US HR functions ahead of Europe in credibility stakes
| DOI | https://doi.org/10.1108/14754390580000603 |
| Published date | 01 March 2005 |
| Pages | 14-15 |
| Date | 01 March 2005 |
| Subject Matter | HR & organizational behaviour |
14 Volume 4 Issue 3 March/April 2005
RESEARCH AND RESULTS
,
A look at current trends and data
,
,
from Sarbanes-Oxley in the US are all
pushing organizations toward reporting
on their human capital.
“Regulatory developments indicate
that human capital reporting will be a
standard requirement within a the next
few years. HR practitioners must ensure
that that they are ready to respond,
with systems and thinking in place,”
says Richard Phelps, a partner at
PricewaterhouseCoopers.
Other key findings from the report
include:
Financial performance
Between 2001 and 2003, the US
recovered both revenue generation and
bottom-line profit growth faster than
Europe. Since 2001, revenue per
employee has increased by 18 percent
in the US and by 11.3 percent in
Europe.
The different rates of recovery per
employee between the US and Europe
would seem to indicate that in times of
economic transition, the US is able to
move faster and more flexibly than
Europe when responding to adverse
economic conditions and subsequently
implementing innovative propositions
for growth.
Training and development
Investment in leadership training and
development continues to be high,
broadly estimated at
€
1.5 billion in
2003 across Europe. The findings show
little evidence that this investment is
currently demonstrating any major
return.
A
study of 10,000 organizations
across the US and Europe found
that HR is still struggling for
credibility and influence in Europe, but
having more success in the US.
Conducted by PricewaterhouseCoopers,
the industry-wide study, Key trends in
human capital: a global perspective,
reported that in Europe the last 12
months have produced little evidence
that the HR function is playing a more
significant role in organizational life.
The study found that the number of
European HR directors operating at the
most senior levels in companies
continued to decline for the third
successive year. Internal moves to
create a more strategic overall
contribution from HR through business
partnerships with line executives had
also not demonstrated any consistent
progress.
Measurement: the key to credibility?
Effective measurement of the impact of
human capital initiatives on business
performance may be the key to gaining
credibility for HR. The report predicted
that people in organizations will not be
regarded as human capital in reality,
until, and unless, their contribution to
value can be measured with the same
confidence as any other asset.
The drive toward meaningful human
capital measurement is, however,
already gaining pace. The Accounting
for People Report in the UK, the
Nouvelles Regulations in France, the
work of the European Multi-
Stakeholder Forum and pressure arising
US HR functions ahead of Europe in credibility stakes
Employers cannot afford to ignore diversity
UK workers feel unappreciated and unsupported
Key Trends in Human Capital: A
Global Perspective is based on data
collected between 2001 and the first
quarter of 2004, from over 10,000
organizations across Europe and the US.A
copy of the report can be downloaded at
www.saratogapwc.com
MORE INFORMATION
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In Europe, there is evidence of a
consistent decline in all formal training
investment since 2001. The figure
stands at 23.9 hours per employee per
year in 2003, compared to 25.8 hours in
2001.
The changing HR function
The size of the HR function in the US is
increasing, with figures indicating a 3
percent growth in numbers since 2002,
resulting in a ratio of 85 employees to
every HR practitioner in 2003. In the US,
investment in the HR function has
grown by some 22 percent since 2000.
Outsourcing in Western Europe has
grown overall by 50 percent.
Approximately 80 percent of the
organizations involved in the study
cited cost reduction as their main
objective in outsourcing and offshoring.
Results show that the impact of
shared services in Europe is mixed.
There is little evidence to show that
outsourcing services or centralizing
work has significantly reduced HR
function costs, impacted on the size of
the HR function or enabled remaining
HR professionals to have greater
business impact.
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© Melcrum Publishing Ltd. 2005. For more information, go to www.melcrum.com or e-mail info@melcrum.com
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