Benchmark Study on HR Management Systems 2010
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1 Benchmark Study on HR Management Systems 2010 SHORT REPORT Tax, People Services 2011 KPMG Limited, a company incorporated under the Companies (Guernsey) Law, as amended in 2008, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved.
2 HR Benchmarking is the comparison of the quantitative and qualitative indicators of a company s HR management system with the same indicators from other companies. Benchmarking is a handy tool for: planning headcount and personnel costs; assessing the effectiveness of HR management processes and the return on investment in human resources; making decisions that optimize personnel costs. In KPMG published the results of a benchmark study on HR management systems 2010 (hereinafter, HR Benchmarking ), that KPMG conducted from November 2010 February HR Benchmarking data from October 2009-September 2010 was gathered. All participants in the study operate in Russia and were drawn from various sectors. Sector IT 9% Insurance 6% Metallurgy 12% Banks 32% Pharmaceuticals and Medical Products 15% FMCG 26% About 100 quantitative and qualitative indicators covering the main aspects of HR management systems were analyzed: financial and statistical data; headcount and support functions responsibilities (HR, finance); compensation and benefits; recruitment and onboarding; training and development; company s image and corporate culture. 2
3 General results of the Benchmark study Financial and statistical data This section covers basic HR department measures: personnel headcount and turnover, total personnel costs and the costs of main HR budget items. Personnel costs 93.26% Personnel costs structure (% of all companies) 4.24% 0.32% 0.72% 0.06% Payroll Benefits Recruitment Training and development Labor safety Personnel costs were categorized as payroll, benefits, learning and development, recruitment and labor safety costs. The majority of personnel costs came from payroll 93.26%. All other costs were significantly lower: benefits 4.24%, training and development 0.72%, labor safety 0.06%, and recruitment 0.32%. Personnel turnover The most common cause of turnover in 2010 was dissatisfaction over salary level. The second most common cause of turnover was personal reasons (HR Benchmarking-2009 results revealed career and professional growth as the second most common cause). Other reasons given included intention to change scope of activity, location of the office and lack of communication (for example, conflict with the management). The rate of involuntary turnover (separations initiated by the employer) was 5.56% for all companies. 3
4 Headcount and support functions responsibilities In this section we analyze the headcount and responsibilities of HR and finance departments. HR function According to HR Benchmarking results, in most cases (82% of all survey participants) the HR director was subordinate to the general director and participated in managing the company (68% of all survey participants). Considering HR headcount by process (as percentages of the total HR headcount), we should mention that personnel records and pensions administration had the largest headcount (20.59%). There were also a significant number of HR business partners in large companies. For all sectors, the HR headcount ratio was higher than the finance headcount ratio (excluding Metallurgy). HR and finance headcount ratio (number of employees, by sectors) All participants FMCG Pharmaceuticals and Medical Products Metallurgy Banks HR Finance Finance function According to HR Benchmarking results, accounting and tax specialists made up the largest part of the headcount (45.45%). Financial control and analysis s head count was lower (7.58%) and budgeting s headcount followed (6.94%). 4
5 Compensation and benefits Salary reviews Most of the participants (73%) reviewed salaries on an annual basis; 68% of them reviewed salaries according to a company plan for all employees. 88% of HR Benchmarking participants increased salaries in The average number of employees whose salaries were increased was %. The average rate of increase was 9 23% for the different categories and function areas. 85% of HR Benchmarking participants plan to increase salaries by 8 15% in Benefits The most widespread benefit in 2010 was health insurance (88% of all HR Benchmarking participants). Other widespread benefits included mobile phone compensation (82% of participants), welfare assistance (76% of participants), corporate cars (68% of participants) and life insurance (53% of participants). Recruitment and onboarding In this section recruitment and onboarding (adaptation) figures were analyzed. The data includes information on the total number of vacancies filled, the number of vacancies filled by recruitment agencies and the cost of closing one position by in-house recruiters. Recruitment According to results of 2010 HR Benchmarking, for each recruiter there were 109 job openings. The number of vacancies filled was 91.04% of total vacancies. The cost of closing one position by in-house recruiters in 2010 was RUB The highest number of vacancies was filled by external candidates (90%), and just 10% were filled by internal candidates. The results do not reach the best practices levels (30 40%). The number of vacancies filled by recruitment agencies was less than 2%. The highest value was in Pharmaceuticals more than 26%. Onboarding 68% of survey participants conducted induction training for new employees. The number of induction training hours per one employee was 3 hours. 5
6 Training and development In this section we analyzed training and development figures, such as the number of employees who received training, number of training hours per employee, positions filled by succession and the number of participants in talent pools. Training In 2010, 62% of employees were trained. The number of training hours per one employee in 2010 was 10 hours. Employees received training as % of total headcount in 2010 (by sectors) 61.58% 83.97% 70.08% 79.49% 47.17% All participants FMCG Pharmaceuticals and Medical Products Metallurgy Banks Career and succession pool 85% of HR Benchmarking participants had formal criteria for promoting employees. The average number of employees promoted in 2010 as % of total headcount was less than 7%. A separate part of the survey was devoted to special development programs, particularly succession and talent pools. Among survey participants succession pool programs were more popular than talent pool programs (41% of survey participants had succession pool programs and only 29% had talent pool programs). Performance appraisal Performance appraisal methods vary greatly by area of use: competence-based interviews are most commonly used for recruiting and selecting candidates (47% of participants), knowledge checks and testing for training (47%), performance appraisal for career development (50%), compensation (71%) and evaluating candidates for talent and succession pools (32%). 6
7 Company s image and corporate culture Programs to develop companies images have lately become an important aspect of companies corporate policies. According to HR Benchmarking results, 88% of participants practiced sponsorship and/or charity, and 62% used employer branding programs in About 76% of companies regularly conducted employee satisfaction surveys, while 15% conducted them once a year. 7
8 Full HR Benchmarking report: purchasing options Option 1. Single sector report Analytical file (pdf), including characteristics of HR Benchmarking participants and survey key findings. Benchmarks for one of the sectors (statistical data in mean, median, 25-th percentile and 75-th percentile format, Excel file). Price RUB20 000, VAT not included. Option 2. Report on all sectors Analytical file (pdf), including characteristics of HR Benchmarking participants and survey key findings. Benchmarks for the whole market and all sectors (FMCG, Pharmaceuticals and Medical Products, Metallurgy, Banks), in mean, median, 25-th percentile and 75-th percentile format (Excel file). Price RUB30 000, VAT not included. Option 3. Report containing your Company data Analytical file (pdf), including characteristics of HR Benchmarking participants and survey key findings. Benchmarks for the whole market and all sectors (FMCG, Pharmaceuticals and Medical Products, Metallurgy, Banks), in mean, median, 25-th percentile and 75-th percentile format (Excel file). Percentile rank for every one of your company s benchmarks against the whole market and a certain sector. This option also allows you to compare your company benchmarks with those of individual participants 1. Price RUB45 000, VAT not included. 1 For confidentiality reasons the minimum peer group size is 4 companies. 8
9 Participant s individual report (example) Payroll costs as % of total personnel costs Number of replies Minimum 25-th percentile Median 75-th percentile Maximum Your reply Percentile rank % 85.97% 93.26% 96.35% 98.56% 89.00% 35% Employee turnover Number of replies Minimum 25-th percentile Median 75-th percentile Maximum Your reply Percentile rank % 7.01% 11.78% 16.98% 45.95% 10.00% 40% Documented HR strategy Number of replies Yes No Your reply % 34.78% Yes If you are interested in participating in the next stage of HR Benchmarking or purchasing the report, please us at surveys@kpmg.ru or call our consultants: Alevtina Borisova Tax and Legal Partner aborisova@kpmg.ru Tel. (495) Maria Malinina Lyudmila Legkaya Tax and Legal Tax and Legal Senior Consultant Senior Consultant mmalinina@kpmg.ru llegkaya@kpmg.ru Tel. (495) Tel. (495) KPMG in Russia Head office, Russia and CIS Naberezhnaya Tower Complex, Block C 10 Presnenskaya Naberezhnaya Moscow Telephone: Fax: moscow@kpmg.ru 9
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