Tech adoption is a Faustian bargain.
Sure, tech is often synonymous with efficiency and streamlining operations. HR (human resource) tech, in particular, helps teams engage and retain top talent. It’s also central to sound decision-making and as many HR software providers point out, can lower overall business costs.
But why is it that 42% of HR tech implementations continue to fail? While most businesses reap the benefits of HR technology, it’s not for everyone, and we’re here to explain why.
By the end of this article, you’ll see HR tech as a powerful ally and the substantial risks it poses for your business.
7 Reasons Your Business Should NOT Adopt HR Technology
1. Upfront Costs
One of the noteworthy reasons businesses should think twice before adopting new technologies is upfront costs. It’s easy to be over-enticed by features, high-end solutions, and being able to purchase technology beyond your current needs.
However, the upfront costs of HR tech may divert the budget that could otherwise be spent on core HR initiatives. Funds set for new HR software might be better invested in areas that directly impact your business goals, including employee benefits, succession planning, and recruitment ads.
Now, if you think building software internally is a cheaper alternative, think again. DIY platforms take longer to build than purchasing a solution. The prolonged development timeline results in increased labor costs.
There’s also the cost of training and onboarding. The learning setup, providing manuals and resources, and the overall time spent influence the cost of onboarding a new system.
2. Resistance to Change
Humans are creatures of habit. So when new technology disrupts existing processes, it can lead to pushbacks.
Oftentimes, the most formidable challenge to overcome isn’t actually implementing the technology, but in a team’s resistance to change.
HR personnel, for example, may be hesitant to embrace automation because they fear job loss, have an inability to adapt, or simply feel uneasy about changes. This resistance to change can lead to platform underutilization.
Learning new systems can be challenging for employees as well. Non-tech-savvy end users may find the learning curve steep, ending with reduced productivity and morale.
Friction can also emerge from management. Senior leaders who are accustomed to traditional employee management may not take new technologies lightly, fearing potential disruptions to existing power structures.
3. Compatibility Challenges
Say you’ve overcome resistance to change and budget restrictions, you now have another pressing issue to solve: Compatibility challenges.
It’s common to experience compatibility issues between your new software and operating systems, existing software, and hardware devices. These issues can lead to downtime, lost productivity, and ultimately, increased costs.
Migrating legacy data may be an issue too
One of the compatibility challenges you’ll first encounter is during data migration. Migrating legacy files, including employee records, payroll information, and employee performance data can be a mammoth task.
It can be easy to get too complacent about your existing data too. Your source data could be incompatible with your new system, resulting in data loss, discrepancies, compliance risks, and an overall waste of investment.
4. Ongoing Maintenance
Platform maintenance is a critical, but sometimes overlooked, aspect of adopting new HR technologies.
Regular software maintenance reduces errors and mitigates cybersecurity risks. While there are providers that maintain software for free, you may still incur extra costs like software licensing fees and technical support.
5. Usability
We can’t discuss tech adoption without touching on usability. What processes is your new tech ready to replace or optimize? Have you considered the downtime risks? All these must be taken into account before employing new tech in your organization.
“If it’s not broken, why fix it?”
The sentiment is so closely rooted in humans. However, it also rings true in tech adoption. If your chosen HR tech merely duplicates current workflows and fails to fully optimize them, you’ll end up with another wasted investment.
Tech, when not thought out, can potentially complicate HR processes as well.
Unnecessary customizations and complicated features can overwhelm even the most tech-savvy users. Your teams may end up struggling to navigate menus and settings, undermining the very purpose of technology to optimize tasks.
System failure
Regardless of uptime guarantee or reliability, there’s always a risk of it breaking down or malfunctioning – grinding your operations to a halt. For example, a system failure occurring in the middle of payroll translates into delayed disbursements and frustrated employees.
6. Security Issues
No one wants to be a statistic. However, technology exposes your business to a number of security risks. The more data and processes move to the digital world, the harder it becomes to keep threats at bay.
The risk of a data breach
The potential of a data breach is higher than it ever was, especially with modern software linked to the internet. In fact, 45% of data breaches worldwide were cloud-based.
A security breach is devastating for any business. For employees, having their personal data exposed or stolen can lead to a ripple effect, perpetuating instances of stolen identities and fraud.
But the threats aren’t just from the outside. Internal threats, involving employees or contractors, can misuse their privileges for malicious purposes. Or, it could be accidental, where individuals accidentally expose their accounts to unauthorized access.
Data loss
Data loss is as catastrophic as a data breach. There’s no question that HR departments manage a large amount of business data, from employee information to financial records. Properly securing these files is a serious legal requirement and ethical obligation.
Failure to comply leads to violating data privacy regulations such as the General Data Protection Regulation (GDPR). Violating GDPR, and other data privacy legislations, incurs hefty fines.
Non-compliance aside, data loss is just a disastrous experience altogether. Mishandling employee data procures an instant loss of trust not just from your employees but investors and customers as well.
7. Overdependence on technology
Relying on technology too much can lead to a loss of human skills, including critical thinking and problem-solving. A decline in these skills can hinder employee development and team communication.
It’s also worth noting that not every employee would have access to technology and digital devices. This could cause a rift between employees of different socioeconomic backgrounds.
Finally, technology lacks any sense of right or wrong, posing a serious ethical dilemma for companies.
Teams that end up relying on tech to drive their strategies may limit the personalized, bias-free initiatives employees need to thrive.
How can Leaders and HR Teams Overcome These Limitations?
There’s a buzzword thrown around different industries called “disruptive innovation”.
As you might have guessed, disruptive innovation involves a product or service that disrupts an existing market by creating its own segment. As with any new technology, HR tech challenges traditional HR practices and helps companies gain a more competitive edge.
So it goes without saying that technology should be seen as a driver for change. It serves as a powerful catalyst for streamlining employee management.
To truly reap its benefits, you’ll need to overcome the challenges we mentioned earlier by taking a more proactive approach.
1. Conduct a Cost-Benefit Analysis
We’ve established that tech investment can be financially draining for businesses. So, before adopting new HR tech, conduct a cost-benefit analysis (CBA).
Estimate the platform’s monetary value
Determine not just the upfront costs of onboarding a new platform, but also maintenance and renewals.
Be sure to take into account the human costs when deciding on a platform’s overall monetary value as well. For example, how many admins will be onboarded to the new system? How much time should you allocate to training and onboarding personnel? What is the overall return of investment?
You’ll have to project future costs as well. Consider factors like price increases, inflation, and opportunity costs (especially when selecting from multiple platform options).
Compare costs with benefits
Calculate your total costs and benefits based on your analysis. You should be able to make a more data-driven decision with your findings.
Of course, you shouldn’t stop there. Once you’ve onboarded the new platform, conduct regular reviews to update your CBA and track actual costs and benefits.
2. Implement Change Management Strategies
Let’s face it, it’s absolutely human to be uncomfortable with change.
Although change can be promising and potentially bring positive outcomes for your entire organization, people tend to dislike change unless it directly benefits them.
To reduce resistance and address the challenges associated with tech adoption, you’ll need a good change management strategy.
Is your organization ready?
Before implementing new tech, assess your business readiness. Understand your employee’s skills, views, and knowledge of technology. Identify potential bottlenecks like lack of technical know-how or even hardware limitations.
Establish a dedicated change management team or leaders to help out. Tap into individuals with good leadership skills, understand the need for change, and are able to build trust across departments. These teams can also work with key stakeholders and vendors, allowing you to address any inquiries your employers may have when implementing new tech.
Manage resistance to change
It’s natural to fear what we don’t know. So keeping employees in the dark amid a tech implementation will more than likely result in them resisting change.
Regular training and collecting employee feedback are just some of the ways you can ease their concerns. Make sure to incorporate valid ideas into your implementation plan and proactively address any concerns.
3. Go for Custom Software
Too often, businesses encounter complex issues or regulatory changes that standard software can’t solve. Customizable software increases productivity by adding features or workflows tailored to your business needs.
Remember, technology should adapt to your HR processes and goals, not the other way around.
4. Prioritizing Privacy and Security During Tech Implementation
Aside from having a clear understanding of why you need new HR tech, you should also assess how it fits into your existing workflows and processes.
The best place to start? With the right vendor, of course.
You don’t need to go for the biggest name in the market. Instead, prioritize factors like reputation and track record, support, and relevant certifications (e.g. compliance with data protection regulations, ISO certification).
You’ll also have to look at built-in security features like access control, regular software updates, data backups and recovery, and multi-tiered approvals, especially for systems with payroll capabilities.
Internally, you’ll need a good security plan too
End users play an equally important role in mitigating security risks. You need to ensure that your staff is aware of security best practices and policies. Continue to educate by providing adequate and comprehensive training to your team.
Take note that cybersecurity practices aren’t a one-off thing. Make it a practice to regularly audit and review HR platforms to assess compliance, security gaps, and suspicious user activity.
5. Strike a Balance Between Tech and Human Intervention
Technology should improve, and not replace, humans in the HR space.
To encourage employee buy-in and ensure that your team remains productive, assign distinct roles for HR tech and personnel. Technology can automate otherwise repetitive and laborious tasks. It can also pave the way for more accurate reports and data analysis.
People, on the other hand, can bring to the table their problem-solving skills, empathy, and creativity. Even department leaders can leverage an HR platform to make more informed decisions for their teams.
You Drive HR Tech, Not the Other Way Around
Adopting HR technology is a process that’s rife with challenges.
Acknowledging that these challenges exist is a good first step in overcoming them. Next, look at where your business stands – is HR tech a viable solution at this stage? Do you have the resources to onboard and maintain these platforms in the long run?
Also, it’s good to note that technology that works for you now may no longer benefit your business in a year.
So think carefully before investing in HR tech. Remember to involve stakeholders, managers, and even your employees before locking in a decision.
Want to test the waters before fully investing in an HR platform? We can help. Talk to our experts today to see your options.
