No Link Between HR Technology and Strategic Gain, Say Researchers

A new meta-analysis finds no empirical link between investments in HR technology and strategic gains for an organization, but HR tech vendors say the data is skewed.

Friday, January 25, 2013
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HR technology vendors may tout their products as helping HR become more strategic, but there's scant evidence that this actually happens.

So suggests a new meta-analysis from a pair of university researchers who combed through 40 reports released between 1999 and 2011 on human resource technology. They found that when it came to the researchers' definition of strategic gain -- something that gives a company an edge over its competitors or directly contributes to its strategic business goals -- no empirical evidence exists that proves investing in HR technology leads to such gains.

"It's not that we're saying technology can't make HR more strategic; there's just no clear evidence to prove that it does," says Janet Marler, associate professor of management at the University at Albany and co-author of the analysis.

"We weren't really seeing what you would expect to see had there been a tight link between technology and strategic HR," says Sandra Fisher, associate professor of organizational studies at Clarkson University in Potsdam, N.Y., and the analysis' other co-author.

A "strategic outcome" would be something that helps HR to add value in a way that enables a company to distinguish itself from its competitors. As an example, HR technology might help an automotive company find, recruit and retain engineers who can develop a revolutionary technology that sets it apart from its competitors, says Fisher.

The analysis did find anecdotal evidence that technology helped HR become more strategic, but such evidence doesn't meet the threshold necessary for being considered a valid outcome, says Marler. A number of the studies noted that technology had helped HR cut costs and increase efficiency, but that hardly qualifies as strategic, she says. 

"If something enables HR to reduce headcount by X amount, that's not a very strategic outcome," says Fisher. "How does that help the company compete against others in its industry or better achieve its strategic goals?"

Marler and Fisher evaluated academic studies conducted in the United States and abroad that had been published in peer-reviewed journals such as the International Journal of Human Resource Management and the Journal of Managerial Psychology.

Too much standardization and an overemphasis on "best practices" may be hindering technology solutions from helping HR departments become more strategic, says Fisher.

"Best practices will, at best, only let you perform as well as the other organizations that use them -- and sometimes not even then, because best practices may not work for every organization," says Fisher.

Companies with global operations may have a tough time getting the most from HR technology because of privacy regulations in some countries that strictly limit how employee information can be used, or inadequate infrastructure, says Marler.

"Some countries may lack the capability to support a technology in the way it's designed to be used," she says. In the analysis, Marler and Fisher cite one company that had to use a container truck to ship its new computer-based learning system between its locations in Mexico because that country's technology infrastructure couldn't support the necessary bandwidth for remote access.

Not everyone agrees with Marler and Fisher's findings, of course. Ed Vesely, chief marketing officer at Chicago-based SilkRoad technology, says the analysis is of little value.

"It was a valiant effort, but a complete waste of time -- the studies that it's based on are too old," he says.

Many of the studies cited by Marler and Fisher were conducted prior to when integrated talent-management systems and cloud computing became commonplace, says Vesely.

"A lot has changed since many of those reports came out," he says. "Cloud-based platforms let companies recruit, onboard and develop people without a lot of overhead. That's something that was not possible to do back in 2007."

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Many of the studies cited by Marler and Fisher examined "point" solutions rather than integrated talent-management suites that make it easier for HR to do things such as tracking and developing high-performing employees -- things that can help a company gain an edge over its competitors, says Vesely.

One problem in ascertaining the strategic impact of HR technology purchases is that most have been focused on the bottom line -- i.e., cost minimization -- rather than top-line growth, such as revenue generation, says Jason Corsello, vice president of strategy and development at Santa Monica, Calif.-based Cornerstone OnDemand.

"Most companies implemented HR software because they were concerned with process efficiency, compliance and risk mitigation," he says.

However, the rise of powerful analytics tools and collaboration -- enabled partly by integrated talent-management suites that can bridge the traditional "silos" within HR departments -- will lead to more of a top-line focus for HR technology in the future, says Corsello.

One factor that could be inhibiting technology from making HR more strategic is a lack of expertise in many HR departments, says Marler. "If you don't have the technological competencies within HR, then you're not going to be able to fully leverage the capabilities of that technology," she says.

Corsello agrees that HR may need to update its skills.

"For people who've been in HR for 25 years, technology is typically the area they know the least about," he says. "If I was an HR leader, I'd gather a handful of millennials in a corner and get their ideas for what technology I should be pushing out to the workforce. Unfortunately, there aren't as many young, ambitious, forward-thinking people in HR as there should be."

Marler and Fisher say more research and better data is needed in order to truly determine whether HR technology is having a strategic impact.

"It's hard to get the necessary data from companies and vendors to prove the connection between e-HRM and making HR more strategic," says Marler. "Having more partnerships between industry and academia would help, and it's something we're interested in doing."


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