Should the Head of Human Resources Report to the CEO?

Yes, if you want to be like other high-performing companies, according to a new i4cp study

SEATTLE, WA (September 8, 2009) - With many human resource departments still grappling with how to become more strategic, a recent study by the Institute for Corporate Productivity (i4cp) revealed several opportunities based on how HR is typically organized.

In the study, respondents were asked to specify how their HR organization was structured on a regional, functional and team level. Results varied by company size, understandably, but several gaps were identified between higher market performing organizations - those companies that have shown considerable revenue growth and increased market share over the last five years - and low-performing organizations. Some of these gaps are listed below (for organizations of 10,000 employees and more):

• High market performers are more likely to have HR structured with a combination of centers of excellence, shared services and HR generalists (65% versus only 44% for low performers).
• Global high performers tend to decentralize by country, whereas a vast majority of lower market performers decentralize by region/continent.
• More than 78% of higher market performers have the head of HR reporting directly to the CEO, versus 67% of low performers.
• Higher market performers rely much more heavily on multifunctional temporary team-based structures (43.5%) than low performers (28%).
• HR sets up more cross-functional teams with other functions in higher-performing organizations (47.7%) than in low-performing ones (only 35 %).

"HR structure certainly isn't the sole driver of higher market performance," noted Jay Jamrog, i4cp's senior VP of research, "but higher performers do, in fact, seem to have more sophisticated and fluid HR structures. What's more, there's probably a stronger and more productive connection between business strategies and HR strategies if the head of HR reports directly to the CEO."

More respondents from high-performing organizations (55.6%) said that their HR budget represents 3-5% of their organization's operating budget, whereas HR departments in low performers tend to receive a smaller percentage.

The HR Organizational Structure Pulse Survey was conducted by i4cp in April 2009. A total of 463 respondents participated in the survey. The full results of the survey are available exclusively for all i4cp corporate members.

About i4cp, inc.

i4cp is the world's largest vendor-free network of corporations focused on improving workforce productivity. Our vendor-free community facilitates innovation by giving our members - among the largest and most respected organizations in the world - access to:

• Peers to spark new ideas and prevent "reinventing the wheel,"
• Research to enable members to understand current practices and next practices,
• Tools to put ideas and research into action,
• Technology to enable members to easily access tailored information and execute workforce strategies.

With more than 40 years of experience and the industry's largest team of human capital analysts, i4cp is the definitive destination for organizations seeking innovative ways to improve workforce productivity. For more information, visit https://i4cp.com/(opens in a new tab)