Human Resources Organizations Can Achieve Breakthrough Improvements by Embracing Digital Technology

By fully embracing digital transformation, human resources organizations can achieve superior levels of efficiency, effectiveness, and stakeholder experience, including 33% lower cost, 72% fewer transactional processing errors, and more, according to new Digital World Class human resources research from The Hackett Group, Inc.

“Digital World Class Human Resources: Reaching New Heights in Peak Performance”

“For decades The Hackett Group’s benchmarks have been the gold standard by which most global companies measure world-class performance in human resources and other business services. Now, with the growing impact of digital transformation, The Hackett Group is raising the bar further with its shift to a Digital World Class measurement standard. Our new research details how highly technology-enabled organizations are achieving new levels of peak performance,” said Global HR Practice Leader Harry Osle.

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“The results are impressive. But the bottom line is straightforward. Our research provides empirical evidence of the impact that digital transformation is having,” said Osle. “For years, companies have been making incremental improvements, optimizing processes, cutting costs and reducing transactional labor to reach world-class performance. But new technologies allow many companies to fast-forward to Digital World Class levels of operational excellence and business value. And they can get much of this benefit by overlaying digital technology on their existing systems, rather than embarking on large-scale infrastructure changes.”

A public version of the research, “Digital World Class Human Resources: Reaching New Heights in Peak Performance” is available free, with registration, at http://go.poweredbyhackett.com/hrdigwc2106sm. It contains more than 30 metrics detailing the performance of Digital World Class human resources organizations. But here is a summary of key research findings:

Improved Efficiency – Digital World Class HR organizations now operate at 33% lower cost than typical HR organizations (i.e., peers) and 11.6% lower cost than traditional world-class HR organizations. For a $10 billion company, this represents HR cost savings of $17.7 million and $4.6 million, respectively. Over the past decade, the cost gap between world class and peers has widened as world-class HR organizations kept costs flat while peers increased cost by 1.5% annually. With the shift to Digital World Class, the gap has now widened even further. Digital World Class HR organizations also employ 40% fewer full-time equivalent (FTEs) than peers per billion dollars of revenue, and each HR full-time employee is also able to serve 66% more people.

Greater Effectiveness – The advantages seen by Digital World Class HR organizations extend far beyond lower costs. These elite HR organizations are also able to deliver improved quality, providing greater strategic business value and enhanced agility. They deliver greater business value, with 59% fewer involuntary terminations per 1,000 employees than typical companies. They also take 22% fewer days to fill management positions, and average 72% fewer transaction process errors.

Improved Stakeholder Experience – In the digital era, stakeholder experience is a more critical performance dimension than ever before. Digital World Class HR organizations provide a better experience to their internal stakeholders. They are 82% more likely to be able to act as strategic advisors to the business, 67% more likely to be viewed as a valued business partner, and 9% more likely to be viewed as agile in meeting business challenges.

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Six Areas of Excellence – Technology enablement is at the heart of the Digital World Class performance advantage. However, to fully unlock the potential of technology, leading HR organizations also focus on five other key areas: data and analytics; cloud-based modern architecture; operating model evolution; end-to-end process design and ownership; and talent. The research provides details about Digital World Class performance in HR in each of these areas. For example, in data and analytics, the pandemic has led to new urgency in improving forecasting and analysis, and Digital World Class HR organizations have a significant head start, having made substantial inroads in automating knowledge processes, freeing up staff capacity to perform value-adding work, and building a strong data architecture to enable insight generation and self-service reporting and analysis. Compared to peers, Digital World Class HR organizations also provide more than twice as many automated self-service capabilities for data management, reporting and compliance. Digital World Class HR organizations are also at the forefront of architecture modernization and cloud migration. Finally, at Digital World Class HR organizations, HR leaders have addressed deficiencies in critical skills that plague typical HR organizations. They have rebalanced their workforce, reducing headcount in transactional roles and increasing it in areas like strategic workforce planning and analytics. They have developed the ability to drive insight, and skills essential to business partnering such as emotional intelligence, relationship management, innovation, and change orientation.

Action Plan for Digital World Class – The Hackett Group’s research offers an outline of how companies can do an assessment of their current performance, maturity, and capabilities, identify design future capabilities to advance the digital agenda, and create a journey map to progress towards Digital World Class performance levels.

Digital World Class human resources organizations are those that achieve top quartile performance in operational excellence and business value across an array of weighted metrics in The Hackett Group’s comprehensive human resources benchmark. The Digital World Class analysis is also designed to quantify the performance improvement opportunity achievable by maximizing technology enablement of human resources work and optimizing the human resources technology landscape. The Hackett Group’s Digital World Class human resources research is based on an analysis of results from recent benchmarks, performance studies, and advisory and transformation engagements at hundreds of global companies.

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