There was an article published recently at HR Executive Online reviewing the results of a meta-analysis that concluded that “that when it came to the researchers' definition of strategic gain — something that gives a company an edge over its competitors or directly contributes to its strategic business goals — no empirical evidence exists that proves investing in HR technology leads to such gains.” Oooooh, ouchie. Having advocated that HR and talent management technologies can provide measurable contributions of business value, that a meta-analysis concludes that such value most likely is not strategic, well… ouchie. Especially for HR heads to sold their fellow executives (e.g., CFOs, CEOs, and CIOs), on the strategic value of multi-million dollar investments in HR technologies.
It is important to stress that the study doesn’t say that investments in HR technology does not provide any business benefit whatsoever; the authors do acknowledge that such investments have resulted in some cost reductions for organizations (whew). They also point out that cost reductions (for example, through reductions in HR headcount due to efficiencies resulting from technology) are not strategic outcomes (well, darn).
Study co-author Sandra Fisher speculates on possible reasons HR technology investments haven’t helped drive strategic goal achievement:
Too much standardization and an overemphasis on “best practices” may be hindering technology solutions from helping HR departments become more strategic, says Fisher.
“Best practices will, at best, only let you perform as well as the other organizations that use them — and sometimes not even then, because best practices may not work for every organizat
ion,” says Fisher.
Those reasons hard to argue with. At the same time, I would offer that a potential lack of strategic return on investments in HR technology has little to do with the technologies themselves.
About three years ago, Chris Watkins at the Hay Group wrote a blog post on why talent management strategies fail. I think HR technology investments have failed for some of the same reasons (I have replaced “talent management” with “HR technologies” in Chris list:
1. No clear vision by senior leaders on what [HR technologies] can do for the organization
2. No clear understanding of what success “looks like here”
3. HR technology is seen as a function of HR [and/or IT], not a business accountability supported by HR [and IT]
4. No distinctive [human capital] proposition that differentiates from the competition
5. Not enough 'quality' time devoted to [true human capital management].
Generally, as I have noted before, many times HR / IT are depending on technology to solve non-technology problems: a lack of understanding of how to realize the true value of people to the business, a lack of identified business outcomes (especially strategic ones) that HR technologies are supposed to enable, and a lack of executive leadership holding line managers accountable for effectively managing the human capital resources.
Effective human capital management requires attention to people, process, data and technology, in that order, and in a proportion of something like 45%-25%-20%-10%. Only when leadership, with the support and guidance of business-focused HR professionals, does the hard work on the people stuff can we start to see resources invested in HR technologies well spent.