According to new research from The Hackett Group, Inc., Digital World Class human resources (HR) organizations have continued to establish their leadership through notable efficiency improvements and strategic investments in technology. These advancements have resulted in significantly lower labor costs, increased productivity and a robust foundation for the successful integration of generative artificial intelligence (Gen AI), projected to enhance HR efficiency by 51%.

“The increased strategic alignment between HR and other parts of the business ensures that HR initiatives are closely integrated with overall business goals. For HR leaders, the path forward involves balancing cost-efficiency with strategic investments in technology, especially Gen AI, to foster sustainable growth and a resilient workforce.”

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In 2024, Digital World Class HR organizations reported labor costs that are 44% lower than their peer groups – an impressive leap from 2023’s 33% reduction. This shows an ongoing commitment to efficiency and reflects a notable improvement from 2019 when world-class HR organizations aimed for a 17% reduction in cost per 1,000 employees through smart automation. Similarly, these teams can create an additional 40% capacity, delivering more value-added services to the business by leveraging intelligent automation, especially Gen AI.

Technology investments further underscore this commitment to reducing operational costs. In 2023, Digital World Class HR teams spent 85% more on technology per HR full-time equivalent than their peers. By 2024, this spending increased to 200% (or two times) that of their peers.

Automation remains a key factor, with Digital World Class HR organizations streamlining 85% or more of their transactions across six key HR processes. This increased focus on automation has led to a 51% increase in HR staff productivity in 2024, illustrating the continued impact of digital tools and Gen AI in boosting operations and enabling extensive self-service capabilities.

“Digital World Class HR organizations have made exceptional strides by leveraging technology, leading to unparalleled efficiency and productivity improvements,” said Anthony DiRomualdo, senior research director, HR Executive Advisory at The Hackett Group. “Our findings suggest that to continue on this trajectory, HR leaders should focus on integrating AI thoughtfully, ensuring it complements human capabilities rather than replacing them. This balanced approach can unlock new levels of innovation and employee engagement.”

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In terms of strategic business alignment, the report highlights that these organizations have significantly bolstered their influence. In 2024, Digital World Class HR organizations were 67% more likely to have senior HR leaders involved in strategic business planning, expanding on the contributions noted in 2023.

Additionally, they deploy 2.9 times more staff who are highly effective in strategic thinking and analysis. Qualitative attributes of staff like these are a major contributing factor to why Digital World Class HR organizations are so effective. They ensure staff keep pace with changing skills needs by providing 47% more training hours for professional staff annually.

Moreover, Digital World Class HR organizations spend 45% more on strategic workforce planning relative to talent management, which improves employee life-cycle cost, productivity and talent outcomes. It follows that Digital World Class HR organizations deliver remarkable business value by filling 68% more professional positions internally compared to their peers, and taking 27% fewer days to hire.

Jessica Haley, Global HR Executive Advisory practice leader at The Hackett Group, added, “The increased strategic alignment between HR and other parts of the business ensures that HR initiatives are closely integrated with overall business goals. For HR leaders, the path forward involves balancing cost-efficiency with strategic investments in technology, especially Gen AI, to foster sustainable growth and a resilient workforce.”

A public version of the research, “Insights From Top Performers: How to Level Up With Gen AI,” is available free

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Source – businesswire

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