US HR organizations spending increasesStaff writer ▼ | January 16, 2015
US human resources organizations increased spending on talent initiatives in 2014, following a rise in employee turnover to 20 percent in 2013, up from 17 percent in 2010, according to new research from Bersin by Deloitte.
Study Bersin by Deloitte
Summarized in a complimentary WhatWorks Brief, the findings show that HR budgets rose an average of 4 percent to $2,936 per employee in 2014. Staffing and technology were the two biggest spending items for the year, with HR staffing up 3 percent on average and one in five organizations citing "technology" as the biggest area for increased investment.
The new research provides key benchmarks and guidance to help human resources teams make valuable investment decisions.
HR organizations at the highest level of maturity spend more than their peers. Mature HR organizations – those with HR functions integrated into the business – spend $4,434 per employee on average, compared with just $2,112 among those at the lowest level of maturity, which tend to have compliance-driven HR functions.
Mature HR organizations have more staff and less involuntary employee turnover.
These high-impact HR organizations also have lower involuntary turnover compared with compliance-driven HR organizations (8 percent vs. 11 percent).
One-fifth of the study's 251 responding organizations said that HR technology was a key area of increased investment in 2014. Bersin by Deloitte's recent research, "Vendor Management in HCM Software Implementation," suggests that the HR technology market is hot, with many organizations trading in outdated systems for new systems offering better integration, improved ease of use and more powerful reporting and analytics capabilities.
HR budgets vary substantially by industry, and some sectors fared better than others. For example, financial service companies increased their HR spending by 10 percent to an average of $3,729 per employee.
By contrast, retail organizations cut their HR budgets an average of 4 percent during the year as they struggled to cut expenses and increase profits at a time of increasing online sales coupled with tentative consumer demand. ■