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HR DEPARTMENT BENCHMARKS AND ANALYSIS2015–2016

A

HR Department Benchmarksand Analysis 2015-2016

�2015 The Bureau of National Affairs, Inc. • Arlington, Virginia

HR Department Benchmarks and Analysis 2015-2016

ISBN 978-1-63359-087-8

ISSN 1540-2711

‘‘This publication is designed to provide accurate and authoritative information in regard to thesubject matter covered. It is sold with the understanding that the publisher is not engaged inrendering legal, accounting or other professional service. If legal advice or other expert assistanceis required, the services of a competent professional person should be sought.’’ − From aDeclaration of Principles, jointly adopted by a Committee of the American Bar Association and aCommittee of Publishers and Associations.

For inquiries about purchasing multiple copies of this report, pleasecontact:

Gail Moorstein, Editorial Director(gmoorstein@bna.com)

s Table of Contents

Acknowledgements .............................................................................................. x

About the Authors ............................................................................................... xi

Executive Summary ............................................................................................. xii

Introduction and Guide to Using This Report

Overview ............................................................................................................. 3

Frequently Used Terms ......................................................................................... 5

Design, Methodology and Presentation ................................................................. 7

Profile of Participating Employers ........................................................................ 9

Chapter 1—HR Department Staffing

Overview ............................................................................................................. 13

Highlights ............................................................................................................ 14

Recent Increases and Cuts in HR Staff ................................................................. 16

How It’s Measured: The HR Staff Ratio ................................................................ 19

Human Resource Department Staff Ratios ........................................................... 21

How It’s Presented: HR Staff Ratios in Charts and Tables ..................................... 27

HR Staff Ratios: 1995-2015 ................................................................................. 36

Composition of the HR Department Staff .............................................................. 39

Specialists on the HR Department Staff ............................................................... 42

Contingent Workers and Human Resources .......................................................... 46

Chapter 2—HR Department Expenditures and Budgets

Overview ............................................................................................................. 51

Highlights ............................................................................................................ 52

How It’s Measured: HR Expenditures and Budgets ................................................ 54

How It’s Presented: HR Expenses per Capita in Charts and Tables......................... 56

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Budgeted Changes in HR Expenditures ................................................................. 57

HR Expenditures per Employee ............................................................................. 61

How It’s Measured: HR Budgets as a Percentage of Operating Costs..................... 71

HR Budgets and Total Operating Costs ................................................................. 72

Benchmarking HR Expenditures: Factors to Consider ............................................ 80

Budgeted Changes in HR Staff Salaries ................................................................ 81

How It’s Measured: HR Salaries as a Percentage of Payroll (HR Salary Ratio)......... 83

HR Salaries and Total Payroll Costs ...................................................................... 84

Chapter 3—Metrics, Strategy and Planning

Overview ............................................................................................................. 89

Highlights ............................................................................................................ 90

Metrics and Strategic Planning in HR ................................................................... 92

HR Execs Cite Wide Array of Barriers to Metrics.................................................... 100

Current HR Department Priorities ......................................................................... 102

As Hiring Ramps Up, Workforce Issues Come to the Fore ...................................... 106

Anticipated Changes in HR’s Priorities ................................................................. 108

HR’s Strategic Involvement and Influence ............................................................. 111

What Are the Characteristics of a Full Strategic Partner?....................................... 115

Where and How Should HR’s Profile Be Raised? ................................................... 117

Chapter 4—HR Activities and Responsibilities

Overview ............................................................................................................. 121

Highlights ............................................................................................................ 122

Changes in HR Department Responsibilities ......................................................... 124

Employment and Recruiting ................................................................................. 126

Strategic Planning ............................................................................................... 130

Training and Development .................................................................................... 133

HR Department Benchmarks and Analysis 2015-2016

iv � 2015 The Bureau of National Affairs, Inc. • Arlington, Virginia

Compensation ...................................................................................................... 136

Benefits .............................................................................................................. 140

Employee Services .............................................................................................. 144

Employee Relations ............................................................................................. 147

External Relations ............................................................................................... 150

HR Records and Systems ..................................................................................... 152

Health and Safety ................................................................................................ 154

Evolution of HR Responsibilities and Autonomy: 1995-2015 .................................. 157

Chapter 5—HR Outsourcing

Overview ............................................................................................................. 163

Highlights ............................................................................................................ 164

Extent of Outsourcing in Human Resources .......................................................... 165

The Outsourcing Decision .................................................................................... 173

Outsourcing Outcomes ......................................................................................... 177

Outsourcing Prospects on the Horizon .................................................................. 180

Offshoring Likely on the Rise, Deloitte Survey Finds .............................................. 181

�2015 The Bureau of National Affairs, Inc. • Arlington, Virginia v

s List of Figures

Chapter 1—HR Department Staffing

Figure 1-1—Changes in HR Staff Levels, 2014-2015 ......................................... 16

Figure 1-2—Changes in Staff Levels: 2005-2015 .............................................. 17

Figure 1-3—HR Staff Ratios: 1995-2015 .......................................................... 21

Figure 1-4—Change in Employee Headcount, 2014 to 2015 .............................. 23

Figure 1-5—Change in HR Staff Level (in FTEs), 2014 to 2015 ......................... 24

Figure 1-6—Change in HR Staff Ratio (HR Staff per 100 Employees),

2014 to 2015 ............................................................................................... 25

Figure 1-7—HR Staff Ratios by Workforce Size, 2015 ....................................... 28

Figure 1-8—HR Staff Ratios by Industry, 2015 ................................................. 31

Figure 1-9—Median HR Staff Ratio, 2014 vs. 2015, by Workforce Size ............. 33

Figure 1-10—Median HR Staff Ratio, 2014 vs. 2015, by Major Industry

Classification ................................................................................................ 34

Figure 1-11—HR Staff Ratios by Workforce Size: 1995-2015 ............................ 37

Figure 1-12—HR Staff Ratios by Major Industry Classification: 1995-

2015 ............................................................................................................ 38

Figure 1-13—‘‘Typical’’ Composition of HR Department Staff,

2005 vs. 2015.............................................................................................. 39

Figure 1-14—HR Staff Composition in 2015, by Workforce Size ........................ 40

Figure 1-15—Prevalence of HR Specialists by Workforce Size,

2015 vs. 2005.............................................................................................. 42

Figure 1-16—Prevalence of Specific HR Specialists, 2015 vs. 2005 .................. 44

Figure 1-17—HR’s Role in Hiring Contingent Workers ....................................... 46

Figure 1-18—Median HR Staff Ratios by HR’s Role in Hiring Contingent

Workers........................................................................................................ 47

Chapter 2—HR Department Expenditures and Budgets

Figure 2-1—Median Budgeted Change in Total HR Expenditures:

1995-2015 ................................................................................................... 57

Figure 2-2—Budgeted Change in Total HR Expenditures, 2014 vs. 2015 ........... 58

Figure 2-3—Budgeted Change in Total HR Expenditures: 2010-2015 ................. 59

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vi � 2015 The Bureau of National Affairs, Inc. • Arlington, Virginia

Figure 2-4—Median Budgeted HR Expenditure per Employee:

1995-2015 ................................................................................................... 61

Figure 2-5—Per Capita HR Expenditures Budgeted for 2015,

by Workforce Size ......................................................................................... 63

Figure 2-6—Per Capita HR Expenditures Budgeted for 2015,

by Industry ................................................................................................... 66

Figure 2-7—Median Budgeted HR Expenditures per Employee,

2005 vs. 2015, by Workforce Size................................................................. 68

Figure 2-8—Median Budgeted HR Expenditures per Employee, 2005 vs.

2015, by Major Industry Classification .......................................................... 70

Figure 2-9—HR Budget as a Percentage of Total Operating Costs:

1995-2015 ................................................................................................... 72

Figure 2-10—HR Budget for 2015 as a Percentage of Total Operating

Costs, by Workforce Size............................................................................... 73

Figure 2-11—HR Budget for 2015 as a Percentage of Total Operating

Costs, by Industry......................................................................................... 76

Figure 2-12—HR Budget as a Percentage of Operating Costs,

2005 vs. 2015, by Workforce Size................................................................. 78

Figure 2–13—HR Budget as a Percentage of Operating Costs,

2005 vs. 2015, by Major Industry Classification ............................................ 78

Figure 2-14—Median Budgeted Change in HR Staff Salaries:

2005-2015 ................................................................................................... 81

Figure 2-15—HR Salary Ratio versus HR Staff Ratio: 2005-2015 ...................... 84

Figure 2-16—HR Staff Salaries for 2015 as a Percentage of Total

Payroll, by Workforce Size ............................................................................. 85

Figure 2-17—HR Staff Salaries for 2015 as a Percentage of Total

Payroll, by Industry ....................................................................................... 86

Chapter 3—Metrics, Strategy and Planning

Figure 3-1—Extent of Metrics and Planning in HR, 2015 ................................... 93

Figure 3-2—Regular Use of Metrics and Planning in HR, 2015 vs. 2005 ............ 95

Figure 3-3—Use of HR Metrics and Planning, by Workforce Size ........................ 97

Figure 3-4—Extent of Metrics and Planning in HR, 2005 vs. 2015 .................... 98

Figure 3-5—Extent of Metrics and Planning in HR, by Workforce Size ................ 99

Figure 3-6—Current HR Department Priorities .................................................. 103

�2015 The Bureau of National Affairs, Inc. • Arlington, Virginia vii

Figure 3-7—Current HR Department Priorities, by Workforce Size ..................... 105

Figure 3-8—Major Change in HR Department Priorities or Initiatives? ............... 108

Figure 3-9—Areas of Anticipated Change in HR Department Priorities ............... 109

Figure 3-10—Reporting Relationships of HR Executives, 2015 .......................... 111

Figure 3-11—HR’s Strategic Involvement within Organization, 2005 vs.

2015 ............................................................................................................ 112

Figure 3-12—HR’s Strategic Involvement by Reporting Relationship ................. 113

Figure 3-13—HR’s Strategic Involvement by Number of Regular

Measurement and Planning Activities ............................................................ 114

Chapter 4—HR Activities and Responsibilities

Figure 4-1—Recent Changes in HR Department Responsibilities ....................... 124

Figure 4-2—Changes in HR Responsibilities: 2005-2015 ................................... 125

Figure 4-3—Employment and Recruiting - Who Handles It? ............................... 127

Figure 4-4—Employment and Recruiting by Workforce Size .............................. 128

Figure 4-5—Strategic Planning - Who Handles It? ............................................. 130

Figure 4-6—Strategic Planning by Workforce Size ............................................ 131

Figure 4-7—Training and Development - Who Handles It? .................................. 133

Figure 4-8—Training and Development by Workforce Size .................................. 135

Figure 4-9—Compensation - Who Handles It? ................................................... 137

Figure 4-10—Compensation by Workforce Size ................................................. 139

Figure 4-11—Benefits - Who Handles It? .......................................................... 140

Figure 4-12—Benefits by Workforce Size .......................................................... 143

Figure 4-13—Employee Services - Who Handles It? .......................................... 144

Figure 4-14—Employee Services by Workforce Size .......................................... 146

Figure 4-15—Employee Relations - Who Handles It? ......................................... 147

Figure 4-16—Employee Relations by Workforce Size ......................................... 149

Figure 4-17—External Relations - Who Handles It? ........................................... 150

Figure 4-18—External Relations by Workforce Size ........................................... 151

Figure 4-19—HR Records and Systems - Who Handles It? ................................. 152

Figure 4-20—HR Records and Systems by Workforce Size ................................ 153

Figure 4-21—Health and Safety - Who Handles It? ............................................ 154

Figure 4-22—Health and Safety by Workforce Size ............................................ 156

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viii � 2015 The Bureau of National Affairs, Inc. • Arlington, Virginia

Figure 4-23—Exclusive HR Department Responsibility for Selected

Activities and Programs, 1995 vs. 2015........................................................ 158

Chapter 5—HR Outsourcing

Figure 5-1—Prevalence of HR Outsourcing: 1997-2015 ..................................... 165

Figure 5-2—HR Outsourcing in 2015, by Workforce Size ................................... 166

Figure 5-3—HR Outsourcing in 2015, by Industry ............................................. 167

Figure 5-4—Most Frequently Outsourced HR Activities ..................................... 169

Figure 5-5—Outsourcing of Specific HR Activities, by Workforce Size ................ 170

Figure 5-6—Activity or Program Most Recently Outsourced by HR .................... 171

Figure 5-7—Who Initiated the Outsourcing Decision? ........................................ 173

Figure 5-8—Importance of Various Factors in the Decision to Outsource ........... 174

Figure 5-9—Top Factors in Choice of Outsourcing Provider ................................ 175

Figure 5-10—Did the Outsourcing Initiative Coincide with HR Staff

Cuts? ........................................................................................................... 177

Figure 5-11—Does HR Oversee the Relationship with the Vendor? ..................... 178

Figure 5-12—Outsourcing Results in Key Areas ................................................ 179

Figure 5-13—Any HR Function(s) to be Outsourced Within Next 12

Months? ....................................................................................................... 180

Figure 5-14—Outsourced HR Activity Ever Brought Back in House? .................. 182

Figure 5-15—Why Doesn’t the HR Department Outsource? ............................... 183

�2015 The Bureau of National Affairs, Inc. • Arlington, Virginia ix

s Acknowledgements

We wish to extend our heartfelt thanks to the many human resource professionalswho participated in this year’s HR Department Benchmarks and Analysis survey.This report would not have been possible without their willingness to complete theextensive survey questionnaire, despite their considerable professional duties andobligations. We are most grateful for their participation.

As always, we are deeply indebted to Fonda Jarrett and Mike Wright ofBloomberg BNA for their diligent, conscientious and professional work indesigning, laying out and publishing the report.

HR Department Benchmarks and Analysis 2015-2016

x � 2015 The Bureau of National Affairs, Inc. • Arlington, Virginia

s About the Authors

The following individuals contributed to the research and questionnaire design,data collection and tabulation, analysis and interpretation of survey findings,writing, copy editing and organization of this report.

Gail C. MoorsteinEditorial Director

Andrew J. HellwegeSurvey Research Analyst

Cordelia D. GaffneyManager, Bloomberg BNA Graphics

Susan J. SalaConsulting Editor

J. Michael ReidyConsulting Editor

�2015 The Bureau of National Affairs, Inc. • Arlington, Virginia xi

s Executive Summary

For nearly four decades, Bloomberg BNA has published its annual report on thestate of the human resources function, HR Department Benchmarks andAnalysis. Since the survey’s inception in 1978, the questionnaire and report haveundergone continual revision, refinement and expansion, ensuring that each reportis as comprehensive, timely and enlightening as possible. As a result, the annualsurvey-based report has remained an authoritative, trusted source of research,analysis and perspective on human resource department staffing, expenditures,responsibilities, priorities and influence.

In keeping with that tradition of continuous evaluation and improvement, thisyear’s report incorporates several noteworthy enhancements. HR DepartmentBenchmarks and Analysis 2015-2016 contains new and expanded historicalanalysis and perspective, including examinations of HR departmentresponsibilities and autonomy over the past two decades, the tenacity ofdemographic patterns in HR staff ratios and key factors in the recent decline inhuman resources staffing relative to the employee population. As always, chartsand tables have been added, updated and refined. This year’s ‘‘perspective’’ piecesconvey HR executives’ views and experiences on a variety of topics, includingimpediments to the use of metrics and benchmarks in human resources; growingemphasis on recruitment, hiring and retention among HR departments; and thestrategic position and influence of human resource officers and departments.

HR Department Benchmarks and Analysis 2015-2016 is based on responses from348 human resource executives and professionals representing a broad crosssection of U.S. employers. (See ‘‘Profile of Participating Employers’’ on page 9 formore details on the enterprises and institutions represented.) Most respondentsare at or near the top of the HR profession, heading up the human resourcesfunction at their organization, division or facility.

Key findings of this year’s survey report, organized by major topic, aresummarized below.

HR Department Staffing

After reaching all-time highs in 2013 and 2014, human resources staffingrelative to the workforce tumbled a bit in 2015. This year’s median ratio ofhuman resources staff to total employee headcount is 1.1 full-time equivalent staffmembers for every 100 employees served by the department, down from 1.3 HRstaff per 100 employees in both 2013 and 2014.

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xii � 2015 The Bureau of National Affairs, Inc. • Arlington, Virginia

Workforce growth triggered the decline in HR staff ratios over the past year.Just 12 percent of responding HR departments suffered some loss in full-timeequivalent staff during the past year, while 24 percent of HR offices addedpositions between 2014 and 2015. Over the same time span, total headcountincreased at nearly two out of three organizations (65 percent), with just 12percent of employers reporting reductions-in-force. (The HR staff ratio declines ifthe size of the workforce increases, unless there is an equivalent or greaterproportional increase in HR staff.)

Despite the dip in HR staff ratios this year, survey findings over the pastdecade indicate an upward shift in human resource staff levels relative toemployment. This year’s median HR staff ratio for all responding employers isdown from the record highs of 2013 and 2014 but still clearly at the high end ofmidpoint ratios recorded since the survey’s inception in 1978. Moreover, themedian ratio last fell below one HR staff member for every 100 workers in 2002,and the midpoint figure has come in at 1.1 per 100 or higher in nine of the last 11years.

The impact of economies of scale on HR department staffing remainssubstantial and consistent. Staff ratios decline steadily and predictably as theemployee population rises, this year from a median of 1.6 human resource staffmembers for every 100 workers in the smallest organizations (fewer than 250workers) to well under half that figure (0.6 per 100) among the largest respondingestablishments (2,500 or more employees).

The composition of the HR staff remains highly dependent on the size of theworkforce served by the department. Managers predominate in departmentsserving the smallest companies (fewer than 250 workers), but the makeup of theHR staff shifts quickly as workforce size increases. Supervisors and managerstypically make up well over half of the HR department staff in the smallestcompanies, compared with about one-third of human resource contingents in thelargest organizations (2,500 or more employees). Overall, managers andsupervisors constitute an average of 41 percent of the HR departmentsresponding for 2015, followed closely by HR’s professional and technicalcontingent (an average of 37 percent). Secretaries and administrative assistantsusually make up a considerably smaller portion of the human resources staff (21percent).

HR Expenditures and Budgets

Recent adjustments to HR’s annual appropriations represent substantialimprovement from 2009-2011, when the median change in the HR department

�2015 The Bureau of National Affairs, Inc. • Arlington, Virginia xiii

budget plunged to roughly 2 percent per year. However, recent HR budgetmodifications (2012-2015) have been well short of levels observed in the decadebefore the Great Recession, when the median year-to-year change in the humanresources budget routinely exceeded 5 percent, peaking at more than 7 percent inboth 2006 and 2007.

In each of the last four years (2012-2015), the median annual adjustment toHR’s funding has been an increase of about 4 percent. For 2015, the medianbudgeted change in HR’s appropriations—the percentage difference betweenactual expenditures in 2014 and budgeted outlays for 2015—is a boost of 4.2percent, little changed from the midpoint figures for 2014 (+3.9 percent), 2013(+3.8 percent) and 2012 (+3.6 percent).

While roughly three-quarters of the surveyed HR offices have budgetedgreater outlays for this year than they spent in 2014, those funds are beingstretched thinner by workforce expansion. Overall, budgeted HR expendituresper employee for 2015 are down modestly from a year earlier, as overallemployment growth at responding firms has outstripped the pace of fundingincreases for human resources. The median budgeted per capita expenditure forhuman resource activities in 2015 is $1,375 per employee, down about 6 percentfrom the median outlay budgeted for 2014 ($1,465 per worker).

HR’s per capita expenditures in hospitals, schools and other nonbusinessestablishments continue to fall well short of annual outlays per worker inthe business sectors, and that disparity has only widened over the last 10years. HR funding growth in the nonbusiness sectors has slightly exceededinflation over the course of the last decade, while growth in per capitaexpenditures among manufacturing companies and nonmanufacturing enterpriseshas been more than double the national inflation rate since 2005, according to thesurvey findings.

On the whole, HR departments have gained a larger overall share of theirorganizations’ financial resources over the last decade. Human resourcesfunding for 2015 constitutes a median of 1.4 percent of the surveyed employers’budgeted operating expenses for the year, the largest median proportion of totaloperating costs represented by HR budgets in the survey’s history (also reachedin 2013). The median HR share has been at least 1.1 percent of budgetedoperating costs in 10 of the last 11 years. From 1997 to 2004, human resourcesroutinely received less than 1 percent of total operating expenditures budgeted bytheir organizations.

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xiv � 2015 The Bureau of National Affairs, Inc. • Arlington, Virginia

HR Metrics, Strategic Planning and Priorities

Compensation and benefits still sit atop the analytical heap in humanresources. Pay and benefits programs are subject to some degree of quantitativeanalysis and/or strategic planning at nearly nine in 10 responding organizations(89 percent), including 59 percent that conduct regular examinations of theirwage, salary and benefits systems.

Since 2005, measurement and planning have grown more prominent in someareas of human resources, languished in others and ebbed in a few. Thegreatest analytical inroads have been made in recruitment and selection, wherenearly half of HR executives surveyed in 2015 (48 percent) reported routine use ofmetrics or formal planning, compared with 36 percent of respondents in 2005.

Improvements in the economy apparently have spurred a modest reshufflingof HR department priorities, with recruitment and retention toppinghealth-care cost control for a third consecutive year. The vast majority of HRofficers (85 percent) characterized ‘‘attracting and retaining qualified employees’’as ‘‘extremely important’’ or ‘‘very important,’’ while about three out of foursurveyed executives (73 percent) put ‘‘controlling health benefits costs’’ amongtheir greatest priorities for 2015. (Four years ago, 86 percent of respondentsranked health benefits cost control as a top concern.)

Human resource officers might not have a key to the executive washroom,but they often report to someone who does. The head of human resourcesanswers directly to the organization’s president or CEO at a solid majority of thesurveyed establishments (54 percent). Reporting relationships continue to matter;HR’s corporate influence is strongest when its leader answers directly to topbrass.

Only 25 percent of responding HR executives reported that human resourceshas ‘‘full’’ involvement in corporate decision-making, the same percentageindicating complete strategic integration a decade ago. Roughly four in 10 HRofficers (38 percent) reported ‘‘substantial’’ influence on corporate strategy, while26 percent indicated ‘‘moderate’’ involvement in major business decisions. Fewrespondents characterized their departments’ strategic involvement and influenceas ‘‘minimal’’ (7 percent) or nonexistent (2 percent).

HR Activities

The pace of change in human resources’ responsibilities has been slowing.Less than three in 10 HR executives responding this year (29 percent) and last(27 percent) reported some change in their offices’ duties or functions within the

�2015 The Bureau of National Affairs, Inc. • Arlington, Virginia xv

previous 12 months, compared with more than two-fifths of survey respondents adecade earlier (42 percent in both 2005 and 2004) and roughly half of HR officersresponding in 2006 and 2007.

The HR department remains much more likely to acquire newresponsibilities than to have any tasks or programs removed from its dutyroster. About one in four HR departments surveyed in 2015 (23 percent) acquirednew functions within the past year, while less than one-tenth (9 percent)relinquished one or more activities during the previous 12 months.

While HR has secured a seat at the corporate table at many, if not most,organizations, its strategic role still tends to be collaborative or supportive.Employers are largely disinclined to give the HR department exclusive controlover organization development (25 percent) or succession planning (11 percent),and very few companies with merger and acquisition functions have assignedthose duties to human resources alone.

Employee benefits are HR’s bailiwick, usually without assistance or interferencefrom elsewhere in the organizations. The HR department manages all aspects ofinsurance benefits, unemployment compensation and leave programs and policiesat more than seven in 10 surveyed organizations, and a strong majority ofcompanies entrust their cafeteria benefits, pension and retirement programs andflexible spending accounts to human resources alone.

Outsourcing

Outsourcing of HR activities has fallen off somewhat from a decade ago, butthe use of outside contractors is in no danger of vanishing from the humanresources landscape. Roughly two-thirds of all employers responding in 2015 (65percent) outsourced at least one HR activity at the time of the survey, littlechanged from a year earlier (62 percent) but well short of the high water mark of79 percent in 2005.

HR usually calls the shots on moving an activity or program to a third party.Among human resource executives queried about their most recent outsourcinginitiatives, about two-thirds (64 percent) reported that HR made the decision tofarm out the program or function. Six percent reported that the company’spresident or CEO directed the switch, 6 percent said the chief financial officermandated the change and 5 percent indicated that the finance department madethe determination.

Contractor expertise and desired improvements in service quality most oftenspark the decision to outsource. About three out of four surveyed HR

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xvi � 2015 The Bureau of National Affairs, Inc. • Arlington, Virginia

executives indicated that access to greater expertise was an ‘‘extremelyimportant’’ (37 percent) or ‘‘very important’’ (39 percent) consideration in theirmost recent outsourcing initiative, followed closely by expected gains in thequality of service (33 percent and 39 percent, respectively). Less than two in fiverespondents cited cost savings as an ‘‘extremely important’’ (14 percent) or ‘‘veryimportant’’ (24 percent) factor.

HR executives are generally satisfied but not often enamored with theperformance of contractors and vendors. Most respondents indicated that thecontractor had met expectations in key performance areas, while only a handfuldeemed the vendor’s performance to be substantially better than anticipated. Forinstance, 66 percent of the HR executives reported that their most recentoutsourcing initiative ‘‘met expectations’’ for improvements in service quality, withonly 11 percent reporting that the contractor’s performance ‘‘exceededexpectations.’’

�2015 The Bureau of National Affairs, Inc. • Arlington, Virginia xvii

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