New Study Finds That HR’s C-Suite Influence is Increasing — a Lot

From the HR blog at TLNTFrom the HR blog at TLNT

Every once in a while, I get a survey that serves up so much information that it becomes really difficult to simply characterize it in an article or blog post.

This study by XpertHR, titled HR Staffing, Costs and Structure Benchmarks 2013 Report, falls into that camp.

According to the survey of more than 150 private and public companies employing more than 200,000 people, including nearly 2,000 HR staff, the top line finding is that “HR’s influence in the workplace and with the C-suite has increased more than 50 percent over the past two years. … Respondents felt changes in HR leadership, greater recognition from the top, improvements in how HR works, and recognition that HR has successfully met challenges were among the top reasons for HR’s more influential role as a strategic partner.”

I don’t know about you, but that alone got my attention.

HR pros overall “are optimistic about the future”

Other notable trends from the study are that:

  • HR operating costs have risen markedly (36 percent) and activities budgets have increased 33 percent over the past two years.
  • Nearly half (45.5 percent) of the HR professionals surveyed expect their companies’ operating budgets to increase over the next two years, while just 10.9 percent expect budgets to decrease.
  • In addition, 39.7 percent expect their HR activities budgets to increase over the next two years.

“We found that HR professionals overall are optimistic about the future, especially when it comes to increased budgets and spending,” says Peggy Carter-Ward, head of content at XpertHR, in a press release about the study. “HR’s influence in the workplace is also increasing, which is an indicator that HR practitioners will be playing an even more crucial leadership role in their organizations’ success.”

I’m not an HR professional, although I have spent a good chunk of my career managing people and covering the HR profession, but the thing that I took away from the HR Staffing, Costs and Structure Benchmarks 2013 Report is the sheer volume of data about all things HR. There’s a lot to chew on in this report, and it would be something I would want to spend a lot of time with if I were working in HR or talent management.

Other HR benchmarks

For example, the survey overview (sort of the executive summary), broke out these key benchmarks to emerge from the study:

  • The typical ratio of HR staff to employees was 1:100. In other words, each member of the HR department provides HR services to 100 employees.
  • The typical ratio of senior to junior HR staff was 1:1.5. Most organizations have more junior HR staff doing the paperwork than making decisions.
  • The typical annual HR operating cost per HR staff member was $100,000. This was the cost of running the HR department itself, including HR salaries.
  • The typical annual HR activities budget per employee was $1,250. This was how much HR had to provide HR services, from recruitment to training to termination.

Of course, these benchmarks came with this caveat:

All these figures vary according to the size of the organization and the sector in which they operate. For example, larger companies usually expect each HR practitioner to look after more employees than smaller ones – with a ratio of 1:60 in small businesses and more than 1:120 in those with 1,000 or more employees. Smaller companies spend more on their HR departments than larger ones.”

What size of companies were surveyed?

And here’s something else to factor into all of this, from the “About the Survey” section:

We received usable responses from 156 organizations. Between them they employ a total of 219,302 people, have 1,978 HR staff and have workplaces in every U.S. state.

Participating organizations vary in size from tiny micro-businesses to those with tens of thousands of employees; the median employer in the survey by size has 386 employees, within a range that runs from 164 employees at the lower quartile to 800 at the upper quartile. The middle 50 percent of all respondents therefore fall within this range. In reporting our findings, we have grouped respondents in three broad size bands:

  • 56 have one to 249 employees;
  • 64 have 250 to 999 employees; and,
  • 36 have 1,000 or more employees.

These three bandings broadly represent small, medium and large employers.”

I don’t know about you, but I don’t consider 1,000 employees to be a “large” employer, because most definitions of that range anywhere from 2,500 to 10,000 employees (and occasionally, even more). Make of that what you will, but I don’t think it invalidates any of the findings in the HR Staffing, Costs and Structure Benchmarks 2013 Report, it just means that YMMV — your mileage may vary.

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“A confident and optimistic HR profession”

There were a few more highlights from the research that are worth mentioning:

  • Although “HR in most organizations considers itself to have the lead responsibility for most people management activities, it is also common to want to share this responsibility with line managers. In half the organizations surveyed, HR and line managers were equal partners in handling employee relations, and in nearly two-thirds there was shared responsibility for performance management.”
  • The survey found a confident and optimistic HR profession. “Well over half believe that HR?s influence in the workplace and the C-suite has increased over the past two years, and almost all the rest report that it has remained unchanged. Just one in 10 say it has decreased. Asked to explain … respondents pointed to dynamic new leadership within their HR function, and to a growing recognition on the part of the Chief Executive Officer and his or her senior colleagues that HR is effective at what it does and can deliver the goods for the organization as a whole in an expert and professional way.”

And in case you were wondering, 67 percent of the respondents said that their organization’s most senior HR executive reported to either the CEO (55.1 percent), or the chief operating officer (12.2 percent). Only 12.2 percent said the top HR person reported to the CFO, so perhaps that trend isn’t as big a deal as some might think.

XpertHR, the company behind this study, is a sister company to LexisNexis and describes itself as an online service providing “HR professionals with practical compliance tools and comprehensive guidance on federal, state and municipal law, helping employers stay current with evolving and complex employment law issues.”

I haven’t dealt with XpertHR very much, but I’m impressed with this study because it really has a lot of solid information about the current state of HR that should be of great interest to anyone in human resources or any related function.

It’s well worth spending some time with, and you can get a copy here.

  • Jacque Vilet

    It’s a shame that Xpert HR didn’t survey CEOs instead of HR. What really counts is what they think.

    • John Hollon

      Jacque, I think that HR professionals were just part of the people surveyed here. Yes, a CEO-only study might have been a little more pointed, but I still found this one to have a lot of value and interesting information.

    • Peggy Carter-Ward

      Jacque, thanks for the suggestion. The CEO perspective would be an interesting point of comparison and overlay to the results from the HR perspective. As John noted, this particular survey was directed to the HR professional. We will look into a CEO survey. Peggy Carter-Ward, Head of Content, XpertHR

      • Jacque Vilet

        Thank you Peggy.

  • Terri Kruzan

    Thanks for the insights – need to read more and see if this report is providing data regarding a real company culture shift happening across organizations – the shift towards ‘managing people well becoming more valued!’ What caught my eye as a Culture Sleuth was that one of the top reasons for HR’s more influential role as a strategy partner is that ‘HR has successfully met its challenges.” A key enabler of culture change is when new practices, behaviors and attitudes bring success to the business and overtime reinforces an underlying belief. The company culture belief that influences the power of HR within organizations is how much the culture sees ‘results are achieved through people.’ Historically that is not a common belief for American-based organizations.

  • Carol Anderson

    In my experience mega-company HR (100,000+) and those that are smaller (in my mind less than 1,500) are not where the challenge lies for HR. Where I have seen the challenge is in organizations with multiple lines of business, working in a matrix design with multiple levels of leadership that struggle. My theory (which I’d love to explore) is that the multiple cultures that come with multiple business lines and multiple leaders creates confusion for HR in terms of how they support their clients. HR gets pulled in multiple directions, and has an uphill battle to develop and execute a plan that will satisfy all of their clients. Would be interested in others’ thoughts on this.