Dissecting the employer disconnect in HR technology

Despite serious dollars spent on HR technology, buyers remain unsatisfied with the return on investment. So what is the disconnect?
By: | March 17, 2020

Tom Starner is a freelance writer based in Philadelphia who has been covering the human resource space and all of its component processes for over two decades. 

Injecting new or updated technology into the human resource realm is no recent phenomenon; employers have been tweaking their HR-tech solutions for two decades or more. From client-server to cloud-native platforms, the spending and the effort on tech improvements are not in dispute—but their effectiveness may be.

According to HR-tech guru Josh Bersin, in his HR Technology 2019 Market: Disruption Ahead report, more than 12 million U.S. employers are spending over US$5 trillion on payroll, benefits and other employee programs annually. Bersin reports that, with more than 40% of the U.S. workforce changing jobs annually, the result is a US$250 billion-plus market just for products related to recruitment, advertisement, assessment and interviewing.

Unfortunately, despite all that spending, it appears that results lag expectations and outcomes. According to recent research from Raven Intel and the International Association for Human Resource Information Management, HR leaders report their tech projects continue to disappoint in the all-important success quotient.

The 2019 IHRIM HR Software Study, executed by Raven, found that, of the 230 HR professionals surveyed involved in tech projects, just 38% said the project delivered “all” of the expected business value. More than half (53%) report getting “some of the value,” with 6% saying they got no value and 3% actually feeling they “went backwards.” In addition, 47% report no cost savings.

Conducted in September, the survey asked participants for feedback on a cross-section of projects implemented in the past two years, including HCM/core HR, talent management (learning, performance, compensation and career goals), recruiting, onboarding and payroll.

Why the Disconnect?

The survey results are very similar to what Raven Intel is hearing from customers, said Bonnie Duncan Tinder, founder and CEO of Raven, which helps enterprise software customers independently find the best implementation partner.

Tinder said her firm sees the highest risk for failure when the buyer doesn’t do its due diligence in choosing a partner—for instance, perhaps it went with a firm suggested by the software vendor or a partner that had been used by another internal team.

“They chose the path of least resistance; they didn’t put in the time and effort on that partner selection that they put into choosing the software,” she said. In fairness, she noted, sometimes by the time HR leaders have completed a grueling software-selection process, they may be so tired that the idea of slapping a partner onto the project to “make it easy” can become a trap—in terms of realizing successful outcomes.

“If you don’t have that second critical piece [of the right partner], it doesn’t matter how good the software is,” Tinder said. “You can get the best product on the market and spend millions of dollars. But if you don’t have the right project partner and the right project plan, it’s going to fail.”

Jeanne Achille, chair of the Select HR Tech Conference, said that, in the past, the adage “Measure twice, cut once” was enough for making an HR-tech investment. Today, she said, the accelerated, intensively competitive pace of global business continuously creates multiple, highly dynamic requirements.

“That’s why, to ensure success, organizations need to deploy well-designed solutions that can accommodate the inevitable: change,” Achille said.

Jason Averbook, industry analyst and co-founder and CEO of Leapgen, a consulting and education firm that works with HR organizations globally, isn’t shy about offering up his reasons behind the all-too-common disconnect surrounding goals and results with HR tech: “HR has pinned its hopes on technology as a ‘digital holy grail,’ and it keeps trying to make simple tools catch up to what I call the ‘now of work,’ rather than devising new strategies,” Averbook explained.

When unaddressed, he adds, this disconnect prevents organizations from achieving meaningful, sustained transformation of the HR/people function, workforce experience and business.

“The world outside has outpaced life inside work,” Averbook explained. “This matters because we’re not unleashing the full potential and power of people, who are digital and modern and innovative—or want to be.” Organizations that harness and unleash this potential will gain competitive edge, drive loyalty and workforce engagement, and extend more value to customers, he added.

Three Stumbling Blocks—And Steps for Success

Scot Marcotte, chief technology officer at Buck—an HR and benefits consulting, technology, and administration-services firm—sees the biggest stumbling blocks with any new HR-tech project as threefold: overly complicated goals (expecting more than the solution can deliver), patchwork solutions that aren’t fully integrated with existing technologies and the wrong person in the decision-maker driver’s seat.

Marcotte offers a few practical steps to tackle the disconnect challenge.

First, HR must base decisions on evidence. Before investing in any new HR technology, Marcotte said, companies need to first step back and use data to determine their HR objectives. Executives should think carefully about what they want the software to accomplish based on the needs of the business and their employees, who deliver on those needs. For instance, benefits and rewards platforms can use data from the firm’s own health, wealth, career and engagement sources, enabling HR and finance to apply analytics to establish a “talent baseline” of health, performance, engagement and rewards.

“With clear baselines, explicit goals and people analytics, the business can best model people scenarios effectively and gain the insight needed to identify the underlying health and wellbeing issues and the potential technology solutions,” Marcotte said.

Next, ensure new and existing systems mesh seamlessly. From workforce planning to talent-acquisition systems, and from payroll to performance-management platforms, he said, there are often up to 20 different components in a complete HR-technology system. Often, the solution needed isn’t a complete overhaul.

“Existing technology investments can be leveraged if those systems can provide baseline and ongoing metrics and can integrate with the other technology in place,” Marcotte said.

Finally, collaborate on the software decision. According to Marcotte, too often, IT takes the lead in selecting technology, since that department must ensure that HR software can be rationalized against other technology goals of the company—including cost—and compatibility with other systems. Because HR has the clearest picture of talent needs through its analytics, however, HR leaders should instead be in the driver’s seat to identify what’s working and what’s not, where replacement is needed or consolidation is in order, and when the time is right to bring change into HR service delivery.

“Given the high cost of technology investment, it’s critical that HR and IT work together to assure software decisions make business—and people—sense,” he said.

‘Less is More’

Another misstep, adds Jonathan Sears, Americas People Advisory Services Technology leader at EY—the multinational professional-services firm headquartered in London—happens when employers look to technology to solve all of their people, capability and process issues in a single implementation.

“They are making a mistake because it’s simply not possible,” Sears said. “In many ways, the technology is irrelevant if you’re not looking at the skills and capabilities of your people, and the processes in which your work is completed. New technology plus old process equals an expensive, old process.”

Effective change management and learning represent two related key success variables, Sears explains, and that means knowing how to enable a workforce to adopt the new technology, and measuring the readiness and effectiveness of the new technology across the organization.

“For decades, the data has shown that those organizations that invest in change-management activities have a much higher success rate from those who don’t,” he said.

Sears said traditional change management (e.g. training) has proven to be limiting in its effectiveness, and organizations have pivoted to tracking employee sentiment, business readiness and adoption, and ROI through digital change-experience tools, while also deploying high-end learning simulations and knowledge-capture tools to effectively change the way people work.

Raven Intel’s Tinder offers another roadblock in attaining a smooth, successful outcome from an HR-tech project: People making the decisions often are not around long enough to see the original plan through. That disruption, whether it be with the HR leadership or the third-party implementation partner, can drive a project into failure mode.

“The people leading a project can change and, all of a sudden, the thing that you thought was really important never materialized within the project,” Tinder said, adding that, with that possibility always looming, taking a “less is more” approach is a good idea.

“It’s about doing the fewer things that you can really do well within the product and project,” she said. “Those are the people who are realizing all the value and really are most successful on a project.”

Sometimes, when things seem to be going awry during planning stages, it might make sense to step back and reevaluate the need in the first place.

For example, Sears said, you’re not ready to invest and implement new technology if you’re not taking a few key steps: eliminating unnecessary processes, outsourcing work to your ecosystem of vendor partners, standardizing and simplifying key activities and processes, and automating what’s left.

“Real change comes from your willingness to evolve your operating model, people, capabilities and processes,” he said. “Technology is, simply, the enablement layer of all of the above.”

In the end, Leapgen’s Averbook said, most employers have come to recognize the urgency and increased importance of considering employee experience—and expectation—and the technological possibilities for deploying truly holistic, end-to-end digital workplaces, he said.  But getting there seems easier said than done.

“Sustained, meaningful transformation requires a change to mindset, people, process and technology,” Averbook said. “A technology transition alone won’t cut it. “

To Averbook, employers are content to buy and implement technology, rather than design its deployment to match workforce capabilities.

“We hack it, rip and replace it, and call it ‘transformation,’ when we’re doing nothing more than a lift and shift from one piece of technology to another,” he explained. “And that’s the disconnect: We’re implementing, but we’re not really deploying.”

Averbook said HR leaders in the past have been afraid of technology, or have considered it to be more in the realm of IT. Instead, modern HR should understand that true deployment of HR technology requires creating and owning a digital strategy—understanding how people work and putting a strategy in place to best activate the workforce.

“That’s the role of the people function,” he said. “It’s not the job of IT to come up with that strategy.”

In short, he adds, the people function needs to embrace the strategy—including understanding the mindset shift required to implement it, remixing processes to support the experience and choosing the technology that best fuels all of it.

“A technology plan is not enough,” Averbook concluded. “A digital strategy with a technology plan embedded into it and which also addresses mindset, people and process will be 10 to 15 times more successful than a technology plan alone.”