Study by Bain & Co also finds up to a quarter of HR departments still rely on manual processes, with many planning to invest in integrated software over the next two years
Digital HR technologies are failing to deliver on their promises, with three-quarters of HR executive and managers saying that their current technologies have so far failed to achieve optimal performance or the business outcomes they desire, according to a recent study by consulting firm Bain & Co.
The report, HR’s New Digital Mandate, surveyed 500 HR executive and managers across the US, UK and Germany – shedding light on how HR teams expect their use of technology to change in the near future.
More than half (57%) of respondents said they plan to increase their HR IT budgets by 1% to 10% in the next two years, while a further quarter said they will increase their IT budgets by more than 10% in the same period. Key drivers behind increased spending included replacing older systems (cited by 51% of respondents), upgrades to existing HRMS (49%) and to take on new functionality from existing vendors (44%).
Although media reports abound with the potential HR applications of technologies such as artificial intelligence (AI) and blockchain, Bain & Co’s report suggests that HR teams are struggling to keep pace even with less sophisticated advances in technology. Between 23% and 31% of HR departments surveyed still use manual, Excel-based or paper-based processes as the main way of delivering certain HR services. These figures are expected to decline dramatically over the next two years (see below).
The report also highlighted the most common pain points associated with HR technology: topping the list were having too many, unintegrated tools; interfaces that are difficult to use; and tools that lacked critical functions.
To tackle these problems, HR professionals are set to integrate more software with their core HRMS suites, rather than relying on third-party standalone apps. The proportion of HR teams using integrated HRMS suites with integrated recruiting, workforce planning, performance management, and compensation and benefits software is set to rise by between 11% and 19% over the next two years, according to the study.
The reasons why HR is investing in technology are shifting, too, according to the report. While saving money remains a key driver in areas such as payroll and recruiting, broader, more strategic, outcomes such as improved productivity, employee engagement, and speed, quality and accuracy of service are higher-priority outcomes in areas such as talent acquisition, workforce planning, reward and benefits, and performance management.
“Digital technologies from the engine of transformation,” concluded the report. “Those HR departments that master the deployment of technology will create a distinct and lasting competitive advantage in the hunt for talent in their industries.”
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