HRO Today April 2014 - 51

Market Insight
Figure 1
Top HR issues for 2014
Source: Hackett Group's 2014 Key Issues Study
objective in 2014; 25 percent indicate margin improvement
is their main goal. Only 10 percent are principally concerned
with simply maintaining revenue levels, and just 3 percent
with protecting margin. Significantly, only 4 percent of
companies are actually targeting the acceleration of their
historical revenue growth rate in the coming year. This very
low number indicates a great amount of lingering caution
and conservatism in business strategies.
This conservatism in growth strategies becomes more
evident when we look at the business strategies deployed
to realize the coming year's financial objectives. Sustainable,
innovation-based strategies are top ranked, but only to
maintain historical growth rates. Historically, innovation has
been associated with a growth-acceleration strategy. In the
current environment, innovation is a prerequisite to merely
maintaining historical growth grates, staying competitive,
and ultimately remaining commercially viable. Improving
innovative capacity just to support a very conservative
growth strategy (or indeed, a survival strategy) represents a
break with the past.
For many, the need to implement sustainable, innovationbased
growth strategies requires cultural change in every
aspect of operations. Companies are extending their efforts
to grow globally, as reflected in the high priority that
study participants give to expanding the customer base.
Globalization, too, brings its own cultural challenges. Not
surprisingly, then, finding or developing the right talent
remains one of the main challenges faced by companies.
Reinventing HR to Support Growth
The ultimate measure of the performance of HR
organizations is their ability to support the business strategy.
Since many of those strategies center on sustainable,
innovation-based growth and global expansion, HR needs
to change accordingly. Supporting enterprise goals in 2014
will require some HR organizations to make far more than
incremental changes.
The majority of companies are pursuing changes in
cost structure. This gap continues a trend that has been
unbroken since the 2008 recession.
In 2014, HR will continue to focus on high-value-added
programs, and on reducing effort and costs for routine
transactions. Increasing the level of business partnering and
the sophistication of integrated talent management will also
help HR demonstrate how it further enables the business to
meet its strategic goals.
No Budget Relief in Sight
Demand for HR services remains high, but on average HR
budgets and staffing will shrink in 2014. The report finds
that staff is slated to decrease at more than twice the rate
of the budget. While this does not mean increased spending
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HRO Today April 2014

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