Romanian HR Outlook

Full results

September 2013, Bucharest

Agenda

Methodology
Sample Characteristics
Companies' Profile

Human Resources Strategy

KPIs by Activity Type

15

Conclusions

23

Page 2

Methodology
Research method
B2B Survey

Target population

HR Managers and HR Directors

Data collection technique

Computer Assisted Web Interviews

Sample size : 87 respondents

Responsible for:
- Organizational Development:
- HR Strategy:
- Learning and Development:
- Performance Management:
- Recruitment and Selection:
- Compensation and Benefits

67
73
73
74
85
75

respondents
respondents
respondents
respondents
respondents
respondents

Fieldwork

11th of July, 2013 - 6th of September, 2013

Page 3

Sample Characteristics
Companies' Profile

The majority of companies participating in

this research are large companies from
Bucharest.
Base, N=87

Number of Employees

City Size
13%

8%

20%

Under 50000

52%

60%

50000-200000

Over 200000

Bucharest

48%

Historical Region
5%
under 250 employees

16%

10%

Moldova

9%

Muntenia

60%

Banat

Ardeal

Bucharest

250 or more employees

G 7. Approximately how many permanent employees (FTE) does your organization have? Please consider only the employees who work in Romania. /G 1. What is the
county in which your organization operates? / G 2. What is the locality in which your organization operates?

Page 5

Most of the companies, Romanian or

foreign, have the fiscal year identical to
the calendar year.
Fiscal Year Division

Capital Origin

Base, N=87

100% Romanian
capital
21%

Joint capital
16%

100% foreign
capital
63%

January December
79%

April - March
21%

Organization Type
9%

23%

66%

1%
1%

Small and Medium Enterprise

Large Romanian company
Multinational organization
Public Institution
Non-Governmental Organization/ civil society
Others
D1. What do you consider as being a financial year within your company? / G 3. Which of the following forms of organizations best defines your company? / G 5. Which of the following statements
best describes your organization?

Page 6

IT&C, Auto and Finance are the sectors

mostly represented in this research.
Base, N=87

Industry Type

Company Turnover

IT&C or BPO

15%

Auto industry

14%

Banking, Insurance

12%

Production (other than FMCG)

9%

Media/ Advertising Agencies/ Media Professional

services

8%

Distribution/ Logistics or transports

7%

Pharmacy/ Health

7%

Sales/ Retail

7%

Constructions

5%

Production of Food/ Beverages (FMCG)

5%

Utilities/ Oil and Gas

5%

Farming/ Forestry

2%

HORECA/ Tourism

2%

Other than these

3%

41% of responding
companies come
from 3 industries

More than
5,000,000 euro

46%

Less or equal
5,000,000 euro

18%

Don't know

36%

Companies with Profit

Yes
62%

Don't know
20%

No
18%

G 6. Which field does your organization activate in? / G 8. Approximately, which of the following categories does your organizations turnover for last year fit? / D1_p: Has
your company reported profit for the previous year (2012)?

Page 7

Organizational Development is the HR

area least present within responding
companies.
Base, N=87

HR Department Responsibility Areas

Recruiting and Selection

98%

Compensation and Benefits

86%

Performance Management

85%

Human Resources Strategy

84%

Learning and Development

84%

77%

Organizational Development

Q 2. Please choose out of the following HR areas those which are included in the activity of the HR department of your organization :

Page 8

Human Resources Strategy

Almost all companies have budgeted Recruiting

activities , followed closely by Learning and
Development, but
HR Activities by
occurrence and
budget allocation

HR Activities Budgeted
in 2013
N=87

N*=70

Recruiting

81%

Learning and Development

75%

Compensation and Benefits

66%

Payroll

Share of HR
budget for activity

54%

%
Difference between
companies with budget
increase and budget
decrease vs. 2012
+12
+14
+14
+11

Internal Communication

44%

+16

Performance Management

41%

+36

HR Administration
Industrial Relations

37%
13%

Other

2%

None

3%

Don't know/ No answer

3%

-10
+9
-25

*Base: Respondents who allocated resources for the HR budget in the FY of 2013
S1. For which of the following HR activities within your organization have you allocated resources from the HR budget in the financial year 2013? / S2. How is the HR departments expenses budget
distributed in the financial year 2013 between each of the following areas?/ S3. For each area, please fill in on the right side of the window how the percentage of budget allocated for the respective
area has changed compared to last year (is higher/ equal or lower)

Learning and Development seems to be a key

HR activity, accounting for a quarter of the HR
budget on average.
HR Activities by
occurrence and
budget allocation

HR Activities Budgeted
in 2013
N=87

N*=70

Recruiting

81%

Learning and Development

75%

Compensation and Benefits

66%

Payroll

Share of HR
budget for activity

54%

%
Difference between
companies with budget
increase and budget
decrease vs. 2012
+12
+14
+14
+11

Internal Communication

44%

+16

Performance Management

41%

+36

HR Administration
Industrial Relations

37%
13%

Other

2%

None

3%

Don't know/ No answer

3%

-10
+9
-25

*Base: Respondents who allocated resources for the HR budget in the FY of 2013
S1. For which of the following HR activities within your organization have you allocated resources from the HR budget in the financial year 2013? / S2. How is the HR departments expenses budget
distributed in the financial year 2013 between each of the following areas?/ S3. For each area, please fill in on the right side of the window how the percentage of budget allocated for the respective
area has changed compared to last year (is higher/ equal or lower)

Compared to last year, companies focused

more on Performance Management this year
and less on Administrative tasks.
HR Activities by
occurrence and
budget allocation

HR Activities Budgeted
in 2013
N=87

N*=70

Recruiting

81%

Learning and Development

75%

Compensation and Benefits

66%

Payroll

Share of HR
budget for activity

54%

%
Difference between
companies with budget
increase and budget
decrease vs. 2012
+12
+14
+14
+11

Internal Communication

44%

+16

Performance Management

41%

+36

HR Administration
Industrial Relations

37%
13%

Other

2%

None

3%

Don't know/ No answer

3%

-10
+9
-25

*Base: Respondents who allocated resources for the HR budget in the FY of 2013
S1. For which of the following HR activities within your organization have you allocated resources from the HR budget in the financial year 2013? / S2. How is the HR departments expenses budget
distributed in the financial year 2013 between each of the following areas?/ S3. For each area, please fill in on the right side of the window how the percentage of budget allocated for the respective
area has changed compared to last year (is higher/ equal or lower)

Reflecting the profile of large companies responding

to this study, the vast majority of organizations have
an HR budget no higher than 10% out of the Payroll
Budget.

2013 HR Budget

Average Value - Relative to Payroll Budget

N*=33

Number of
Companies
39%
33%

15%

less than 5%

5-10%

12%

11-20%

more than 20%

Percentage of HR budget out of payroll budget

N*=21

Average Value - Relative to Total Expenses

Number of
Companies

52%

29%

less than 5%

5-10%

10%

10%

11-20%

more than 20%

Percentage of HR budget out of total expenses

*Base: respondents who give an answer, excluding dont know/ no answer

Treat data with caution due to small base size!

S8. Approximately, what is the HR departments expenses budget of your organization in 2013 in relation to the total payroll budget? Please express it both as percentage and amount (RON). / S9.
Approximately, what is the HR departments expenses budget of your organization in 2013 in relation to the total expenses budget of your organization?

Page 13

Turnover Rate is the HR indicator mostly

monitored by responding companies.
General HR KPIs
HR KPI Usage

N=84

Turnover Rate

74%

Voluntary Turnover Rate

52%

Productivity per Employee

45%

Absenteeism Rate

45%

HR Ratio

43%

Number of Overtime Hours (expressed as FTE)

Profit per Employee

Other indicators

I don't know/We don't measure it

41%

32%

12%

13%

K1. What indicators do you use for measuring the HR department performance of your organization?

Page 14

HR Departments use
Turnover Rate
almost twice more
than Productivity or
Profit per Employee.

Key Performance Indicators by

Activity Type

The time needed for a recruitment is a

metric companies use more than metrics
related to cost.
Recruitment and Selection
N*=86

KPIs Usage for Recruitment and Selection

Average Recruitment Time

45%

Recruitment Rate

40%

Turnover rate 6 months from the employment date

34%

Internal Recruitment Rate

33%

Average Recruitment Cost

28%

Number of Interns

22%

Refreshment Rate
Other indicators

12%
0%

I don't know/We don't measure it

Only 1 in 10
companies is
monitoring the
Average Cost per
Recruitment
differentiated by
position (specialists,
non-specialists, and
managers).

26%

*Base: Those who work in companies that include HR strategy and Recruitment and Selection in the activity of their HR department
K2. What indicators do you use for measuring the recruiting and selection activity?

Page 16

Training Rate remains the most used KPI

in the Development area.
Professional Development and Training
N*=81
KPIs Usage for Professional Development and Training

Training Rate

46%

Total Training Cost / Employee

41%

Development Rate

41%

Training/Turnover

Other indicators

24%

3%

32%

I don't know/We don't measure it

Up to 25% of the
companies
participating in this
research are
evaluating the
Training Cost by
position (specialists,
non-specialists and
managers).

*Base: Those who work in companies that include HR strategy and Professional development and Training in the activity of their HR department
K3. What KPIs do you use for measuring the Professional Development and Training activity?

Page 18

Almost half of the companies participating

in this research use no Compensation and
Benefits KPIs.
Compensation & Benefits
KPIs Usage for Compensation and Benefits
N*=82

Labor cost/ FTE

37%

Benefits cost/ FTE

26%

I don't know/We don't measure it

Up to 23 % of the
responding
companies are
evaluating the Labor
Cost by position
(specialists, nonspecialists and
managers).

49%

*Base: Those who work in companies that include HR strategy and Compensation and Benefits in the activity of their HR department
K4. What indicators do you use for measuring the compensations and benefits activity?

Page 20

A third of the companies doing OD

activities are using a metric for
measuring their employees engagement.
Organizational Development
N*=78

KPIs Usage for Organization Development

Employee engagement rate

35%

Succession rate

28%

Talent Management Rate

Planned Succession Rate

Talent Utilization Rate

I don't know/We don't measure it

21%

14%

12%

51%

*Base: Those who work in companies that include HR strategy and Organizational Development in the activity of their HR department
K5. What indicators do you use for measuring the organizational development activity?

Page 22

Conclusions

Caveats

Results should be treated with caution, as they reflect the responses of only 87
companies.

The number of responses concerning the actual KPIs values targeted by

companies were too few to allow us to compute a benchmark value. Except
for the General KPIs of the HR Department, a third up to half of the
companies do not measure any KPIs in specific HR areas.

Page 24

Key Findings (1)

Recruitment and Learning & Development are the activities most of the
companies focus on, almost half (44%) of the HR departments budget being
allocated for these two;

Generally, in 2013 there has been an increase of the HR budget compared to

2012. Performance Management is becoming more important to companies in
2013, as this is the area recording the highest increase of budget;

For 7 out of 10 companies, the HR department has a budget of up to 10% out

of the Payroll budget, with a third of them having the budget no higher than
5% of the Payroll budget;

Turnover Rate is the KPI most companies use, while the Profit per Employee
is the one used least;

Page 25

Key Findings (2)

Recruitment and Selection

Most of the companies are looking in this area at the Average Time to Recruit, followed
by the Recruitment Rate;
On the other hand, the Refreshment Rate and the Number of Interns are KPIs that only
very few HR departments use;
Moreover, a quarter of the companies responding to the survey mentioned they are
using no KPI in this area;

Professional Development
and Training
Training Rate and Development Rate are the KPIs which companies mostly use for
monitoring and evaluating activities in this area;
Although the Cost of training is monitored by 41% of responding companies, it is
monitored overall, and not by the position type (non-specialist, specialist, manager);
Still, a third of responding companies do not use any indicators to measure the
activities performed on this area;

Page 26

Key Findings (3)

Compensation &
Benefits
Half of responding companies are not measuring any Compensation & Benefits KPIs;
Labor Cost/FTE and Benefits Cost/FTE are used by a 37% and 26% respectively, of the
companies responding to the survey.
Only few companies are also monitoring these two KPIs differentiated by position type
(non-specialist, specialist, manager);

Organizational
Development
Just as for Compensation and Benefits, 1 in 2 companies answering to the survey do not
use any KPIs to evaluate performance in OD;
The Engagement Rate along with the Succession Rate are the metrics mostly used by
HR departments;

Page 27

Appendix Definitions used

General KPIs
HR departments expenses budget = budget of expenses for services regarding/for employees, other than HR employees wages (e.g.: training,
recruiting etc.); it does not include Occupational Health and Safety.
Payroll budget = total staff expenses budget (base salary + other payroll elements + benefits + company taxes).
KPI Name

Computing formula

Profit per Employee

= Operational profit (EBITDA)/ FTE

Productivity per Employee

= Turnover/ FTE

Additional term definitions

Full Time Equivalent (FTE) = Measure of the actual time
worked = No. of hours worked in a month/8 (standard
workload).

Turnover Rate

= (Total Number of Employees who Left/ Average

Number of Employees per Month)*100

Total Left Employees = includes the no. of all

employees who have left the company: voluntarily,
involuntarily (initiated by the company, employees
whose employment contract expires on term retiree,
fixed term)

Voluntary Turnover Rate

= (Number of Employees who Left Voluntarily /

Average Number of Employees per Month)*100

Employees who Left Voluntary = employees who take

the initiative to end the employment

HR Ratio

= Total Employees with HR Responsibilities/ Total

Number of Employees

Total Employees with HR Responsibilities = include all

HR departments employees, as well as the employees
who are working on HR areas without technically
belonging to the HR department in terms of
administrative or HR cost center, e.g. trainer for sales
team; DOES NOT INCLUDE specialists in health and
safety

Absenteeism rate

= (Number of absent days in a month/ Number of

days worked in a month)*100

Absent days (not worked) = for illness, personal,

unjustified, other reasons (excluding holidays, trainings
organized by the company)

Number of overtime hours

(expressed as FTE)

= Number of overtime hours per month /(number

of working days*8)

No. of hours worked over the standard 8 hours

workload. It is monthly measured

Page 29

Recruitment and Selection

KPI Name

Recruitment rate

Computing formula

= ((Number of Internal + External Recruiting)/ Total

number of employees)*100

Internal Recruitment rate

=(External recruiting/Internal recruiting)*100

Refreshment rate

= (External recruiting/Total number of

employees)*100

Turnover rate 6 months from the

employment date

Additional term definitions

Internal Recruiting = recruiting from within the
company
External Recruiting = recruiting from outside the
company

=(Number of Left Employees within 1-6 months/

Total Number of Left Employees)*100

Average Recruitment Time

undifferentiated by position

= Number of days spent for the recruitment process

since the posting of the recruitment ad
(internal/external) until the signing of the contract

Average Recruitment Cost

undifferentiated by position

= Total Recruitment Cost/ Number of Positions

Filled

Number of Interns

=(Number of Interns/ Total Number of

Employees)*100

Page 30

Total Recruitment Cost= financial cost for recruiting:

recruitment ad, agency fee, tests etc. (does not include
the time of employees involved in recruiting process
e.g. HR, Manager of the position etc.)

Professional Development and

Training

KPI Name

Computing formula

Additional term definitions

Total Training Cost/ Employee

undifferentiated by position

=Total Training Cost/ Total Number of Employees

Total Training Cost = Training Costs +

Administrative Costs (accomodation,
meal, transportation, hall, equipment etc.)

Training rate

= Total Number of Training Hours/ Total Number

of Employees

Total number of training hours per year

Development rate

= Total Number of Trained employees/ Total

Number of Employees

Training cost /Turnover

= Total Training Cost /Turnover

Page 31

Compensation and Benefits

KPI Name

Labor cost/ FTE undifferentiated by

position

Computing formula

Additional term definitions

=Total Labor Cost / FTE

Total Labor Cost = Base salary + Other payroll elements (e.g.:

bonuses, commissions, overtime etc.) + Company taxes (all
payroll expenses should be included)

=Total Benefits Cost / FTE

Total Benefits Cost = Benefits cost + taxes

Benefits cost / FTE undifferentiated by

position

Page 32

Organizational Development

KPI Name

Computing formula

Additional term definitions

Employee engagement rate

Engagement Rate is calculated by each

companys methodology

Succession rate

= Number of Successors/ Number of Key jobs

Succession rate depends on the Succession

Policy of each company (number of successors
per key job)

Planned Succession Rate

= ((Number of Existing Successors/ Number of Needed

Successors per position)/ Number of key jobs)*100

Talent Management Rate

= Number of Talent Employees / Number of Key Jobs

Talent Utilization Rate

= (Number of Talent Employees in key jobs/ Number

of Talent Employees in regular jobs)*100

Other indicators. Which?

Page 33

"Talent" Employee = specific for each company.

The formula refers to all categories of Talent
employees; e.g.: Employees with Potential,
Employees with High Potential etc.

Thank You!