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World Class HR Team

Why Building a ‘World-Class HR’ Team Is Worth the Effort

CoAdvantage- Here’s a question too few companies ask: what is possible with HR?

Most businesses think of human resources in limited ways. For them, HR has a clearly defined role within the organization, and that role focuses on the administrative and transactional tasks related to having employees – payroll, benefits, labor law compliance, etc.

But HR can produce much more value that just getting certain tasks done and support more strategic objectives than just crossing to-do’s off a list. That’s a realization that more and more organizations are slowly accepting. But what does it actually look like when HR is allowed to live up to its full potential?

Advisory firm The Hackett Group researches the behavior and performance of what they call “world-class HR organizations.” They don’t offer a specific definition of what they mean by “world-class.” Instead, they say they use “a proprietary methodology that measures efficiency and effectiveness and ties performance to the adoption of proven best practices.” They study the top 10% to 15% of HR teams and departments that achieve outcomes that significantly outperform the average HR group.

World-class HR organizations achieve tremendous outcomes.

According to The Hackett Group’s research, world-class HR seems to be defined by four huge performance gains.

1: Efficiency: 66% more employees served per HR FTE, and 22% fewer days required to fill managerial positions. In other words, world-class HR delivers more bang for the buck to their employers.

2: Accuracy: 72% fewer transactional process errors when compared to average HR teams.

3: Retention: 59% fewer involuntary terminations per 1000 employees. Whether this is correlation or causation, world-class HR clearly helps organizations to prevent turnover and stem problems before they turn into personnel crises.

4: Savings: 41% lower labor cost, 33% lower cost per employee (non-world class peers increased costs by 1.5% per year over the last 12 years), and 33% lower total operational cost. In short, world-class HR delivers ROI that absolutely eclipses their peers.

What does this all add up to?

HR can achieve so much more than most business leaders realize. With the right investments, help along the way, and a willingness to engage expert HR partners, the HR function can recruit better candidates more quickly, engage the workforce more effectively, drive enhanced productivity throughout an organization, and save money all the while. But that begs the question, how? We’ll look at that question in our next post in this series.

CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about CoAdvantage’s ability to create a strategic HR function in your business that drives business growth potential, contact us today.