World-Class HR Organizations Spend 37% Less Than Peers

World-class HR organizations now spend 37 percent less than their peers and operate with 31 percent fewer staff, while delivering improved effectiveness and greater agility, according to new research from The Hackett Group, Inc.

The research also identified an array of HR capabilities that drive performance leadership, including: strategic workforce planning; technology/automation strategy; unified streamlined processes and systems; and performance measurement and analysis.

"In the face of unprecedented competition, extreme market volatility, and disruptive change from new technologies, the need for agility is greater than ever before," said Global HR Solutions Practice Leader Harry Osle.

"Most HR organizations are challenged by flat budgets and FTE counts. But some are succeeding, largely through a focus on operational excellence, leveraging specific capabilities which are correlated with high performance. This is what we're calling the HR 'Step up to World-Class' framework."

The 2015 analysis of The Hackett Group's benchmarking database uses detailed HR metrics to quantify the performance advantage of world-class companies compared to typical HR organizations.

Among the results: world-class HR organizations excel at cost reduction, and spend 37 percent less than typical HR organizations - saving up to $17 million annually (for the typical company with $10 billion in revenue), while relying on 31 percent fewer FTEs.

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.

World-class HR organizations are distinguished by four characteristics, according to the research: operational excellence; strategic talent management capabilities; close alignment to business needs; and the ability to deliver analytic-driven insights that drive performance.

The research also identified several areas of HR strategy where companies can strive to excel in order to drive towards world-class performance: Superior Strategic Workforce Planning (SWP), Technology/Automation Strategy; Unified, Streamlined Processes; and Performance Measurement and Analysis.