Organizations have spent years investing in Human Capital Management (HCM) technology to automate processes, improve HR compliance and support employees. Yet many continue to struggle with extracting meaningful value from those investments. The recent 3Sixty Insights Benchmark Report, Why half of businesses want to invest in service-enabled HR, found that only 13% of organizations fully utilize their HCM solution, suggesting that for many businesses, the greatest challenge is no longer acquiring technology but driving adoption and effective use across the organization.
“The biggest challenge I see leaders have isn’t the technology; it’s the adoption,” said Keisha Forbes, the director of strategic client experience at Insperity.
Most organizations understand the value of investing in HCM software to improve efficiency, support HR compliance and create a better employee experience. But many are learning that adopting technology alone does not translate into effectiveness.
“They might have a successful implementation but are then left with little support for integrating it into their workflows and may not realize the full value of their investment.” she said.
Only 12% of businesses consider themselves sophisticated users, according to the recent 3Sixty Insights Benchmark Report. Simultaneously, 86% of HCM users experienced issues with HR, payroll or benefits in their software.
“The organizations that tend to get the most value primarily focus on automation, workforce data and adoption,” she said. “They’re making sure it’s being used in a way that improves how work is getting done.”
Why the value may be coming up short
Companies invest in HCM technology to streamline processes, but often find that the systems they have chosen are misaligned with their business workflows. Even with an HCM platform, they are still using fragmented systems, often using overlapping software and paying for duplicate systems or unused licenses.
Instead of creating a single source of truth, HR information becomes scattered across payroll systems, spreadsheets, scheduling tools and manual processes. Every additional workaround creates another opportunity for inconsistent data, repeated work and delayed decision-making.
“I call this fragmentation tax,” Forbes said. “Leaders tend to focus on software costs, but they also need to pay attention to the operational costs behind the scenes, including visibility.”
Often, this fragmentation tax arises from poor implementation, a lack of training and little or no ongoing support. This can also create unnecessary operational expenses and what Forbes calls an organizational tax on employees.
“When systems frustrate employees, it erodes trust over time and gives them a disorganized feeling,” she said. “It also takes away from the time they should be spending working with clients or on the business goals.”
The impact of fragmented systems
Even as organizations invest in HCM solutions to address these challenges, many still operate across multiple systems. As a result, organizations face increased HR compliance risks, and HR teams are bogged down in administrative tasks. The challenge isn’t whether organizations have an HCM solution—it’s whether their systems are truly working together and are supported in ways that reflect how the business operates.
“If people are still relying on spreadsheets, manual processes, workflows or workarounds, teams are spending more time on administrative work, and leaders are missing opportunities to leverage workforce data for better decision-making,” Forbes said.
Employees feel the impact too, with a poor self-service portal that limits visibility into important information and ultimately erodes trust. When systems are disconnected, simple things like onboarding, payroll, benefits and time tracking become harder than they need to be. Over time, employees lose confidence in the experience.
“Fragmented systems and workarounds create chaos and frustration for employees,” Forbes said. “Leaders are more focused on the high-level metrics and not always as focused on how cumbersome it might be for employees to navigate on a day-to-day basis.”
Beyond frustration, duplication and lower productivity, disconnected systems can increase the risk of errors.
“When teams are working in multiple systems, they are spending far more time fixing errors and re-entering information,” she said.
Conclusion
The organizations seeing the greatest return on their HCM investments are leveraging human-led partnerships to maximize the impact of their technology investment. If implementation goes well, but the questions start piling up on how to use specific features or leverage all the platform can provide, organizations may struggle to unlock the full value.
“An HCM platform is no longer the competitive advantage. Most businesses have one,” Forbes said. “The real value comes from having the training and ongoing support from a partner so that you can work smarter, make better decisions and create a better employee experience.”
Download the 3Sixty Report to explore the findings.