How ‘smart automation’ can boost HR to world-class levels

A “smart-automation” approach can give a typical HR organisation a measurable lift when it comes to improving customer experience and efficiency, according to new research from the Hackett Group in the US.

The Hackett Group’s new Digital World Class analysis found that those typical HR organisations can reduce costs by 17% and operate with 26% fewer staff hours — while also improving effectiveness and internal customer experience. The Hackett Group research advises that, by following a smart-automation strategy, typical HR functions can boost efficiency levels close to those seen by world-class HR organisations (defined as those that achieve top-quartile performance in both efficiency and effectiveness across an array of weighted metrics in the Hackett Group’s HR benchmark).

For instance, world-class HR organisations currently operate at 20% lower cost and with 31% fewer employees than typical HR organisations, the research found. Smart automation — defined as approaches including robotic-process automation, cognitive automation, intelligent data capture and other leading-edge technologies— can enable world-class HR organisations to cut costs and reduce the number of staff hours needed to perform existing administrative and transactional work. That can free up resources that can be directed to higher-value business and talent-related tasks, according to the report.

The research emphasised that, in the emerging digital era, HR organisations are moving beyond the inward-focused metrics of efficiency and effectiveness to also measure the experience of key stakeholders. As a result, the Hackett Group has added “customer experience” as a separate area of analysis, measurement and transformation focus.

For 2019, in fact, the Hackett Group has begun breaking out customer (user) experience as a separate performance metric, rather than embedding it as part of effectiveness. The research found that world-class HR organizations are more than three times as likely to be seen as valued business partners, and over seven times more likely to be seen as collaborators than typical HR organisations.

“Smart automation offers a very achievable path to performance improvement for HR today, particularly for HR organisations that have not already fully optimised their HCM environment,” says Harry Osle, leader and principal in charge for Hackett Group’s Global HR Practice. Osle says that, at typical HR organisations, the majority of the people and budget go to administrative and transactional work.

He adds that smart automation can help address this by streamlining and automating inefficient, fragmented processes, so that staff can be redirected to higher-value activities. He explains that HR organisations that do not take advantage of what smart automation offers will be stuck delivering services in a very traditional way, which is likely to increase costs and underwhelm its customers.

“To capture the entire opportunity available to them, HR organisations must take on the harder long-term job of truly optimizing and rationalizing their overall technology environment in tandem with their smart-automation efforts,” Osle says.

Max Caldwell, principal-in-charge of the Hackett Group’s People and HR Transformation practice, says it’s important to keep in mind that technology alone will not get HR organisations to digital world class. He says a holistic transformation plan describing how to engage and partner with the business is key. For example, to address talent shortages and retention difficulties, HR must adjust its service design to focus on improving the employee experience, he says.

“Analytics must play a role in strategic workforce planning, to ensure that the company’s future talent needs are met,” Caldwell says.