Research Report Summary-The State of HR Automation in Today’s Organizations
Exclusive HR.com research sponsored by Iron Mountain
Posted on 03-21-2019, Read Time: - Min
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Over the last decade or more, HR professionals have worked to become better strategic business partners in their organizations. However, they have often been hindered by the obligation to meet the administrative and procedural demands of their jobs. How can HR achieve a balance between strategic and administrative duties?
One way to potentially achieve this is through greater automation of administrative tasks, according to a new research by HR.com. During the summer of 2018, Iron Mountain and HR.com surveyed HR communities in both large (those with 2,500 or more employees) and mid-sized (between 500-2,499 employees) organizations in an effort to better understand the current state as well as the possible future of the automation of HR processes.
Key Findings:
- HR automation is well-established in some organizations, but most are not yet highly automated.
- Some HR processes are much more likely than others to be automated.
- The need to improve HR effectiveness and efficiency are the primary drivers pushing organizations toward HR process automation, but some cite lack of resources as a hindrance.
- HR automation seems to result in a number of advantages, including higher productivity and the ability to spend more time on strategic matters.
How Automated Is Human Resources Today?
Mid-sized organizations are slightly less likely than larger organizations to be highly automated (33% versus 37%). This might be because larger organizations have more personnel and IT resources to pour into HR automation, but the differences are not great. Larger organizations might hold an advantage in the area of HR automation, but it’s also possible that the rise of software as a service (SaaS) solutions and HR technologies aimed at mid-sized firms have helped to erode the advantages of larger organizations in this area.
In mid-size organizations, only 36% said that more than half of their HR employee services are automated, but the proportion is 45% in larger firms. Again, this suggests that larger organizations may still hold an advantage in the area of HR automation.
However, these proportions are a moving target. A majority of HR professionals in both large and mid-size organizations indicate that the move towards greater automation is going to continue unabated.
In mid-size organizations, only 36% said that more than half of their HR employee services are automated, but the proportion is 45% in larger firms. Again, this suggests that larger organizations may still hold an advantage in the area of HR automation.
However, these proportions are a moving target. A majority of HR professionals in both large and mid-size organizations indicate that the move towards greater automation is going to continue unabated.
Which Processes Are Most Highly Automated?
“Time and attendance” is the most frequently cited automated HR process, as per 71% of the mid-size organization respondents. The other two areas cited by over half of HR professionals were payroll management (69%) and benefits (56%).
What Will Happen in the Future?
Looking ahead, onboarding is a clear-cut top choice for automation. Half of respondents in mid-size organizations and nearly half (46%) in larger organizations say they plan to automate onboarding over the next two years.
The further automation of areas such as payroll management and benefits will not cease in the future, especially among firms that have not yet automated them. In fact, if we combine both past initiatives and future plans, then benefits, payroll management and time and attendance should remain among the most automated HR areas over the next few years.
The further automation of areas such as payroll management and benefits will not cease in the future, especially among firms that have not yet automated them. In fact, if we combine both past initiatives and future plans, then benefits, payroll management and time and attendance should remain among the most automated HR areas over the next few years.
What Factors Are Driving or Hindering the Trend Toward Automation?
HR professionals want to improve their performance, and they indicate that the two main drivers of the push for automation are the need to boost HR efficiency and the need to improve HR effectiveness. The emergence of new technology, the desire for better talent analytics, and a need to hold down costs are all important factors as well.
A lack of resources is the top barrier to further automation of HR processes, followed by “outdated technology.” These perceived barriers are probably related in many organizations. That is, managers don’t feel they have the funds to improve their technology infrastructures to incorporate greater automation. This suggests that one of the key challenges for HR professionals is the ability to make a strong business case for automation. To achieve this, HR professionals must do their homework, starting with determining the cost of a new system. They may discover that, in the age of cloud-based services, the costs are not as high as anticipated.
Most HR departments remain bogged down by manual administrative tasks. In large organizations, over half (55%) of HR professionals spend more than 50% of their time on manual administrative tasks. In mid-size organizations, the percentage is 59%.
On the opposite end of the spectrum, a scant 13% said HR professionals in their organizations spend less than 30% of their time on manual administrative tasks.
HR professionals believe increasing automation and delivering more HR training and development represent solid opportunities to drive gains in overall HR efficiency. They are not nearly as supportive of outsourcing HR tasks.
A lack of resources is the top barrier to further automation of HR processes, followed by “outdated technology.” These perceived barriers are probably related in many organizations. That is, managers don’t feel they have the funds to improve their technology infrastructures to incorporate greater automation. This suggests that one of the key challenges for HR professionals is the ability to make a strong business case for automation. To achieve this, HR professionals must do their homework, starting with determining the cost of a new system. They may discover that, in the age of cloud-based services, the costs are not as high as anticipated.
Most HR departments remain bogged down by manual administrative tasks. In large organizations, over half (55%) of HR professionals spend more than 50% of their time on manual administrative tasks. In mid-size organizations, the percentage is 59%.
On the opposite end of the spectrum, a scant 13% said HR professionals in their organizations spend less than 30% of their time on manual administrative tasks.
HR professionals believe increasing automation and delivering more HR training and development represent solid opportunities to drive gains in overall HR efficiency. They are not nearly as supportive of outsourcing HR tasks.
How Would HR Respond to Greater Automation of Work Processes?
If HR professionals could reduce the time they spend on manual administrative tasks, where would they spend more time? The most widely cited response is that they would spend it in strategic planning, followed by serving as business partners.
The study also suggests that the automation of HR processes may not lead to a reduction in HR staffing levels. In fact, as HR professionals are able to function in more strategic roles that deliver greater business benefits to their organizations, the value of HR teams and individual professionals should rise. Of course, this may be dependent on senior leadership’s willingness to support HR professionals in such roles.
The study also suggests that the automation of HR processes may not lead to a reduction in HR staffing levels. In fact, as HR professionals are able to function in more strategic roles that deliver greater business benefits to their organizations, the value of HR teams and individual professionals should rise. Of course, this may be dependent on senior leadership’s willingness to support HR professionals in such roles.
How Do Organizations with More Automated HR Functions Benefit?
The studies also compared two different groups of respondents: those from Highly Automated HR Departments* and those from the Least Automated HR Departments**.
Highly Automated HR departments tend to be more productive and effective.
In large organizations, overall, 38% of HR professionals indicate their organizations perform above average in terms of HR productivity. Those from Highly Automated HR Departments are twice as likely as those in the Least Automated HR Departments to say that the HR productivity in their organization is above average (50% to 25%).
About 36% said their organizations perform above average in terms of HR effectiveness. HR professionals in Highly Automated HR Departments are more than twice as likely as those from the Least Automated HR Departments to say they enjoy above-average HR effectiveness (52% to 19%).
In mid-size organizations, overall, 34% of participants said their organizations perform above average in terms of HR productivity. HR professionals in Highly Automated HR Departments are almost twice as likely as those from the Least Automated HR Departments to say that the HR productivity in their organization is above average (44% to 23%).
This finding supports the idea that greater HR automation can be linked to higher-quality HR. It’s not possible to prove a causal relationship here, but it does suggest that organizations with higher levels of HR process automation may have HR teams engaged in higher-value-added practices. For example, HR may be operating in more strategic areas such as planning, serving as business partners, providing HR consultation, engaging in organizational development, etc. This may well be leading to higher overall levels of HR performance.
To learn more about the research, The State of HR Automation in Today's Organizations and for key takeaways from the study, please read the full report. Click the button below to download the report of your choice, based on your organization size.
Highly Automated HR departments tend to be more productive and effective.
In large organizations, overall, 38% of HR professionals indicate their organizations perform above average in terms of HR productivity. Those from Highly Automated HR Departments are twice as likely as those in the Least Automated HR Departments to say that the HR productivity in their organization is above average (50% to 25%).
About 36% said their organizations perform above average in terms of HR effectiveness. HR professionals in Highly Automated HR Departments are more than twice as likely as those from the Least Automated HR Departments to say they enjoy above-average HR effectiveness (52% to 19%).
In mid-size organizations, overall, 34% of participants said their organizations perform above average in terms of HR productivity. HR professionals in Highly Automated HR Departments are almost twice as likely as those from the Least Automated HR Departments to say that the HR productivity in their organization is above average (44% to 23%).
This finding supports the idea that greater HR automation can be linked to higher-quality HR. It’s not possible to prove a causal relationship here, but it does suggest that organizations with higher levels of HR process automation may have HR teams engaged in higher-value-added practices. For example, HR may be operating in more strategic areas such as planning, serving as business partners, providing HR consultation, engaging in organizational development, etc. This may well be leading to higher overall levels of HR performance.
To learn more about the research, The State of HR Automation in Today's Organizations and for key takeaways from the study, please read the full report. Click the button below to download the report of your choice, based on your organization size.
Exclusive HR.com Research Sponsored by Iron Mountain
*Highly Automated HR Departments: We designated HR departments as Highly Automated if participants gave scores of seven or higher when asked to rate, on a 10-point scale, the degree to which HR processes are automated in their organization
** Least Automated HR Departments: We designated HR departments as Least Automated if participants rated their level of automation four or lower on the 10-point scale
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