Latest Hackett Study on “World-Class HR”

world class HRIs your HR department world-class? Would you like it to be? It wouldn’t hurt to check out the latest Book of Numbers research from the Hackett Group, which has been putting out these reports for the past 17 years. Hackett defines “world class” as “companies that achieve top-quartile performance across a weighted array of efficiency and effectiveness metrics.” The findings are based on detailed benchmarks of Global 1000 companies over the past two years.

World-class HR departments make far greater use of self-service for payroll, training, total-rewards administration and staffing services than typical companies do. They also focus on keeping it simple: they use nearly 70 percent fewer job grades, 40 percent fewer health and welfare plans and 40 percent fewer compensation plans than typical companies of their size. They have 20 percent fewer managers but with greater spans of control, which leads to streamlined management, reduced costs and quicker decisionmaking, says Hackett. They’re also better at outsourcing than typical companies, retaining fewer internal staff associated with processes that have been outsourced, which helps them realize greater cost benefits from the arrangement than other companies, which tend to make few internal changes after outsourcing.

World-class HR departments are heavily focused on employee development, says Hackett. They dedicate 15 percent more in spending and allocate more staff than typical companies do to strategic workforce planning and tend to have more staff skilled in areas such as anlytics and modeling. They’re focused on identifying skills needed by their company today and in the future, and often take a “multi-year” perspective that lets them develop needed skills internally. They have nearly twice the number of internal placements than typical companies, and are able to recruit staff externally much more quickly when necessary. They also take a rigorous approach to employee engagement, measuring it regularly and equipping managers with the skills they need to guide people effectively.

In addition to being more tightly integrated with business strategy than their counterparts at typical companies, world-class HR departments are more engaged in managing and facilitating organizational change. And, while 20 percent of typical HR departments report metrics for HR-managed projects, world-class HR departments do this three times more often, and close to 80 percent report organizational metrics for change initiatives. Doing this, says Hackett, “helps HR leadership build credibility with executive management.”