Optimizing the organization of HRM

January 20 2002 - Human Resource departments are often targeted by senior managers wanting to cut budget costs. So it makes sense for HR managers to know how to optimize their practices within tight financial constraints. A study by US benchmarking specialists, Best Practices, LLC, explored how businesses focus their limited HR assets into critical areas.

They found that most of the 'benchmark partners' (companies identified as using best practices) they examined outsourced a number of HR tasks in order to release staffing resources for more important functions. The most commonly outsourced functions were benefits and compensations.

Benchmark partners also tracked their HR metrics carefully in order to determine return on investment and to evaluate performance. One company used a balanced scorecard, measuring a wide range of financial, quality, operational and strategic metrics to determine the HR department’s performance and contribution to business profitability.

Major Findings

The following data analysis and best practice lessons were identified through quantitative surveys and executive interviews:

Coordinate HR Roles and Responsibilities - Most benchmark companies - whether centralized or decentralized - assigned corporate human resource functions the following responsibilities:

- managing benefits
- compensation
- leadership development/management
- Human Resource Information Systems and other HR technologies

They also found that few business units had sole responsibility for any specific HR activity.

In decentralized companies, business unit HR groups were also responsible for:

- staffing and recruiting
- employee communications
- generalist functions

Centralize HR Performance Measurement - Every benchmark company monitored their competitiveness for compensation/benefits, and over half tracked their overall headcount, employee turnover rates and safety incidents. But monitoring methods varied considerably. Decentralized companies gave responsibility for HR performance measurement decisions to individual business units or locations, letting each decide which metrics to track and how to collect them.

Maximize Use of Staffing and Budgeting Resources - The ratio of employees to HR generalists among the companies survyed ranged from 141:1 to 318:1. But the researchers pointed out that companies at the high end of this spectrum ran the risk of short-changing some of the tasks assigned to generalists.

Self-Service Technologies - Companies were increasingly creating HR call centers and incorporating self-service HR software programs within company websites in order to:

- reduce administrative costs and time
- increase information access to employees and managers
- enable strategic HR
- reduce overall HR headcount
- improve information accuracy

In fact these companies regarded their HR call centers as valuable entry points and training grounds for future full-time HR employees. HR assistance offered through self-service software and call centers included:

- clarifications on benefits plans
- performance management worksheets and monitoring
- questions about company policies
- incentive compensation allocations
- monitoring employee training administration

More information about purchasing "Optimizing Human Resources Organizations: Managing Staffing, Roles and Budgets," is available at http://www.benchmarkingreports.com/pr/hr54.htm