According to research from The Hackett Group, not only do world-class HR organizations enjoy cost savings of around 23% per employee and function with 32% less staff, they do so and still manage to outperform their peers.
Impressive. So, what’s the secret?
For starters you need a well-designed service delivery model (SDM) focused on operating at optimum levels.
Then—and we have spoken about this many times before– you need to use your data to produce analysis that matters. Analysis that measures and quantifies aspects of human capital and allows you to clearly demonstrate the value HR brings to your organisation. “World-class HR organizations show an unrelenting commitment to operational excellence,” said The Hackett Group’s Global HR Transformation and Advisory Practice Leader Harry Osle. “They use analytics to derive superior business insights from HR data and information, which helps earn them a ‘seat at the table’ with senior leadership.”
The next bit might ruffle a few feathers, but part of their reason for success is that they spend more on technology. This means higher levels of self-service and automation across a wide array of administrative and transactional activities. And all at lower running costs.
This one I find particularly interesting – these organisations all streamlined their hierarchies. They all operate with far fewer job grades – 22% fewer managers and 23% fewer clerical staff. They outsource more, make fewer internal staff changes and have smaller in-house teams.
Additionally, these firms prioritise strategic workforce planning (SWP). How? By getting their senior business leaders involved, by asking the experts to analyse the data, and by relying on platforms and tools to give them the necessary data to plan, develop and promote their internal talent. Talent who will not only be active faster, but who will then remain with the company longer. Retention rates for managers at these companies are 86% better after one year and 70% better after two years.
Top HR departments also are better at understanding the symbiotic relationship between business strategy and talent management. They recognise how investment in human capital enables financial performance, and they are routinely involved in executive-level discussions about tying business strategy to people and HR strategy.
Finally, and perhaps in many ways the most significant differentiator, is that these leaders know what to measure. In fact, they measure the business impact of HR projects over 80% more often than typical companies, and spend significantly more time analysing data than typical companies—but only about half as much time collecting that data.
Each of these tactics or strategies, if you prefer, is transferable to every organisation. You do not need to reinvent the wheel—you simply need to watch and take note.
Learn more about what sets leading HR organizations apart: download the SumTotal and Skillsoft Learning and Talent Maturity Framework here.