A recession is looming; the macroeconomic outlook is not looking good.
In light of this, HR teams are facing significant budgetary challenges.
With company budgets being reduced, executives worry about the future of talent management and retention. This period will be a critical time for businesses to extrapolate the most efficient policies while maintaining employee satisfaction.
Tech is often seen as a solution to driving efficiencies around employee engagement and retention, but research by the Hackett Group has found that HR tech budgets are also under threat.
According to a survey of 350 HR executives from all industries, spending on HR tech is expected to drop from 8.7% in 2022 to 1.8% this year.
Consequently, HR leaders will be confronted with gaps in productivity and efficiency all while trying to keep employees happy, productive and engaged.
The Hackett Group survey found there is an expected 1.3% growth from 2022 in the productivity gap (8.9% in 2022 to 10.2% in 2023) and a 0.6% growth in the efficiency gap (9.5% in 2022 to 10.1% in 2023).
They are also facing increasing workloads as the COVID-19 pandemic transformed HR into a more strategic, business critical function.
Doing more with less
These findings by the Hackett Group beg the question, how can HR deliver satisfactory results with lower budgets? This is a particular concern as HR tech adoption without workplaces is expected to grow this year.
Franco Girimonte, associate principal of the Hackett Group, tells UNLEASH: “Cost-cutting, efficiency improvements, and new technology will go some way to covering the gap”.
But this isn’t a sustainable approach in the long-term, according to Girimonte.
This is where HR needs to lean more on data and analytics; it can help HR teams to easily track key metrics such as employee satisfaction and diversity statistics, enabling them to identify areas for improvement.
Data and analytics can also highlight inefficiencies throughout the company in areas like payroll and retention strategies.
As mentioned in a McKinsey report, data analytics have a far way to go in order to produce accurate predictions and inefficiencies mentioned above.
Improving existing infrastructure and adopting new technology will be the key to post-recession growth and survival.
If HR leaders don’t take action, they face falling behind, meaning when the next crisis hits, the HR team and the wider organization will struggle to keep up, let alone thrive.
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