2021-10-27 UKG HRStrategy ResearchReport

The State of the HR Boost HR strategy and
Function in Small to practices in smaller

organizations
Mid-sized Businesses
OCTOBER 2021
Sponsored by
www.hr.com | 877-472-6648
CONTENTS
3 Executive Summary
HR Automation Remains a Challenge That Can Impact Time

6 Available for Strategy
Among SMBs, HR Tends to Prioritize Recruitment, Onboarding and

9 HR Administration
10 Most HR Professionals in SMBs Need Best Practices
11 About Half of SMBs Struggle to Achieve Proactive Analytics
15 Compliance Is Often a Challenge, Partly Due to Low Automation
Many SMBs Need to Forge Stronger Connections Between

20 HR and Business Goals
24 Certain Managerial and Employee Processes Could Be Made Easier
27 What Leads to Strategic HR Departments?
38 Takeaways
2 The State of the HR Function in Small to Mid-sized Businesses www.hr.com | 877-472-6648 | copyright © HR.com 2021
Executive Summary About the Survey
Most of the management research focuses on large organizations; this The “Balancing HR Strategy in Small
leaves many HR professionals in small and mid-sized businesses with to Mid-Sized Businesses” survey ran
fewer than 1,500 employees (SMBs) wondering how much of this research from May to July, 2021. We gathered
246 complete and partial responses
is relevant to them. To help close the gap in our understanding of HR’s
from HR professionals in companies
challenges, priorities, and practices in SMBs, HR.com partnered with UKG, with 1,500 or fewer employees.
a global HR technology company, to investigate HR strategies in SMBs and Respondents came from virtually
provide best practices for making changes. every industry vertical.
The survey was a collaboration

This study covers a wide range of topics of interest to HR leaders in SMBs between HR.com’s HR Research
including automation, data, compliance, employee self-service, and more. Institute and UKG (the Ultimate
Kronos Group), a global technology
The data in this study provides a benchmark that readers can judge their
company providing workforce
own organization against and provides clarity on which actions should be
management and human capital
a priority so that HR can make a larger impact. management solutions.
What do we mean by “SMB”?
Throughout this report, Conversely, we refer

we use the term small and to larger organizations
mid-sized business, or as those with more
“SMB.” We define SMB as than 1,500 employees.
an organization with 1,500
or fewer employees.
Key Findings from the Study
Major
Finding 1 SMBs typically struggle with connecting HR work to business
strategies.
●● Only 37% of responding HR professionals say they anticipate and

participate in defining business strategy (i.e., scoring 4 or 5 on a
5-point scale)
●● Nearly one in three (30%) say they wait to be told business strategy
(i.e., scoring 1 or 2 on a 5-point scale), and another 34% are
somewhere in between.
Major
Finding 2 HR automation remains a challenge that can impact the time available
for strategy.
●● Only 40% say all HR, payroll, talent, time and scheduling processes
are automated, either via a single (14%) or multiple systems (26%).
●● Some organizations (15%) are still using all manual or paper-based

processes.
●● This lack of automation seems to be affecting HR’s ability to focus

on strategic tasks. About two-thirds fail to focus primarily on
business and people strategy, as opposed to back-office tasks.
Major
Finding 3 Many organizations would benefit from regulatory compliance
automation.
●● Thirty-four percent of respondents spend more than one-quarter of

their time managing regulatory compliance
●● Just 26% of organizations have high levels of regulatory

compliance automation.
●● The top three areas of regulatory compliance that are of highest

concern in terms of tracking and management are:
Wage and hour laws (63%)

Family and medical leave laws (53%)
Benefits-related laws (48%)
Major
Finding 4 About half of HR professionals in SMBs indicate that their organizations
struggle to achieve proactive analytics.
●● A little over half (54%) either take a reactive approach to people-related
data (29%) or fail to use such data at all (25%).
●● Just 26% of respondents successfully use people-related data to
get actionable recommendations on next steps and address trends in
people activity before they happen, though another 21% use analytics to
understand trends in people activity and what may happen in the future.
●● Most (71%) indicate it is not very easy for the leadership team to tie
people data and HR results to larger business goals and initiatives.
Major
Finding 5 Improving managerial and employee self-service could free up HR’s time.
●● Two-fifths say their HR department spends 26% or more of their time
on tasks that could be handled through employee self-service.
●● The common processes most difficult for managers to handle are:
Understand and report on team data
Review performance
Provide feedback
●● The self-service activities most difficult for employees to engage in are:

Get performance ratings
Swap shifts
Keep up with announcements and policies
Major
Finding 6 HR strategy experts1 succeed by integrating processes, leveraging high
levels of automation and making good use of data.
●● Compared with HR strategy novices, HR strategy experts are:
more than five times more likely to use their HR data to make
actionable recommendations
nearly five times more likely to use their HR and payroll
processes to set the strategic direction
four times more likely to be proactive in aligning people strategy
to business strategy and goals
three times more likely to make it easy to tie people data to
larger business goals
almost three times more likely to have automated regulatory
compliance to a high level
1
HR strategy experts are those that report success at helping guide business and people strategy, and HR strategy novices are those focused more
on back-office tasks.
HR Automation Remains a Challenge
That Can Impact Time Available for
Strategy
Finding: Most organizations fail to fully
automate key administrative HR processes
Most HR departments automate at least some of their HR, payroll, talent,
time and scheduling processes. Almost half of respondents (45%) say
they have some specific solutions to automate certain processes, but
only a small number (14%) have what might be considered the ideal
solution: all their processes automated in a single system.
What is especially concerning is the 15% of respondents who say they

are still using all manual (e.g., spreadsheets, PDFs) or paper-based
processes. Manual work can easily consume the bulk of HR’s time and
energy and leave little room for strategic work. Making the effort to
standardize and automate processes can pay off, especially when a
company begins to grow.
Differences by organizational size

Automation is more prevalent in larger organizations, where 61% of
organizations with more than 1,500 employees have either all processes
automated in a single system or all processes automated via multiple
systems. In the past it was generally easier for large organizations
to automate due to budget and access to technology. However, that
difference is shrinking because SMBs now have access to powerful
SaaS HR systems which often can rival the capabilities of those available
to large enterprises.
Survey Question: How automated would you say your HR, payroll, talent, time, and
scheduling processes are? (please select the one that best applies)
We have some specific

solutions to automate 45%
certain processes
All these processes

are automated via 26%
multiple systems
We use all manual (eg., spread-

sheets, PDFs, etc.) or 15%
paper-based processes
All these processes

are automated in a 14%
single system
0 10 20 30 40 50
Fifteen percent of
organizations are still
using all manual processes
Finding: Two-thirds fail to focus primarily on
business and people strategy, as opposed
to back-office tasks
One-third of responding HR professionals say their team mainly focuses

on back-office tasks. That is, they rate their department as 1 or 2 on a
5-point scale, with 1 being a focus on back-office tasks and 5 being a
focus on business and people strategy. This is a discouraging position to
be in for HR, which we believe should be playing a key role in leveraging
the organization’s most important asset: its people.
HR leaders in these organizations should work toward joining the 26%

of respondents who do focus on business and people strategy. It will
involve streamlining then automating processes to reduce the time
consumed by back-office tasks. At the same time, HR should consider
working on how it is perceived in the organization and position itself as a
strategic asset.
Survey Question: On a scale of 1 to 5, rate how much your HR team focuses

on back-office tasks (such as managing employee records or processing
forms) as opposed to helping guide business and people strategy (such as
presenting people data or continuously improving processes).
[1 = Back-office tasks, 5 = Business and people strategy]
Just over a Focus on Focus on

back-office business and
quarter of tasks people strategy
respondents
say their HR
team focuses 11% 22% 41% 17% 9%
on business and
people strategy
0 20 40 60 80 100
1 2 3 4 5
Among SMBs, HR Tends to Prioritize
Recruitment, Onboarding and HR
Administration
Finding: Among SMBs, the highest priority
is recruiting, onboarding, and benefits
In this question, we asked respondents to rank their top three priorities.
The areas most commonly ranked as top priorities are:
1. recruiting, onboarding, and benefits

2. HR administration and employee records
3. payroll
Recruiting and onboarding are especially important in the current

climate. Recruiting top talent can be difficult for many organizations
today, and having a stellar onboarding experience may be key to
retaining talent. It’s well worth HR’s time to ensure they put extra
effort into recruiting.
Survey Question: Of the areas below, which three are you most focused on at your
organization? [Note: Select three items in the order you would rank them, with 1
being the highest rank and 3 being the third highest rank]
Number of
HR area of focus Rank respondents
choosing
Recruiting, onboarding, and benefits 1 151
HR administration and employee records 2 123
Payroll 3 98
Performance and talent management 4 95
Regulations and compliance 5 80
Reporting and analytics 6 47
Time and scheduling 7 35
Time and scheduling is the least commonly

cited priority, although this might be because
organizations already have effective systems for this
Most HR Professionals in SMBs Need
Best Practices
Finding: More than half of respondents say
their organizations have a strong need for
best practices
More than half of respondents indicate their organization has a high
need for best practices. It can be particularly challenging for HR leaders
in SMBs to keep up with best practices since these HR professionals
may wear several hats.
While many large organizations have teams of people in various HR

functions, HR departments in SMBs don’t always have that luxury. HR
professionals in these organizations need to be particularly adept at
keeping up with the best practices most suitable to their business. A
possible way to do this is to have a strong network of peers in other
organizations who can share what practices work best for them. Use
your local HR associations to build connections, then nurture these
relationships over time.
Survey Question: On a scale of 1 to 5, what level of need would

you say your organization has for best practices?
[1 = No need, 5 = High need]
Just 14% of High level of
No need for
respondents say best practices
need for best
practices
their organization
has no need for
3% 11% 32% 33% 21%
best practices
0 20 40 60 80 100
1 2 3 4 5
About Half of SMBs Struggle to Achieve
Proactive Analytics
Finding: Fifty-four percent either take a
reactive approach to people-related data or
fail to use such data at all
There are different ways of using people-related data. Organizations
can look backward at what has happened (i.e., be reactive), they can
look forward by analyzing past trends (i.e., think proactively), or they
can look forward and determine actions they need to take (i.e., take
action proactively). While it’s more common for organizations to look
backward (29%), nearly the same amount (26%) say they get actionable
recommendations on next steps and address trends in people activity
before they happen.
The takeaway from this is that HR should be sure that they are not
only looking backward but also have the courage and ability to make
informed estimates about where things are going and what actions may
be necessary.
The area of real concern is the 25% who say they don’t use any of the
methods presented. Data does not need to be sophisticated to be useful.
Even in small organizations, HR should have some basic analytics. A few
data points can go a long way to building credibility for HR.
Survey Question: How does your organization typically use
people-related data? (select the one that best applies)
29%
30
26%
25%
25
21%
20
15
10
0
To respond to To get actionable To understand None of the
changes recommendations trends in people above
happening now on next steps activity and what
or in the recent and address may happen in
past trends in people the future
activity before
they happen
A quarter of respondents use people-related

data to get actionable recommendations on
the next steps and address trends in people
activity before they happen
Finding: Almost one-quarter of respondents
(24%) say they do not measure specific
KPIs for HR and payroll
Even in an era where there is an emphasis on data and analytics, one-
quarter of respondents say they do not measure specific KPIs for HR and
payroll processes. Moreover, most KPIs seem to be underutilized even
among organizations that leverage them.
The most commonly measured KPI is retention/turnover. This is a good

measure because it is objective, easy to understand and important to
managers and leaders. What this survey cannot determine is whether HR
is putting these KPIs to good use. For KPIs to be useful, they need wise
interpretation and then appropriate actions based on that interpretation.
That interpretation will usually arise from discussions that ask, “Based
on this data, what should our priorities be? Is there anything else we
need to measure before we take action?”
Survey Question: What key performance indicators (KPIs) do

you currently track for your HR and payroll processes?
(select all that apply)
Retention/
Retention/turnover 53%
turnover is the
only KPI used by Employee engagement/satisfaction 36%
more than half of
Time-to-hire and/or time-to-fill 32%
organizations
Budgeted pay vs. actual pay 31%
Benefits adoption 30%
Diversity and equity information such

26%
as pay equity, workforce composition, etc.
Hiring costs 24%
Scheduled hours vs. actual hours 22%
Training costs 20%
We don’t measure specific KPIs 25%
0 10 20 30 40 50 60
Finding: Most (71%) indicate it is not very
easy for the leadership team to tie people
data and HR results to larger business goals
There is a surprising degree of divergence in the ability of leaders to tie
people data and HR results to business goals. On a 5-point scale (with 1
being not easy and 5 being very easy), just 29% find it easy.
The responsibility for making the connection between HR and the

business lies with both leaders and HR. Many SMBs are unable to do
this easily. This may be a case where getting advice from a business
leader in another organization that has made the connection would be
helpful. Consider asking for an example of a presentation they have
done and have them talk you through it. Making the connection between
HR and the business is not rocket science; it’s a matter of starting with
a core issue the business cares about then showing decision makers
the associated datapoints (e.g., turnover rates, absenteeism, time-to-fill
vacancies) to explain specifically how that impacts the business.
Survey Question: On a scale of 1 to 5, how easy is it for the

leadership team at your organization to tie your people data
and HR results to larger business goals and initiatives?
[1 = Not easy, 5 = Very easy]
Fewer than a third
of respondents
(29%) say it is Not easy Very easy
easy for the
leadership team
to tie people data 19% 17% 35% 23% 6%
and HR results to
larger business
0 20 40 60 80 100
goals
1 2 3 4 5
Compliance Is Often a Challenge, Partly
Due to Low Automation
Finding: Wage and hour laws are the most
commonly cited regulatory concern for HR
departments
The two areas of regulatory compliance most commonly cited as
concerns in regard to tracking and managing them are:
●● wage and hour laws
●● family and medical leave laws
These are inherently difficult areas for two reasons. First, the frequency
with which these issues arise. Every day hourly employees are clocking
in and out and the relevant wage and hour laws need to be complied
with in every instance. Similarly, decisions on leave are also frequent and
need to be compliant every time. Second, the laws are complex and may
differ among jurisdictions.
HR should take some time to walk leaders through the specifics of the
associated risks and costs so they can make an informed decision to
support the needed investments in technology, processes, and training
so that the organization can easily remain compliant.
Survey Question: What three areas of regulatory compliance
are of highest concern for your HR department in terms of
tracking and managing them? (select up to three)
Wage and hour laws 63%
Family and medical leave laws 53%
Benefits-related laws 48%
Health and safety laws 40%
Workers' compensation laws 31%
Anti-discrimination laws 23%
Union/labor laws 9%
Retirement-related laws 9%
Immigration laws 5%
Other 2%
0 10 20 30 40 50 60 70 80
Finding: Just over one-third of respondents
(34%) spend more than one-quarter of their
time managing regulatory compliance
In some firms (12%), regulatory compliance is a crushing burden, taking
up more than half of the HR department’s time. Further, in an additional
22%, regulatory compliance is a heavy burden taking one-quarter to half
of their time. However, in some well-run SMBs, regulatory compliance is
not much of a burden, taking up less than 10% of HR’s time.
This data shows regulatory compliance is usually a significant burden

for SMBs but it doesn’t need to be. If it is a burden and eating up a
large portion of HR’s time, then there’s a good business case to work
on smoothing processes and potentially adding automation so HR can
better focus on value-added work.
Survey Question: How much time does your HR department

spend managing regulatory compliance? (please select the
one that best applies)
50
Just 22% of
44%
respondents
say their HR
department 40
spends 10%
or less of their
time managing 30
regulatory
22% 22%
compliance
20
10 7%
5%
0
0% to 10% 11% to 25% 26% to 50% 51% to 75% More than 75%
Finding: Forty-four percent say regulatory
compliance has a low level of automation
Regulatory compliance is an important role for HR. However, many find
it difficult and few have automated it to a high level. Forty-four percent
of respondents say regulatory compliance is not highly automated (i.e.,
scoring 1 or 2 on a 5-point scale), and about a third (34%) say it is not
very easy (i.e., scoring 1 or 2 on a 5-point scale). This matters because
the effort it takes to fulfill regulatory demands drains HR of the time and
energy to do more strategic work.
We also found a strong relationship between ease of use and

automation. That is, when we confine ourselves only to the organizations
that say they have high level of automation (4 or 5 on a 5-point scale), we
found that fully 83% also say their ease of use is high. This relationship
between ease of use and automation is a useful proof point when HR
is making the case for compliance automation. Simplified, easy-to-use
processes save time and energy, allowing HR to focus on supporting the
business and its employees.
Differences by organizational size

Done well, automation will make compliance both faster and easier.
Organizations with 1,500 or more employees are twice as likely as SMBs
to have a high level of automation (52% vs. 26%) and are also more likely
to have a high level of ease-of-use (50% vs. 32%).
Survey Question: On a scale of 1 to 5, how automated and
how easy is it for your HR department to manage regulatory
compliance?
[1 = Low level, 5 = High level]
Automation 23% 21% 29% 16% 10%

level
Low level High level
Ease-of-use
level
18% 16% 34% 23% 9%
0 20 40 60 80 100
1 2 3 4 5
Many SMBs Need to Forge Stronger
Connections Between HR and Business
Goals
Finding: One in five respondents say that
HR and payroll processes are disconnected
from each other and from operational or
business goals
Ideally HR and payroll processes not only get essential work done
efficiently, but they also provide data to guide strategic and operational
decisions. This is, however, only an aspiration for most SMBs, with only
13% saying they have achieved this level of connection between HR
processes and the business.
Roughly a third of organizations (37%) say HR and payroll processes are

part of the organization’s wider operational or business goals. That is a
reasonable level of connection between HR and strategy for most SMBs.
Unfortunately, that still leaves more than half of the respondents

who say HR and payroll processes don’t have a good connection
to business goals. About one-third (31%) say that HR and payroll
processes are aligned with each other but not with operational or
business goals. Further, 20% report that HR and payroll processes are
disconnected from each other as well as being disconnected from
operational or business goals.
If your organization is one of the 51% where there is not a good

connection between HR processes and business goals, then it may be a
good idea to seek and adopt best practices in this area.
Survey Question: Which of the following statements do you
think represents your organization most accurately in
terms of your HR and payroll processes?
(select the one that best applies)
They and the data they produce

help set the strategic direction for 13%
operational or business goals
They're part of our

organization’s wider 37%
operational and business goals
They're aligned with each

other but not with operational 31%
or business goals
They're disconnected from

each other and from 20%
0 5 10 15 20 25 30 35 40
Only 13% of SMBs say HR and payroll

processes and the data they produce
help set the strategic direction for
Finding: Nearly a third of respondents wait
to be told business strategy
We asked respondents to indicate on a 5-point scale how proactive their
organization is when it comes to aligning people strategy to business
strategy and goals, with 1 being "wait to be told business strategy" and 5
being "anticipate and participate in defining business strategy."
A good indication of how seriously top leadership takes HR in an

organization is the degree to which they involve HR in business strategy
alignment and development. In nearly one-third of organizations (30%), HR
usually waits to be told about business strategy after the fact (i.e., scoring
1 or 2 on the 5-point scale). Fortunately, slightly more (37%) participate in
defining business strategy (i.e., scoring 4 or 5 on a 5-point scale).
It can be difficult to get leaders who don’t see a role for HR in setting
strategy to change their minds. In this situation, HR leaders should
consider continuously demonstrating that they are forward-looking
and have insights relevant to setting strategy. A good way to show
you are forward-looking is to have clear KPIs with measurable results
and regularly express an opinion on what those KPIs mean for the
organization’s future.
Survey Question: On a scale of 1 to 5, how proactive is your

HR department about aligning people strategy to business
strategy and goals?
[1 = We wait to be told business strategy, 5 = We anticipate and
participate in defining business strategy]
More than
one-third of Anticipate and
Wait to be told
respondents business strategy
participate in defining
business strategy
(37%) say they
anticipate and
participate 14% 16% 34% 29% 8%
in defining
business
0 20 40 60 80 100
strategy
1 2 3 4 5
Finding: More than one-quarter of
respondents (28%) report that their
leadership team rarely or never views HR
and payroll as strategic functions
There is a significant divergence in how leadership teams view HR and
payroll. At a high level, 30% say their leadership team often or always
value HR and payroll as strategic functions. However, roughly the same
amount (28%) say that their leadership team rarely or never view HR and
payroll as strategic functions.
The leadership team's view of HR and payroll will have a significant

impact on what is likely to work in the function. In those organizations
where the function is seen as strategic, HR may find itself well-resourced
and listened to. In organizations where the function is not seen as
strategic, there will likely be a heavy focus on cost reduction and HR may
be kept out of the loop on strategic decisions.
Survey Question: How often do you feel your leadership

team views HR and payroll as strategic functions at your
organization?
Just 7% say
that their
leadership
team always 7% 21% 42% 23% 7%
views HR
and payroll
as strategic
0 20 40 60 80 100
functions
Never Rarely Sometimes Often Always
Certain Managerial and Employee
Processes Could Be Made Easier
Finding: The most difficult process for
managers to handle is understanding and
reporting on team data
Some common processes are relatively easy for managers. For example,
79% say approving time-off is easy to do at their organization. However,
other less frequent but equally important processes appear to be more
difficult. For example, 38% say understanding and reporting on team
data is not easy, and 29% say the same about reviewing performance.
The lesson here is that organizations have done a good job making
routine processes easy (like approving time off), but need to take
further steps and provide managers the support they need to handle
more complex topics such as understanding team data. It’s not enough
to provide technology that, for example, allows managers to see
performance data; they also need training in how to review that data so
that they can make good decisions.
Survey Question: On a scale of 1 to 5, how easy is it for managers to handle the following
common processes at your organization? [1 = Not easy, 5 = Very easy]
Understand and report on team data 38% 31% 31%

The second most
Reviewing performance 29% 25% 46% commonly cited
difficult process
Providing feedback 28% 29% 42%
for managers
Tracking performance 25% 28% 46% to handle is
reviewing
Onboarding new team members 21% 27% 52%
performance
Scheduling 10% 19% 71%
Approving time off 10% 11% 79%
0 20 40 60 80 100
Not easy (1 or 2) Neutral (3) Very easy (4 or 5)
Finding: In about two-thirds of organizations,
it is not very easy for employees to swap
shifts via self-service applications
We asked respondents how easy it is for employees to engage in self-
service activities and it appears that, like managers in the previous
finding, some activities are easier than others. For example, most say
enrolling in benefits, seeing pay information, or requesting time off is
easy. This is a good example of the power of self-service technology;
everyday activities can and should be easy for employees.
However, about two-thirds of respondents indicate that swapping shifts

or getting performance ratings is not very easy. When these tasks aren’t
simple for employees, it means that HR generally has to pick them up,
once again taking HR away from more strategic work. Furthermore, a
poor employee experience may contribute to higher turnover.
The good news here is that the technology to enable easy-to-use self-
service is proven and readily available. For HR, it is a matter of making a
case to add it to the organization’s technology roadmap.
Survey Question: On a scale of 1 to 5, how easy is it for employees to engage in self-service

activities at your organization? [1 = Not easy, 5 = Very easy]
Only 37% say
Get performance ratings 39% 24% 37% it is very easy
for employees
Swap shifts 35% 31% 35% to get their
performance
Keep up with announcements and policies 24% 27% 50% ratings
Enroll in benefits 14% 20% 66%
See pay information 13% 17% 70%
Request time off 12% 19% 69%
0 20 40 60 80 100
Not easy (1 or 2) Neutral (3) Very easy (4 or 5)
Finding: In 40% of organizations the HR
department spends more than a quarter of
its time on tasks that could be accomplished
through employee self-service
As we found previously, some employee self-service activities can be
difficult for employees. Employee self-service is not a new concept in
HR technology, yet it remains underutilized. In nearly 1 in 5 organizations
(17%), the HR department spends more than half of its time on tasks
that could be accomplished through employee self-service.
The issue with employee self-service is whether it is just pushing HR

tasks onto employees with no net gain in efficiency. This of course
needs to be considered on a case by case basis. For many activities
in the absence of self-service, both the employee and HR are involved
in accomplishing the task. For example, an employee may change
their address in one location, but HR must also update it in a separate
location. Removing that duplication of effort is the point of self-service.
It also needs to be stressed that even in cases where it makes sense to

use self-service, it's important to provide communication, training, and
support as employees make the transition to a new way of working.
Survey Statement: Rate what percentage of time your HR department spends on tasks that
could be handled through employee self-service. (please select the one that best applies)
50 43%
40
30
23%
18%
20 13%
10
4%
0
0% to 10% 11% to 25% 26% to 50% 51% to 75% More than 75%
In a plurality of organizations (43%), HR spends 11% to 25% of its time

on tasks that could be handled by employee self-service
What Leads to Strategic HR
Departments?
To better understand why some HR functions have a strategic
focus, whereas others are mired in back-office tasks, we divided the
respondents into two cohorts:
HR strategy experts: Those who answered 4 or 5 to the question “On

a scale of 1 to 5, rate how much your HR team focuses on back-office
tasks (such as managing employee records or processing forms)
as opposed to helping guide business and people strategy (such as
presenting people data or continuously improving processes).”
HR strategy novices: Those who answered 1 or 2 to the same

question.
Finding: HR strategy experts are nearly

twice as likely as HR strategy novices to
have all their HR processes automated in
a single system
HR strategy experts are more likely than HR strategy novices to have
all their processes automated either in multiple systems (26% vs.
21%) or automated in a single system (18% vs. 10%). There is no
question that automation can play a big role in opening the door for
HR to be strategic.
Survey Question: How automated would you say your HR,
payroll, talent, time and scheduling processes are?
(please select the one that best applies)
26%
25
21%
20 18%
15
10%
10
0
All these processes All these processes are
are automated in a automated via multiple
single system systems
HR strategy novices HR strategy experts
Close to half of HR strategy experts (44%)

have all their HR processes automated in
a single or multiple systems whereas only
31% of HR strategy novices do
Finding: HR strategy experts are nearly five
times as likely as HR strategy novices to
use their HR and payroll processes to set
strategic direction
One of the most notable features of HR strategy novices is how unlikely
they are to use HR and payroll processes to inform their strategic
direction (only 6% do) and how likely it is that those processes are
disconnected from each other (35% suffer from this disconnection).
With HR strategy experts we see just the opposite. They are nearly
five times as likely as HR strategy novices to use their HR and
payroll processes to set the strategic direction and only 13% have
disconnected processes.
The takeaway is that HR strategy novices may suffer because their

processes are disconnected and hence cannot begin to draw strategic
insights from the data they provide. In other words, the path to being
strategic starts with getting the basic systems and processes set up,
connected, and producing useful data.
Survey Question: Which of the following statements do you think represents your organization
most accurately in terms of your HR and payroll processes? (select the one that best applies)
50 42% 39% 35%

40 29%
30 20%
16% 13%
20
6%
10
0
They and the data they They're part of our They're aligned with They're disconnected
produce help set the strategic organization’s wider each other but not with from each other and
direction for operational and operational and operational or from operational or
business goals business goals business goals business goals
HR strategy novices are nearly three times as likely as HR strategy

experts to say their HR and payroll processes are disconnected from
each other and from operational or strategic business goals
Finding: HR strategy experts are more than
five times as likely as HR strategy novices
to use their HR data to make actionable
recommendations
HR strategy experts are proactive whereas HR strategy novices are
reactive. HR strategy experts are more than five times more likely
than HR strategy novices to use their HR data to make actionable
recommendations, whereas HR strategy novices are more likely to use
HR data to react to changes.
Using data in a reactive manner is not a bad thing, but HR strategy experts
have moved beyond simply reacting and are focusing on providing
actionable recommendations on next steps and addressing trends.
Survey Question: How does your organization typically use people-related data?
(select the one that best applies)
50
43%
41%
40 36%
30
23% 23%
20 16%
12%
8%
10
0
None of the above To get actionable recommenda- To understand trends To respond to changes
tions on next steps and address in people activity and happening now or in the
trends in people activity before what may happen in recent past
they happen the future
HR strategy novices are more than three times as likely as experts

to be reactive in their use of HR data responding to changes that are
happening now or in the past
Finding: HR strategy experts are almost
three times as likely as HR strategy
novices to have a high level of regulatory
compliance automation
One factor that clearly distinguishes HR strategy experts from HR
strategy novices is the degree to which they have automated regulatory
compliance. HR strategy experts are almost three times more likely than
HR strategy novices to have automated regulatory compliance to a high
level.
It’s likely that this high level of automation is also driving higher ease-
of-use levels. Experts are more than twice as likely than HR strategy
novices to say regulatory compliance is easy to manage.
Survey Question: On a scale of 1 to 5, how automated and

how easy is it for your HR department to manage regulatory
compliance? [1 = Low level, 5 = High level]
Percent responding 4 or 5
41%
38%
40
30
20%
20
13%
10
0
Automation level Ease-of-use level
Finding: HR strategy experts are four times
more likely than HR strategy novices to
be proactive in aligning people strategy to
business strategy and goals
One of the signature differences between HR strategy experts and HR
strategy novices is the degree to which they are proactive in aligning
people strategy to business strategy and goals. HR strategy experts
are four times more likely than HR strategy novices to anticipate and
participate in defining business strategy.
Survey Question: On a scale of 1 to 5, how proactive is your

HR department about aligning people strategy to business
strategy and goals?
[1 = We wait to be told business strategy,
5 = We anticipate and participate in defining business strategy]
61%
60
53%
50
HR strategy 40
novices are
nearly three 30
times as likely
20 15% 17%
as leaders to
be reactive in
aligning people 10
strategy to
business strategy 0
Proactive (4 or 5) Reactive (1 or 2)
and goals
Finding: Managers in HR strategy expert
organizations have an easier time handling
common processes
HR strategy expert organizations make many common processes easy
for managers, (i.e., scoring 4 or 5 on a 5-point scale where 1 is “not
easy” and 5 is “very easy”). The biggest differences are:
●● HR strategy experts are more than three times as likely as HR

strategy novices to make tracking performance easy
●● HR strategy experts are nearly five times as likely as HR strategy

novices to make understanding and reporting on team data easy
●● HR strategy experts are nearly three times as likely as HR strategy

novices to make providing feedback easy
●● HR strategy experts are almost twice as likely as HR strategy

novices to make reviewing performance easy
It’s apparent that HR strategy experts are not just focusing on strategy
but on making life easier for their internal customers. HR strategy
experts appear to take more steps to empower, develop and engage
employees and managers while also giving leadership and business
stakeholders deeper visibility into the impact people data has on
organizational goals and planning.
Survey Question: On a scale of 1 to 5, how easy is it for managers to handle the following
common processes at your organization?
Percent responding 4 or 5
79%
80 73%
70
60% 58% 58%
60 54%
50%
50
39%
40
32%
30
21% 19%
20
9%
10
0
Scheduling Tracking Reviewing Onboarding new Providing Understand and
performance performance team members feedback report on team data
HR strategy experts are more than three

times as likely as HR strategy novices to
make tracking performance easy
Finding: Swapping shifts is easier
for employees in HR strategy expert
organizations
HR strategy expert organizations make life easier for employees in two
areas:
●● They are more likely to have effective self-service in swapping

shifts
●● They make it easier for employees to access performance ratings
While the differences between HR strategy experts and HR strategy

novices are less dramatic in employee self-service than in other areas,
the results point to areas that the HR strategy novices could focus on
improving.
Survey Question: On a scale of 1 to 5, how easy is it for

employees to engage in self-service activities at your
organization? [1 = Not easy, 5 = Very easy]
[Percent responding 4 or 5]
Getting 50%
performance 50
ratings is 41%
easier in HR 40
strategy expert
organizations 30 27%
21%
20
10
0
Swap shifts Get performance ratings
Finding: HR strategy experts are three
times more likely than HR strategy novices
to make it easy to tie people data to larger
business goals
Strategic decisions should be grounded in data, so if an HR team wants
to be strategic then it should make it easy to tie people data and HR
results to larger business goals and initiatives. This is exactly what HR
strategy experts have done; they are three times more likely than HR
strategy novices to make it easy to tie people data to larger business
goals. In contrast, HR strategy novices are more than three time more
likely to say it is not easy.
Survey Question: On a scale of 1 to 5, how easy is it for the

leadership team at your organization to tie your people data
and HR results to larger business goals and initiatives?
[1 = Not easy, 5 = Very easy]
70 66%
60
50
41%
40
30
18%
20 14%
10
0
Very easy Not easy
(4 or 5 on a 5-point scale) (1 or 2 on a 5-point scale)
Finding: Leadership teams in HR strategy
expert organizations are more than twice as
likely to often or always see HR and payroll
as strategic functions
HR and payroll functions in HR strategy expert organizations are far
more likely than those in HR strategy novice organizations to often
or always be seen as strategic by the leadership team. This is likely a
finding that cuts both ways. The HR and payroll functions in HR strategy
expert organizations acts strategically so they are seen as strategic
by the leadership team. At the same time, a leadership team that sees
HR as strategic is more likely to create the opportunity and provide the
resources for HR to act strategically.
Survey Question: How often do you feel your leadership

team views HR and payroll as strategic functions at your
organization?
50%
50
40
36%
35%
30 28%
21% 21%
20
10
0
Often or always Sometimes Rarely or never
Takeaways
Key
Takeaway 1 Ensure you have a strong HR technology stack. Today HR departments
usually have multiple systems to handle different processes. If these are bought
piecemeal, then it can be difficult to integrate data, and seemingly simple
reports or processes can end up being difficult. Consider working with IT or an
HR tech specialist or consultant to establish a systems architecture to minimize
problems as you add new tools. Alternatively, consider minimizing the number
of systems by choosing a single, streamlined technology that can meet most of
your needs in one system.
Key
Takeaway 2 Automate processes. HR departments in SMBs need to recognize that the
path to strategic impact runs through automation. Without automation, HR will
forever be mired in low value-added administrative tasks. There are now several
viable paths to automation. One is simply investing in tools that have the
required automaton built in, for example self-service software that allows
employees to swap shifts without manual intervention from HR. There are
also new no-code and low-code automation tools that help HR partially
automate processes.
Key
Takeaway 3 Get the help you need to manage regulatory concerns. Regulatory
compliance is difficult and so can place a burden on HR. If you struggle
with regulatory compliance, seek help from consultants, vendors or peer
organizations to find ways to reduce the burden. Ensure any HR technology
solutions stay in sync with the newest regulations and compliance rules.
Key
Takeaway 4 Enable self-service. Done well, self-service simultaneously reduces the
administrative burden on HR while providing better service to workers
and managers. However, if it is not done well, employees will see it as HR
shifting a burden onto them. Ensure the system is tested prior to release and
communicate regularly throughout the process to minimize any problems or
confusion. Also consider having a person in charge of all things self-service,
including troubleshooting, onboarding new tools and the subsequent training.
Key
Takeaway 5 Make forward-looking use of data in a way that is relevant to the business.
One thing that builds HR’s reputation as a strategic partner is the effective
use of data. Build your business understanding so that you know what the
business most cares about, then regularly gather data that will help point out
issues before they become problems. You don’t necessarily need to hire a data
scientist to have an analytics savvy HR department. Just hire HR professionals
who are comfortable with numbers and are willing to learn, and back them up
with HR technology that can help proactively guide your decisions.
Key
Takeaway 6 Emphasize what matters most to leaders. Many SMB HR departments are
consumed by administrative and compliance tasks, but these are of little
interest to leaders—only visible when things go wrong. HR needs to emphasize
the work they do that is relevant to leaders. One area that is almost certainly
highly relevant is recruiting, so HR should ensure it is doing—and is seen to be
doing—excellent work in that area. It’s hard to do excellent work in recruiting
if there is not an effective working relationship with the hiring manager or a
compelling company culture, so make sure to spend time to get to know the
manager and educate them about what HR needs from them for recruiting to
be successful, as well as where you can partner to build an environment where
employees want to work.
Key
Takeaway 7 Build your reputation with leaders. It’s an uphill battle for HR when leaders
don’t value the function. HR needs to be aware of its reputation with the top
leadership team and work consistently on building that reputation. A strong
reputation will come in handy when you need resources to deliver strategic HR.
There are a couple of things HR can do to build its reputation. Number one is
to be keenly aware of what business leaders care about; talk about business
issues, not just HR issues. Second, consider providing some numbers and
explaining their relevance when talking about issues. HR doesn’t necessarily
need advanced analytics or highly precise numbers. So rather than saying
“Absenteeism is increasing,” say, “Absenteeism is up by 15% and we estimate
that has caused a 10% increase in overtime costs.” You could then propose
specific action plans to solve the problem (e.g., build or boost an incentive
program for hourly attendance and train managers on successful employee
engagement and motivation).
About UKG
At UKG (Ultimate Kronos Group), our purpose is people. Built from a
merger that created one of the largest cloud companies in the world,
UKG believes organizations succeed when they focus on their people.
As a leading global provider of HCM UKG delivers award-winning
Pro, Dimensions, and Ready solutions to help tens of thousands of
organizations across geographies and in every industry drive better
business outcomes, improve HR effectiveness, streamline the payroll
process, and help make work a better, more connected experience for
everyone. UKG has 13,000 employees around the globe and is known
for an inclusive workplace culture. The company has earned numerous
awards for culture, products, and services, including consecutive years
on Fortune’s 100 Best Companies to Work For list. To learn more,
visit ukg.com.
About HR.com and the HR Research Institute

The HR Research Institute helps you keep your finger on the pulse of HR! Powered
by HR.com, the world’s largest community of Human Resources professionals,
the HR Research Institute benchmarks best practices and tracks trends in human
resources to help more than 1.92 million HR professionals (that many people can’t
be wrong!). Companies are backing up their strategic decisions with informed and
insightful HR.com research references!
Over the past few years, the HR Research Institute has produced over 100 leading
edge primary research and state of the industry research reports, along with
corresponding infographics, based on surveys of thousands of HR professionals.
Each research report highlights current HR trends, benchmarks and industry best
practices. HR Research Institute reports and infographics are available online,
and always free. Visit hr.com/hrresearchinstitute to maximize your HR potential.
#hrresearchinstitute

2021-10-27 UKG HRStrategy ResearchReport

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

2021-10-27 UKG HRStrategy ResearchReport

Uploaded by

Copyright:

Available Formats

The State of the HR Boost HR strategy and

Function in Small to practices in smaller

HR Automation Remains a Challenge That Can Impact Time

Among SMBs, HR Tends to Prioritize Recruitment, Onboarding and

10 Most HR Professionals in SMBs Need Best Practices

11 About Half of SMBs Struggle to Achieve Proactive Analytics

15 Compliance Is Often a Challenge, Partly Due to Low Automation

Many SMBs Need to Forge Stronger Connections Between

24 Certain Managerial and Employee Processes Could Be Made Easier

27 What Leads to Strategic HR Departments?

The survey was a collaboration

What do we mean by “SMB”?

Throughout this report, Conversely, we refer

●● Only 37% of responding HR professionals say they anticipate and

●● Some organizations (15%) are still using all manual or paper-based

●● This lack of automation seems to be affecting HR’s ability to focus

●● Thirty-four percent of respondents spend more than one-quarter of

●● Just 26% of organizations have high levels of regulatory

●● The top three areas of regulatory compliance that are of highest

 Wage and hour laws (63%)

●● The self-service activities most difficult for employees to engage in are:

What is especially concerning is the 15% of respondents who say they

Differences by organizational size

We have some specific

All these processes

We use all manual (eg., spread-

All these processes

One-third of responding HR professionals say their team mainly focuses

HR leaders in these organizations should work toward joining the 26%

Survey Question: On a scale of 1 to 5, rate how much your HR team focuses

[1 = Back-office tasks, 5 = Business and people strategy]

Just over a Focus on Focus on

1. recruiting, onboarding, and benefits

Recruiting and onboarding are especially important in the current

Time and scheduling is the least commonly

While many large organizations have teams of people in various HR

Survey Question: On a scale of 1 to 5, what level of need would

A quarter of respondents use people-related

The most commonly measured KPI is retention/turnover. This is a good

Survey Question: What key performance indicators (KPIs) do

Benefits adoption 30%

Diversity and equity information such

Hiring costs 24%

Scheduled hours vs. actual hours 22%

Training costs 20%

We don’t measure specific KPIs 25%

The responsibility for making the connection between HR and the

Survey Question: On a scale of 1 to 5, how easy is it for the

●● wage and hour laws

●● family and medical leave laws

Wage and hour laws 63%

Family and medical leave laws 53%

Benefits-related laws 48%

Health and safety laws 40%

Workers' compensation laws 31%

Anti-discrimination laws 23%

This data shows regulatory compliance is usually a significant burden

Survey Question: How much time does your HR department

We also found a strong relationship between ease of use and

Differences by organizational size

Automation 23% 21% 29% 16% 10%

Low level High level

Roughly a third of organizations (37%) say HR and payroll processes are

Wage and hour laws (63%)