Industry Research Summary: The State of Today's HR Tech Stack 2020

Optimize HR tech stacks to improve the employee experience as well as make productivity gains

    

Despite the importance of Human Resources (HR) technology solutions in 2020, few HR professionals give top grades to their current systems, according to the HR Research Institute’s new analysis.

Many HR professionals refer to the entirety of their technology solutions as the HR technology stack, aka, the “HR tech stack.” This research shows that developing a robust and useful HR tech stack can be a struggle for many organizations.

Having a strong HR tech stack is among the top three HR priorities in nearly half (46%) of surveyed organizations. A further 34% say it is among the top ten HR issues. Larger companies are more likely to say that having a strong HR tech stack is their top HR issue or among their top three issues (52%), compared with mid-sized (48%), and small companies (33%). As organizations grow, the HR tech stack often increases in importance as HR struggles to handle a larger volume of work. 

Although nearly three-quarters of responding HR professionals say the quality of their organization’s HR tech stack is at least average, relatively few give their technologies high marks. In fact, just 21% say their stack is above average and only 3% say it is top-notch. This indicates that HR tech stacks have a lot of room for improvement in most organizations. About a quarter (26%) say the quality is below average or poor.

Due to the Covid-19 pandemic, it is possible that some HR tech stacks have been put to the test more than ever as organizations rely on HR and other technologies to provide employee services. With this increased reliance, organizations could be finding more faults with their systems.

We asked respondents about the current characteristics of their HR tech stacks. The two most common characteristics are related to employees rather than HR professionals. Over half say their tech stacks:

Such worker access to HR technology solutions—which might be especially helpful when more employees work remotely—is good news, but there is also plenty of troubling news. It was surprising to find that most do not report widespread automation or integration. For example, only 42% have HR technology that automates many talent management processes, and just 32% say it integrates many of their talent management solutions. Another problem is that just 28% say their tech stack is relatively easy to reconfigure as needed. Only 21% of HR professionals say their HR tech stack nurtures and reinforces the desired corporate culture.

HR technology should increase HR productivity, so it is encouraging to see that—even with the problems of poor integration and implementation—nearly two-thirds (63%) agree or strongly agree their HR tech stack increases HR efficiency/productivity. 

However, 10% disagree or strongly disagree, and 27% are neutral. Perhaps these organizations have not invested enough in HR technology, have chosen the wrong solutions for their organization’s needs, or have failed to properly train HR professionals on how best to use these systems. A lack of integration could also be a culprit.

Over half (57%) agree or strongly agree their tech stack improves the employee experience in their organization. On one hand, this can be viewed as good news, supporting the idea that these systems are often serving the needs of employees by allowing them to access certain systems themselves instead of turning to HR to get information, for example, about their benefits.

On the other hand, fewer responding HR professionals view these systems as enhancing employee experience compared with boosting HR efficiency.

Only 33% say that the various components of their HR tech stack integrate with one another well or extremely well. However, another 42% say they integrate to a moderate degree.

Larger organizations seem to place greater emphasis on integration than smaller ones. Small organizations are far more likely to say their HR tech stacks are very poorly integrated (11%), compared with just 4% among mid-sized and large organizations.

Only 44% agree or strongly agree that their organization has a well-defined strategy for developing—or continuing to develop—a well-integrated HR tech stack over the next several years. This suggests that today’s integration problems will continue to represent a challenge for many organizations in the future.

More HR professionals are unhappy than happy with the accuracy of the metrics and analytics that their HR tech stack produces. Only 24% say their HR tech stack produces accurate and actionable HR metrics/ analytics that enhance decision-making to a high or very high degree, whereas 31% say it does to a low or very low degree.
 

Although a majority feel their HR heads have a vision of the future for their HR technology stack, only 36% of HR professionals say their organizations are good or excellent at planning the implementation of an HR tech stack system. The largest group (40%) say their organizations are only “okay” at planning implementations.

We already know that only one-third say the components of their HR tech stacks are well integrated, so it makes sense that the most widely cited problem organizations face with their HR tech stack is that they are not well integrated or cannot be integrated (41%).

The second most commonly cited problem is that organizations do not get enough support from their information technology (IT) departments (28%).

About a quarter over-rely on external consulting firms for implementation, and 18% say external contractors often fail to complete projects to their satisfaction. On the other hand, 21% over-rely on internal teams for implementations.

HR professionals cite a variety of pain points with their current HR tech stacks, but no pain point is cited by a majority. The most common pain point is that there is not enough in-house expertise (40%). Even organizations that implement and integrate an HR tech stack well will have problems if they don’t also have skilled employees who know how to optimally use and/or troubleshoot the system.

Employee experience will be the focus of HR tech stacks over the next two years. In fact, four of the top choices focus on enhancing the employee experience:

Of course, based on previous findings, 71% have employee self-service as part of their HR tech stack. Therefore, an increase in employee self-service may mean that many of those organizations that already have it will focus on making it better.

Just over half of HR professionals (52%) expect their HR tech stacks to allow greater access to remote workers. Many also believe that better training of users is the best non-technological method (55%) for improving HR tech stacks in the coming years.

To know about what differentiates organizations with successful HR tech stacks from those with less successful HR tech stacks and to get useful tips for improving and maximizing your organization’s HR tech stack, we invite you to download and read the full report.