World-class HR Organizations Seen Reducing Termination Rates, Operating Leaner

Increased efforts in skills analysis and development, greater focus on strategic workforce planning yield fewer, faster hires, Hackett finds

Increased efforts in skills analysis and development, greater focus on strategic workforce planning yield fewer, faster hires, Hackett finds

Atlanta — July 14, 2006 — With an intense focus on strategic workforce planning, world-class human resources (HR) organizations drive down voluntary termination rates to 33 percent that of typical companies, according to new research findings from business advisory firm The Hackett Group.

In part as a result of these lower termination rates, companies with world-class HR organizations require 46 percent fewer hires than typical companies and fill open positions 11 percent faster, Hackett reported in its latest Book of Numbers research findings.

Hackett's research identified "Hackett-certified Practices" — those empirically correlated with the practices employed by world-class HR organizations — to improve their workforce planning activities.

Among Hackett's findings: World-class HR organizations consult with senior management as they develop their strategic workforce plan and are more than six times more likely to do so than typical companies. They analyze skill sets and sourcing strategies, and they incorporate these into their plans about twice as often as typical companies. They also focus much more than typical companies on linking learning and development initiatives to the critical skills and competencies identified through their strategic workforce planning efforts.

World-class companies identify key performers and put formal retention programs in place for them, and they are 12 times more likely to do so than typical companies. They also are twice as likely to review succession plans with senior management on a regular basis. Finally, they focus on diversity, and are nearly four times more likely than typical companies to make it part of their strategic resource planning.

"The HR executive's primary goal in any company is to ensure that the business has the right talent and skills at the right time, in the right place and in the right role," said Hackett HR Practice Leader Stephen Joyce. "So it's not surprising to find that the best HR leaders show a continuous focus on improving their organizations' human capital — their ability to attract, develop and retain high-potential staff. Workforce planning and overall talent management are driving forces that enable world-class performance within all areas of an organization, and HR has a critical role to play."

According to Hackett Senior Business Advisor Brian Siller: "Predicted labor and skills shortages have made employee selection, development and retention a top priority for both business and functional leaders. Getting and keeping the talent to achieve critical business objectives will require HR to be more creative than ever before. For example, employment relationships will need to be flexible to appeal to the various segments of an age-diverse workforce, and organizations will take a closer look at what it takes to prevent unwanted turnover."

Overall, Hackett's Book of Numbers research found that world-class HR organizations spend 13 percent less than their peers ($1,614 versus $1,864 per company employee), and operate with 15 percent fewer staff (11.5 versus 13.5 HR staff per 1,000 employees). They also show improved performance across a wide range of efficiency and effectiveness metrics.

The research is available through the Hackett Research Insight Center at

Additional Articles of Interest

— To become world-class, companies must improve speed and agility, as well as enhance responsiveness, but they also must inspire passion, according to speakers at a recent best practices conference organized by The Hackett Group. Read more in "World-class Companies Move beyond Cost in G&A in Response to Globalization," online on

— The world may or may not be flat, but supply chains must still stretch around the globe. Read about one high-tech manufacturer's quest to deliver near-perfect fills rates across its global service organization in "Managing a Global Supply Chain in a 'Flat' World," only on