Over the past 20 years, HR has transformed from an administrative function into a strategic one. Today, as many as 81% of companies with the Employer Partner certificate for excellence in HR systems have an HR department that actively participates in business decision-making and strategic planning at the organizational level. Once part of the administration, HR now, alongside other top management members, participates in the implementation and execution of changes. We bring nalysis of the labour market and the conditions that contributed to this transformation of the HR function.
The transformation of human resources management
Today, HR is deeply integrated into the business strategy and goals of organizations. This transformation, both globally and in the Croatian labour market, has been driven by several key factors. Increased competition and globalization have pushed organizations to recognize the importance of people as a source of competitive advantage. Technological advancements, especially in data analytics and HR technology, have provided HR professionals with tools to measure their impact and contribution at the strategic level. At the same time, a growing understanding of the link between human capital and business performance has encouraged greater HR involvement in strategic decision-making.
A special role in the local market was played by the Employer Partner certificate, which set standards of excellence in HR practices. The influence on the entire Croatian labour market through this certificate was achieved thanks to the promotion of HR's strategic role, standardization of HR processes, the introduction of measurable performance indicators, and the use of data in HR decision-making. Employers who followed these trends no longer perceived their HR professionals as cost centers, but as strategic partners who significantly contribute to business success. Today, the influence of the Employer Partner certificate and the raising of the quality of human resource management from the Croatian market is spreading to the entire region.
What encouraged employers to recognize HR's potential?
Research shows that the costs associated with employee turnover and replacement are among the highest for an organization. Namely, replacing high-level experts or managers can cost the company up to 400% of their annual salary. Replacing middle management costs about 150% of their annual salary, and replacing an intern on average about 30 to 50% of the salary. What is included in these amounts? The costs include exit interviews, recruitment, selection, onboarding, training, lost productivity, customer dissatisfaction, lost business and expertise, and costs of temporary replacement. There are also intangible costs such as dissatisfaction, absenteeism, errors, low motivation, and damaged interpersonal relationships.
Observing these high costs due to turnover, employers recognized the potential of a strategic approach to employee retention. Over time, companies developed methods for tracking employee satisfaction that helped identify potential departure risks. Our research confirmed that companies that regularly conduct employee satisfaction surveys and follow action plans for improvement record an average 10% increase in employee satisfaction, a 10 to 15% increase in productivity, 15% lower absenteeism, and 20% lower turnover. This is because the data collected from organizational climate and employee engagement surveys are not just numbers. They provide deep insights into how employees perceive their workplace, what motivates them, and where key opportunities for improvement lie. The effects of increased satisfaction and engagement are the result of creating a higher quality and fairer work environment, which in practical terms means enormous savings for employers.
The power of organizational culture and investment in employee wellbeing
Employers have also recognized the importance of building a supportive organizational culture, which according to many studies is one of the greatest indicators of company success. Companies holding the Employer Partner certificate intentionally work on building an organizational climate that supports the retention of quality employees. These companies pay great attention to processes that support long-term talent retention. Employers recognized as Employer Partners understand that learning and development opportunities and skill advancement rank high among employee priorities. Therefore, they invest in various forms of professional development and offer opportunities for personal growth and development through participation in wellbeing programs such as Future Resilience.
Support for mental and physical health, flexible working hours and locations, and other benefits that increase overall employee satisfaction are today's standards that many employers do not deviate from and that employees expect. Employers with the Employer Partner certificate continuously promote high-quality HR processes, employee development strategies, and care for employee wellbeing, and as a result, often have lower turnover.
From reactive to active talent acquisition
In the past twenty years, a significant shift has been observed from a reactive to an active approach in hiring. According to a LinkedIn survey on what recruitment skills will be important in the next five years, 83% of recruiters responded that it will be engaging passive candidates. This approach involves systematically developing the reputation of a desirable employer, diversifying talent attraction strategies, adapting to different labour market segments, and applying an increasing number of recruitment methods.
Employers once relied on traditional channels such as newspaper ads to search for talent. However, today companies holding the Employer Partner certificate use on average eight to nine different channels to search for candidates. In doing so, they regularly highlight the Employer Partner certificate in job ads to signal to candidates that they care about the quality of human resource management. In today's environment, headhunters have become valuable partners to companies hiring or looking to strengthen their teams, especially for managerial and expert positions and in cases where there are few qualified candidates in the labour market.
With the development of increasingly advanced recruitment processes, organizations are continually investing in building employer brand recognition. A portion of employers recognized with the Employer Partner certificate for their high quality in human resource management (34% of them) have a long-term employer branding strategy, while others revise their strategy on an annual basis.
Data-based strategic decision making
The Employer Partner certificate has set measurable standards of quality in human resource management, allowing organizations to compare HR practices with competitors and assess themselves against the best standards in the market. This comparison encourages companies to develop and improve their human resource management processes, which consequently raises the overall standard of HR practices in the local and regional market. At the same time, the digitalization and automation of routine HR tasks have freed HR professionals from strategic activities.
Over the past twenty years, HR departments have moved from paper forms to sophisticated digital solutions that enable more efficient management of employee data, automation of administrative processes, and generation of reports needed for decision-making. Companies holding the Employer Partner certificate show a greater tendency toward tracking key HR metrics and using such data for strategic decisions. This includes tracking hiring costs, employee retention, performance, and development initiatives.
Building higher quality workplaces
Monitoring performance indicators and comparing them with the market are prerequisites for raising quality in human resource management and building better workplaces. Over the past twenty years, the Employer Partner certificate has become a KPI for many HR teams in some of the most successful global organizations. Today it serves as a lever for the HR function to demonstrate its contribution to business results and thereby justify investments in HR initiatives.
Among the certificate holders are organizations of various sizes and structures, and as their number increases each year, benchmark data for comparing the quality of HR systems is becoming increasingly sophisticated. Employers recognized for the quality of human resource management, just like other organizations that want to remain competitive in the market, will need to continue investing in the development of HR practices. This means they will need to continually adapt to changing labour market conditions. On the other hand, HR professionals are increasingly aware of the importance of continuous development and investment in strategic skills. As such, they increasingly strive to include segments such as business understanding, financial literacy, and change management in their professional development.
Thanks to this proactive approach and the pursuit of continuous improvement, the HR function continues to strengthen its position as a strategic partner in the organization and contributes to business success in a concrete, measurable way.
