The Value of Support Functions

New research suggests UK firms may be misallocating up to £10 billion in capital through the expansion of HR functions - raising important questions about how organisations structure support roles versus value-creating activity.

According to analysis from Policy Exchange, the UK’s HR sector is now twice the relative size of the EU’s, with 1.6% of the UK workforce employed in HR, compared with 1% in the US and 0.8% across the EU. Between 2011 and 2023, HR roles grew by 83%, far outpacing the wider workforce growth of 13.5%.

The report also argues that while equality, diversity and inclusion initiatives are often introduced with positive intent, poorly implemented policies may unintentionally impact profitability, competitiveness and long-term growth.

This isn’t an argument against HR, far from it. Strong people functions are critical to culture, compliance, talent retention and organisational resilience.
But it is a reminder of a bigger leadership challenge:
Are support functions enabling performance or becoming disconnected
from commercial outcomes?

Are businesses measuring the ROI of internal functions with the same rigour applied to investment and operations?

And how do organisations balance governance, culture and productivity in a tougher economic environment?

As UK businesses face increasing pressure to drive efficiency and growth, the conversation may need to shift from “more HR” to “smarter HR.”

Curious to hear perspectives from leaders across HR, finance and operations - how should companies strike the right balance?
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