1、HR Budget&Efficiency BenchmarksOptimize strategies.Prioritize future investments.2 2022 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_1781017IntroductionHR budgets have returned to prepandemic levels,with two-thirds of HR leaders expecting their budgets to increase in 2022.This is alm

2、ost twice as many compared to 2021.But to meet the current off-the-scale talent demands caused by the pandemic disruption,HR leaders are now tasked with doing more with the same budget while shaping a work environment that needs to attract and retain talent in a competitive talent landscape.These ch

3、allenges heighten the need to rethink functional spending and lead data-driven discussions to advocate for critical HR investment opportunities.This report,based on our 2021 HR Budget and Efficiency Benchmarking Survey provides fundamental benchmarks around HR functional costs and efficiency,as well

4、 as budget and staffing allocation ratios to help HR leaders:Identify potential HR areas of overinvestment or underinvestment.Pinpoint areas to adjust spend or optimize functional cost.Validate staffing levels and reveal staff shortages or areas of overstaffing.Pinpoint areas for reinvestment to ena

5、ble critical business objectives.Inform their budgeting process.Two-thirds of HR leaders expect their budgets to increase in 2022.Source:Gartner3HR Cost as a Percentage of RevenueThis is often the most recognized metric,as it shows the investment levels in the HR function relative to organizational

6、performance.When we look at HR cost as a percentage of revenue benchmarks across multiple industries,we see industries with a high ratio of highly skilled staff such as electronics or financial services companies at the top of the list.In contrast,more labor-intensive industries such as manufacturin

7、g or energy and utilities are at the bottom(see Figure 1).Typically,organizations with a greater level of HR investment relative to revenue see HR as a strategic enabler that can improve workforce productivity levels and thereby business performance.However,HR cost as a percentage of revenue levels

8、above or below the benchmarking average should not necessarily be interpreted as good or bad.This is because the metric neither reflects the quality of HR services provided nor HRs contribution to business performance.Therefore,HR spending as a percentage of revenue should be interpreted in the cont

9、ext of the HR functions maturity level,along with the level of investment other organizational support functions receive(i.e.,IT,finance or marketing).Figure 1.HR Cost as a Percentage of Revenue n=196Source:2021 HR Budget and Efficiency Benchmarking SurveyIndustrial Electronics and Electrical Equipm

10、entPharmaceuticals,Life Sciences and Medical ProductsManufacturingBanking and Financial ServicesInsuranceEnergy and UtilitiesMean:0.74%Cross-Industry 2022 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_17810171.36%1.32%0.88%0.44%0.42%0.41%4HR Cost as a Percentage of Operating ExpensesT

11、his provides another way of looking at HR investment levels and the role HR plays in overall business spending patterns.While revenue may be subject to external volatilities,an organizations operating expenses typically remain more consistent or at least predictable year over year.Therefore,the metr

12、ic better reflects the overall business investment strategy for HR.On average,HR functions make up 1.42%of the organizational operating expenses.Again,industries with a high ratio of highly skilled staff such as electronics or financial services companies are at the top of the list.More labor-intens

13、ive industries such as manufacturing or energy and utilities are at the bottom(see Figure 2).Therefore,organizations with a greater level of HR investment relative to operating expenses might see HR as a strategic enabler that improves critical talent outcomes.However,HR cost as a percentage of oper

14、ating expenses also needs to be interpreted in the context of the HR functions maturity level,workforce-related metrics and the level of investment other organizational support functions receive.Figure 2.HR Cost as a Percentage of Operating ExpensesIndustrial Electronics and Electrical EquipmentPhar

15、maceuticals,Life Sciences and Medical ProductsManufacturingBanking and Financial ServicesInsuranceEnergy and Utilities0%2%4%Mean:1.42%Cross-Industryn=174Source:2021 HR Budget and Efficiency Benchmarking Survey 2022 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_17810172.34%2.09%1.65%1.

16、51%0.96%0.78%5HR Cost per EmployeeThis is often used to determine the amount of HR support an organizations workforce receives.It can also serve as an initial litmus test as to whether the function should further explore reducing spend,shifting resources and/or investing in new capabilities.The aver

17、age HR spend per employee is$2,441.Industries with the highest HR cost per employee tend to be the ones with high ratios of highly skilled staff such as pharmaceutical companies.HR teams within manufacturing or retail and wholesale industries typically spend the least per employee(see Figure 3).Vari

18、ations in this metric could also be due to organizational staffing strategies a decrease or increase in the number of employees or investments in new technology.In addition,the benchmarking data does not reflect an organizations deliberate decision to increase HR spend.The current fragmented and vol

19、atile business environment has led to a demand for HR support that is growing off the scale,putting HR functions under continued pressure to make the right investments to fuel organizational growth.As a result,some organizations are investing in HR as a means to create differentiating capabilities t

20、hat improve employees experience,attract specific talent segments or develop critical skills.Therefore,above-average HR cost per employee could indicate that an organization sees HR as a key contributor to its ongoing success and market competitiveness.On the other hand,given that around two-thirds(

21、67%)of total HR costs are people-related,high cost per employee can also indicate a people-heavy HR function.Labor-intensive HR functions should seek opportunities for reallocating HR resources,leveraging HR technology to maximize cost optimization efforts and establishing mechanisms to build flexib

22、ility within the HR function in response to unpredictable business demands.At the same time,HR must avoid a high number of HR people in specialist roles that become costly when priorities change.Figure 3.HR Cost per Employeen=220Source:2021 HR Budget and Efficiency Benchmarking Survey 2022 Gartner,I

23、nc.and/or its affiliates.All rights reserved.CM_GBS_1781017Pharmaceuticals,Life Sciences and Medical ProductsIndustrial Electronics and Electrical EquipmentEnergy and UtilitiesInsuranceBanking and Financial ServicesProfessional ServicesSoftware Publishing and Internet ServicesManufacturingRetail and

24、 Wholesale$0$3,500$7,000Mean:$2,441 Cross-Industry$6,567$3,735$3,422$3,033$2,932$2,446$1,700$864$2,3326HR Budget and Staffing AllocationThe allocation of budget and staff quantifies and compares how HR functions use spend and people to support major HR activities.It can serve as a reference for dete

25、rmining where to prioritize investments to support strategic talent objectives.It also helps answer questions about whether certain processes are inefficient and may be ripe for standardization and automation,indicating lower HR service maturity.The HR budget is primarily distributed to key HR activ

26、ities,such as recruiting,learning and development(L&D),and total rewards(see Figure 4).This underpins the relative importance HR functions still place on major HR activities,as organizations struggle to succeed in a competitive talent landscape driven by resignations,hiring slumps and mass turnover

27、threats.The same is reflected in the fact that the highest percentage of staff is allocated to recruiting.Figure 4.HR Budget and Staffing AllocationStaffing and RecruitingHR AdministrationTotal RewardsHR TechnologyLearning and DevelopmentPayrollHR Functional ManagementEmployee RelationsTalent Manage

28、mentOrganizational DevelopmentWorkforce Planning and StrategyTalent AnalyticsDiversity and InclusionAllocation of HR Spend as a Percentage of Total HR Spend Allocation of HR Staff as a Percentage of Total HR Staff n=14-242Source:2021 HR Budget and Efficiency Benchmarking Survey0%10%20%2022 Gartner,I

29、nc.and/or its affiliates.All rights reserved.CM_GBS_178101720%16%14%13%12%10%10%11%12%9%9%9%8%8%7%4%4%3%3%3%3%2%2%2%9%5%7Recruiting is also one of the top three areas for a budget increase in 2022.In fact,67%of HR leaders plan to increase their recruiting budgets for 2022.Remote work,burnout and soc

30、ial justice movements have left candidates more selective about which organizations and roles they consider a good fit.To meet organizations talent needs,HR leaders must create not only fair and equitable hiring opportunities but also an employee value proposition(EVP)that focuses on employees overa

31、ll quality of life through well-being,radical flexibility and shared purpose.1 It also comes as no surprise that 14%of the HR budget is allocated toward L&D.With more employees working in a hybrid work environment,solutions to enable virtual learning and collaboration have become more important.Also

32、,HR leaders are challenged with changes to employee expectations of learning,such as wanting more personal not just professional development.Organizations allocate 13%of the HR budget toward total rewards.For total rewards,the competitive talent landscape and mass turnover threats introduce new and

33、complex challenges.A highly differentiated work environment that meets employee needs also requires a new system of highly differentiated rewards to ensure employees are healthy,engaged and productive.HR leaders strategies often include substantial technology investments:Organizations allocate 9%of

34、the HR budget toward HR technology.This reflects HR leaders increasing responsibility to meet two different imperatives through digitalization:Executives expect digitalization to improve the businesss performance,cost savings and overall competitiveness.Employees expect a digitalized workplace to re

35、flect the personalization,speed and interconnectedness they experience outside work.In fact,given the digital push organizations have experienced due to the new hybrid work environment,investment in HR technology may further increase throughout the year.Changed working environments with a focus on r

36、emote work require the use of new technologies to ensure employee productivity and effective collaboration.2022 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_17810178HR Productivity RatiosThese ratios relate to the number of employees served per HR staff full-time employee (FTE)and ca

37、n help determine HRs productivity in terms of workforce support.With respect to efficiency,on average,HR functions deploy one HR FTE per 60 employees.Organizations with highly labor-intensive operations such as manufacturing industries tend to have the highest HR productivity levels(see Figure 5).Ho

38、wever,variations in HR productivity ratios are driven not only by industry-specific workforce characteristics but also by an organizations geographical footprint,which requires dedicated HR resources in certain regions/business areas.Further,HR efficiency ratios should be considered within the conte

39、xt of effective HR technology use that enables automatized HR processes and increased employee and manager self-service opportunities,thereby positively impacting HRs overall efficiency.Figure 5.HR Productivity Ratios by IndustryThe HR business partner(HRBP)productivity ratio,on average,is one HRBP

40、per 391 employees.We see a slight increase in HRBP productivity ratios compared to the previous years benchmarks.However,HRBPs are still involved in transactional HR activities,as a clear division between strategic and operational HR activities is not yet fully achieved.ManufacturingRetail and Whole

41、saleProfessional ServicesBanking and Financial ServicesInsuranceIndustrial Electronics and Electrical EquipmentEnergy and UtilitiesSoftware Publishing and Internet ServicesPharmaceuticals,Life Sciences and Medical Products04080Mean:60,Cross-Industryn=261Source:2021 HR Budget and Efficiency Benchmark

42、ing Survey 2022 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_6455545351454591 Reinventing the Employee Value Proposition:The Human DealConclusionBenchmarking is a foundational component of HR strategic planning,as it provides context for required optimization strategies an

43、d helps prioritize future HR investment decisions.However,the metrics and benchmarks outlined in this research focus on HRs cost and efficiency,not its effectiveness and maturity.Therefore,HR leaders should link their cost and efficiency benchmarks to a larger discussion about HRs strategic prioriti

44、es(see HR Score)and business impact.This means moving beyond how much the HR function is spending compared to peer organizations,to identifying the most valuable work that should be funded to support business objectives.Having greater visibility into how HR spending decisions are aligned to strategi

45、c HR and business priorities helps make better decisions on which HR services should ultimately be best in cost versus best in quality.EvidenceThis research contains results from more than 300 organizations,from across the Americas(76%),EMEA region(16%)and APAC region(8%),that participated in our 20

46、21 HR Budget and Efficiency Benchmarking Survey conducted from August through December 2021.Participating organizations represented all major industries,revenue sizes and organization sizes.2022 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_178101710Explore these additional compliment

47、ary resources and tools to support the HR function at your organization:WebinarThe Gartner 2022 HR Trends:Budget,Efficiency,and Functional PlanningGet recommendations for planning your HR functional staffing and spending for future success.ToolkitHR Transformation ToolkitLearn how to drive strategic

48、 impact in a world of hybrid work through the four key HR Transformation components.Watch webinarDownload ToolkitActionable,objective insightAlready a client?Get access to even more resources in your client portal.Log In 2022 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_1781017 2021

49、Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_122022911Connect With UsGet actionable,objective insight to deliver on your mission-critical priorities.Our expert guidance and tools enable faster,smarter decisions and stronger performance.Contact us to become a client:U.S.:1 855 811 7593International:+44(0)3330 607 044Become a ClientLearn more about Gartner for Human Resources connected to the latest insights 2022 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_1781017