Three barriers to investing in HR tech
No matter where you operate, the sector you operate in, or the size of the business you work for, I believe the last five years have created a ‘once-in-a-generation’ change to the HR leadership role.
Whether it’s adapting to remote work, navigating geographic expansion, or tackling efficiency in an inflationary market, these changes will be felt for many years to come.
As HR leaders recognise the need to maximise productivity, efficiency and employee satisfaction in the current economic climate, many businesses have turned to HR technology.
Gartner research shows global spend on HR administration increased from $155 per employee in 2021 to $194 per employee in 2022, with technology ranked as the leading HR investment priority for the second year in a row in 2023.
Recently, HR tech firm Atlas published 2023 Global HR Study following the launch of its Annual Employer of Record Report, revealing insights from over 500 HR leaders across five markets, the US, UK, Australia, Singapore and UAE.
We can exclusively reveal that 9 in 10 of companies, with a value of $189 billion in global turnover, are looking to increase their investment in HR tech over the next 12 months.
When considering the resources and time saved combined with the data-driven insight to boost efficiency and retain and attract talent that HR technology can deliver, it’s little wonder so many businesses have earmarked greater expenditure in this area.
However, these benefits will not be felt by all – and there are three main barriers to investment, namely: A lack of understanding about what it can deliver; inability to customising the technology to a company’s needs; and costs.
Integrating new technology is usually mentioned as a significant hurdle to further investment in HR tech. This friction with integration is often due to many organisations having a patchwork of existing HR systems, each serving a specific function.
Many leaders want to ensure that if they were to introduce new technology, it would be the right fit for the business, and its implementation would be seamless.
Our survey found that over half of the companies interviewed (58%) cited having trouble finding the right technology to fit their existing infrastructure. It is often the case that new technology can disrupt legacy systems and would require immense technical expertise and meticulous planning to ensure efficiencies in data and workflow.
This integration process demands time, effort and resources, which not all companies are willing to expend at a certain time. However, overcoming these integration challenges is crucial, as it is the key to unlocking the benefits of streamlined HR processes and improved employee experiences.
Lack of HR tech knowlege
The lack of understanding and awareness about HR technology is a significant barrier to its adoption within organisations. Some businesses may not fully grasp the transformative potential of HR tech solutions or have misconceptions about its complexity or relevance to the company’s specific needs.
Furthermore, with the various service providers and products available on the market, organisations may become ‘choice hesitant’ as they are unsure which system will suit them best. This is made more strenuous because HR technology is an evolving field, and companies want to ensure that the technology they invest in can stay a head of the latest updates and meet these new challenges.
Elsewhere, the ability to customise HR technology to companies’ needs is a cause of concern for some businesses. The Atlas Study reports that over half of companies in Singapore (69%) struggled with customising HR technology to their needs.
The fear of navigating unfamiliar technology can lead to resistance, but to overcome this, organisations should prioritise training for key stakeholders to demonstrate how the technology will help drive forward the business objectives.
Cost of change
Cost is another significant obstacle to HR technology investment. Chris Cavanagh, a general partner at Guidepost Growth Equity, has noted that business priorities have shifted from growth at all costs to “cost management,” which may allude to why businesses are conscious about budget for investment.
The Atlas Study highlights that UK companies (58%) have identified cost as their main aversion to investing in HR technology. Despite HR technology’s multiple benefits to an organisation’s operations, the initial investment or spending can be quite substantial.
In addition to the upfront costs, ongoing expenses for software licenses and updates can add to the financial undertaking. Small and medium-sized businesses, in particular, may find the budget allocation for implementing and maintaining these systems difficult.
While the opportunities for implementing HR technology are seemingly boundless, some companies may feel justified in withholding their investment. I believe, as with any moment of change, those who reap the benefits in 2024, will be those investing for the future in 2023.
Subscribe to our Editor's weekly newsletter