HR Challenged With Getting, Keeping More with Less

July 29, 2002 ( - Human resource professionals appear to be caught between the rock of cost constraints and the hard place of tight budgets, according to a new survey.

In the midst of a tough employment market, it is perhaps not surprising that retaining talent was cited as the top people-related issue by HR respondents to the latest Towers Perrin Track survey.  However, the 72% that cited that objective outpaced the next highest issue, attracting talent with critical skills, which was cited by 58% of the 100 respondents to the survey.

Spend “Thrifts”

Somewhat ironically, the largest decrease in HR spending was staffing – a category that nearly 40% said they were spending less on since 2001 (however, nearly a quarter were spending more in this area). 

“HR has been trying to reinvent itself for more than a decade, but when the economy goes south, support for it quickly takes a back seat to more pressing financial concerns,” noted Cary Rhodes, a Towers Perrin principal who specializes in the design and operation of the HR function.

Offsetting the cut in staffing may well be the fact that more than half (52%) of the survey respondents say they have increased, or significantly increased, spending on HR information systems (HRIS).  In a related finding, more than half (52%) say that implementing new HR technologies is a significant internal HR management challenge, second highest in that category. 

Business Focus

However, the most critical internal challenge was shifting HR’s role to help address critical business, cited by 57%. 

Other key challenges cited were:

  • 41% – building capabilities of HR staff
  • 39% – strengthening relationships with internal customers
  • 34% – building/strengthening HR measurement capabilities
  • 28% – building global capabilities within HR
  • 18% – shaping the culture within HR
  • 9% – implementing new outsourcing relationships
  • 4% – strengthening vendor relationships

Towers Perrin notes that more than three-quarters of the survey respondents reported that their HR budgets have either dropped or held steady since 2001, with just 22% reporting an increase in overall budget.  On the other hand, the “worst” could be over, with the percentage anticipating a drop in their budget declining from 46% to just 34% for next year, while 41% were anticipating no change, compared with 32% this year.

Roughly 100 senior HR executives from North America responded to the survey.