Doubling-Down on Your Investment in HR Technology Can Actually Help Your Business During Economic Downturns

Two young businesswomen working together on a digital tablet and laptop in an office

While economic uncertainty and tight budgets prompt companies to lay off employees or reduce technology spending, savvy HR and learning leaders know this isn’t the best course of action — at least not as a definitive solution. Increasing your organization’s HR technology budget, in particular, may be a better solution to realize valuable cost and time savings and performance and productivity gains in the years ahead. 

As virtually every leadership team and Board’s lists of responsibilities expand, prevailing talent shortages and interconnected business risks remain top-line challenges that need to be addressed sooner rather than later. Further, companies should reconsider taking an overly cautious stance in their recession response. 

For instance, defaulting to mass layoffs could backfire should the economy rebound quickly. In almost any response scenario, recovery should remain top of mind. So, it’s critical that Boards first weigh the impact of recession responses on company culture — particularly where human capital management (HCM) is concerned — and talent retention and leadership gaps. 

Why increase investment in HR technologies?

HR leaders polled in the 2022 Gartner Market Guide for Cloud HCM Suites for Regional and/or Sub-1,000 Employee Enterprises believe company culture and HCM are prime reasons to increase investment in people-first HR technologies. Only 20% of HR leaders believe their teams effectively utilize their current HR technology systems, citing that most existing HR tech only offer back-end HR support. 

As a result, almost three-quarters of the HR leaders polled indicated they plan to switch to a cloud HCM suite at the heart of their HR technology landscape by 2025. This planned increase in HR technology investment has also become a top priority in 2023 to address key issues around:

  • Diminished employee well-being: As more virtual or hybrid teams struggle to balance work and home life, having decreased in-person contact and a reduced sense of belonging, their overall well-being can diminish. 
  • Escalating talent shortages: With so many employees feeling burnout, less job satisfaction, and apprehension about the job market, many will continue seeking flexible work options in 2023. This will continue to fuel the talent shortages many companies are already experiencing. 
  • Growing leadership gaps: Leaders, especially new managers, struggle with being stretched beyond their limits. They are falling short of their responsibilities because they lack the leadership capabilities needed to be effective. This prompts them to rethink their career options, expanding already large leadership gaps.
  • Poor digital employee experience: Employee experience in a digital environment has become critical. Without people-centric HR technology, digital employee experience at all levels can suffer, negatively impacting productivity, engagement, and talent retention rates.



There is an interesting dynamic emerging between forward-thinking Chief Information Officers (CIOs) and Chief Human Resource Officers (CHROs) that impact how organizations will address these issues — especially the digital employee experience — going forward. While these two leaders don’t typically collaborate on joint initiatives, they’re starting to recognize the value in partnering to improve communication, collaboration, and connection in a hybrid or remote environment. Their partnership is focused on understanding gaps in employee digital experience, how to take action, and how to use HR technology to facilitate better experiences on an enterprise level.

How employees communicate, collaborate, and connect are fundamental qualities of the employee experience, and it's critical that employers get it right when it comes to how they facilitate these interactions with technology.

The desire to elevate the employee experience has implications for learning and development as well. HR technology is a great enabler in scaling development programs, facilitating their management, and leveraging data to ensure program investments bear tangible fruit.

Where should you invest in growing your HR technology budget?

Growing your HR technology budget in 2023 has the capacity for significant business value, but the key is to align your organization’s technology with identified people-centric gaps. 

According to Gartner’s 2022 HR Efficiency and Benchmarking Survey, Information Technology (IT) and HR leaders should increase investments in strategic (rather than tactical) HR that supports employee experiences and career journeys. Gartner estimates 45% of HR leaders plan to invest in HR tech to enhance DE&I, well-being, collaboration, and innovation. 

HR and learning leaders can expand and progress these key initiatives through scalable leadership coaching technology. Coaching enables leaders and professionals at all levels to supplement their technical expertise, and gain people-first capabilities that make them more adaptable for facing future challenges. 

Integrating leadership coaching technology into your development program ensures leaders at all levels, like new managers and other vulnerable talent cohorts, can be equipped with the capabilities they need to lead themselves, lead others, and lead with impact. As leaders become more effective in their roles, they will have a marked impact on business outcomes. Effective leadership increases engagement, improves digital employee experience and employee well-being and helps bridge talent and leadership gaps. In doing so, this people-centric HR technology investment provides measurable value to human capital management and overall HR function.

GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in theU.S. and internationally and is used herein with permission. All rights reserved.

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