As far as HR metrics are concerned, it is evident from the graph below that labour cost as a percentage of revenue is the most common type of metric used. The average total labour cost as a percentage of revenue for the respondents of the survey is 28%. However, most of the other metrics relate to transactional HR measures such as sick leave costs and training cost per employee. The only metric that directly affects the bottom line is sales per employee, but very few respondents reported on this metric. In general, it is clear that most companies in South Africa do not generate HR metrics. This is of concern in the light of the need to be a business partner and to report on the tangible value of HR to management.
Employment Outlook and Investing in Training Forty-eight percent of the organisations surveyed indicated they plan to grow the number of employees in their respective organisations. That represents a 3% increase compared to 2010. Fourteen percent still plan to reduce employment, down from 16% in 2010. In 37% of the organisations employment will stay at the same levels.
The outlook for employment in the HR departments is also more positive. Twenty-five percent of organisations will increase the staff employment (21% in 2010), whereas only 6% plan to reduce HR employees. That is almost half compared to the 13% in 2010.
The increase in HR headcount is understandably a function of growth in the various companies, the increased need for HR specialists, such as OD practitioners, increased requirement for training and an increased realisation that HR should become a true business partner. On the negative side, restructuring, cost savings and increased efficiencies and the fact that HR is seen as an overhead is still leading to reductions in HR employees.
Most organisations (54%) plan to increase the overall skills development budget. That represents an increase of 8% since 2010. Only 11% of the respondents plan to decrease the skills budget.
Most organisations plan an increase of below 10% more in line with inflation. There are however organisations planning increases between 15% and 30%.
Biggest HR Challenges and Opportunities for the Year Ahead The responses to the open-ended question, “What is your biggest challenge and opportunity for the year ahead?” can be classified into 14 categories. There are three areas that emerged as new and specific challenges this year, i.e.: HR as a business partner (14.4%); Industrial Relations (3.1%) and HR Policy and Maintenance (5.9%).
HR as a Business Partner This year the challenge and opportunity to reposition HR as a business partner came out very strong. This category has the highest response at 14.4%. Some of the specific comments were:
“Becoming competent in all aspects of HR and for HR to be acknowledged as a strategic partner.”
“HR to be taken as the profession in the organisation and the strategic.”
“Transforming HR into a strategic partner.”
“Ensuring that line managers understand that HR is a management function and HR component is a strategic partner.” »