Recent headlines have highlighted challenging market dynamics for many organizations: large cost takeout initiatives, employee layoffs and other optimization initiatives. If you are one of these organizations tasked with achieving savings amid reduced HR budgets – or you just want to better position your organization for efficiency in 2024 – consider the following:
- Accelerate or increase savings through HRO, payroll, benefits or RPO contract analysis and early renewals. Organizations may be able to find savings opportunities through benchmarking clauses in existing contracts or analysis of invoices and variable pricing elements that can lead to quick cost takeout opportunities. We find that organizations that start their renewal process 18-24 months in advance to conduct renewal planning and analysis get the best results due to greater leverage. ISG market data shows that some outsourcing renewal fees have had a notable drop. For example, Benefits Administration and Defined Contribution outsourcing fees have declined an average of 12-19% due to market consolidation, greater leverage of automation and competitive market pressures.
- Assess your current HR delivery model and costs. When was the last time you assessed the efficiency of your HR organization? If it has been a while, or you have a revised organizational view, now may be a good time for an assessment. A quick HR assessment can identify targeted areas for efficiencies (e.g., opportunities to increase the centralization of HR services, shift location footprint, improve self-service, optimize processes, etc.) that will help streamline HR delivery and achieve organizational goals. Targeting the the most achievable opportunities helps HR focus on the biggest impact initiatives for near-term savings.
- Consider opportunities to rationalize HR technology. Many organizations are still on outdated technology or have amassed a broad set of disparate technologies over time. Even in cases in which organizations have consolidated a number of HR functions around a core human capital management (HCM) solution, certain domains (such as payroll, time, learning or recruiting) often have their own technology ecosystems. A focus on rationalizing and simplifying your HR technology stack not only reduces the technology cost model moving forward but can provide a simplified support structure and improved employee experience.
- Evaluate new HR automation. Capability around solutions such as chat or other HR automation may not be part of your HR delivery model today. Organizations with HR administrative inefficiencies are good candidates for cost savings. The use of HR chat and automation can be one of the quickest ways to ROI by enabling increased scale and reduced cost.
As we move into 2024, HR will likely be tasked to do more with less while still ensuring employees stay productive and engaged and support the agility that the business demands. Decisions HR leaders make today can help organizations achieve not only near-term cost savings but better positioning for HR in the years to come. ISG helps HR organizations make decisions that put them where they need to be. Contact us to find out how we can help you.