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HR Spending on the Rise

Company spending on human resources per employee increased from 2012 to 2013, according to a new HR trends report.

May 9, 2014
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Human resources spending is on the rise at many organizations, according to a new report.

HR spending per employee jumped to $1,995 in 2013, according to a PricewaterhouseCoopers Saratoga practice study, compared with $1,923 in 2012. The study, PwC’s “Human Capital Effectiveness Report,” surveyed 375 companies.

The enhanced investment in HR comes with a specific emphasis on strategic talent management, leadership development and workforce planning, the study showed.

In addition to reporting on the state of HR spending, the study contained more than 200 metrics focusing on three big trends: Operational workforce planning, voluntary turnover and predictive hiring solutions.

Productivity indicators trended up in 2013 for the second consecutive year, the report showed, with revenue per full-time worker up to $404,058 in 2013 from $370,399 in 2012.

Though revenue levels have been improving, organizations are still struggling with labor costs. Labor cost revenue percent — a measure of compensation and benefits costs divided by revenue — fell to 28.2 percent, the study showed, down from 28.8 percent in 2012 and 30.3 percent in 2011.

The study also found that turnover rose to 8.8 percent in 2013 from 8.4 percent in 2012. The high performer separation rate — a measure of top performers leaving a company — was at its highest level in 10 years, up to 6 percent in 2013, from 5 percent in 2012, the study showed.

Critical talent is leaving at a 20 percent higher rate than they were the previous year, the study showed. To better retain high performers, the PwC study found that organizations are integrating their employee surveys to view the entire employee life cycle and find the breakpoints for critical populations. First-year turnover also rose, to 24.1 percent, the highest it has been since before the recession.

Finally, the study looked at the value of predictive analytics in the hiring process. It showed that most organizations are using big data techniques to build predictive models to help select candidates.

Eric Short is an editorial intern at Talent Management. He can be reached at editor@talentmgt.com.

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