PricewaterhouseCoopers Saratoga, part of the Human

Resource Services advisory practice, has an established

track record in providing global human capital
benchmarking and measurement studies, and has one of
the world’s largest HR consulting businesses and most
robust databases of human capital performance
measures.
PwC Saratoga work with 40% of FTSE 100 and Fortune
500 companies and consider intelligent measurement to
be fundamental to performance improvement.
Benchmarks cover a broad spectrum including country
workforce, size and sector. Data is collected according to
strict definitions ensuring resultant benchmarks reflect a
robust, like-for-like comparison.
 PwC Saratoga is renowned globally for its work on human
capital benchmarking and measurement. For some 30 years,
it has worked with organisations to gather data upon an
increasing range of closely defined quantitative and
qualitative measures. The information is interpreted and
integrated into the business planning process and relevant
balanced scorecards. The only results received from
organisations that are included in its database conform
exactly to its prescribed definitions. We are therefore highly
confident that all its data is consistent and usable for
comparison and benchmarking purposes. PwC Saratoga uses
an evidence based consulting approach to human capital
issues and, where possible, our work is underpinned by data
and trends throughout.
This report is based on PwC Saratoga’s global database of
human capital performance metrics and other secondary
sources. This data has been collected by client organisations
undertaking measurement and benchmarking projects and
also from other PwC Saratoga research activities. This
briefing is based upon an all-industry median. Commercial
region, size and sector can have a major influence upon many
metrics so where appropriate we include tables that detail
results by region and sector that reveal the strong structural
and cultural differences that continue to pervade European
and other markets. There is solid coverage across European
nations and the US, including comparisons for Central and
Eastern Europe (C&E Europe). Nearly a quarter of
participants are multinational operators, many producing
data for multiple countries or business units.
 •HR Function Trend:-The recognised importance of
human capital to an organisation’s overall performance
would suggest that the HR function should be
evidentially moving into an increasingly influential
position in the business environment. There are worrying
signs to the contrary. The PwC’s 11th Global CEO Survey
highlighted that two-thirds of CEOs want recruitment,
motivation and development improved. But they give HR
a low vote of confidence. The size and cost of the function
per FTE is now declining throughout the majority of
Europe, with HR costs falling from 1,200 euros per FTE in
2015 to 1,017 euros per FTE in 2016. Whereas the US
appears to remain similar in terms of size and show a
slight increase in costs.
 •HR Reputation Trends:-Linked to the trend for the
HR function to become more accountable in
measuring the value it adds to the business, is the
need to manage reputation with its key stakeholders:
the board, the line and employees. In order to do this
well, the HR function needs to be proactively
managed and a clear agreement, understanding and
communication of the role of HR in the organisation is
also required. The HR function needs to focus on the
impact and effectiveness of their communications.
Furthermore, the role of Head of HR communication
is becoming more common but often fails to address
the strategic importance of communication to HR.
What is needed is a comprehensive approach that
encompasses the following elements:
 1. The Board
-demonstrating through quantitative and qualitative
measures the strategic value of HR;
-taking a business perspective and communicating
succinctly and in business language;
-and talking about the right things.
2. The Lines
-engaging managers in the development of policies
and processes
-encouraging dialogue
-communicating things in the simplest way possible
– in the language of line managers.
 3. The Employees
-an employment brand that integrates the employee
experience;
-using the language of employees;
- open, adult communication that achieves
consistency while allowing line managers to interpret
locally.
The trend for HR to demonstrate its value with robust
metrics is closely linked to the need for HR to better
manage its reputation.For HR to become more highly
regarded internally, all communications must be of a
standard which justifies this. The perception of HR is
determined by how it represents itself through
communications, both written and verbal; HR is
therefore responsible for its own PR through internal
communications.
 The move to HR shared services (HRSS) continues. The
objectives of lower cost, business process excellence,
higher advisory consistency and centralised human capital
feedback to energise policy development, all continue to
provide the rationale for this shift. The rise in the number
of HRSS operations has been accompanied by a greater
number of HR processes being delivered via the HRSS
model. On average, participant organisations in PwC
Saratoga’s HRSS network now report information on
seven key HR processes, with recruitment administration,
payroll administration and employee data maintenance
information topping the list.
 Since the last Key trends report, more positive
results are emerging on performance across a series
of measures within HRSS contact centres. However
HR functions are struggling to balance this with an
effective business partnering service to executives.
We have seen a drop in the level of outsourcing in
alignment with the performance improvements.
Overall we are seeing that many mature (over four
years) HR shared services organisation show
significant cost efficiencies within key transactional
processes such as payroll and data maintenance
when compared to less mature (less than four years)
HRSS operations.
-There is a decrease in both the size and cost of HR functions
across Europe & US
-There is little evidence to show that the influence of HR has
increased in the Boardroom – there has been limited strategic
penetration, CEOs have a low opinion upon its contribution
and the number of HRDs on the main board of the FTSE 100
in the UK has further decreased to five
-The role of the HR business partner is not rated highly by
executives
-HR services are increasingly provided by a range of
disciplines external to the HR function
-The success of HRSS depends upon a strategic appreciation
of its purpose and a regular and full evaluation of its value.
More than 60% of people surveyed thought risk management
processes would be more effective if they were embedded into
lines of business.Risk management is now becoming an
established organisational discipline. Identifying risk,
assessing its likely impact, establishing mitigating options,
deciding optimal actions and implementing decisions is
becoming part of the normal agenda for all lines of business.
People risk is now seen as one of the top 10 threats to an
organisation’s earnings. This is hardly surprising since people
constitute a significant level of both the cost base and the
proactive actions of organisations. However, integrating risk
management and human capital management is a major
challenge for most organisations. Effective people risk
management challenges organisations to be agile in
identifying the sources of risks, their likelihood of occurrence,
and the impact they can have on the organisation both
financially and in broader sustainability terms.
These are times of real challenge for the HR function. At a
time when human capital is being recognised as key to an
organisation’s sustainability, the reputation of the
function is at low ebb. Its future is in doubt.
To arrest the decline in the status and the reputation of the
function, there is little doubt that there is an urgent need
to embrace broader business disciplines, adopting a
genuine strategy to relate measurable people policies to
the goals of the organisation. In a sense, the environment
is extremely positive. CEOs appear to realise now that
people count. For the HR function to have real impact, it
must appreciate what people counting means.
 We believe that discussion and debate lead to
breakthrough. PricewaterhouseCoopers continues
to search for breakthroughs in human capital
thinking. It is our view that, in the immediate years
ahead, new thinking and innovative action around
human capital contribution will be the best
guarantee that people’s lives will become
meaningful and complete, and that an
organisation’s human capital will be given the
respect, consideration and status that it deserves.