The HR landscape over the last 18 months has been reactionary and unprecedented, culminating in mass digital transformation and new ways of work. This has manifested in a significant amount of fire fighting, gut-based decision making and quite frankly survival. We are now witnessing a shift to a more proactive approach, which (pleasingly) sees HR having more of a strategic role in the organisation. 

What does this mean for HR budgets, strategic investment and budget ownership?

From our customer insights, research and market observation, there has been a clear shift with People and Culture leaders finally coming up for air, saying “Enough is enough” and being able to consider investment in much needed tools. Navigating through the pandemic has been a game of survival for most – keeping heads above water and trying to keep the business and their people afloat.

The risk of not investing in your people is clear to see as people voted with their feet in droves. Add to this the burden that HR leaders have carried and as such the amount of movement and displacement we have witnessed in the HR leadership space has been significant. This has surfaced for two key reasons; firstly the lack of investment and engagement across the board in people and secondly is the ABSOLUTE requirement for the tools and investment to do their jobs as a people and culture leaders. “HR must leverage innovation. Reimagining how it delivers its services, harnessing powerful insights and providing people analytics.” Danny Ferron. Global HR Transformation Lead

So who does own the budget?  The variance in this space is significant but what is clear is that this should not be a budget that stands alone, but one that is part of the overall budget. Alongside Marketing, HR has historically been the first line of the budget that gets cut. Thankfully we are starting to see this change.  One of the main reasons for this is an emerging style of leader; one that absolutely believes in investing in people and the strategic tools required to maximise that investment. Underpinned by the knowledge and insights to know that  this is where you go from good to great as a leader and a company.

Has there been a shift in strategic investment in HR tools as a result of the pandemic and new ways of working?

We are seeing two key trends here: Firstly on the demand side, where HR and People Leaders need richer data and insights on their people to make more rapid, better informed decisions, that are data led and balanced. Secondly on the supply side, where as a result of the pandemic we have seen a massive spike in the number of new entrants into the booming HR tech sector.

On the demand side, HR leaders are looking for digital solutions that result in better and faster ways of engaging with their people, that can enable line managers with deeper and more accurate insights. In addition there are more questions coming down from the executive level in relation to people, so HR leaders are looking for the right tools to help address those questions and the data required to go back quickly with meaningful answers and more importantly strategies and solutions.

On the supply side, the combination of a global people crisis, digital transformation and tech investment in HR solutions has resulted in a spike in new entrants. Coupled with the fact that HR continues to get broader and deeper echoed by the segmentation of tools and solutions we are starting to see outside of the monolithic HRIS systems. From talent and recruitment solutions to engagement and wellbeing across to capability and performance and of course learning and development.

When considering investment in your people, should you limit your options to the HR budget alone?

This is a really interesting quandary and an argument that we don’t get to see very often as it tends to be behind closed doors and not make it to the surface. What we do know is that HR budgets have constrained the growth and investment in people for many years. The real question should be ‘Are we investing in our people?’ If your people truly are your greatest asset then aren’t they the foundation of the entire business? Without them arguably you would not have a business.

Consequently the budget for your people and in particular strategic HR tools that enable greater productivity, performance and consequently profits should sit more broadly across the business. Finding evidence to support this is tricky but we all know that budgeting is a game of balance.

Which other key stakeholders and influencers should be involved in the buying decision?

Understanding the difference between the key sponsor of HR tech solutions and where the budget lies is one element of the buying decision. This is a more complex strategic purchasing decision especially when software licences and data protection are a key part of the solution. As such, ensuring you are across the key stakeholders and influences will ensure that the right decision is made. This is particularly important in larger enterprises and can mean that sales cycles are significantly longer especially when procurement is involved.

The importance of the balance between benefits realisation and cost saving

In influencing a strategic purchase of this nature, sometimes features and benefits are not enough. Regardless of the problem you are seeking to solve for when it comes to investing in strategic HR tools, connecting your solution to the benefits in a simple and easy to follow way is critical. However, traditionally the decision to acquire business solutions have been made based on numbers alone. Here the real clincher would be the cost savings to your company through employee retention. We all know that the cost of losing an employee is significant – from recruiting and training through to replacement. Being able to clearly define the resulting cost savings and the additional benefits of your platform will be key.

In summary

Just as we saw a shift in the role and budget authority of CFOs following the Global Financial crisis, we’re seeing a similar impact on HR leaders following the recent Global People crisis. It’s clear that there is a change in sentiment when it comes to making strategic investments in modern HR tools, and indeed who owns that budget. The combination of top down demands and bottom up requirements have left HR leaders in a time-sensitive conundrum where if they don’t have the budget and tools to be able to do their job, it’s the people of the organisation who will suffer as a result.

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