Yesterday, I was able to get an early look at the findings of The Hackett Group’s latest study on HR budgets and trends.
While there weren’t many huge surprises in the report, titled “The HR Agenda for 2015: Major Transformation Efforts Are Planned to Close the Gaps in HR Capabilities,” there definitely were a few data points to reflect on. (The study can be downloaded today with registration.)
As far as budgets are concerned, the study—based on research involving executives from more than 170 large companies in the United States and abroad—found that HR organizations, for the first time in a while, should experience marginal increases in both staff levels and budgets in 2015. Specifically, budgets are expected to rise 1.4 percent and staff grow by 1.5 percent—no doubt a reflection of a relatively healthy economy and the growing awareness among business leaders of the importance of talent strategies and practices.
The report, however, also points out that the increases are far from universal. Only 40 percent of the companies in the study actually expect to see budget increases, with just under 30 percent saying the same for staff levels. Further, just over 30 percent still expect to see declines in budgets and full-time employees, with the remainder expecting no change.
Of course, it’s good to see things move in the right direction, but as the Hackett report suggests, even more important will be what HR organizations do with the extra dollars and staff. In their report, the experts at Hackett suggest many HR organizations are largely unprepared to help improve enterprise agility and address those issues most relevant to achieving business objectives, including workforce strategy, innovation and talent management.
When I asked Hackett’s Global HR Practice Leader Harry Osle to elaborate on how world-class organizations differ from others when it comes to addressing these issues, he said, “they’re continually looking for ways to optimize their HR organizations.”
More specifically, he said, three characteristics come to mind when you look at world-class organizations. “First, these companies continue to look at process optimization … and look for ways to [eliminate] slack in the system.”
Next, he explained, they have a sharp focus on talent management and a hunger for finding and keeping the best talent, and making that talent more productive.
And finally, they have a strong commitment to digitization and technology. “That means,” Osle said, “having the right data at the right time to make the critical analytical decisions that organizations have to make today.”
The study found that the best-prepared HR organizations are clearly committed to making digital transformation and the utilization of cloud-based technologies a reality. Roughly 70 percent of the best-prepared HR organizations view the development of an HR digital-transformation strategy a high priority, compared to 25 percent of typical HR organizations. For cloud-based HR solutions, the gap is smaller, but still significant, with 50 percent of the best-prepared HR organizations considering it a high priority, compared to 40 percent of typical HR organizations.
As Osle explained, investing in technology in the cloud and SaaS is an easy decision to make when you consider the cost savings—and efficiency and effectiveness improvements—it can result in.
Osle predicted a substantial amount of the budget increases will likely be targeted to HR technologies. (Assuming he’s right, I would have to think this fall’s HR Technology Conference and Exposition® in Las Vegas will be a pretty lively event.)Twitter It!