HR Efficiency: Doing More With Less

HR Departments in all size companies are facing expanding workloads and operating costs – but not all are adding staff to cope. How’s that possible? World at Work recently reported some numbers on HR efficiency, gathered in a 2013 survey on HR staffing and costs.

Survey respondents came from companies ranging in size from under 250 to over 2,000 employees, meaning that the whole range of HR management style was represented – from the small company executive who’s fulfilling the HR function part time, to the full-scale HR department headed by a VP for HR. The way HR functions are carried out within this spectrum can vary widely, so it’s interesting to examine what trends they might have in common.

Several of their findings stood out for us.

1. One of those trends occurring everywhere is increased HR operating costs, which rose by an average of 36% over the past two years. Going forward, more than 45% of survey respondents expect further increases in the next two years. (Some 11% had a contrary view, expecting budgets to decrease.) This wasn’t surprising, considering the ever more difficult regulatory environment in which companies operate.

2. Another notable trend is that HR budgets are increasing. Activities budgets (for things like recruiting, training, etc.) have increased 33% in two years, and nearly 40% of respondents expected larger activities budgets in the next two years. This may be indicative of the costs associated with meeting ever more expansive regulations.

3. The minority of respondents who reported falling operational costs cited a number of different reasons. The most commonly cited explanation (21.1%) was efficiency improvements. Since the numbers elsewhere in the study show HR workloads at all size operations to be increasing, these plucky few have managed to find ways to manage their workflows in a smarter, more streamlined fashion. In the classic phrase, they are doing more with less.

This last point is the most intriguing part of the study, for our money. How are these HR departments able to avoid adding staff when they’re responsible for more work than ever before? They’ve had to keep up with the ever-changing dynamics of modern recruiting, choose from an expanding universe of training and quality improvement courses, select from a vastly changing menu of benefits programs, and keep current with a slew of new laws, judicial rulings and regulations that affect how companies must deal with their employees’ personal circumstances.

Within the numbers is the fact that larger companies are doing a better job of controlling costs than smaller companies, and it’s where you see most of the efficiencies happening. Companies with 1000+ employees are spending only $721 per employee, while the under 250 group is spending about $1,784 per employee.

You really have to wonder what kinds of efficiency improvements can make up for these burgeoning HR responsibilities. The most obvious one that comes to mind is automation. Larger companies have invested more heavily in their HR technology than smaller outfits. At over $1,000 per employee in increased costs, we would contend that these smaller enterprises can’t afford not to invest — especially considering the low price points offered today by full featured HR management systems.

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