In retrospect, 2016 was a pretty good year for HR.
Staff ratios reached an all-time high of 1.4 HR department staff members for every 100 workers; HR also received an even bigger percentage of the organization’s total operating cost — 1.6 percent, a slight increase from 2015 and the year before, according to a recent Bloomberg BNA report.
Currently, organizations with at least 2,500 workers spend a considerable amount — $664 per employee — on their HR function. Smaller companies with fewer than 250 employees spend even more: $2,375 per employee, on average.
Wondering what will companies spend that money on this year?
Allocating Human Resource Funds
Studies indicate HR departments plan to put their financial resources toward addressing a number of growing concerns, such as the retention of high-performing and high potential employees.
Xerox HR Services’ research found retention of top talent was the No. 1 compensation-related priority for 2017; more than half of organizations (53 percent) felt it should be a focus area.
Cost management and employee engagement also ranked as compensation priorities for the year.
Some of the other key elements HR departments plan to invest in include:
Investors put close to $2 billion into HR tech system and platform development last year, according to CB Insights. With nearly half (47 percent) of companies, as research from Bersin by Deloitte notes, sporting HR software that is more than seven years old, it’s likely some will be in the market for new and updated products this year.
According to Information Services Group data, 48 percent of HR and talent professionals want to swap their current HR software for a cloud-based system by next year; 12 percent want to upgrade their current system. ISG also found an increasing amount of organizations are warming to predictive analytics use, with just over half saying they consider analytics to be a must-have tool.
Forty-five percent of the companies that participated in Brandon Hall Group’s HR technology trends study cited alleviating manual HR tasks as their main motivation for adopting human capital management technology; obtaining analytics information, though, was a close second, with 41 percent of organizations identifying it as a central reason.
(For a brief rundown of which HR tech tools were popular last year, check out our 2016 HR technology primer blog post.)
Training and Education
In recent years, spending on corporate training has escalated to more than $130 billion worldwide. In the U.S., the largest share of the learning and development budget goes to leadership development; 35 cents, on average, of each training dollar is spent on developing leaders at levels ranging from executive to first-line supervisors.
Tuition reimbursement is likely to remain another popular expenditure. Last year, 61 percent of companies offered it to employees, with an average annual maximum of roughly $4,000, according to the Society for Human Resource Management’s November 2016 benchmarking report.
Globally, very little salary growth was expected in 2017 compared to last year’s levels in the 19 countries WorldatWork studied in its 2016-2017 salary survey. In the U.S., for example, the median salary budget increased 3 percent in 2015 and 2016; it’s expected to slightly increase to 3.1 percent this year. In Canada, where the average total salary budget increase last year was 2.6 percent, a 2.9 percent rise is projected for 2017.
Recruitment and Hiring
Each hire currently costs, on average, $4,129, according to SHRM. Close to half of all companies (48.9 percent) say they plan to increase the amount they spend on employer branding to make their companies and open positions easier for ideal-fit candidates to find in 2017, according to Entelo’s report on recruiting trends. (For more on employer branding, view our blog post and white paper on the topic.)
HR departments are also utilizing other unique approaches to recruiting, including, according to PwC research, building their talent strategies around their organization’s social and environmental conscience and their staff’s values and beliefs — which could possibly include undertaking corporate philanthropy efforts and seeing a subsequent increase in employee engagement, a trend we wrote about last year.
Our posts on inventive recruiting campaigns, improving your tech recruitment practices, weathering a tough hiring climate and attracting better candidates might spark some ideas about how your organization can successfully recruit candidates.