Employers in the U.S. continue to invest—and invest more—in HR technologies despite the economic uncertainties stemming from the COVID-19 pandemic, according to Gallagher’s new HR Technology Pulse Survey report. Close to three-quarters (69%) of employers said they expect this trend to continue at least into 2021. What they invest in, however, may be changing.
The ongoing investment in HR technology did not surprise our team of consultants. We talk to market stakeholders every day and see first-hand how employers’ interest in HR technology applications drives market growth, with innovative new tools coming on to the market every day. The research findings suggest, however, that employers are not taking full advantage of available HR technologies, nor of the capabilities provided by the tools they already own. Of the investments in HR technology made in the past two years, 82% of those were in technologies designed to automate processes, versus technologies that support more strategic activities such as enabling the organization’s people strategy (51%).
The market solved for automation years ago, but many employers—especially those with fewer than 500 employees—have been slow to catch up. We encourage employers to look beyond automation and focus on how new and/or optimized technology can support their people strategy and deliver on big organizational goals.
The HR Technology Pulse Survey findings are reinforced by data from Gallagher’s 2020 Benefits Strategy & Benchmarking Survey, which found that 85% of employers lack a comprehensive HR technology strategy that aligns with their organizational strategy. This may reflect the HR Technology Pulse Survey data that shows 38% of HR leaders face difficulty obtaining executive support for HR technology investments, with “leadership doesn’t understand the value of the investment” as the top-cited reason.
The HR Technology Pulse Survey, conducted in the summer of 2020, found that more than 90% of HR leaders find HR technology useful to support workforce wellbeing during the pandemic. Technology that supports basic administrative functions was cited as most valuable, including for payroll (59%), time and attendance (48%), and mobile access (37%). Nearly three-quarters of respondents (73%) wished they had capabilities that provided better support for workforce wellbeing before COVID-19’s arrival.
Shifting focus of interest after COVID-19
The big change in work norms of recent months has really elevated the value of HR technology. Our team heard from many employers—especially large employers—interested in communication and engagement technologies, underscoring the importance of this core activity at a time of severe operational disruption. More than half of HR leaders relied on mobile technology at the time of the Pulse Survey. The most popular tools cited by respondents include a mobile app supplied by an HR tech vendor (53%), SMS text messaging capability (51%), and a mobile-responsive website (49%).
Although COVID-19 did not diminish employers’ interest in HR technologies, it appears to have shifted the focus of their interest. A year ago, everyone was talking about talent attraction. Today, employers focus on core functions such as payroll, timekeeping, employee communication, and performance management. This trend reflects the growing importance of sustaining HR capabilities to support a vastly expanded remote work environment, which most believe will continue, even when the pandemic ends.
Optimizing existing HR technology tools
Whether employers look to HR technology to support core functions, such as payroll, or more strategic ones, such as productivity, employers need to get the most out of the technology they own—especially during this time of heightened fiscal scrutiny. With today’s technology largely in the cloud, HR technology providers routinely expand their software’s functionality through new releases, but most employers fail to take advantage of it.
Gallagher’s HR Technology Pulse Survey found that only 29% of employers use more than 75% of the capabilities in their existing HR technology, and 40% use 50% or less. The root cause cited for underutilization of available capabilities is a lack of adequate processes for optimizing these tools to support the organization’s people strategy. More than half (51%) have no process in place for this, including 39% of large employers.
The fast pace of innovation in the HR tech industry partly explains the lag in optimization. Formal processes are needed to effectively govern both strategy and vendor relationships, to monitor and deploy new software releases. Committing the effort required to maximize your investment value is worthwhile as it opens a full range of possibilities for increasing HR technology’s value to the organization.
Our team of consultants is available to help employers be more strategic about their purchase and use of HR technology, and help organizations get the most out of the technology they already own. Download the HR Technology Pulse Survey Executive Summary to learn more about what U.S. employers say about their needs and HR technology uses.