Greater Operational Excellence, Better
Strategic Workforce Planning, And Tighter Business Alignment Among
Key Benefits Driven by World-Class HR
World-class HR organizations continue to outperform their peers,
according to new research from The Hackett Group, Inc.
(NASDAQ:HCKT), delivering a greater focus on strategic workforce
planning and other high-value activities while operating at 23
percent lower cost per employee than typical companies and
functioning with 32 percent fewer staff.
A well-designed service delivery model (SDM) focusing on
operational excellence is one key to how world-class HR
organizations achieve greater agility and better understanding of
business needs, The Hackett Group’s research found. They also turn
to HR metrics and analytics to provide better data on the company’s
human capital and more effectively quantify the value HR brings to
the enterprise. By contrast, half of all typical HR organizations
do not even measure the result of change initiatives or produce any
type of functional scorecard.
“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. “Their cost
advantage continues to grow, in part because they understand that
the keys to this are process optimization and the strategic use of
shared services. They focus intensely on talent management, and
have a clearer understanding of what skills need to be developed or
acquired for their business to succeed. And 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.”
Achieving Operational Excellence
In their quest to achieve higher levels of efficiency and
effectiveness, world-class HR organizations excel in several areas,
The Hackett Group’s research found. They achieve higher levels of
self-service and dramatically higher levels of automation across a
wide array of administrative and transactional activities, in part
by spending 8 percent more on technology than typical companies.
They are highly committed to complexity reduction, operating with
far fewer job grades, health and welfare administration plans, and
compensation plans. World-class HR organizations are also
significantly flatter, with a very different staff mix than their
peers: 22 percent fewer managers, 23 percent fewer clerical staff,
and 26 percent more professionals.
World-class organizations utilize HR outsourcing more
effectively than typical companies as well. While both use
outsourcing at the same level, world-class take more care to
reconfigure internal staff and retain significantly fewer employees
in-house. Typical companies appear to make few staffing changes
internally after outsourcing, preventing them from reaping the full
cost and productivity benefits of the outsourcing arrangement.
More Strategic Talent Management
The proven ability to manage talent sets world-class HR
organizations apart from their peers, the research found. At the
heart of this is a comprehensive approach to strategic workforce
planning (SWP). World-class HR organizations use three principal
enablers to improve strategic workforce planning effectiveness.
Senior business leaders are 2x more likely to be involved in SWP,
which helps ensure that insights derived from SWP process are
factored into business decision making. World-class HR
organizations are also much more likely to employ professionals to
analyze workforce data, enabling them to identify supply and demand
trends, assess risks, and uncover opportunities. They are also 2.4x
more likely to rely on common platforms and toolsets for SWP,
providing direct access to data and reports to specialists, HR
business partners, and even managers.
World-class HR organizations also produce demonstrably better
results from their SWP efforts, with smaller talent gaps and higher
retention rates. They place 61 percent more staff per FTE
internally, reducing the cost of hiring. Internal hires are also
likely to be productive in their new roles more quickly.
World-class HR organizations are 82 percent better at developing
managers so they can move into leadership roles. They achieve this
through a combination of improved succession planning, better
retention plans, and enhanced organizational and leadership
development.
Another critical benefit of their talent management efforts is
greater retention of managers and professionals. Retention rates
for managers at companies with world-class HR organizations are 86
percent better after one year and 70 percent better after two
years. Retention rates are similarly better for professionals.
Today’s enterprises face significant talent issues. In addition,
HR organizations are confronted with their own unique talent
challenges. Major changes in business requirements and expectations
are driving the need for HR to transition its talent to a new
skills profile with an emphasis on business skills. To achieve this
requires a different talent strategy and more integrated and
effective talent management.
A key to addressing these issues is improved SWP, built on a
foundation of competency models. Given the scarcity of candidates
with highly valued skills, a strong commitment to developing new
competencies in existing staff is required. Recruiting practices
must also be transformed in order to tap fresh sources of HR
talent. Existing expertise can be leveraged through collaboration
and knowledge-sharing practices, supported by appropriate
technologies. Finally, the traditional employment deal should be
entirely rethought to ensure that it is appealing enough to attract
the kinds of talent that HR organizations urgently need.
Tighter Business Alignment
World-class HR organizations also show a dramatically greater
ability to work with the business and deal with the human capital
aspects of planning and executing business strategy, the research
found. They demonstrate an understanding of how human capital
enables financial performance, and are more likely to be routinely
involved in executive-level deliberations about tying business
strategy to people and HR strategy. They are also much more
frequently engaged by management to partner on strategic business
opportunities. This is supported by their advanced skill sets,
which enable them to do high-level consulting.
Finally, one of the largest capability gaps between world-class
and typical HR organizations is in measurement and analytics.
World-class HR organizations have a better handle than typical
companies on what is most important to measure (not just what is
possible to measure). They also publish scorecards of standard
performance metrics 53 percent more often than typical companies,
which do this less than half the time. They are 179 percent more
likely to publish scorecards on a quarterly basis, which only 24
percent of typical companies do. They also measure the business
impact of HR projects over 80 percent more often than typical
companies, and spend significantly more time analyzing data than
typical companies, and about half as much time collecting that
data.
The Hackett Group's 2014 HR World-Class Performance Advantage
research is based on an analysis of more than 100 in-depth HR
benchmark studies performed at large companies over the past few
years. World-class HR organizations are those that, according to
The Hackett Group's benchmarking methodology, are among the top
quartile of companies in both efficiency and effectiveness.
A complimentary version of The Hackett Group's research insight,
"How Leading HR Organizations Outperform their Peers,” is available
with registration at this link:
http://insights.thehackettgroup.com/2013wcpa-hr-press-register
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 10,000 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 ERP 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 93% of the Dow Jones Industrials,
83% 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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