47 – The operating model.
- 11:01 – Technology in the operating model.
- 13:47 – Next-generation HR.
- 20:28 – The customer-centric design.