HR budget planning for 2022 is already underway as 2021 comes to a close. With this in mind, we were recently invited by Unleash to talk about the key challenges and considerations HR teams need to be thinking through as they set their budgets and map out their short, medium and long-term vision for to support their 2022 people strategy. Max Bailey our Technology Advisory Executive Director commented on the article, which you can read here, but we thought we’d also expand on some of the points he made, giving us today’s blog.
The competition for budget across your business
2020 and 2021 may have felt as though they bled into each other in terms of the global pandemic – forcing HR teams to react quickly to Covid demands, the ebb and flow of their businesses and the demands of their people, many of which were dealing with significant impacts in their everyday lives and families – and as we hit the budget and planning cycle for fiscal year 2022 it feels like an opportunity to reset, almost a a fresh start for so many organisations looking to make up for lost time, opportunity and revenue.
HR’s role during the pandemic
HR teams have demonstrated huge value through the pandemic, quickly turning scale problems (like sending large swathes of the workforce home), into longer term productivity gains. Introducing, for example, hybrid working cultures and policies to support what we referred to fondly as “the new normal”. It’s a term which was much overused in 2020 but captures the sense of change we have all been through. For many, it has empowered HR teams to do more and gain recognition for their value. So as HR leaders define transformation budgets and plans for the next fiscal year, they intend to further improve technology in areas such as digital employee experience, workforce management, and hybrid working, while supporting restructuring the current office estates to an even “newer normal”. Presenteeism and the office are no longer central to the typical way of working.
The challenge of securing transformation budgets
As always, the transformation budget’s availability determines which initiatives, not just from HR but from all business functions, gain approval and move forward in 2022. The need for HR to effectively articulate its case for change and business case for budget approval is tougher than ever.
Each business is unique. Depending on the available transformation budget, business performance, and strategic pressures, some HR organisations lose out to the ‘Do Nothing’ option. In these cases, companies recognise the need for change and believe they can make it, but they delay, hoping to get through another budget cycle without immediate transformation. Decision-makers may approve the case for change and even the budgets, but schedule implementation for “when we can afford it, perhaps next year.”
This leaves HR with political support and implicit approval but delays actual progress. Often, HR loses out to a lack of overall budget or initiatives seen as more critical to survival, like restructuring due to mergers or transforming core areas such as finance or retail.
Keep in mind, HR is a support service, not a front-office, revenue-generating function.
This is the biggest challenge we are seeing for HR transformation initiatives, how their business case competes with arguments to transform the revenue generating parts of the organisation.
Delivering a compelling business case for your budget requirements
Being able to deliver a compelling business case for your HR transformation or new set of people technology, showing a tangible value-add and benefit to the business is the key.
As always, HR teams will be competing with other functions for transformation budget, and ultimately it is for the senior leaders of the business to decide which initiatives will deliver the best return-on-investment (ROI). Take the need to execute an improved digital employee experience (EX) across an organisation, for example. It’s not that digital EX isn’t important, it’s just that it may not come first in the competition for funding.
The ROI conversation versus the ‘if the process works ok today – even if it can be improved’ is likely to garner a response of ‘do we have to change it now?’. Being able to demonstrate the value of your proposed initiative, and specifically how it will impact productivity and generate revenue, as well as cut HR and HR technology costs, should be your focus when trying to secure transformation funding.
Knowing the market and staying ahead of the game
Being clear of the value of what you are proposing and in your HR tech implementation plans is essential. Having an idea on what others are delivering and how they are delivering it is also an important part of ensuring that your business remains ahead of the curve.
What are the typical types of HR technology we are seeing organisations focus on right now?
Budgets are typically being spent on the Cloud – migrations, transformations, consolidation, etc. Employers are moving to the latest versions of major Cloud products, ideally a single product that works across their landscape. Where they are on multiple platforms the trend for consolidation to improve experience, harmonise processes, and consolidate the data architecture to support improved reporting, analytics, and insights continues.
Service optimisation vs transformation
If you get pushback on your full transformation proposal and budget there is another way forward – the service optimisation programme. Rather than completely replacing your systems, the service optimisation programme (SOP), as it is often affectionately called, improves service and optimises costs using the current platforms through a mixture of process streamlining and harmonisation, automation, and enablement. When decision-makers push back on the full transformation request, a less expensive service optimisation programme often provides an alternative way forward.
A service optimisation programme tends improve the current operations and systems adoption rather than providing a step change in capability and experience. It provides an avenue to eek out another year or two on the current platform and service model.
Part of a service optimisation programme often includes “skinning” the existing application to try and improve the user experience. There are several vendors – ServiceNow and Salesforce for example – which support this approach as part of a case management initiative, or solutions like Applaud, which specialise the user experience by sitting over existing applications.
A service optimisation programme is also a great way of focusing on improving your data in preparation for a delayed transformation programme. All the new tech in the world won’t fix broken data and processes; this can be a good opportunity to get ready for when the full transformation budget is approved.
The punchline
HR transformation still faces huge demand, and the request for investment in technology surpasses last year’s, but the cycle time for budget approval continues to stretch longer. We would expect this to continue in to 2022; whilst businesses start to claw back their lost Covid revenues and adjust to the “new new normal”, hybrid work and reconfigured office estates. Many organisations are taking a cautious approach in case of another longer-term lockdown or other market factor, impacts the recovery we are all hoping for. If your full transformation request is delayed, don’t dismiss how much you can achieve with a Service Optimisation Programme in the interim.
If you would like to talk to Max or any of the team about your HR strategy, tech roadmap, or how you can build out your business case for investment during this budget-setting season, reach out to us today through the form below and we can offer some initial, impartial, advice.
You may also be interested in these additional resources:
HR budgeting for 2022 – what should you be thinking about?
The power of partnership: The four players you need for a successful implementation
Understanding and overcoming buyer’s remorse in HR technology investments
