As HR Organizations Seek to Transform
Talent, Tech, Analytics, The Best Prepared Focus on Digital and the
Cloud as Others Fall Behind
After years of cuts, HR organizations are expecting to see
marginal increases in both staff and budgets in 2015, according to
the newly-released HR Key Issues research from The Hackett Group,
Inc. (NASDAQ: HCKT). The study also found that HR organizations are
largely unprepared to help improve enterprise agility and address
issues most relevant to achieving business objectives, including
workforce strategy, innovation, and talent management in the
context of changing business needs.
Companies are struggling to improve in several key HR strategy
areas, the research found, and are focusing transformation efforts
in the areas of talent, technology, and analytics. These
transformations are likely to take several years, so prioritization
and prudent resource allocation is key, the research found. A clear
dichotomy is also emerging in the area of digital transformation of
the HR function, including adoption of cloud technology – with the
best prepared HR groups moving forward aggressively while typical
organizations fall behind.
“The bottom line is that many HR organizations are simply
falling short when it comes to building the capabilities required
to respond swiftly to changes in business demands and truly
contribute to greater enterprise agility, providing strategic
guidance as business objectives shift,” said The Hackett Group
Principal and Global HR Practice Leader Harry Osle. “Many of these
deficiencies are in two key areas – talent and technology. As a
result, HR is often seen as a cost center rather than an area for
investment. This is a tremendous hurdle that many HR organizations
know they need to overcome. But it will take time and courage. The
top HR organizations are spending their time and efforts on talent
and analytics.”
For the enterprise, innovation remains a key concern in 2015.
This year’s research offered more detailed insight into the
innovation-led strategies companies are taking. Many are focusing
on innovating new business models, products, and services
offerings. But an equal number are primarily focused on innovation
to expand into current markets.
In order to deal more effectively with high levels of market
volatility, uncertainty, risk, and competition, enterprises are
seeking to improve agility in 2015 and beyond. To enable agility
and innovation, The Hackett Group believes that HR organizations
should begin with a focus on operational excellence, allowing them
to free up resources that can be dedicated to strategic activities
such as talent management and analytics. As HR develops a core
competency around talent and analytics, it provides the business
with better insights into skills gaps, critical jobs, and employee
performance, so that adjustments can be made as necessary. A focus
on talent management is also required, to enable the enterprise to
attract, develop, and retain critical staff. Finally, HR can play a
key role in the development of specific programs designed to
incentivize creativity and strategic thinking as well as provide
critical support to key change initiatives.
After many consecutive years of cuts, HR organizations are
expecting marginal increases in budgets and staff for 2015, with
budgets rising by 1.4 percent and staff growing by 1.5 percent.
However the increases are far from universal. In fact, only 40
percent of the companies in The Hackett Group’s study actually
expect to see budget increases, with just under 30 percent saying
the same for staff. In addition just over 30 percent still expect
to see declines budgets and FTEs. The remainder expect no
change.
Hackett research found that many HR organizations are poorly
positioned to support key enterprise goals. Specifically, HR
organizations identified four areas that were simultaneously rated
as the high priority and low ability to address. All four areas
related to agility: defining forward-looking workforce strategy to
align with future demand for and supply of skills; fostering
innovation; adapting talent management strategies and processes to
deal with changing business needs; and improving development of
executives who can lead in a volatile business environment.
According to The Hackett Group’s research, talent and technology
transformation initiatives are dominating the HR agenda for 2015.
Strategic workforce planning and training and development lead the
talent transformation agenda. In technology, three areas are seen
as top priority: self-service enablement; development of an HR
technology roadmap; and expanding the footprint of a common ERP
platform in HR.
The Hackett Group’s research also saw a significant gap in the
key areas of digital transformation and utilization of cloud-based
technologies. The best-prepared HR organizations are clearly making
these areas a greater priority than typical companies. A total of
70 percent of best prepared HR organizations call development of a
digital transformation strategy for HR a top priority or major
initiative, the research found, while only just over 25 percent of
typical HR groups make the same claim. Looking at implementation of
cloud-based HR solutions, the gap is smaller, but still
significant, with 50 percent of the best prepared HR organizations
calling this a top priority or major initiative, but less than 40
percent of typical HR organizations making the same claim.
“The bottom line is that despite diverse deficiencies, progress
is possible,” said The Hackett Group Global HR Executive Advisory
Practice Leader Nathalie Bression. “We suggest that for 2015, HR
organizations start by improving strategic workforce planning,
focusing on critical roles and enhancing their ability to make
data-driven decisions. They should prioritize talent management,
and improve their ability to develop leadership skills within their
company. A close look at the HR skills set is required, to assess
where HR organizations need to add capabilities in key areas such
as business acumen, strategic thinking, and change management. HR
organizations should create a long-term technology strategy. And
they should improve data and systems integration to enable
evidence-based workforce decisions.”
The Hackett Group’s new study, “The HR Agenda for 2015: Major
Transformation Efforts Are Planned to Close Critical Gaps in HR
Capabilities,” is based on research with executives from over 170
large companies in the US and abroad, most at companies with annual
revenue of $1 billion or greater. A complimentary version of the
research is available with registration at this link:
http://www.thehackettgroup.com/research/2015/pr/keyissueshr15/.
About The Hackett Group
The Hackett Group (NASDAQ: HCKT) is an intellectual
property-based strategic consultancy recognized as the leading
enterprise benchmarking and best practices implementation
firm to Global 2000 companies. Services include business
transformation, enterprise performance
management, working capital management, and global
business services. The Hackett Group also provides dedicated
expertise in business strategy, operations, finance, human capital
management, strategic sourcing, procurement, and information
technology, including its award-winning Oracle and SAP
practices.
The Hackett Group has completed more than 11,000 benchmarking
studies with major corporations and government agencies, including
93% of the Dow Jones Industrials, 86% of the Fortune 100, 87% of
the DAX 30 and 51% of the FTSE 100. These studies drive its Best
Practice Intelligence Center™ which includes the firm's
benchmarking metrics, best practices repository, and best practice
configuration guides and process flows, which enable The Hackett
Group’s clients and partners to achieve world-class
performance.
More information on The Hackett Group is available at:
www.thehackettgroup.com, info@thehackettgroup.com, or by calling
(770) 225-3600.
The Hackett Group, Inc.Gary Baker, 917-796-2391Global
Communications Directorgbaker@thehackettgroup.com
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