HR Leaders Hesitant to Make Drastic Changes

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Burlington, Mass. — Nov. 21
While corporate layoffs and budget cutbacks plague today’s news, many human resource leaders are hesitant to make drastic changes to their talent or information technology investments until they can get a better sense of where the economy is headed, according to a recent survey conducted by the International Association for Human Resources Information Management (IHRIM).

“Many respondents are cautiously optimistic that the economy will begin recovering early next year, said Lynne Mealy, IHRIM president and CEO. “They don’t expect to make drastic changes until after the first 100 days of the new Washington administration.”

Mealy presented survey findings during a free Webinar IHRIM hosted Nov. 19 titled “The Economy and its Impact on HR Technology Spending Plans,” where industry leaders and analysts discussed the current state of affairs.

Almost 210 company HR leaders primarily from North America responded to the survey. Almost half of the respondents (42.2 percent) reported their HR IT budgets will remain the same in 2009 as in 2008. Another 20.6 percent of participants said budgets will increase by an average of 23 percent, while 37.3 percent said their budgets will decrease by a median of 15 percent.

“For companies in a good financial and cash position, they should take this opportunity to extend their market share and make long-term investments,” said panelist John Greer, senior vice president for HR and development at Smart Financial Credit Union, and incoming chair of IHRIM. “Those without as much cash are waiting to see what happens. There is still a lot of uncertainty right now.”

Across the board, budgets for software, hardware, outsourced services, staffing costs and training and development are projected to remain the same as 2008. Thirty percent of respondents plan to spend the most on software purchases in 2009, followed by outsourced services, staffing and development (20 percent each, respectively). Conversely, 40 percent of those surveyed plan to make the most budget cuts in the area of training and professional development.

“I’m encouraged by the survey findings, but also a bit skeptical,” said Lisa Rowan, program director of HR and talent management for IDC. “I am seeing a rush to spend down budgets before year-end. If consumer confidence remains low after the holidays, I believe budgets will be very tight next year.”

A quick poll of Webinar participants revealed that 45 percent expected to spend all of their 2008 budgets; 23 percent did not.

The survey also found that companies making software investments will spend the most on onboarding tools (28 percent) and benefits management solutions (25 percent), and less on core HR management systems (12 percent).

Additionally, the survey found more companies are not investing in new HR information management systems, but instead are purchasing solutions that address core needs.

Before any purchases are made, panelists felt HR leaders had to build a stronger business case to demonstrate how a technology will benefit the entire company as much as it does the HR department.

When asked what organizations and HRIM professionals can due to weather the economy, panelists suggested working closely with vendors to create a compelling business case for technological investments; and ensure risk and compliance capabilities are adequate to keep up with changing regulations and legislation.

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