Written by
Changeboard Team

03 Mar 2016

6 steps to build a world-class HR organisation

03 Mar 2016 • by Changeboard Team

What makes a world-class HR organisation?

Research from The Hackett Group indicates that world-class HR organisations maintain a steady lead over competitors in 2015. These companies spend 37% less ($17 million savings on average) and use 31% fewer FTEs. If the peer group wants to reach this standard, it has some catching up to do.

Given instability in supply and cost, rival companies, and new technology, agility is more important than ever – and to create a more agile HR company, it’s useful to follow the example of world-class organisations.  

1. Staffing

World-class HR has two-thirds more staff focused on aiding business transformation, and 80% of these have staff acting as partners in the wider company. This suggests that the peer group could benefit from understanding key drivers across the business.

It’s advisable to temporarily transfer staff to cross-functional teams; this will give them insight into the inner workings of different parts of the organisation. Equally, have employees from other units serve temporary stints in HR. An understanding of business fundamentals should be a key hiring criterion going forward.

2. Strategic workforce planning (SWP)

World-class organisations make SWP central: it improves transparency and makes it easier to divine routes to success. It also highlights areas of staffing-related risk, automates data collection, and employs analytical tools to use this information for decision-making.

The peer group should set benchmarks for expenses, staffing levels and cost of workforce analysis. They should also facilitate uniform analysis and reporting of workforce data to improve capabilities and processes. 

3. Automation

With peer group and world-class organisations, the difference in spending per HR FTE is sometimes as high as 80% - leading to a significant uptick in productivity because staff can dedicate more time to performance-improving activities. World-class HR services 59% more employees per FTE.

HR should create and implement a technology strategy and encourage staff to take responsibility for tech management and usage. These efforts should support the business case for HR technology. 

4. Employee and manager self-service

Over half of world-class HR organisations make considerable use of self-service technology for critical tasks like employee appraisals, new staff acquisition and rewards. 75% of these companies use self-service for data maintenance and career-development related tasks. There are several advantages to using this technology: it means managers are relieved of unnecessary administrative duties, and lets employees personally manage their data.

If a HR organisation does not have a self-service functionality, it should consider implementing one; if it has limited self-service options, it should consider expanding them. 

5. People management

HR is a people business, so it should be no surprise that world-class companies try to improve people management skills: 50% supply leadership training to a high extent, and they’re twice as likely to provide it to new managers.

This can entail training in giving feedback, coaching performance, and building rapport across the organisation. 

6. Performance measurement

World-class HR organisations publish regular scorecards to inform managers of issues that require action. These scorecards relate to important metrics, and help to align HR with key business goals.

HR’s priority should be strengthening performance-related measurement and analytics capability. It should report on topics with value to business management, and create a dedicated analytics group populated with people proficient in marketing and data analysis. 

Beyond 2015, taking it to 2016

In 2015, 40% of HR organisations expect their budgets to increase. Despite this, one third are projecting staff losses, suggesting that pressure on head count remains considerable. Following the above steps will alleviate this pressure.

Still, HR organisations are in good shape – they simply need to build on their good work and strive towards world-class status.