Hackett Group: Budget, skill shortages impact HR priorities

HR leaders lack confidence in their ability to achieve seven of their top 10 priorities for 2022, according to new HR Key Issues research from The Hackett Group.

The report reveals how only with improvements in digital transformation and talent strategies will they move forward.

Seven of the top 10 HR priorities will be challenging to achieve

Of the top 10 priorities for HR in 2022, seven represent objectives that HR executives lack confidence they can achieve, the research found.

The majority of HR departments have launched or are launching major initiatives to improve their capabilities to enable enterprise growth strategies, support digital transformation, create a high-performing organizational culture, and improve talent management.

But to close capability gaps, they must take greater advantage of digital technology to improve their service delivery and insights, and also upgrade talent strategies, programs, and processes to enable the achievement of top enterprise and human capital-related business objectives.

Doing more with less – HR to reply on technology

One key issue driving the problem is an expected decline in budgets and only a small increase in headcount in the face of a workload increase, according to the study. HR expects its budget to decline by 0.2% and headcounts to increase by just 0.4% in 2022, and with workloads projected to jump by 9.3%, HR leaders are faced with another challenging year of “doing more with less”.

To help fill productivity and efficiency gaps, HR will therefore rely on technology, as HR tech spending is expected to increase by more than 9% in 2022, according to the study.

To reap the full benefits of these investments, HR departments will need to intensify their efforts at digital transformation and harnessing data and insights from analytics.

According to the research, 68% of HR leaders have already deployed next-gen, cloud-based core applications, and a further 24% have small-scale implementations in place. Business process management/workflow tools are now well established, and data-related technology adoption is also widespread, while robotic process automation (RPA) continues to make inroads within HR, although with mostly small-scale implementations.

HR Struggling with Talent Retainment and Recruiting Pressures

A further challenge, however, is that the HR-related tech skills needed to drive the digital transformation are sorely lacking, with HR departments chronically lagging in essential key business and tech-related skills, reveals the report.

Competencies such as the ability to derive meaningful insights from data, proficiency using digital technologies, critical thinking and adaptability to changing priorities remain underrepresented among HR groups, as are highly prized skills, such as business acumen and the ability to innovate.

This is in part thanks to the war on talent impacting the HR function with executives feeling increased pressures on their recruiting processes. Amid increasing difficulties retaining talent and filling open positions, HR is struggling to determine practical hybrid work strategies and prevent workforce burnout.

The report suggests HR must improve both its own talent management capabilities and the capabilities of managers across the enterprise.

Strategic advisor role is top HR priority, but unachievable

For the second consecutive year, the top HR priority is to act as a strategic advisor to the business. But this will continue to be a struggle for most firms as they battle the higher demands on the recruiting front and “doing more with less.”

The pandemic thrust HR into an even more vital role to help navigate a range of health, safety, culture, productivity and employee engagement challenges. But many must upgrade their staff skills and support capabilities to more successfully play this role.

Read the full report here