Following two straight years in which HR department staff cuts were more common than increases, the pattern reversed in 2012, according to a new survey.
by Site Staff
November 21, 2012
Arlington, Va. — Nov. 20
Human resource department staffs and budgets showed some signs of recovery in 2012, although those gains probably did not compensate for cuts and freezes experienced during the recession.
Following two straight years in which HR department staff cuts were more common than increases, the pattern reversed in 2012, as reported staffing gains in human resources outpaced reductions-in-force by 10 percentage points this year, according to a survey of HR departments by Bloomberg BNA.
Budgeted adjustments in HR funding for 2012 also reflect some improvement from the last few years, according to the survey, but are still well short of levels observed before the recession.
HR department staff levels have seen some reversal of fortune in 2012. Twenty-one percent of surveyed human resource offices gained staff positions between 2011 and 2012, while only 11 percent experienced cuts. Two years ago, nearly a third of respondents (32 percent) reported reductions-in-force within human resources, with just 13 percent indicating gains in HR staff.
Human resource staff ratios appear to have stabilized at slightly higher levels than those observed from the mid-1990s through the early 2000s. For 10 straight years, the median ratio of HR staff to total headcount has been either 1 or 1.1 human resource employees for every 100 workers served by the HR department. The median ratio bounced between 0.9 and 1 HR staff per 100 employees from 1996 to 2004.
HR budgets for 2012 suggest some easing of the fiscal austerity observed over the last several years.
Roughly one-fifth of the responding employers (22 percent) reported reductions in human resource funding for 2012, down from 37 percent of respondents to last year’s survey.
Moreover, only 11 percent indicated HR budget cuts of more than 5 percent, versus 24 percent of those surveyed about a year earlier.
Budgeted changes in HR outlays also reflect modest improvement in HR departments’ fiscal situations. The median budgeted change in human resource department budgets for 2012 is an increase of 3.2 percent, up from both 2011 (2 percent) and 2010 (2.2 percent).
However, reported budget adjustments are still a far cry from those observed before the recession. For both 2006 and 2007, the median budgeted change in HR department funding was an increase of more than 7 percent.
As in years past, HR departments were far more likely to take on new functions in 2012 than to give up any duties. Among all responding HR executives, 40 percent reported some change in their departments’ responsibilities within the past year. Only 6 percent relinquished any activities, while more than a third (34 percent) acquired at least one new initiative or program.
Quantitative evaluation and formal planning have gained a solid foothold in most HR offices. For instance, virtually all surveyed HR departments conduct formal measurement and planning of their compensation and benefits programs — including 71 percent that regularly undertake quantitative evaluations of their wage, salary and benefit structures.
Health care cost containment sits atop most HR department agendas. Stemming the tide of rising health benefit costs ranks as ”extremely important” (42 percent) or ”very important” (39 percent) for more than four out of five surveyed HR executives.
Outsourcing is a well-established aspect of doing business in HR. Roughly 69 percent of human resource professionals outsourced at least one activity or program in 2012, little changed from reports for the past several years.
Employee assistance plans and retirement planning programs remain common targets for outsourcing.
Quality and track record are primary determinants of vendor selection for outsourcing. Existing relationships or the low bid do not often secure the inside track for contractors and vendors, according to surveyed HR executives.
Source: Bloomberg BNA