Hr Book of Metrics 2009

8/8/2019 Hr Book of Metrics 2009

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2009Human ResourcesBook o Metrics:Executive Summary

Global Benchmarking Center

September 2009


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Dear Colleague:

As executives ace incredible pressure in todays shaky business environment, cost-cutting initiatives become even more crucial than ever.

Where will I get the most impact without negatively aecting our ability to serve the business? Where can I reduce costs without

endangering our ability to rebound quickly when the economy improves and talent needs change? Are opportunities in my industry the same

as in other industries?

Measuring internal strengths and weaknesses and comparing them against best-in-class perormance can help executives in their eorts

to identiy and mitigate gaps that have the potential to impair the perormance o both the human resources unction and the entire business.

To quantiy various improvement opportunities, Deloitte has conducted diagnostic studies o core human resources activities:

Transactionprocessing

Rewardsadministration Talentmanagement

Strategyandprogramdesign

We believe that in conducting these studies and by identiying the spend amounts o low-cost perormers, we can provide executives relevant

data and practical insights about their competitive positioning.

We hope you fnd the results o our studies helpul and instructive, and we invite you to contact our specialists or urther inormation about

our research.

Sincerely,

Richard T. Roth

Principal

National Benchmarking Leader

Deloitte Consulting LLP

As used in this document, Deloitte means Deloitte Consulting LLP, a subsidiary o Deloitte LLP. Please see

www.deloitte.com/us/about or a detailed description o the legal structure o Deloitte LLP and its subsidiaries.

All study data and statistics reerenced and presented in this report, as well as the representations made and opinions expressed, unless specifcally described otherwise, pertain only to the

participating organizations and their responses to the Deloitte Global Benchmarking Center study o human resources process perormance conducted in 2009.


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Overview: Why industry matters ................................................................ 1

Transaction processing .............................................................................. 3

Rewardsadministration............................................................................. 5

Talent management ................................................................................... 7

Strategyandprogramdesign .................................................................... 9

Studyapproachandmethodology........................................................... 11

Contents

2009 Executive Summary Finance diagnostic benchmark study


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Overview: Why industry matters

Executives that useindustry-specifcbenchmarking to eectcost reductions,

operational improvementand better decisionmaking are more likely toset the pace or theircompetition.

Figure 2: HR process cost per employee

Strategy and program des

Talent managementadminstration

Reward administration

Transaction processing

Cross-industrylow-cost performer

Cross-industrymedian

$1,520

$928

In an environment where the pressure to perorm gets higher while the cycle times

or making decisions gets shorter, executives depend on access to data thats relevant

to them, timely and specifc to their industry. What are my competitors spending,

and where? How does that aect MY spending decisions?

While the cross-industry perormance measures in this executive summary are useul,

industry-specifc benchmarking can provide executives with the targeted data needed

to guide ast, eective decision making and achieve competitive advantage (Figure

1). Metrics such as cost and FTEs are compared with a defned set o industry medianand low-cost perorming peers to identiy cost gaps. This analysis is signifcant; while

a metric is a useul number, a cost gap measured in pure dollars and specifc to

the company can help identiy opportunities. In other words, companies looking

to reach the level o the studys median or low-cost perormers will see what that

means to them in dollars.

Executives that use industry-specifc benchmarking to eect cost reductions,

operational improvement and better decision making are more likely to set the pace

or their competition.

Across industries, human resources process-related costs o the low-cost perormers

in the study are 28% lower than the median, with much o the savings occurringin process costs labor and outsourcing (Figure 2). Examining those process costs

urther, the study shows a process cost gap o $592 per employee, with $271 o this

opportunity in labor and outsourcing costs or the rewards administration process

category (Figure 3).

Figure 1: Total HR cost per employee

Cross-industry

$2,189

$1,578

$3,585

$2,694 $2,517

$1,910

$893

$1,578

High-tech Automotive Industrial products

MedianLow-cost performer


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Transaction processing

Low-cost perormers spend 13% less in transaction processing costs than the

median

Low-cost perormers have the same sta as the median, yet our study fnds that

they still achieve 13% more efcient transaction processing administration

primarily due to common processes and their high use o sel-service (Figures 5-6).

Eective transaction processing practices are oten supported by a strong level o

automation and system integration, as well as centralized common and non-strategicservices, such as payroll, time and attendance processing (Figure 7).

For example, based on our research, eective HR organizations invest in operations

inrastructure that can vastly improve back-ofce efciency and move controls to the

beginning o a process instead o relying on downstream processes to catch errors.

Figure 5: Transaction processing staff per 1,000employees


Cross-industrylow-cost

3.2 3.2

Figure 6: Transaction processing process costper employee


Cross-industrylow-costperformer

$340

$295


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2009 Executive Summary Human resources book o metrics 4

Enablers Eective Practice Attributes

Tools are ully automated, standardized, and consistently developed with

one common and global HR data warehouse

Management inormation system is ully integrated and automated, with

system validation checks and edits

Employee sel-service tools (ESS), both PC and interactive voice response

systems (IVR), are highly utilized

Outsourced/shared services operations are used when practical and cost

eective

Centralized operations eectively execute transactions and align with

organization needs

Sta is knowledgeable, continually trained, and able to quickly identiy

business requirements and anticipate uture needs

Transaction policies and processes are defned, efcient, customizable, and

continuously developed and improved

Standardization and automated data sharing is paramount or transaction

processing, and top organizations demonstrate a well documented,

reerenced policy manual

Systems &

Inormation

Organization &

Talent

Policy &Process

Figure 7: Automation and system integration support transaction processing improvements


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Employee sel-service tools (ESS) and manager sel service (MSS) play a

signifcant role

Electronic and/or interactive voice response units are utilized or open enrollment

and data changes

Beneft usage is tracked, and employees are surveyed to understand their

opinions about what programs are most benefcial; oerings are then tailored

based on eedback

Asset/liability modeling is used to fnd an investment mix that best aligns with

unding goals or defned beneft pension plans

Outsourcing is highly utilized or Tier 1 and specialized services

Tier 2 and 3 services are delivered by centers o excellence

Compensation process is standardized to a single, company-wide process,

while decision making, communication and administration components are

decentralized

Depending on organization goals, entitlement programs are replaced by

perormance-based compensation programs (i.e., employee stock ownership

programs, proft sharing)

Defned beneft health plans are replaced by defned contribution plans,

with cost management and a decreased employer role making them a more

attractive option

Figure 10: Perormance-based compensation plans earn avor over entitlement programs

Systems &

Inormation

Organization &

Talent

Policy &

Process


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Talent management

administrationLow-cost perormers spend 28% less than the

median on talent management administration

In our study, talent management administration is

another area where low-cost perormers deliver

services at a lower cost and with ewer sta. Low-cost

perormers spend 28% less than the median (Figure

11) and with a more prolifc use o common processes,

centers o excellence and outsourcing, they utilize33% ewer sta than the median (Figure 12). A

more efcient use o ESS and MSS as well as more

integrated technology systems also helps them keep

costs in line.

Based on our research, well-conceived technology

solutions and outsourcing agreements can drive

common processes, reduce labor costs, and increase

process efciency and eectiveness. Outsourcing can

be particularly successul in lowering stafng costs, as

it can help scale process expenditures to the business

need (Figure 13).

Figure 11: Talent management administration

process cost per employee



$408

$293

Figure 12: Talent management administration

staff per 1,000 employees



performer

3.9

2.6


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Web-based training is blended with instructor-led training to maximize

on-the-job time

Job description ormats and terminology are standardized and kept

up-to-date

Proessional development programs are aligned with organizational

strategies

Internal candidates are identifed whenever possible

Learning vendor costs are managed with an approved vendor list, ormal

vendor selection process and managing long-term agreements with SLAs

and perormance agreements

Recruiters are integrated into the upront orecasting and planning process

to discuss growth goals, anticipated attrition and critical skill requirements

Figure 13: Aligning with organizational strategy helps maximize talent managementadministration eectiveness

Systems &Inormation

Organization &

Talent

Policy &

Process


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Strategy and program design

Low-cost perormers spend 52% less than the

median on strategy and program design

A clearly defned strategy properly aligned with the

overall business strategy can make a huge dierence

when creating a high-value workorce that best serves

both present and uture needs.

Our study shows that low-cost perormers spend 52%less on strategy and program design than the median

(Figure 14) while allocating the same percentage o

FTEs (13%) (Figure 15).

Some o the practices that help low-cost perormers

gain an edge over their median counterparts are the

use o HR sta with strong business knowledge to

partner with business leaders in designing strategy,

as well as the use o centers o expertise to create

common business-oriented programs (Figure 16).

Figure 14: Strategy and program design

process cost per employee



$309

$147

Figure 15: Percent of HR FTEs allocated to thestrategy and program design process



performer

13% 13%


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Common global processes, shared services centers and ESS/MSS are

implemented to deliver processes eectively

Shared services use extends into decision-making roles, allows business partners

to spend more time on strategy as opposed to administrative activities

HR business partners have a primary role o providing strategic HR d irection to

business leaders

Strategic partners provide specialized knowledge, as needed

Business-savvy HR generalists and specialists are employed in the organization

Administrative HR resources are reduced and realigned to elevate the role o

business partners as advisors to line management

Figure 16: Shared services moves beyond administrative support togenerate more value rom business partners

Systems &

Inormation

Organization &Talent

Policy &Process


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Study approach and methodology

Methodology

This report is the result o a Deloitte Global

Benchmarking Center study o human resources process

perormance. We gathered one year o data across

Transaction Processing Rewards Administration Talent Management Strategy and Program Design

Employee data administrationPayroll, time and attendance

Health and welare beneftsadministrationCompensation administrationDefned beneft planadministrationDefned contribution planadministration

Career developmentadministrationGlobal mobility administrationEmployee relationsadministrationLearning administrationStafng administration

HR strategyHR program design

Key defnitions

Low-cost perormers: Partcipating companies in the

frst quartile o the our process categories*

Median: Midpoint value o participants

Total HR cost at the companies in the study:

Labor: Fully loaded labor cost (compensation and

benefts) o employees, contractors and temporaries

Outsourcing: Services provided by third-party

vendors

Technology: Hardware, sotware, license ees, and

the related support

Other: Facilities, supplies, travel, training

Process cost: Cost o labor plus outsourcing at the

companies in the study

3 Year Revenue CAGR

Revenues

Employees

Countries

Legal Entitles

$30.1M $670.8M $1.9B $3.9B $20.2B

-12.0% 2.2% 8.9% 15.3% 132.0%

132 1,750 4,099 7,914 71,853

1 1 3 21 80

1 1 3 21 80

Min 1st Quartile Median 3rd Quartile Max

Profle o participants

Participants in this study represent a cross-section o

various sectors:

13 processes in our process categories. By ollowing

a strict taxonomy, the researchers generated apples-

to-apples comparisons necessary or meaningul

perormance measures:

*Low-cost perormers are not necessarily best in class along othermeaningul dimensions, such as quality, innovation, or customer/employee satisaction. The benchmarks in this study suggestpossible cost-reduction opportunities, which must be balancedagainst growth strategies.

All study data and statistics reerenced and presented in this report, as well as the representations made and opinions expressed, unless specifcally described otherwise, pertain only to the

participating organizations and their responses to the Deloitte Global Benchmarking Center study o human resources process perormance conducted in 2009.


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Partial participant list

Accuride Corporation

AFLAC Incorporated

Aisin Holdings O America, Inc

Allegheny Energy, Inc.

Applied Materials, Inc.

Autodesk, Inc.

Ball CorporationBayer Corporation

CIGNA Corporation

Cleaver-Brooks, Inc.

Convergys Corporation

Crane Plastics Manuacturing Ltd.

Flowserve Canada Corp

Gardner Denver, Inc.

Genentech, Inc.

Gilead Sciences, Inc.

Graybar Electric Company, Inc.

Harley-Davidson, Inc.

Hitachi Automotive Products (USA) Inc.JDS Uniphase Corporation

Johnson Controls, Inc.

Juniper Networks, Inc.

Keihin Indiana Precision Technology, Inc.

Kyb Manuacturing North America Inc

Lexmark International, Inc.

Mine Saety Appliances Company

Modine Manuacturing Company

M-Tek Inc.

National Semiconductor Corporation

NetApp, Inc.

North American Lighting, Inc.

Novo Nordisk A/S

NTN USA Corporation

NVIDIA Corporation

Old World Industries, Inc.

Omnicell, Inc.Omron Automotive Electronics, Inc

Oshkosh Corporation

Polaris Industries Inc.

Rexnord Holdings, Inc.

Rockwell Automation, Inc.

RTI International Metals, Inc.

SanDisk Corporation

SAP America, Inc.

SunPower Corporation

Synopsys, Inc.

Textron Inc.

The Manitowoc Company, Inc.Tokico (USA) Inc.

Tower Automotive Inc.

Ts Tech North America, Inc

United Technologies Corporation

US Foodservice, Inc.

Valmont Industries, Inc.

Varian, Inc.

Verigy Us, Inc.

Wabash National Corporation

Winnebago Industries, Inc

Yamaha Motor Corporation, U.S.A.


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About theGlobal Benchmarking Center

Deloittes Global Benchmarking Center (GBC) was established to provide executives with industry-relevant metrics

and insight. The GBC delivers this inormation through ongoing benchmark studies in areas such as sales, general

and administrative (SG&A), fnance and accounting, supply chain, inormation technology, human resources, and

operations. The GBC has conducted studies in more than 500 global organizations since 2005. These studies are

uniquely designed to provide industry-specifc insight relevant to multiple sectors.

Consumer and Industrial Products

Aerospace and Deense-

Automotive-

Consumer Products-

Process and Industrial Products-

Retail-

Tourism, Hospitality and Leisure-

Financial Services

Banking-

Securities-

Insurance-Energy and Resources

Oil and Gas-

Power and Utilities-

Lie Sciences and Health Care

Health Care Providers-

Health Plans-

Lie Sciences-

Government

Federal Government-

State Government-

Local-

Technology, Media, and Telecom

Media & Entertainment-

Technology-Telecommunications-

Fina nce

Inormation Technology

Human Resources

Sales and Marketing

Indirect Materials

Corporate Services

Legal

Corporate Real Estate

Supply Chain

Operations

Product Development

Industry Function


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AuthorsRichard T. RothPrincipalNational Benchmarking Practice LeaderDeloitte Consulting LLPAtlanta, GA+1 404 942 6719

[email protected]

Contributors

Greg des GroseillersGlobal Benchmarking CenterDeloitte Consulting LLPPhiladelphia, PA+1 484 406 [email protected]

Participation in our studies is open to all companies. For inormation about participating in a human resourcesstudy, contact:

Global Benchmarking CenterDeloitte Consulting LLP+1 866 897 [email protected]


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This publication contains general inormation only and is based on the experiences and research o Deloitte practitioners. Deloitte is not, by

means o this publication, rendering business, fnancial, investment, or other proessional advice or services. This publication is not a substitute

or such proessional advice or services, nor should it be used as a basis or any decision or action that may aect your business. Beore making

any decision or taking any action that may aect your business, you should consult a qualifed proessional advisor. Deloitte, its afliates, and

related entities shall not be responsible or any loss sustained by any person who relies on this publication.

Copyright 2009 Deloitte Development LLC. All rights reserved.

Member o Deloitte Touche Tohmatsu

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