CoAdvantage – Most business owners intuitively understand that excessive administrative work is undesirable. It adds expense, creates inefficiency, and imposes opportunity costs. So, why do we take it for granted that the average HR professional is going to spend nearly all (86%) of their time on administrative tasks, according to research from consultancy group EY?
To be fair, a significant portion of HR’s mandate is transactional. Making sure workplace functions like payroll and benefits administration are handled promptly and accurately is hugely important. However, an exclusively administrative or transactional understanding of HR’s role creates several potential problems.
First, too much administrative work means organizations are less likely to leverage opportunities for efficiency.
In today’s era of advanced technology, it’s just not necessary for HR professionals to spend so much time on administrative tasks. Smart automation and technology-enabled self-service options can free up a huge amount of bandwidth and reduce the overall burden placed on HR teams, making them more efficient and effective.
Second, it discounts the role HR can play in organizational strategy.
When organizations see their HR teams as primarily administrative, they usually also view HR as a cost-center rather than a value-generator. This is a self-limiting viewpoint that prevents businesses from allowing their HR teams to become engines of innovation that can help the organization as a whole to achieve business objectives. EY agrees, arguing that HR’s true value “lies in bringing a powerful combination of people capabilities to business problems, rather than the depth of just one skillset.”
Third, it imposes a ceiling on HR’s capabilities.
An HR group that spends most of its time on manual administrative work won’t have the capacity to administer services to a larger and larger workforce as the business grows. They’ll be spread too thin, and every aspect of the employment experience will suffer. In other words, an administration-focused HR is not scalable. In this situation, HR itself can begin to act as a constraint on the business’s ability to grow.
Fourth, administration alone is costly without adding value.
Per research from The Hackett Group, the most successful (what they term “world-class”) HR organizations operate at 25% lower cost while requiring 31% fewer staff. Notably, they are also 91% more likely than other HR groups to “act as strategic advisors to the enterprise.” Too much focus on administrative duties simply costs more, requires more staff, and steals time from more strategic initiatives. This is likely why so many businesses view HR as a cost-center: if they’re spending 86% of their time on admin, they don’t have the bandwidth to create value.
How Do You Reduce Administrative Burden?
Both technology and outsourcing can help. Let third parties handle the transactional work while your internal HR staff refocus their attention on building a more successful organization that can grow and thrive. For more information about how third-party HR services like Professional Employer Organizations can empower internal HR teams to serve as a more strategic partner, read our article, “Does Strategic HR really make a difference?”
CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.