Executive Briefings

World-Class Human-Resources Departments Saved Money While Recession Drove Up HR Costs, Study Finds

While typical companies saw the recession drive up human-resources costs by over 11 percent from 2008 to 2010, world-class HR organizations have largely avoided the impact, and managed to reduce costs by more than 13 percent, according to research from The Hackett Group.

World-class companies now spend nearly 30 percent less per employee on HR, and operate with over 25 percent fewer employees. In addition to this dramatic cost reduction, they also achieve significantly higher effectiveness across many key areas. By focusing on standardization, automation and process rationalization, world-class HR organizations are able to reduce transaction processing costs per employee by 41 percent.

Other recent HR research from The Hackett Group also quantified the bottom-line benefit of the HR strategy of improving talent management performance. A new performance study found that talent management top performers see significantly higher EBITDA than typical companies, driving $550m to the bottom line annually (for a typical $26bn Global 1000 company).

"HR organizations have been sailing into stiff winds over the past few years," said Harry Osle, The Hackett Group Global HR Transformation and Advisory Practice Leader. "What we see in this year's ... research is very clearly how world-class HR organizations outperform their peers under stress. As the recession forced companies to make staffing cuts, world-class HR organizations were in a better position to make smarter downsizing decisions, and were able to move faster than typical companies, and control costs more effectively. At the same time, they have a better understanding of their companies, and can more effectively identify and develop HR capabilities and infrastructure that provide powerful support for the unique strategic needs of the business."

Source: The Hackett Group

While typical companies saw the recession drive up human-resources costs by over 11 percent from 2008 to 2010, world-class HR organizations have largely avoided the impact, and managed to reduce costs by more than 13 percent, according to research from The Hackett Group.

World-class companies now spend nearly 30 percent less per employee on HR, and operate with over 25 percent fewer employees. In addition to this dramatic cost reduction, they also achieve significantly higher effectiveness across many key areas. By focusing on standardization, automation and process rationalization, world-class HR organizations are able to reduce transaction processing costs per employee by 41 percent.

Other recent HR research from The Hackett Group also quantified the bottom-line benefit of the HR strategy of improving talent management performance. A new performance study found that talent management top performers see significantly higher EBITDA than typical companies, driving $550m to the bottom line annually (for a typical $26bn Global 1000 company).

"HR organizations have been sailing into stiff winds over the past few years," said Harry Osle, The Hackett Group Global HR Transformation and Advisory Practice Leader. "What we see in this year's ... research is very clearly how world-class HR organizations outperform their peers under stress. As the recession forced companies to make staffing cuts, world-class HR organizations were in a better position to make smarter downsizing decisions, and were able to move faster than typical companies, and control costs more effectively. At the same time, they have a better understanding of their companies, and can more effectively identify and develop HR capabilities and infrastructure that provide powerful support for the unique strategic needs of the business."

Source: The Hackett Group