7 reasons why investments in HR technologies fail

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Investment in human resources technology is booming, with venture capitalists pumping money into the space at an unprecedented rate and organizations feverishly purchasing new HR and work technology platforms to support the switch to remote work.

The third quarter of 2021 is poised to be the largest on record for investment in work technology, according to data from WorkTech, an HR technology research and consultancy firm in New York City. HR technology spending for the year could reach a record $ 16 billion or more, WorkTech found.

But lost amid the rush to buy new digital tools is the fact that few companies are measuring the returns they have received from these increased spending. As a result, experts say there has been considerable waste and unmet expectations either from poorly designed technology investments or because new platforms did not receive the proper care and power once introduced. in the organization.

1. Lack of formal change management

One of the main reasons companies are not getting the return on investment (ROI) they seek from new HR technologies is the lack of real commitment to change, said Teri Zipper, chief executive officer. operating and managing partner of Sapient Insights Group, an Atlanta-based research and consulting firm. Organizations with a culture of change management have performed 21% better than organizations without it, according to Sapient Insight’s annual HR Systems Survey over the past five years.

“Those with higher scores not only focused on the details of the technology implementation, but also had a plan for how the implementation would affect all stakeholders in the organization, and they followed him, ”she said.

Another reason for the limited return on investment is the inability to create a detailed roadmap for HR technology investments, Zipper said. “Organizations are not achieving the desired return on investment because they are often exhausted by the time projects go live. additional elements of the system that will help to increase the return on investment. “

2. Not investing in the right technologies

Investing in next-generation recruiting technologies has paid dividends during the pandemic as recruiting teams have been forced to shift from in-person forms of recruiting and onboarding to virtual ones.

But some of those tech investments have paid off more than others, said Elaine Orler, senior vice president of technology consulting for the Talent function, part of the Cielo company. Orler said the expenses that generated the highest return on investment were invested in “drastic” improvements to the hiring process.

“Innovation in the process, not the use of core recruiting systems, is where I see the greatest return on investment,” Orler said. “Candidate relationship management (CRM) solutions, for example, are dramatically changing the way sourcing is delivered and improving candidate marketing and capture rates. CRMs create stronger opportunities to engage with candidates at the right time. “

Conversational AI is another tool that has had a big impact on recruiting results, Orler said, helping recruiters meet the challenge of competing for scarce talent in a tough job market. “The ability to engage candidates in real time to capture, assess, shortlist and schedule interviews has important implications for the business, especially for highly competitive models of retail and hourly labor.” , she said. “If you can’t capture these point-of-interest candidates, you lose them to your competition.”

Kara Yarnot, vice president of strategic advisory services for HireClix, a talent acquisition consultancy in Gloucester, Mass., Said another smart move during the pandemic was to introduce new online skills assessments in the recruitment process.

“The pandemic has forced many companies to abandon face-to-face interviews, and while many video interview options have been effective, interviewers felt they weren’t able to assess skills as well as they could. they could with in-person interviews, ”Yarnot said.

3. HR builds it … but they don’t come

HR can invest wisely in new digital tools, but if employees do not use these technologies at high rates, the investment pays little. In a According to a recent study by research and consulting firm PwC, 82% of respondents said they face adoption issues when implementing or transforming HR technology.

Dan Staley, head of human resources technology practice at PwC, said the investigation showed that two tactics organizations have historically relied on to drive technology adoption – system training and communication skills. leadership – were in fact the less efficient to encourage employees to use the new technologies implemented.

What has worked much better in driving adoption are incentives and gamification strategies, Staley said. Providing employees with perks like time off or points to apply for rewards convinced them to start using new apps or platforms and that behavior has continued over time, he said.

“We’ve found that initially people will start using new HR or work technology because of the incentive or gamified approach,” Staley said. “But once that use becomes ‘muscle memory’ or a habit, they keep using new technology over time, and it becomes second nature.”

Sam Grinter, senior senior analyst at Gartner, said another adoption issue is that companies are often reluctant to deactivate modules in new platforms or terminate initiatives when they have limited ongoing value.

Often this is because an organization is not tracking current employee adoption rates or assessing KPIs. [key performance indicators] associated with new technology, ”said Grinter.

4. Failure to set precise and defensible expectations

Mark Stelzner, Founder and Managing Partner of IA, a Human Resources Consulting Firm company in Atlanta, said that obtaining the desired return on investment from investments in human resources technology begins with setting specific and defensible expectations.

“Despite well-meaning aspirations, there are headwinds in the real world with initiatives such as truly global deployments, device activation for all employees and types of workers, adoption of valuable features and functionality, and the overall management of time and expectations, ”said Stelzner.

The investments that generate the highest ROI always focus disproportionately on strong dollar savings and fully measurable impacts, Stelzner noted. “Although the time savings for managers, HR and employees are significant, we cannot credibly take them into account unless we take into account all the impacts on the workforce,” he said. he declares. “Likewise, cost avoidance is a great incentive for a business case, but doesn’t always translate into a calculable result.”

Stelzner said his best advice for HR managers is to work with the most conservative finance manager in your organization to ensure that ROI categories and calculations used are not immediately dismissed by the CFO. and the board of directors.

5. Fail to measure business process improvements

Orler said the cost of many HR technologies has increased in recent years, especially recruiting systems, and because recruiting technology is often funded from an operational budget rather than a capital budget, everything return on investment should be measured by improving business performance.

“This means that organizations need to have a clear idea of ​​their true operating costs today,” Orler said. “Because when it’s just the technology side of it, you’re limited in justifying your ROI, only saving money by replacing legacy system costs. ”

Expanding the calculations to include operational costs results in a more compelling ROI for top executives, Orler said, because it includes things like reducing ad spend on posts, reducing spend on posts, agencies, increasing the efficiency of the recruiting team, etc.

6. Underestimation of implementation and integration costs, challenges

Experts say another mistake that can reduce ROI is the underrepresentation of the costs and efforts of implementing and integrating new technology platforms.

“A business is often expected to have already defined its future processes and data elements,” Orler said. “But when this assumption is not realized, the implementation of a new system tends to take the form and experience of the existing system, with limited opportunities for transformation. This can be the costliest mistake when buying new systems. “

Wrong assumptions about how easy it is to integrate new systems with existing platforms can also impact ROI, Orler said. “When HR or hiring managers are evaluating or demonstrating new systems, it can be assumed that simple APIs [application programming interfaces] will solve for all integrations, when in fact the dependency and success lies in what data is really needed in what system and when, ”she said. “Today’s APIs are stronger than ever, but are the foundation of common datasets. Highly customized systems require a more personalized approach to integrations. “

7. Poor project management by HR

Flawed project management by HR can also negatively impact ROI, experts say. “While most vendors now have strong implementation plans and acceleration programs to get solutions in place quickly, project management on the human resources side is essential so you don’t end up reviewing them. decisions over and over again and you delay your project, ”Zipper said. “Delays can seriously affect your return on investment. Make sure the vendor clearly defines your roles and theirs in the statement of work and identify the resources named for implementation so you can hold people accountable. “

Dave Zielinski is a freelance business writer and writer in Minneapolis.


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