Opening the Wallet
With the economic forecast slightly improving, recent research finds that HR buyers plan to increase their budgets by 25 percent this year. Corporate social-networking tools, employee-wellness programs, performance-management systems and leadership-development initiatives are among the items on HR's wish list for 2010.
By Mark McGraw
In the wake of stock-market crashes and corporate bailouts, we've all watched the U.S. economy sink to depressing depths in the last two years. Businesses of all stripes have faced slumping sales and shrinking expectations, and responded by cutting corners and curtailing expenses.
And many HR departments have been hamstrung by a lack of available funds for pay raises, hiring, training and development, and other initiatives.
But, if a recent survey is any indication, HR may be feeling a bit more hopeful about 2010, and plans to spend accordingly.
HR buyers plan to increase their budgets by 25 percent in 2010, according to a poll of more than 200 human resource and employee-benefits professionals, conducted by Capitola, Calif.-based marketing software and services firm HRmarketer.
The report,
HR Buyers' Behavior: What to Expect in 2010
, also found that 45 percent of HR buyers are "somewhat optimistic" about the economy and think business will start to improve this year.
Economic forecasts aside, some organizations may simply be tired of waiting for overall economic improvement, and are "taking the bull by the horns" in an effort to turn their own fortunes around, says Kevin Grossman, president of HRmarketer.
"Growth has been flat, if not negative, for companies in the past two years, and some of those companies are reinvesting in their marketing and business development in order to kick-start whatever the heck they can," Grossman says.
According to the HRmarketer survey, the HR programs targeted for increased funding include corporate social-networking tools, employee-wellness programs, management and leadership-development initiatives, performance-management systems, and other training and development programs.
"This is a fairly long list of programs," says Laura Sejen, global head of strategic rewards consulting at New York-based professional services firm Towers Watson. "But in the context of emerging from the recession, each makes sense."
For example, many companies dramatically cut back on or froze expenditures for development and training last year, so there is "pent-up demand" for such initiatives, she says.
"A 25 percent budget increase is steep for one year," Sejen says, "but given the significant cuts in spending in 2009, the 2010 budgets might simply represent a return to pre-recession spending levels."
A spike in HR spending may also mean increases in hiring this year.
Nearly one-third (31 percent) of HR professionals reported their companies will hire 10 percent to 20 percent more staff in 2010, according to the HRmarketer survey.
The outlook was less bright in a Towers Watson survey completed in January, which found that U.S. companies anticipated headcount increases in the 10 percent to 12 percent range for the next year. Those projections are likely realistic, says Sejen.
"As long as business conditions continue to improve, I believe we will see this uptick in hiring. The reality is [that] so many companies made workforce reductions in 2008 and 2009 -- 75 percent of U.S. participants in the Towers Watson survey -- that companies are running very lean from a headcount perspective."
Regardless of hiring projections, stepping up programs to engage, develop and retain existing talent is -- or should be -- a top priority for companies now, says Grossman.
"Companies have neglected employee development and leadership development, and it will continue to plague them," he says. "On-demand leadership [is] lacking when there are no leaders being identified and developed."
He notes that some of the same programs that HR plans to spend more on in 2010 were also cited in the HRmarketer survey as key "pain points" for HR in the year ahead.
Sejen says social-media initiatives and employee-wellness programs figure to create issues for HR as well.
"Corporate social networking is still fairly new to many companies, and they may struggle to leverage social-networking tools to support recruiting or other HR programs," she says.
"Encouraging and securing high levels of employee participation in wellness programs is an ongoing challenge for HR, as it can be hard to gain employees' attention and keep them engaged in wellness activities."
It's worth the effort, however, says Grossman.
"The expense of keeping employees productive and happy can be ameliorated with quality wellness programs," he says. "Empowering employees to get well and stay well with diet, exercise and [by] quitting addictive habits such as smoking pays long-term dividends in presenteeism and productivity at work as well as at home. Wellness programs and behavioral health coaching contribute to these improvements."
Achieving employee buy-in for such programs may present challenges in the year to come, Sejen says, but there are strong signs that HR professionals will at least have more resources to confront those challenges.
"A consensus seems to have emerged among economists and industry analysts that the worst is behind us in terms of the economic crisis and recession," she says. "The financial services sector has largely returned to profitability, and other key sectors are showing signs of increased top line revenue growth. HR buyers are most likely reflecting this consensus."
February 3, 2010 Copyright 2010© LRP Publications
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