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Despite a steady increase in spending on human resources technology, HR performance received borderline failure or barely passing grades in a leading study of talent, leadership and HR challenges around the world.
The lagging performance of HR and the largely unfulfilled promise of human resources technology were two of six key findings in the Global Human Capital Trends 2015 report by Deloitte Consulting and Bersin by Deloitte. The research in the report, which also includes 10 important trends, stemmed from surveys and interviews with more than 3,300 business and HR leaders from 106 countries.
About 61% of HR leaders -- and 72% of non-HR business leaders -- rate HR performance as "adequate, getting by or underperforming," the report said. Although business grows and changes exponentially, HR improves at a much slower pace, barely budging from last year's survey, according to the report.
The market for human resources technology investments has grown by 50% into a $10 billion industry in the last five years, but the money is not resulting in improved outcomes, the report said.
Josh Bersin, founder of Bersin & Associates, now Bersin by Deloitte, said companies often spend a lot of money on HR software, but they fail to redesign their processes, including performance appraisals, recruiting or training, and the result is an automated version of what they were doing before the big investments.
"What the data shows, from our research, is that the talent problems around the world -- leadership, learning, engagement -- are not really being fixed, [or] at least they haven't improved much as the economy has picked up," Bersin said in an interview.
"We think one of the reasons is that the companies are implementing software without going through the process design to fix and improve the processes. That's not a blanket statement, but certainly I have seen it in a lot of companies."
The report says the lesson is not to stop spending on human resources technology. Instead, complementary investments are needed in programs that overhaul processes, develop new learning content and programs, and train both leaders and the HR team.
HR needs to be reinvented
HR is not keeping pace with change and should be reinvented through a "massive reskilling" of HR professionals around the world, the report said. Leading enterprises are redefining the HR role from service provider to enabler and builder of talent, and from generalists to a team of highly skilled business consultants, the report said. Professional development and research are also emerging as important capabilities for HR professionals.
Among the other important findings and trends in the 110-page report:
- Talent and people analytics are a high priority and a tremendous opportunity, but progress in this area is slow.
- Culture and engagement was rated the most important issue, pointing out the need for managers to clearly understand their organization's culture and reexamine every HR and talent program to better engage and empower people.
- Difficulty in building leadership was ranked as the No. 2 challenge, with companies struggling to develop leaders at all levels.
- Inadequate corporate learning was the No. 3 challenge, with only 40% of respondents rating their organizations as "ready" or "very ready" in learning and development.
- Cognitive computing -- the use of machines to read, analyze, speak and make decisions -- is affecting work at all levels. HR departments must think about how to redesign jobs, as people work in cooperation with computers in almost every role.
- To improve recruiting, hiring, retention and leadership development, it is urgent for companies to learn to view, manage and take advantage of "people data" in social networks and recruiting and talent networks.
Bersin said companies want to do a better job in analytics, but they deal with data that is hard to sort out and struggle to build a business case for change.
The survey found that 75% of companies believe that using people analytics is important, but just 8% believe their organization is strong in the area, about the same percentage as last year. "A lot of the data is not cleaned up," Bersin said. "They have data in the recruiting system, data in the training system, data in the payroll systems, survey data. It's not all in one place."
Bersin said HR people also need to be sophisticated in understanding people data. "The richest data that you have about your people now is actually not in your company anymore. It is outside. Data in public networks -- whether it be LinkedIn or Facebook -- is pretty accurate because the people are giving it up themselves. Data inside a company is usually out of date.
"If you are a relatively forward-thinking HR professional or leader and you want to know why people are leaving, or what would create a more high-performing organization, or how to attract people or how to recruit people -- which are the main things HR people do -- and you are not tapped into [outside data], you are not using the most important tool you have."
While technology has done a great job of automating many HR practices, it is not necessarily improving them, according to Bersin. "You could question where all this technology money is going in many companies," he said. "You can't change the way people work until you simplify the technology environment they have. So one of the things the research shows is that simplification is a huge trend. As people buy technology, they have to make sure the technology they are buying does make people's work lives better, not just improve HR."
Traditionally, most human resources technology was designed to make HR professionals' jobs easier, not to make employees' jobs easier, he said.
"The real action is helping employees do their jobs: making it easier to fill out your time card, easier to do your expense account, easier to train yourself, easier to assess an employee on their performance, easier to set goals -- all those things is what the HR software should do."
The report lists several possible strategies, including building multidisciplinary analytics teams, using analytics tools in spreadsheets instead of buying new software and having human resources partner with IT. It also advises organizations to make analytics a business priority, not just a tool for human resources.
Analytics can also help build a business case for upgrading human resources technology with cloud platforms and other infrastructure, according to the report, because reducing turnover, improving sales productivity and increasing the quality of hires provide a high return on investment.
Get a different researcher's take on HR trends
Read a Q&A with Josh Bersin
Understand the benefits of HR technology