HR DEPARTMENT BENCHMARKS AND ANALYSIS

HR DEPARTMENT
BENCHMARKS
AND ANALYSIS
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
2012-2013

s Table of Contents
Acknowledgements ..............................................................................................
About the Authors ...............................................................................................
Executive Summary .............................................................................................
x
xi
xii
Introduction: Guide to Using This Report
Overview ......................................................................................................... 3
Frequently-Used Terms ..................................................................................... 5
Design, Methodology, and Presentation ............................................................ 7
Profile of Participating Organizations ............................................................... 9
Chapter 1: HR Department Staffing
Overview ......................................................................................................... 13
Highlights ........................................................................................................ 14
How It’s Measured: The HR Staff Ratio ......................................................... 16
How It’s Presented: HR Staff Ratios in Charts and Tables ............................. 18
HR Staff Ratios: Trends and Analysis ................................................................ 19
Staff Composition of the HR Department .......................................................... 25
Specialists in Human Resources ....................................................................... 27
Contingent Workers and Human Resources ...................................................... 30
Perspectives on Challenges and Obstacles in Hiring Contingent
Employees ................................................................................................ 32
HR Activity Loads ............................................................................................ 34
How It’s Measured: HR Activity Load Scale ................................................... 35
Trends in HR Staff Levels: Cuts vs. Increases ................................................... 36
Chapter 2: HR Expenditures and Budgets
Overview ......................................................................................................... 41
Highlights ........................................................................................................ 42
How It’s Measured: HR Expenditures and Budgets ........................................ 44
How It’s Presented: HR Costs per Capita in Charts and Tables ...................... 46
HR Expenditures per Employee ......................................................................... 47
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HR Department Benchmarks and Analysis 2012-2013
Budgeted Changes in HR Expenditures ............................................................. 52
How It’s Measured: HR Budgets as a Percentage of Operating Costs ............. 54
HR Budgets and Total Operating Costs ............................................................. 55
Benchmarking HR Expenditures: Factors to Consider .................................... 59
How It’s Measured: HR Salaries as a Percentage of Payroll
(HR Salary Ratio) ..................................................................................... 60
HR Salaries and Total Payroll Costs .................................................................. 61
HR Staff Salaries ............................................................................................. 64
Chapter 3: HR Measurement and Strategic Planning
Overview ......................................................................................................... 67
Highlights ........................................................................................................ 68
Degree of Measurement and Planning in Key HR Areas ..................................... 69
Perspectives on HR’s Use of Metrics ............................................................ 74
HR Measurement and Planning Scale ............................................................... 76
Top HR Priorities .............................................................................................. 78
HR Involvement in Key Decisions ...................................................................... 82
Perspectives on HR’s Role and Influence in Strategic Planning ...................... 86
Chapter 4: HR Activities
Overview ......................................................................................................... 91
Highlights ........................................................................................................ 92
Changes in HR Responsibilities ........................................................................ 94
Employment and Recruiting ............................................................................. 96
Strategic Planning ........................................................................................... 99
Training and Development ................................................................................ 102
Compensation .................................................................................................. 105
Benefits .......................................................................................................... 108
Employee Services .......................................................................................... 111
Employee Relations ......................................................................................... 113
External Relations ........................................................................................... 116
Personnel/HR Records .................................................................................... 118
Health and Safety ............................................................................................ 120
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Chapter 5: HR Outsourcing
Overview ......................................................................................................... 125
Highlights ........................................................................................................ 126
Extent of Outsourcing ...................................................................................... 127
The Outsourcing Decision ................................................................................ 133
Outsourcing Outcomes ..................................................................................... 136
Outsourcing Obstacles and Prospects .............................................................. 139
2012 The Bureau of National Affairs, Inc. • Arlington, Virginia
v

HR Department Benchmarks and Analysis 2012-2013
s List of Figures
Chapter 1—HR Department Staffing
Figure 1-1—HR Staff Ratios: 2002-2012 .......................................................... 19
Figure 1-2a—HR Staff Ratios for 2012 by Workforce Size ................................. 21
Figure 1-2b—HR Staff Ratios for 2012 by Workforce Size ................................. 21
Figure 1-3a—HR Staff Ratios for 2012 by Industry ........................................... 23
Figure 1-3b—HR Staff Ratios for 2012 by Industry ........................................... 24
Figure 1-4—Composition of HR Department Staff ............................................. 25
Figure 1-5—HR Staff Composition by Workforce Size ........................................ 26
Figure 1-6—Prevalence of Human Resource Specialists by Workforce
Size .............................................................................................................. 27
Figure 1-7—Prevalence of Human Resource Specialists by Area ........................ 29
Figure 1-8—HR’s Role in Hiring Contingent Workers ......................................... 30
Figure 1-9—Median HR Staff Ratios by HR’s Role in Hiring Contingent
Workers........................................................................................................ 31
Figure 1-10—HR Activity Load Scale ................................................................ 34
Figure 1-11—Median HR Staff Ratios by Activity Load ...................................... 35
Figure 1-12—Changes in HR Staff Levels: 2011-2012 ....................................... 36
Figure 1-13—Changes in HR Staff Levels: 2000-2012 ....................................... 37
Chapter 2—HR Expenditures and Budgets
Figure 2-1a—Per Capita HR Expenditures Budgeted for 2012
by Workforce Size ......................................................................................... 48
Figure 2-1b—Per Capita HR Expenditures Budgeted for 2012
by Workforce Size ......................................................................................... 48
Figure 2-2a—Per Capita HR Expenditures Budgeted for 2012
by Industry ................................................................................................... 50
Figure 2-2b—Per Capita HR Expenditures Budgeted for 2012
by Industry ................................................................................................... 51
Figure 2-3—Median Budgeted Changes in Total HR Expenditures:
2001-2012 ................................................................................................... 52
Figure 2-4—Budgeted Changes in Total HR Expenditures: 2010 versus
2012 ............................................................................................................ 53
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Figure 2-5—Budgeted Changes in Total HR Expenditures: 2010 versus
2012 ............................................................................................................ 53
Figure 2-6—HR Budget as a Percentage of Total Operating Costs:
2001-2012 ................................................................................................... 55
Figure 2-7a—HR Budget as a Percentage of Total Operating Costs by
Workforce Size ............................................................................................. 56
Figure 2-7b—HR Budget as a Percentage of Total Operating Costs by
Workforce Size ............................................................................................. 57
Figure 2-8—HR Budget as a Percentage of Total Operating Costs by
Industry........................................................................................................ 58
Figure 2-9—HR Salary Ratio versus HR Staff Ratio: 2001-2012 ........................ 61
Figure 2-10—HR Staff Salaries as Percentage of Total Salaries by Workforce
Size ..................................................................................................... 62
Figure 2-11—HR Department Salaries as Percentage of Total Organization
Payroll by Industry (2012)...................................................................... 63
Figure 2-12—Median Budgeted Change in HR Staff Salaries:
2001-2012 ................................................................................................... 64
Chapter 3—HR Measurement and Strategic Planning
Figure 3-1—Frequency of HR Measurement and Planning .................................. 71
Figure 3-2—Frequency of HR Measurement and Planning
by Workforce Size ......................................................................................... 73
Figure 3-3—HR Measurement and Planning Scale ............................................. 76
Figure 3-4—Number of Areas That HR Measures by Workforce Size ................... 77
Figure 3-5—HR Priorities for 2012 ................................................................... 79
Figure 3-6—HR Priorities for 2012 by Workforce Size ....................................... 81
Figure 3-7—Reporting Relationships of HR Executives ...................................... 82
Figure 3-8—Strategic Involvement of HR Within Organization ............................ 83
Figure 3-9—HR Strategic Involvement by Reporting Relationship ..................... 84
Figure 3-10—HR Strategic Involvement by Number of HR Measurement
and Planning Activities.................................................................................. 85
Chapter 4—HR Activities
Figure 4-1— Changes in HR Responsibilities Within the Past Year ..................... 94
Figure 4-2—Changes in HR Responsibilities: 2002-2012 ................................... 95
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HR Department Benchmarks and Analysis 2012-2013
Figure 4-3—Employment and Recruiting - Who Handles It? ............................... 97
Figure 4-4—Employment and Recruiting by Workforce Size .............................. 98
Figure 4-5—Strategic Planning - Who Handles It? ............................................. 99
Figure 4-6—Strategic Planning by Workforce Size ............................................ 101
Figure 4-7—Training and Development - Who Handles It? .................................. 103
Figure 4-8—Training and Development by Workforce Size .................................. 104
Figure 4-9—Compensation - Who Handles It? ................................................... 105
Figure 4-10—Compensation by Workforce Size ................................................. 107
Figure 4-11—Benefits - Who Handles It? .......................................................... 109
Figure 4-12—Benefits by Workforce Size .......................................................... 110
Figure 4-13—Employee Services - Who Handles It? .......................................... 111
Figure 4-14—Employee Services by Workforce Size .......................................... 112
Figure 4-15—Employee Relations - Who Handles It? ......................................... 113
Figure 4-16—Employee Relations by Workforce Size ......................................... 115
Figure 4-17—External Relations - Who Handles It? ........................................... 116
Figure 4-18—External Relations by Workforce Size ........................................... 117
Figure 4-19—Personnel/HR Records - Who Handles It? .................................... 118
Figure 4-20—Personnel/HR Records by Workforce Size .................................... 119
Figure 4-21—Health and Safety - Who Handles It? ............................................ 120
Figure 4-22—Health and Safety by Workforce Size ............................................ 121
Chapter 5—HR Outsourcing
Figure 5-1—Prevalence of HR Outsourcing: 2002 – 2012 .................................. 127
Figure 5-2—Prevalence of HR Outsourcing by Industry Sector ........................... 129
Figure 5-3—Most Prevalent Outsourced HR Activities ....................................... 130
Figure 5-4—HR Outsourcing Prevalence by Workforce Size ............................... 131
Figure 5-5—Most Prevalent Outsourced HR Activities, by Workforce
Size .............................................................................................................. 132
Figure 5-6—Who Initiated the Outsourcing Decision? ........................................ 133
Figure 5-7—Top Factors in Choice of Outsourcing Provider ................................ 135
Figure 5-8—Did Outsourcing Initiative Coincide with HR Staff Cuts? ................. 136
Figure 5-9—Does HR Oversee the Relationship with the Vendor? ....................... 137
Figure 5-10—Results of Outsourcing in Key Areas ............................................ 138
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Figure 5-11—Outsourced HR Activity Ever Brought Back in House? .................. 139
Figure 5-12—Why Doesn’t the HR Department Outsource? ............................... 140
Figure 5-13—New Outsourcing of HR Function(s) in Next 12 Months? .............. 141
2012 The Bureau of National Affairs, Inc. • Arlington, Virginia
ix

Introduction: Guide to Using this Report
s Overview
Technological advancements, the social media age, global financial instability, and
a weak economic recovery have ramped up the uncertainties and challenges faced
by employers. Companies that have thrived for decades are closing their doors,
while new enterprises and products are creating and transforming markets.
Moreover, a generational transition looms; as baby boomers reach retirement age,
Generation X and Y will soon dominate the working population. Already, this next
generation of employees is making their voices heard, with different expectations
of their jobs and their employers.
Human resource professionals and departments are right in the middle of it all, of
course; virtually every workforce transition, economic development, and
technological innovation has implications for the human resources function. Every
HR department responsibility—employment, training, compensation, benefits,
etc.—grows more sprawling and complex with each passing year.
HR Department Benchmarks and Analysis 2012-2013 provides a comprehensive
overview of the state of human resources—responsibilities and challenges, staffs
and budgets, metrics and planning, historical, current, and projected. The
statistics, analyses, and perspectives contained in this report provide tools through
which HR professionals can examine their own departments’ resources, influence,
duties, and performance, as well as compare their staffs, budgets, and
responsibilities with those of other HR offices throughout the U.S.
More specifically, the metrics and analyses in HR Department Benchmarks and
Analysis 2012-2013 can help inform decisions and shed light on issues and
inquiries such as:
s What are ‘‘typical’’ or ‘‘normal’’ levels of funding and staff in human resources?
How do those metrics vary by industrial classification or workforce
size?
s What levels of funding growth have HR departments seen over the past
several years?
s What is a typical duty roster for an HR department? Does it include payroll?
Public relations?
s Which activities and programs are most likely to be outsourced? What functions
are usually kept in-house? Is outsourcing usually successful? How often
are outsourced activities brought back inside HR?
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HR Department Benchmarks and Analysis 2012-2013
s Does the head of HR typically report to the CEO or a mid-level VP? How
involved is human resources in strategic planning and corporate decisions?
The remaining sections of this chapter summarize frequently-used terms, study
design and research methodology, and the demographic characteristics of
participating employers.
4 2012 The Bureau of National Affairs, Inc. • Arlington, Virginia

HR Department Benchmarks and Analysis 2012-2013
s Executive Summary
For nearly three decades, Bloomberg BNA has published its comprehensive
annual report on the state of human resources function, HR Department
Benchmarks and Analysis. The report has long been a widely-referenced,
authoritative source of research and analysis on HR department responsibilities,
staffing, expenditures and budgets, measurement and strategic planning, and
outsourcing. Throughout the survey’s history, the questionnaire and report have
undergone near-constant enhancement and refinement.
In keeping with that tradition of continuing improvement, HR Department
Benchmarks and Analysis 2012-2013 includes several significant enhancements.
First, the timing and methodology of the survey have been adjusted to secure more
timely staffing and expenditure information. Specifically, the survey was conducted
in early 2012 (surveys in the recent past were conducted in the fourth quarter),
allowing collection of actual staffing and spending data for 2011 and budgeted
staff and expenditure information for 2012. The survey report also includes three
‘‘perspective’’ pieces, which provide surveyed HR executives’ views and
experiences on several key topics: the challenges of hiring contingent staff; the
use of metrics and planning in human resources; and HR’s influence on strategic
planning and corporate decisionmaking.
This year’s report is based on responses from 571 human resource executives and
professionals representing a broad cross-section of U.S. employers. (See ‘‘Profile
of Participating Organizations’’ on page 9 for more details on the enterprises and
institutions represented.) Most respondents are at or near the top of the HR
profession, heading up the human resources function at their facility, division, or
organization.
The challenges facing human resource professionals and their departments are in
ample evidence throughout the survey findings. Year in and out, HR departments
are far more likely to take on new duties than to relinquish any programs or
activities. Human resources has gained greater influence on strategic planning
and corporate decisions, but likely greater scrutiny and accountability in the
bargain. And while human resource staff levels relative to employment have
ticked slightly upward over the past decade, it seems a safe bet that increases in
HR’s responsibilities have been as great or greater. Human resource budget
adjustments for 2012 reflect some improvement from the last several years, but
are still well short of levels observed before the recession.
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Key findings from this year’s survey are summarized by major topic:
HR Department Staffing
HR department staff levels have seen some reversal of fortune from the
previous few years. Twenty-one percent of surveyed human resource offices
gained staff positions between 2011 and 2012, while 11 percent experienced cuts.
For 2009, nearly a third of respondents (32 percent) reported reductions-in-force
within HR, with just 13 percent indicating gains in staff positions.
HR Expenditures and Budgets
Budgeted changes in HR outlays also indicate modest improvement in HR
departments’ fiscal situations. The median budgeted change in human resource
department budgets for 2012 is an increase of 3.2 percent, up from 2011 (2.0
percent) and 2010 (2.2 percent). Still, budget adjustments were substantially
higher before the recession, peaking at a median increase of 7.2 percent for both
2006 and 2007.
HR Measurement, Strategic Planning, and Priorities
Health care cost containment sits atop most HR department agendas.
Stemming the tide of rising health benefit costs ranks as ‘‘extremely important’’
(42 percent) or ‘‘very important’’ (39 percent) for more than four out of five
surveyed HR executives, in line with results of previous Bloomberg BNA surveys.
HR Activities
As in years past, HR departments were far more likely to take on new
functions in 2012 than to give up any duties. Among all responding HR
executives, 40 percent reported some change in their departments’ responsibilities
within the past 12 months. Only 6 percent relinquished any activities, while more
than a third (34 percent) took on at least one new initiative or program. This
pattern has been consistent throughout the survey’s history.
HR is firmly in charge of most employers’ EEO and affirmative action
programs, as about eight in 10 employers (79 percent) assign all aspects of their
EEO compliance and affirmative action to human resources.
Outsourcing
Outsourcing is a well-established aspect of doing business in HR. Roughly
seven in 10 human resource offices (69 percent) outsourced at least one activity or
program in 2012, little changed from reports for the past several years but down
a bit from the mid-2000s (e.g., 79 percent in 2005).
2012 The Bureau of National Affairs, Inc. • Arlington, Virginia
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Chapter 1: HR Department Staffing
s Specialists in Human Resources
The past several decades have seen a tremendous evolution—or perhaps even
revolution—in the duties, challenges, and perceptions of the human resources
function. Globalization, technology, laws and regulations, and the rise of metrics
and analytics have all conspired to make human resources an infinitely more
demanding and complex discipline, one that increasingly demands specialized
skills and knowledge. Generalists remain, but specialists have risen to the fore in
HR. Bloomberg BNA surveys give no indication of any reversal in this trend.
Specialists—executive, professional or technical employees who handle only
one or two areas of human resources—retain a solid foothold in most HR departments.
s Two-thirds of the surveyed human resource departments (66 percent) have
at least one specialist on staff, perhaps reflecting a slight increase from last
year (64 percent) and two years ago (62 percent).
s More significantly, HR specialization is far more common than it was about
a decade ago. For instance, just 47 percent of human resource departments
surveyed in 2003 had specialists on staff.
Figure 1-6
Prevalence of Human Resource Specialists by Workforce Size
Total
66%
Less than 250
41%
250–499
71%
500–999
60%
1,000–2,499
80%
2,500+
83%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
A BNA Graphic/hrbc0106
Specialization surges as the population served by HR increases. Or alternatively,
HR departments in many small companies do not have the luxury of
hiring specialists.
s Barely two-fifths of organizations with fewer than 250 employees (41 percent)
have an HR specialist on staff, as Figure 1-6 shows. HR specialization
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HR Department Benchmarks and Analysis 2012-2013
s HR Measurement and Planning Scale
Bloomberg BNA’s HR Measurement and Planning Scale is a broad index of the
extent of HR departments’ measurement and planning activities, based on survey
respondents’ reports of regular evaluations in 10 key areas of human resources:
compensation and benefits, staffing, training and development, cost-saving,
employee relations, trend analysis, HR productivity, succession planning,
workforce diversity planning, and balanced scorecard or dashboard presentations.
Among employers responding for 2012, the median number of reported areas in
which measurement and planning tools are routinely applied is 4.0, the same
median figure in each of the previous two years of the survey.
Though most HR departments regularly conduct formal measurement of
some aspect of their performance, extensive use of metrics across a wide spectrum
remains the exception.
s At roughly one-fifth of the surveyed firms (22 percent), no more than one
area of HR receives regular quantitative assessment. As Figure 3-3 shows,
one-quarter indicated fairly extensive use of metrics, with six or more of the
specified areas evaluated on a routine basis. Just 6 percent reported that all
10 areas covered by the survey are subject to regular quantitative evaluation.
s About one in five HR executives (21 percent) routinely measures performance
in two to three areas covered by the survey, while 31 percent indicated
that four to five HR parameters get regular quantitative scrutiny.
Figure 3-3
HR Measurement and Planning Scale:
Number of Areas that HR Measures Regularly
0–1 area
22%
2–3 areas
21%
4–5 areas
31%
6 or more areas
25%
0% 10% 20% 30%
A BNA Graphic/hrbc0303
76 2012 The Bureau of National Affairs, Inc. • Arlington, Virginia

Chapter 4: HR Activities
s Employee Services
In addition to traditional benefits discussed in the previous section, workers
typically enjoy a number of services designed to help them plan, manage, and
cope with their personal and professional lives. The prevalence of those services
suggests that both employer and employee appreciate their value; the sensitivity
of some (e.g., employee assistance and counseling) might have prompted their
delegation to outside providers.
With one exception, employee services are managed by HR alone far more often
than jointly with other offices. Outsourcing is far more common in this
arena than in any other broad area of human resources.
s Employee assistance plans and counseling are almost as likely to be outsourced
(40 percent) as assigned solely to human resources (44 percent),
and outplacement services are more often farmed out among the surveyed
firms (23 percent) than given to HR alone (20 percent). Very few organizations
ask other internal departments to take a role in their EAPs or outplacement
programs, as Figure 4-13 shows.
s Outsourcing of retirement preparation programs might be gaining traction,
as 37 percent of employers reported that their pre-retirement counseling
and retirement planning services are managed by outside vendors, up from
29 percent last year and 28 percent two years ago.
Figure 4-13
Employee Services—Who Handles It?
Employee assistance
plan/counseling
Relocation services
31%
44%
1%
10%
9%
2%
16%
40%
Pre-retirement counseling/
retirement planning
30%
7%
2%
37%
Recreation/social programs
26%
54%
10%
1%
Outplacement services
20%
5%
1%
23%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
HR Only
HR and Other
Departments
Other Departments
Only
Outsourced
A BNA Graphic/hrbc0413
2012 The Bureau of National Affairs, Inc. • Arlington, Virginia 111

Chapter 5: HR Outsourcing
s Outsourcing Obstacles and Prospects
Disappointment with outsourcing is not unheard of. Nearly one in five HR officers
reported cases in which a program or activity was returned to human
resources.
s Seventeen percent of respondents indicated that an activity assigned to an
outside provider was eventually brought back in-house, presumably to human
resources. (See Figure 5-11.) While not an insignificant figure, one
would presume than HR departments have not been dissuaded by such experiences;
the overall prevalence of outsourcing has been stable, and quite
high, for a number of years.
s Fifteen percent were not sure whether an outsourced activity had ever been
reassigned to human resources, likely the result of some respondents’ short
tenures with their organizations.
Figure 5-11
Outsourced HR Activity Ever Brought Back in House?
15%
17%
Yes
No
Don't know
69%
A BNA Graphic/hrbc0511
2012 The Bureau of National Affairs, Inc. • Arlington, Virginia 139