The Hackett Group Research Alert: HR Leaders Asked to Do “More with Less”
Once Again in 2014
Despite Planned Cuts to Budgets and Staff, Stakeholders Demand Greater Value
Through Partnering, Talent Management, and Analytics
MIAMI & LONDON -- February 13, 2014
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
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
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
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 firstname.lastname@example.org.
The Hackett Group
Gary Baker, 917-796-2391
Global Communications Director
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