World-Class Executives Don’t Spend More, but Get More from Technology

What does it mean to be “world class”? In at least one key area of business, it means to be able to generate significant return on average investment. That’s the conclusion of the latest in a series of research reports from Atlanta-based The Hackett Group, an Answerthink company. The 2004 HR Book of Numbers© Research Series, focused on human resources, is a part of Hackett’s continuing Book of Numbers research into world-class performance, which provides senior executives with fact-based performance metrics and insights into best practices in HR, IT, finance, procurement, and other areas.

To achieve Hackett’s world-class designation, an organization must score in the top 25% in both efficiency (cost and productivity) and effectiveness (quality and business value) output metrics in a given functional area of Hackett’s current database. Organizations are compared with the median results for all non-world-class companies, identified as “peers.” In terms of technology spending, Hackett’s research found that world-class HR executives and their peers dedicate almost exactly the same amount per employee on technology. But world-class organizations operate with 35% fewer HR staff per thousand employees (10.5 versus 16.2), thus actually translating into a 53% higher technology investment per HR staffer.

Virtually across the board, Hackett determined that world-class HR executives do a better job of leveraging technology than their peers, and this leverage plays a key role in helping them generate better results. • 86% of all world-class HR organizations use a high degree of functionality in their HR applications—110% more likely to do this than their peers • 25% of all world-class companies identify management decision-making and planning as a primary use of their HR application; only 9% of peer companies make the same claim, a gap of 178% • World-class companies are twice as likely to generate management reports from a central repository Also, according to Hackett’s research, world-class companies spend almost exactly the same amount on technology per employee as their peers—but their improved ability to leverage technology means: • World-class executives spend 27% less per employee on HR than their peers • Operate with 35% fewer HR staff • Provide improved HR productivity and strategic alignment virtually across the board

Hackett also found that world-class HR organizations:

• Have 61% fewer voluntary terminations • Fill professional positions 35% more quickly than their peers. • Use technology for resume capture 126% more than peers • Use technology for applicant tracking 56% more than peers • Have some degree of paperless payroll, 317% greater than peers • Use technology for requisition tracking 222% more than peers

Additionally, at world-class organizations, senior HR executives are: • 115% more likely than their peers to report to the chairman/CEO. • 67% more likely to tie business strategy to people strategy • 84% more likely than their peers to have an articulated explicit workforce strategy in place. • Over four times more likely than their peers to own one or more strategic initiatives

Quality and productivity measures are other areas where world-class HR executives clearly outperform their peers, seeing dramatically lower error rates than their peers in key areas such as: • Employee data management (29% lower) • Compensation administration (50% lower • Health and welfare administration (43% lower)

More information on The Hackett Group’s 2004 HR Book of Numbers Series is available by phone at (404) 682-2500; by e-mail at info@thehackettgroup.com, or on the Web at http://www.thehackettgroup.com.

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