1、2023 HR Budget and Efficiency BenchmarksOptimize strategies.Prioritize future investments.2023 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_21900862IntroductionThis research contains benchmarking insights from our 2022 HR Budget and Efficiency Benchmarking Survey to help human resour

2、ces leaders compare their HR functions performance against peers,assess cost optimization strategies and prioritize future HR investments.OverviewKey Findings The average HR functional spend as a percentage of revenue is 0.74%.Compared to other support functions such as finance(1.33%),IT(3.06%),mark

3、eting(5%)and sales(7.01%),HR receives one of the lowest investments.HR accounts for 1.52%of organizational operating expenses on average.HR functions spend$2,524 per employee annually on average.The top spending areas are recruiting($425 per employee),total rewards($213 per employee)and L&D($188 per

4、 employee).However,the No.1 area HR is planning to increase investments in is HR technology.HR functions deploy one HR FTE per 57 employees on average.The majority of HR staff full-time equivalents(FTEs)are involved in activities such as HR administration(2.22 FTEs per 1,000 employees),payroll(1.36

5、FTEs per 1,000 employees)and employee relations(1.51 FTEs per 1,000 employees).RecommendationsTo successfully identify HR improvement areas and make effective,data-driven investment decisions,HR leaders should:Use the benchmarks in this report as a first step to validate their own performance and id

6、entify potential areas where they could adjust spend or make investments.Complete benchmarking for their own function via our HR Budget&Efficiency Benchmarks to get a personalized baseline comparison of their HR functional spend and efficiency levels against key HR performance metrics.Extend their b

7、enchmarking analysis by assessing the depth,breadth and quality of their HR services to determine the trade-off between efficiency and quality of HR services being delivered.Link cost and efficiency benchmarks to a larger discussion about HRs strategic priorities and business impact by moving beyond

8、 how much the HR function is spending compared to peer organizations,to identifying how HR spending and staffing allocations are aligned to strategic business objectives.This allows for deliberate decisions on which HR services should ultimately be best in cost/efficiency versus best in quality/effe

9、ctiveness.2023 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_21900863Data InsightsTodays business landscape is defined by rising economic uncertainty,coupled with hypercompetition for talent.Disruption is the new status quo.However,we learned one lesson from prior contractionary perio

10、ds:They offer the opportunity for executives to differentiate their performance and their companys performance.During times like these,organizations can pull away from their competitors and drive success for decades to come.Our 2022 CEO and Senior Business Executive Survey shows CEO priorities are s

11、hifting in 2023.CEOs are not prioritizing cost cutting and fighting inflation.Instead,they focus on growth,with talent and the workforce as well as the acceleration of technology becoming front and centered to driving growth in 2023 and beyond.As a result,budgets are shifting:47%of HR leaders plan t

12、o increase their 2023 budgets,with recruiting and HR technology as the top two areas where HR leaders are planning to increase investments.Hypercompetition for talent and a digital strategy are taking center stage to keep up with future organizational needs.As you work with your CEO and CFO to reass

13、ess organizational priorities and start to reset expectations on critical talent investments during turbulent economic times,use this report as a first step to validate your own functions performance,identify potential areas to adjust spend and advocate for critical investment opportunities.This rep

14、ort provides fundamental benchmarks around HR functional costs,efficiency as well as budget and staffing allocation ratios,collected via our HR Budget&Efficiency Benchmarks survey.In the report,we will dive into three fundamental metrics:1.HR function spend as a percentage of revenue2.HR function sp

15、end per employee served3.HR productivity ratiosHR leaders can use this report to: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

16、 investment to enable critical business objectives.Inform the budgeting process.2023 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_219008641.HR Function Spend as a Percentage of RevenueWhy it matters HR cost as a percentage of revenue is often the most recognized metric,as it shows th

17、e investment levels in the HR function relative to organizational performance.It helps clarify the role HR plays in overall business spending patterns.The average HR functional spend as a percentage of revenue is 0.74%.Compared to other organizational support functions such as finance(1.33%),IT(3.06

18、%),marketing(5%)and sales(7.01%),HR receives one of the lowest investments.How to interpret the resultsWhen 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 professional services,technology or phar

19、maceutical companies at the top of the list.In contrast,more labor-intensive industries such as manufacturing are at the bottom.The energy and utilities industry is coming off a strong year,as tight supplies and rising demand fueled high energy prices.Therefore,look at HR function spend as a percent

20、age of revenue numbers for this sector in the context of the current economic circumstances(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.Ho

21、wever,HR cost as a percentage of revenue levels 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.Multiple internal and external fac

22、tors affect the calculation.Therefore,interpret HR spending as a percentage of revenue in the context of the HR functions maturity level,the business leaders satisfaction with the HR service they receive and the level of investment other organizational support functions receive(i.e.,IT,finance,marke

23、ting).This can provide further context for whether HR cost as a percentage of revenue is at an appreciable level.2023 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_21900865Figure 1:HR Function Spend as a Percentage of Revenuen=174 HR leaders Source:2022 Gartner Budget and Efficiency B

24、enchmarking Survey1.21%1.11%0.78%0.74%0.52%0.47%0.21%Professional ServicesHealthcare Providers,Pharmaceuticals,Life Sciences and Medical Products0.0%1.0%2.0%Consumer GoodsTechnology and TelecomBanking and Financial ServicesManufacturingMean:0.74%Cross-IndustryEnergy and Utilities0.52%0.47%2023 Gartn

25、er,Inc.and/or its affiliates.All rights reserved.CM_GBS_219008662.HR Function Spend per EmployeeWhy it mattersHR cost per employee 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 fur

26、ther explore reducing spend,shifting resources and/or investing in new capabilities.How to interpret the resultsThe average HR spend per employee is$2,524.Industries with the highest HR cost per employee again tend to be the ones with high ratios of highly skilled staff.HR teams within the manufactu

27、ring or retail and wholesale industries typically spend the least per employee(see Figure 2).However,variations 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

28、does not reflect an organizations deliberate decision to increase HR spend.The current fragmented and volatile 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 grow

29、th.As a result,some organizations are investing in HR as a means to create differentiating capabilities that 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 cont

30、ributor to its ongoing success and market competitiveness.On the other hand,given that more than two-thirds(71%)of total HR costs are people-related,high cost per employee can also indicate a people-heavy HR function.People-heavy HR functions should seek opportunities for reallocating HR resources,l

31、everaging HR technology to maximize efficiency and cost optimization efforts and establishing mechanisms to build flexibility within the HR function in response to unpredictable business demands.At the same time,HR should embrace an“HR shared services first”mentality and allocate transactional respo

32、nsibilities into an HR shared services or HR operations team.HR should also avoid a high number of HR people in specialist roles that become costly when priorities change.2023 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_21900867Figure 2:HR Spend per Employeen=202 HR leadersSource:20

33、22 Gartner Budget and Efficiency Benchmarking SurveyNote:Currency in U.S.dollars.$1,900$2,022$2,245$2,519$2,750$2,778$3,237$4,195Energy and UtilitiesProfessional ServicesManufacturingRetailMean:$2,524 Cross-Industry$1,900$2,022$2,245Healthcare Providers,Pharmaceuticals,Life Sciences and Medical Prod

34、ucts$0$2,500$5,000Banking and Financial ServicesTechnology and TelecomConsumer Goods 2023 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_219008683.HR Productivity RatiosWhy it mattersThe number of employees served per HR staff FTE can help determine HRs productivity in terms of workfor

35、ce support.How to interpret the resultsWith respect to efficiency,on average,HR functions deploy one HR FTE per 57 employees.Organizations with highly labor-intensive operations such as manufacturing industries tend to have the highest HR productivity levels(see Figure 3).However,variations in HR pr

36、oductivity ratios are driven by not only industry-specific workforce characteristics but also an organizations geographical footprint,which requires dedicated HR resources in certain regions or business areas.Further,consider HR efficiency ratios within the context of effective HR technology use tha

37、t enables automatized HR processes and increased employee and manager self-service opportunities,thereby positively impacting HRs overall efficiency.2023 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_21900869Figure 3:HR Productivity Ratiosn=233 HR leadersSource:2022 Gartner Budget and

38、 Efficiency Benchmarking Survey7568675857534843Mean:57 Cross-IndustryManufacturingConsumer GoodsRetailProfessional ServicesHealthcare Providers,Pharmaceuticals,Life Sciences and Medical ProductsTechnology and TelecomEnergy and UtilitiesBanking and Financial Services0408053 2023 Gartner,Inc.and/or it

39、s affiliates.All rights reserved.CM_GBS_219008610ConclusionCEOs continue to prioritize the workforce and technology for business success.Hence,with the reality of workforce issues rising substantially in importance,HRs chance to attract CEO attention and secure funding for critical HR initiatives ha

40、s never been higher.Benchmarks can serve as a foundational component to guide HR leaders in rethinking and reprioritizing functional spending,providing context for required optimization strategies and advocating for critical investment opportunities.However,the metrics and benchmarks outlined in thi

41、s research focus on HRs cost and efficiency,not its effectiveness and maturity.Therefore,HR leaders should link these cost and efficiency benchmarks to a larger discussion about HRs strategic priorities(see HR Score)and business impact.This means moving beyond how much the HR function is spending co

42、mpared to peer organizations,to identifying those HR services that require funding or additional investments to support business objectives and provide an opportunity to gain competitive advantage.Having greater visibility into how HR spending and staffing allocations are aligned to strategic busine

43、ss priorities helps HR leaders make better decisions on which HR services should ultimately be best in cost/efficiency versus best in quality/effectiveness.EvidenceThis research contains results from more than 200 HR organizations from across the Americas(73%),EMEA region(19%)and APAC region(8%)that

44、 participated in our 2022 HR Budget and Efficiency Benchmarking Survey,conducted from January through December 2022.Participating organizations represented all major industries,revenue sizes and organization sizes.Resources Available to Gartner Clients:We recommend Gartner for HR Leaders clients com

45、plete their own benchmarking using our HR Budget&Efficiency Benchmarks to get personalized results against the metrics outlined in this report and filter results according to their peer group.2023 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_219008611Position your HR organization for

46、 success.Explore these additional complementary resources and tools:Actionable,objective insightAlready a client?Get access to even more resources in your client portal.Log InWebinarThe Gartner 2023 HR Benchmarks and Investment TrendsGet recommendations for planning your HR functional staffing and s

47、pending for future success.Register nowToolkitHR Transformation ToolkitLearn how to drive strategic impact in a world of hybrid work through the four key HR Transformation components.Download ToolkitDownload DataHR BenchmarksBenchmark With GartnerGet peer benchmarks from our monthly live polling eve

48、nt focused on the latest insights in the labor market.2023 Gartner,Inc.and/or its affiliates.All rights reserved.CM_GBS_2190086Connect 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 HR Leaders connected to the latest insights