The more firms spend on HR tech, the less they seem to know
Many organisations have yet to fully take advantage of their modern HR and payroll technologies despite major investments in these areas, leaving leadership in the dark about important workplace data, according to a new report.
Findings from Strada's global poll among senior organisational leaders revealed that 74% of organisations are already investing in a major cloud-based Human Capital Management (HCM) platform.
However, just 29% of them said they have seen meaningful improvement in core outcomes, particularly on automating manual tasks (23%), self-service adoption (22%), and compliance confidence (21%).
"We're seeing strong and sustained investment in HR and payroll technology, but many organisations are still in the process of realising its full value," said Jenni Flaherty, Director of Payroll Product Strategy at Strada, in a statement.
"Our research shows that manual checks and legacy processes persist where systems are not fully optimised or integrated," Flaherty said.
'Strategic blindness' at work
According to the report, 77% of organisations still have backup systems or manual workarounds alongside their primary platform to manage payroll and workforce operations.
Only 39% of firms said they can see their total global payroll spend in real time, while just 38% can confirm compliance across jurisdictions without manual checks.
The report noted that over 40% of firms still need human intervention or compilation to get data on questions such as total people cost, workforce composition, overtime and premium pay, and use of freelancers.
Human intervention and compilation also remain needed on areas such as attrition and turnover, skills and competency data, as well as benefits cost.
"The result is a state of strategic blindness," the report read. "When information is delayed, incomplete, or uncertain, opportunities are missed because leaders lack the data and confidence to act decisively."
Cost of complexity
In addition to under-optimised tools, the report revealed that fragmented systems are also hindering growth in organisations.
The majority of businesses (84%) said they use three or more workforce management systems at work, with 28% saying they use six or more.
"Businesses use an average of five systems. And each one adds more inconsistency, inefficiency, and cost," the report read.
It warned that fragmented workforce systems are holding organisations back from progress, distracting them from driving digital transformation and improving employee experience at work.
Friction caused by system fragmentation is also costing businesses up to millions.
The report revealed that 2.6% of the total annual payroll spend is lost on average to errors, rework, compliance issues, and administrative inefficiency.
Around 25% of HCM and payroll technology spend is also consumed by managing the cost of complexity.
"For an organisation with a $200 million payroll, that equates to $5.2 million lost every year," the report read.
Flaherty said these gaps are opportunities for organisations to improve how they operate, and implement their HCM tools.
"When these workarounds are embedded, they point to opportunities to better connect systems and improve how they operate day to day," she said.
"Organisations that focus on optimisation and continuous improvement are the ones unlocking greater efficiency, confidence, and long-term value."
The report further pointed out that high-performing organisations have "deliberately" created conditions where technology investment is turned into operational confidence.
Integrated and optimised HCM platforms allowed these high-performing firms to report better outcomes, such as stronger confidence in growth plans, higher employee satisfaction, more reliable scaling, and greater compliance certainty.
