According to The Hackett Group’s latest research, Digital World Class HR organizations are leading the charge in workforce transformation, with significant advancements in efficiency, productivity, and cost management. Through strategic investments in automation and Generative AI (Gen AI), these organizations have achieved remarkable results, including lower labor costs, enhanced productivity, and the ability to seamlessly integrate cutting-edge technologies into their HR operations.
Key Findings from The Hackett Group’s 2024 HR Report
1. Labor Costs and Productivity Gains
In 2024, Digital World Class HR organizations reported labor costs that are 44% lower than their peers—a significant improvement from the 33% reduction observed in 2023. This substantial decrease in operational costs underscores the ongoing commitment of these organizations to drive efficiency through smart automation. These teams have also been able to free up 40% more capacity, allowing them to deliver more value-added services to the business. This has resulted in a 51% increase in HR staff productivity, primarily driven by Gen AI and digital tools.
2. Strategic Technology Investments
One of the most notable factors contributing to the success of Digital World Class HR organizations is their continued investment in technology. In 2023, these organizations spent 85% more on technology per HR full-time equivalent (FTE) than their peers. By 2024, this figure had skyrocketed to 200% more—two times the spending of non-Digital World Class® organizations. These investments have paid off, enabling HR teams to streamline operations, reduce transactional costs, and deploy intelligent automation across a wide range of HR processes.
3. The Role of Automation in HR Operations
Automation remains a cornerstone of HR transformation, with Digital World Class® HR organizations automating 85% or more of transactions across six key HR processes. This focus on automation has not only reduced operational costs but also contributed significantly to the 51% boost in HR staff productivity in 2024. Gen AI is playing a central role in this transformation, particularly in providing employees with self-service capabilities and enabling HR teams to focus on high-value tasks such as strategic planning and employee engagement.
4. HR’s Strategic Business Alignment
The research also reveals that Digital World Class HR organizations are more strategically aligned with overall business goals than their peers. In 2024, these organizations were 67% more likely to have senior HR leaders involved in strategic business planning. Furthermore, they employ 2.9 times more staff who excel in strategic thinking and analysis, a key factor in the organizations’ ability to adapt to evolving business needs. As a result, these organizations are better equipped to deliver meaningful business value by improving workforce planning and filling 68% more professional positions internally.
5. Focus on Employee Development and Talent Management
Training and development play a crucial role in keeping HR organizations ahead of the curve. Digital World Class® HR organizations provide 47% more training hours for their professional staff annually, ensuring their teams remain equipped with the skills necessary to meet the demands of a rapidly changing workplace. These organizations also invest 45% more in strategic workforce planning, which helps optimize talent outcomes, reduce employee lifecycle costs, and increase overall productivity.
Balancing Cost-Efficiency with Technology Investments
Jessica Haley, Global HR Executive Advisory Practice Leader at The Hackett Group, emphasizes the importance of balancing cost-efficiency with strategic investments in technology, particularly Generative AI. She notes that HR leaders who focus on AI integration—while complementing human capabilities—are more likely to achieve sustainable growth and employee engagement. This balanced approach is crucial for fostering a resilient workforce capable of thriving in an increasingly digital world.
Digital World Class HR organizations are setting the bar high with their combination of strategic automation, technology investments, and effective use of Gen AI to enhance HR efficiency and productivity. As businesses face a rapidly evolving landscape, these organizations continue to showcase how leveraging technology, particularly Generative AI, can create significant advantages in cost savings, employee development, and workforce planning.
By focusing on smart, AI-driven solutions and maintaining a strong alignment with overall business goals, HR leaders can unlock new levels of innovation, ensuring their workforce is both engaged and well-prepared for the future.
