I have written a few times recently about how HR technology is in a kind of “golden age,” where innovation, investment and capabilities in HR tech have all surged–leading to more and better HR tech solutions across all areas that are available to HR leaders and organizations of all sizes. But just the existence of these amazing new tools is not enough for organizations to reap the benefits that can often come with their implementation. Companies must intentionally allocate resources–time, budget, leadership support, etc.–around research, contracts, communication, deployment, support and measurement for these HR tech projects to have a chance of generating positive return on investment. And even all of that does not guarantee project success, but it is certainly a prerequisite for that success.
Those prerequisites for HR technology project success are what I was thinking about while reviewing the results of PwC’s recent pulse survey of CHROs and human capital leaders, which asked these leaders about their challenges and priorities. A full 87% of HR leaders indicated that they experience budget “challenges” with enabling human resources systems and tools, with 33% indicating these budget challenges were “major” and another one-third saying they were “moderate.” Only 9% of these leaders reported that the availability of budget for HR systems was not a challenge at all.
While it is not news that HR leaders are reporting difficulty securing the budget required to make investments in HR technology and new HR systems, the circumstances of the last 18 months have greatly expanded HR’s priority list, making the need for these investments more urgent. From designing new work models (fully remote, hybrid) to employee health and safety in a rapidly changing climate, and from the increased focus and importance of employee wellbeing to the heightened emphasis on diversity, equity and inclusion at all parts of the organization, HR’s challenges have never been greater. And they’re only additive to the perennial problems of hiring the right candidates, leadership development, retention and more, all in a rapidly tightening labor market in the U.S., with a record number of job openings (over 10 million). In fact, data from another PwC survey indicated that nearly two-thirds of more than 1,000 full- and part-time employees surveyed said they were looking for a new job.
In short, HR has never been more important for the organization.
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So, if the HR technology market has never been more innovative and more capable, and the HR function has never been more important for the success and even the survival of the organization, why are so many HR leaders struggling to secure HR technology budgets? I can think of three likely drivers behind this disconnect.
- Business leaders outside of HR have traditionally not equated “people” challenges as “business” challenges. This is true despite the fact that, for most organizations, salary, wages and employee benefits costs represent the largest annual cost item. When HR leaders attempt to make the business case for increased HR technology investments, these investments are often seen as secondary to technology investments that impact customer-facing or operational functions. In other words, the new sales and marketing system trumps a new employee learning and development solution, even if the new L&D tool can actually help employees improve their sales and marketing skills.
- This one is really the cause of many of the prioritization challenges I alluded to above: In many organizations, HR is still not a key stakeholder in budgeting and decision-making around overall organizational technology investment. Technology is either “owned” by the CIO or the CFO, or both, to the extent that HR, along with other functions, must come hat-in-hand to beg for increased investment in and allocation to HR systems each year. And, in many cases, HR has more difficulty presenting the kinds of “hard” ROI calculations from HR technology investments that CIOs and CFOs tend to seek out in these budgetary allocation exercises, placing HR at a competitive disadvantage when compared to technology investment alternatives.
- HR leaders are often caught up in a cycle that can prevent them from having the time to do the necessary analysis and business-case development for new HR technologies. If the HR organization is constantly tied up in day-to-day and very reactive behavior, simply having the internal time and resources to devote to analyzing the fast-growing HR technology market becomes extremely difficult. But this cycle is often caused by not having the best or right HR technology installed that would alleviate many of the day-to-day problems that keep HR so swamped. HR technology projects can typically be medium- and longer-term payoffs, and–in a reactive, “we just need to keep the trains running” environment–such longer-term planning becomes less of a priority.
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While it is instructive to look at the CHRO survey data, we must remember that each organization is unique and that its HR technology strategy and investment plans are specific to its circumstances. But if you, as an HR leader, are having difficulty securing the technology you need to drive your people and talent objectives, it is important to ask why that is the case, and then drive toward getting past those issues. There is so much amazing HR technology in the market today, it would be a shame if your organization is not able to reap the benefits.
Join me at the HR Technology Conference next month to see these technologies for yourself!