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October 29, 2001 Issue

Review of the SHRM/BNA Human Resource Activities, Budgets and Staffs 2000-2001 Survey

The following is an executive summary of the Human Resource Activities, Budgets and Staffs 2000-2001 Survey, produced by a joint effort of the Society for Human Resource Management (SHRM) and the Bureau of National Affairs (BNA). For details of this report, visit www.shrm.org.

This survey, published in June 2001, includes data from over 400 HR executives from a variety of industries. 26% of respondents are manufacturing organizations, 36% non-manufacturing firms, and 38% non-profit organizations. 33% of respondents have fewer than 250 workers, 21% have 250 to 499 workers, 17% have 500 - 999 workers, 16% have 1,000 to 2,499 workers, and 14% have more than 2,500 workers. 72% of respondents are from non-union organizations.

HR department funding continues to grow. This growth is not as robust as in the past few years. The median HR budget increase from 2000 to 2001 was 6.3%, below the 1999 - 2000 increase of 7.1%, and ahead of the 1998 - 1999 adjustment of 4.7%. The median per capita increase of HR costs from 2000 to 2001 was 4.5%, almost identical to the 4.4% increase in the 1999 - 2000 budget review. The decrease in HR budgets may be due to the slowdown in workforce expansions in a number of industries.

Survey Highlights

Budgeted HR expenditures per employee for 2001 indicate an overall increase in HR outlays. The median per employee expenditure for HR services was $813, up from last year's $725.
HR budgets for 2001 represent a median of 1.0% of total projected organizational costs for the year, up from 0.9% in 2000 and 0.8% in 1999.
27% of those reporting data went over their 2000 expenditure budgets.
HR staffs comprise a median of 1.0% of the employer's total workforce in 2001, unchanged from 2000. This 1 per 100 employees ratio has been a constant for many years.
Managerial, professional, and technical employees make up 71% of the total HR staff. 21% reported that they operate without any clerical help.
HR specialists are employed in 49% of the surveyed organizations. HR specialization is more common in employers with more than 2,500 workers. 93% of these organizations employ HR professionals with a single specialty. Prevalent areas of specialization include benefits, employment, and training.
60% of HR offices report responsibility beyond the traditional HR functions. These include mailroom, security, risk management, and security.
74% report the use of outside vendors, contractors, or consultants for at least one HR function. This is up from last year's 69% and 1999's 58%. 47% report outsourcing their Employee Assistance Programs. 31% outsource their pension and retirement function.

Selected Survey Detail

HR Activity and Budget Allocations

The table below is a summary of the prevalence of HR functions among the surveyed organizations and the allocation of the budgeted cost. Following are the top 10 activities, all reporting 98% to 99% prevalence, out of the 55 listed in the survey, and their associated budget allocations.

Activity	Costs Allocated Only to HR	Costs Shared Between HR and Another Department's Budget	Costs Allocated Only to Another Department's Budget
Employment Interviewing	48%	46%	6%
Recruiting Activities	69%	26%	5%
Orientation of Staff	67%	30%	3%
Wage & Salary Admin.	75%	24%	3%
Job Descriptions	70%	28%	2%
Vacation/Leave Admin.	71%	24%	2%
Insurance Benefits Admin.	78%	15%	7%
Disciplinary Procedures	54%	44%	2%
HR Record Keeping	87%	12%	0%
Workers Compensation	60%	20%	20%

HR Staffing Ratios

Expansions in HR staffs were more common than cutbacks, but the rate of increase has slowed. 64% report the same number of HR employees as the year before. 22% report adding staff and 13% report losing staff. The following is a summary of staffing ratios by industry sector (per 100 employees).

All respondents: 1.0
Manufacturing: 1.0
Non-Manufacturing: 1.1
Communications & Information: 1.7
Finance & Insurance: 1.4
Wholesale & Retail Trade: 0.6
Non-Business: 0.9
Healthcare: 0.7
Education & Government: 0.8
Associations & Social Org.: 1.2

HR Budgets

HR departments now account for 1.0% of the organization's overall budgeted costs (total operating expenses including labor, materials, equipment, overhead, sales, and administration) for the year. The following is a breakdown of the median expenditure, per employee, for HR reported by industry.

All Manufacturing: $1,062
All Non-Manufacturing: $1,094
Communications & Information: $1,548
Finance, Insurance, Real Estate: $1,709
Wholesale, Retail Trade: $259
All Non Business: $557
Health Care: $636
Education & Government: $480
Associations and Social Services: $931

Conclusions

The survey reveals a number of critical trends.

There is a growing reliance on HR in terms of controlling expenditures that impact the short- and long-term success of any organization.
The trend for HR to become more creative in how it meets the growing demands of their organizations is evident by the increase in outsourcing of services.
With a median impact of 1% of the organization's total operating budget, HR will be asked to develop more creative programs that will retain and motivate the current and future talent for the organization.

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ISSN Number 1549-0467