Are Employers Investing in the HR Technology They Need?

HR Global

Despite economic uncertainty and a surge in layoffs, U.S. employers are continuing to invest in HR technology, and more than two-thirds of them anticipate continued spending into 2022.

But while they’re planning for future needs, most employers aren’t taking advantage of their existing technologies or the capabilities of existing tools, according to an HR tech pulse survey by the insurance and risk management firm Gallagher.

Most employers plan investment in #HRTech next year, but are they spending for the right solutions? Research shows they may not see the big picture. #HR @GallagherGlobal Share on X

Over the last two years, the great majority of HR tech dollars, 82%, went to automation, compared to the 51% that was used for tools that support strategic activities such as developing and maintaining human capital strategies.

In a separate 2020 Benefits Strategy & Benchmarking Survey, Gallagher found that 85% of employers don’t have an HR tech strategy that aligns with their overall organizational plan. That might reinforce the pulse survey’s finding that more than a third of HR leaders, 38%, have difficulty getting leadership to buy into their technology investments. “Leadership doesn’t understand the value of the investment” was the most commonly cited reason.

More than 90% of HR leaders said HR technology has helped support workforce well-being during the pandemic. However, technology that supports basic administrative functions were seen as the most valuable, for example payroll at 59%, time and attendance at 48% and mobile access at 37%.

Sleeping HR Technology

Even though cloud services make it easier to expand the use of software solutions, most companies aren’t taking full advantage of their HR suite. Only 29% of employers use at least three-quarters of their HR tech capabilities, Gallagher found, while 40% use half… or less. The main reason for such under-use: a lack of processes that can optimize HR tech to support the organization’s workforce strategy. Notably, 51% of employers—including 39% of large companies—have no process in place at all.

“Formal processes are needed to effectively govern both strategy and vendor relationships, to monitor and deploy new software releases,” said Rhonda Marcucci, Gallagher’s HR & Benefits Technology practice leader. She attributed the lag in optimization to “the fast pace of innovation” in HR tech.  

Vendors and investors are thinking more strategically than many employers,  Marcucci believes. “The market solved for automation years ago, but employers, especially those with less than 500 employees, have been slow to catch up,” she observed. Organizations today “need to look beyond automation and focus on how new or optimized existing technologies can support their people strategy and deliver on big organizational goals,” she said.

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