HR Sees Technology as One Solution to Rising Costs

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Nearly half of HR leaders, 46%, say that HR technology is their top spending priority this year, followed by staffing and recruiting, total rewards and learning and development, according to research by Gartner.

High inflation, intense competition for talent and global supply constraints are, leading organizations to focus on “growth and determining which investments will drive competitive advantage in the year ahead,” said Seyda Berger-Böcker, director at the Gartner HR practice.

To optimize costs and drive growth in this environment, HR leaders should take action on certain investment imperatives, such as:

HR Technology

During 2023, technology was ranked as the leading HR investment priority for the second year in a row. For one thing, HR leaders expect technology-related initiatives goffer the most potential for increasing efficiency within the HR function.

For one thing, technology can trigger savings in HR administration, which has seen a drastic rise  in cost because of pandemic-related tasks, remote work arrangements and contact tracing programs.

Gartner found that the yearly spend on HR administration increased from $155 per employee in 2021 to $194 per employee in 2022. “This is alarming considering HR functions have been trying to reduce the burden of administrative tasks through the use of technology,” said Berger-Böcker.

HR leaders can create efficiencies by implementing human-centric technology solutions – such as skills management or learning experience platforms – to maximize employee experience, retention, collaboration and performance outcomes, Gartner said.

Staffing and Recruiting

As talent shortages expand because of digitalization and the adoption of remote work, HR leaders must redefine their hiring needs to access larger pools of candidates and meet hiring demands.

That’s led many organizations to invest in recruiting technology. As digitalization pushes employers to automate more parts of the hiring process, HR leaders have begun focusing their investments in all areas of the pipeline, including candidate attraction, sourcing and experience, as well as talent analytics to help navigate the complex labor market.

Total Rewards

HR must also provide additional financial support to employees affected by the increasing cost of living. At the same time, it has to avoid a wage-price spiral.  

HR functions are boosting total rewards investments by focusing on equitable reward and recognition programs, pay transparency and well-being programs. This includes investments in areas such as compensation planning technologies, pay equity tools or smart wearable devices to monitor employee stress and fitness levels.

Learning and Development

Skills needs continue to change rapidly, which requires L&D to take on an expanded role in providing a more human-centric employee experience, Gartner said.

The problem is L&D offerings are not keeping up with the pace of change. Fewer than half of employees, 45%, agree with the idea that their organization’s learning provides information that is is relevant to them.

To deliver on employee expectations, HR leaders must shift their L&D investments toward whole career growth, rather than focus only on current or future roles, Gartner said. Meanwhile, increased digital learning solutions and changing learning preferences provide an opportunity for L&D to invest more heavily in technologies that enhance skills management solutions, learning experience platforms with self-service learning options, coaching applications and virtual reality technologies.

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