Benchmark HR

Updated: June 02, 2010

The companies in the study that were able to achieve and sustain a competitive advantage, saw their Human Resource functions contribute to these results through the comprehensive deployment of their Human Capital initiatives across five dimensions. These five dimensions were seen to be the factors that most significantly differentiated effective HR functions from the less effective HR functions. The five dimensions are:

  • Strategic Alignment, the extent to which the Human Capital strategy is aligned with the company's business strategy. When HR focused on the priorities of the business, they were rated by senior managers as Strategic Business Partners and were 38% more likely to be directly involved in overall business planning. Initiatives coming from HR were seen as business initiatives, not HR initiatives.
  • HR ROI, where HR demonstrates a measured balance of investment versus results. A cost-benefit analysis was regularly a part of the decision-making process. Less than 23% of the time lowest cost was the driving criteria for an investment decision by top performing companies.
  • HR Operations, where the top performing companies saw their HR staff members devoting their time to the most value added of tasks and routinely deploying best practices. Spending valuable staff time on strategic HR issues, and workforce management processes, made the most significant contributions to company growth and performance. Where HR staff spent more than 40% of their time on Administrative processes, there was no material contribution to company performance.
  • HR Technology was used by the top performers to increase efficiency by 23%, improve accuracy by 52%, and reduce costs by 61%. The study confirmed a growing trend by top performing HR functions to deploy manager and employee self-service options to complete the majority of administrative activities.
  • Stakeholder Alignment, crafting HR policy, practice, and process around the needs, wants, and expectations of line-managers and employees. The study showed significant achievement by top performing companies in employee productivity, retention of top talent, the ability to be seen as "an employer of choice," and to receive recognition as a "great place to work." The HR function that regularly solicited feedback from line-managers and employees, as a means to delivering service that met or exceeded stakeholder expectations, were seen as contributing most significantly to company success.

The study showed that when HR was ineffective in two or more of these dimensions, it was unable to make significant or material bottom-line contributions.

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