Hackett: HR Organizations Feeling Increased Pressure in the Face of Global Uncertainty
The Hackett Group, Inc. (NASDAQ: HCKT) highlights the importance of generative AI and technology in improving HR efficiency and effectiveness. The research identifies developing effective leaders and maintaining a high-performing organizational culture as top priorities for HR in 2024. HR workload volume is expected to rise by 7%, with a focus on cost reduction. Technology spending is set to increase by 4% to bridge efficiency gaps. Generative AI adoption is growing, with potential for significant cost and staff reductions. HR organizations are urged to align workforce planning with business strategy and enhance employee experiences.
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Generative AI and technology are crucial for HR efficiency and effectiveness.
Developing effective leaders and maintaining a high-performing culture are top HR priorities in 2024.
HR workload volume is expected to increase by 7%, with a focus on cost reduction.
Technology spending is set to rise by 4% to bridge efficiency and productivity gaps.
Generative AI adoption could lead to a 40% reduction in SG&A costs and staff over the next five to seven years.
HR organizations are recommended to align workforce planning with business strategy and enhance employee experiences.
From the perspective of a Market Research Analyst, the integration of generative AI into HR operations could signal a paradigm shift in how companies manage their workforce. The potential for a 40% reduction in SG&A costs and staff due to AI implementation is a significant figure that could impact the bottom line of businesses. This could lead to a reevaluation of company valuations and stock prices, particularly for those organizations that are early adopters and can effectively leverage AI for competitive advantage. The expected increase in technology spending by 4% reflects a growing trend of digital transformation investments, which could influence investor sentiment towards companies in the HR technology sector.
As a Financial Analyst, the expected 7% increase in HR workload coupled with a slight drop in HR operating budgets and staff presents a challenging financial scenario. Companies will need to balance cost reductions with the need to maintain, if not improve, HR service quality. The anticipated rise in technology spending suggests a strategic shift towards capital expenditures on technology to gain long-term savings and efficiency. The financial implications for stakeholders include the need to closely monitor ROI on these technology investments and the potential for improved profitability margins if the promised efficiencies and cost savings are realized.
An HR Technology Expert would note the significance of a 19% growth rate in the adoption of cloud-based human capital management applications. This indicates a strong move towards scalable and flexible HR solutions that can adapt to changing business needs. The 7% expected growth rate in generative AI adoption in 2024 underscores the importance of this technology in driving HR efficiencies. Organizations that can effectively integrate AI into their HR functions may gain a competitive edge in talent management, which is critical in a landscape marked by potential labor and skills shortages. It is important to consider the implications of such technologies on employee experience, data privacy and the ethical use of AI in the workplace.
02/29/2024 - 10:00 AM
Generative AI and Other Technology Are Key to Improving HR Efficiency and Effectiveness
MIAMI --(BUSINESS WIRE)--
As companies face significant uncertainty, including the potential for stalled global economic growth, high interest rates and possible labor and skills shortages, human resources (HR) teams expect to feel increased pressure, including a growing workload and the need to enable the success of business stakeholders, according to new HR Key Issues research from The Hackett Group , Inc. (NASDAQ: HCKT). HR leaders also see generative AI (Gen AI) and other technologies as key to improving efficiency and effectiveness.
In 2024, developing effective leaders remains the top priority for HR, marking its second consecutive year in the top spot, according to The Hackett Group® . The need to create and maintain a high-performing organizational culture climbed three spots in 2024 to become priority No. 2. As organizations navigate these priorities, it is crucial to recognize the emerging need for HR business partners to incorporate leadership coaching at the highest levels. The Hackett Group’s research recommends that organizations carefully deliberate on how leadership development is integrated into the broader HR operating model. In light of these trends, the research calls for HR organizations to take proactive measures to align workforce planning and strategy with business planning, and enhance the experiences of employees, managers, and candidates – both critical considerations newly introduced to the top 10 priorities list for 2024.
A complimentary version of The Hackett Group’s 2024 Human Resources Key Issues research – The CHRO Agenda – is available, with registration, at https://go.poweredbyhackett.com/ush .
While HR workload volume is expected to rise by 7% , cost reduction is also a focus. The research found that both HR operating budgets and staff are expected to drop slightly in 2024, creating significant efficiency and productivity gaps. Technology spending, which is expected to rise by 4% , is one way HR organizations are hoping to bridge those gaps. More HR work will also be apportioned to fully automated and self-service systems’ functionality, and HR executives expect global business services (GBS)/HR shared services units to handle 3.5% more work, while centers of excellence, corporate HR and business unit HR will see over 2% increases in overall workload.
The research recommends that HR organizations explore generative artificial intelligence (AI) as part of their HR operations digital transformation efforts. Although adoption is still maturing, generative AI has huge promise. Our recent research found that generative AI could yield a 40% reduction in selling, general and administrative (SG&A) costs and a 40% reduction in SG&A staff over the next five to seven years. The research found that 41% of HR organizations have implemented pilots or small-scale generative AI deployments, and a 7% growth rate is expected in 2024 – higher than any other emerging technology.
According to The Hackett Group Senior Research Director Tony DiRomualdo, “A pressing need to equip managers to guide the organization through the challenges posed by continued business disruption and workplace transformation has made leadership the top HR issue for the second year in a row. The people skills of leaders can make a difference in today’s volatile markets and disrupted workplaces. To succeed, leaders must sharpen seminal competencies while mastering new management techniques.”
“HR executives clearly see the importance of this objective,” continued DiRomualdo. “The percentage of study respondents with a major 2024 initiative planned to address this objective is 65% – higher than for any other objective in the top 10. HR executives not only must commit resources to leadership development but also sustain their focus to achieve this objective. But the opportunity is significant. Our functional HR benchmarking results show that Digital World Class® HR organizations – those that perform in the top quartile in both business value and operational excellence – spend 27% more HR business partner time focused on organizational and leadership development.”
According to The Hackett Group Principal and Global HR Advisory Practice Leader Harry Osle, “HR organizations are placing increasing focus on using technology to improve efficiency and productivity, with a 19% growth rate expected in the adoption of cloud-based human capital management applications and significant growth expected in adoption of HR point solutions, generative AI, and agile orchestration.”
“Adoption of emerging technologies enabled by AI is picking up, albeit at a smaller scale for now,” Osle continued. “As part of their digital transformation efforts, HR organizations are already cautiously trying out generative AI, particularly for low-risk activities such as answering common HR-related questions, chat-bots and creating consistent job descriptions. But the areas where generative AI will be used to streamline HR are numerous and include talent acquisition, onboarding, learning and development, employee engagement, and communications, which will free up HR resources to expedite strategic initiatives aligned to business needs. The effect is going to be tremendous.”
The Hackett Group’s 2024 Key Issues research is based on results gathered from more than 375 executives in finance, procurement, supply chain, HR, information technology, and GBS at a global set of midsized and large enterprises.
About The Hackett Group
The Hackett Group, Inc. (NASDAQ: HCKT) is an IP-based strategic consulting and executive advisory firm that enables Digital World Class® performance. Using AI XPLR™ – our AI assessment platform – our experienced professionals guide organizations to harness the power of Gen AI to digitally transform their operations and achieve quantifiable, breakthrough results, allowing us to be key architects of their Gen AI journey.
Our expertise is grounded in unparalleled best practices insights from benchmarking the world’s leading businesses – including 97% of the Dow Jones Industrials, 89% of the Fortune 100, 70% of the DAX 40 and 55% of the FTSE 100 – and are delivered leveraging our Digital Transformation Platform, Hackett Connect™ and Quantum Leap®
For more information on The Hackett Group, visit: https://www.thehackettgroup.com/ ; email info@thehackettgroup.com ; or call (770) 225-3600.
The Hackett Group, Hackett-Certified, quadrant logo, World Class Defined and Enabled, Quantum Leap, Digital World Class and Hackett Value Matrix are the registered marks of The Hackett Group.
Cautionary Statement Regarding “Forward-Looking” Statements
This release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Statements including without limitation, words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” seeks,” “estimates,” or other similar phrases or variations of such words or similar expressions indicating, present or future anticipated or expected occurrences or outcomes are intended to identify such forward-looking statements. Forward-looking statements are not statements of historical fact and involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. Factors that may impact such forward-looking statements include without limitation, the ability of The Hackett Group to effectively market its digital transformation and other consulting services, competition from other consulting and technology companies that may have or develop in the future, similar offerings, the commercial viability of The Hackett Group and its services as well as other risk detailed in The Hackett Group’s reports filed with the United States Securities and Exchange Commission. The Hackett Group does not undertake any duty to update this release or any forward-looking statements contained herein.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240229770012/en/
Gary Baker
gbaker@thehackettgroup.com
Source: The Hackett Group, Inc.
What is the ticker symbol for The Hackett Group, Inc.?
The ticker symbol for The Hackett Group, Inc. is 'HCKT'.
What are the top priorities for HR in 2024 according to The Hackett Group research?
The top priorities for HR in 2024 are developing effective leaders and maintaining a high-performing organizational culture.
How much is HR workload volume expected to rise by in 2024?
HR workload volume is expected to rise by 7% in 2024.
What is the expected increase in technology spending to bridge efficiency gaps?
Technology spending is expected to rise by 4% to bridge efficiency gaps.
What potential cost and staff reductions can generative AI adoption lead to?
Generative AI adoption could lead to a 40% reduction in SG&A costs and staff over the next five to seven years.
