Despite Planned Cuts to Budgets and Staff,
Stakeholders Demand Greater Value Through Partnering, Talent
Management, and Analytics
HR leaders are preparing for another year of budget cuts and
larger staff reductions in 2014, as they focus keenly on three HR
strategy areas -- improving partnerships with internal customers,
finding ways to manage talent more effectively, and creating more
value from workforce data -- according to 2014 HR Key Issues
research from The Hackett Group, Inc. (NASDAQ: HCKT).
"Pressure on HR to do more with less clearly remains high," said
The Hackett Group Global HR Transformation and Advisory Practice
Leader Harry Osle. "At the same time, there's a real struggle for
HR to reinvent itself, and improve the efficiency and effectiveness
of how it delivers services and information. HR leaders are
searching for ways to realign resources and become a better partner
to the business."
The Hackett Group's study found that despite anticipated revenue
growth of nearly 7 percent, companies are expecting to see a small
drop in HR operating budgets in 2014, with cuts of 1 percent. This
growing gap will likely require companies to improve efficiency in
their HR organizations. At the same time, companies are expecting
to make larger staff reductions, cutting HR staff by 2.7 percent.
With head count shrinking faster than budgets, The Hackett Group
finds that many companies will increase their spending on
technology, helping generate higher productivity levels while also
increasing pay for retained, higher skilled HR staff. HR is the
only business services function in The Hackett Group's 2014 Key
Issues Study services seeing cuts to both budgets and staffing.
Enhancing HR/Business Partnership
Much of HR’s effort in 2014 will be devoted to the difficult
task of enhancing HR/business partnership and improving HR's
participation in the formation of business strategy, the study
found. Three areas were cited by many study participants as being
either a top priority or a major focus of improvement initiatives
for 2014: integration of planning processes and data between HR and
operations; alignment and integration between company strategic
planning and HR planning; and effectiveness of collaboration and
business partnership.
"In order for HR to strengthen its ability to partner with the
business, HR leaders and staff must begin to think and speak in
terms that the business cares about and understands. They need to
build the political and intellectual capital to become a full
member of the strategy-setting team, applying their knowledge of
human capital to the business strategy," said Mr. Osle.
Clear Focus on Talent Management
The Hackett Group's HR Key Issues study also found companies
poised to make significant changes in talent management programs in
2014, as they struggle to find better ways to enhance the value of
human capital and improve productivity. As HR leaders try to do
more in these areas, they're also focused on finding new ways to
measure the business value of talent management.
More than 80 percent of respondents in The Hackett Group's study
said they were making comprehensive or moderate changes to employee
performance management policies and practices in 2014, in part due
to the fact that companies have not been getting sufficient return
on effort in this area. Another 75 percent of respondents said they
were planning similar levels of change in strategic workforce
planning, making this the second largest area of focus. Recruiting
and staffing and rewards programs were two other talent management
areas identified as top priority for change in 2014.
Within training and development, The Hackett Group's research
also found a shift away from traditional activities, moving away
from formal, classroom-based activities, in part due to lack of
funding. However, coaching and mentoring programs will be in the
spotlight in 2014, along with a renewed emphasis on
leadership-development programs and expansion of these programs to
middle managers, in part to support more formal succession
planning.
As global economic conditions improve, The Hackett Group also
expects to see the recruiting market become more competitive, with
an increased emphasis on retention programs.
Getting More Value from Data
Recent research by The Hackett Group found that low-quality data
is a significant inhibitor to strategic workforce planning
processes. The Hackett Group believes that HR needs to make the
most of the data it has, while also gathering more data in areas
where it has not done so previously, such as employee competencies
and external labor market trends.
The Hackett Group's 2014 HR Key Issues Study found that
technology priorities are currently heavily weighted towards making
the most of existing investments. Companies are minimizing new
technology purchases as they roll out Web-based and self-service
offerings.
The study identifies three major initiatives around HR
technology and information for 2014. Half the companies in the
study are planning major initiatives around improving their ability
to analyze and interpret HR performance management information.
Over a third are planning major initiatives to improve the
integration of planning processes and data between HR and
operational areas. Many are also seeking to improve information and
key performance indicators needed to manage the HR function.
HR leaders are also significantly changing the way they capture
data about their organization's performance, and share that
information with other parts of the enterprise. Many companies in
the study are hoping to move beyond basic cost and turnover rates
over the next two to three years and dramatically expand their use
of metrics such as: impact of employee engagement activities;
workforce productivity; HR cost per process; the ROI of learning
and development; and others. An increased focus on productivity
measurement is also expected, which should enable HR to realign
resources to improve efficiency and effectiveness.
The Hackett Group's HR Key Issues research is based on a study
conducted in late 2013. Study participants included executives from
over 150 large companies in the US and abroad, most with annual
revenue of $1 billion or greater. A complimentary copy of The
Hackett Group's research insight, "2014 HR Agenda: Recalibrating HR
to Deliver Higher Value," is available with registration at:
http://www.thehackettgroup.com/research/2014/pr/keyissues-hr/
About The Hackett Group
The Hackett Group (NASDAQ: HCKT), a global strategic business
advisory and operations improvement consulting firm, is a leader in
best practice advisory, business benchmarking, and transformation
consulting services including strategy and operations, working
capital management, and globalization advice.
Utilizing best practices and implementation insights from more
than 8,400 benchmarking studies, executives use The Hackett Group's
empirically-based approach to quickly define and implement
initiatives that enable world-class performance. Through its REL
group, The Hackett Group offers working capital solutions focused
on delivering significant cash flow improvements. Through its
Archstone Consulting group, The Hackett Group offers Strategy &
Operations consulting services in the Consumer and Industrial
Products, Pharmaceutical, Manufacturing, and Financial Services
industry sectors. Through its Hackett Technology Solutions group,
The Hackett Group offers business application consulting services
that help maximize returns on IT investments. The Hackett Group has
completed benchmark studies with over 3,500 major corporations and
government agencies, including 97% of the Dow Jones Industrials,
84% of the Fortune 100, 87% of the DAX 30 and 48% of the FTSE
100.
More information on The Hackett Group is available: by phone at
(770) 225-7300; by e-mail at info@thehackettgroup.com.
The Hackett GroupGary Baker, 917-796-2391Global Communications
Directorgbaker@thehackettgroup.com
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