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Many companies, regardless of their industry, struggle with technological debt, which affects efficiency, productivity, and overall service quality. This is particularly important in dynamic fields like HR, where operations largely depend on technology.
Not every organization can recognize whether their current system requires an upgrade. Often, this is due to a strong attachment to the functionality of the old system or fear of making a wrong investment. However, such an approach is not beneficial, as it can easily lead the organization into technological debt.
What is Technological Debt?
The term 'debt' in HR has not been clearly defined. Intuitively, it can be understood as a lack of utilizing existing technological or IT solutions, as well as a lack of basic automation and optimization in human resource management, which would facilitate operational functioning. One way to combat technological debt could be the purchase of a system for managing leaves or promotions, which would automate and streamline work processes. However, there are many companies for which even implementing simple and cost-free improvements poses a challenge.
Technological debt mainly occurs in three cases: rapidly growing companies, long-established companies, and public institutions. The accumulation of debt usually arises from two reasons. Firstly, the lack of ongoing investments in HR. This makes it much more demanding to implement necessary changes in terms of resource commitment, equipment, working hours, and finances compared to gradual and well-planned implementation. Secondly, the practice of patching existing solutions to address previous errors instead of building them from scratch. An example of this is bonus and incentive systems. From the experience of companies, it is often changes in labor laws and market conditions that necessitate adjustments. However, instead of building new regulations from scratch, they are often expanded upon - comments Karolina Korzeniewska, ReX Manager at Antal.
Instead of continuously adding new sections of text to create a bonus system, it would be better to reconstruct and improve it according to technological possibilities, such as adding an Excel calculator that would allow each employee to know the amount of their remuneration and its components.
Expenditures or Investments? Consequences of Technological Debt for the HR Industry
The consequences of growing technological debt in the HR field will soon be noticeable in various areas, including financial, legal, and human resources dimensions. These consequences include penalties related to GDPR, employee lawsuits against employers, repressive measures imposed by labor inspectorates and social security institutions. The growing technological debt directly affects the efficiency and effectiveness of recruitment processes, employee satisfaction, turnover, salaries, working hours and overtime, consulting and legal costs, necessary workforce, staff shortages, and lost revenues. It is worth mentioning that technological debt in HR, just like in programming, can be intentional or unintentional.
Intentional debt most often leads to a holistic change in the operational dimension, transforming the entire company. To put it bluntly, it covers the gaps, as companies wait until all interconnected departments are ready to accept new solutions or until other changes occur, which will force adaptation - explains Karolina Korzeniewska, ReX Manager at Antal.
As HR overlays the entire organization and strongly influences and regulates operations within a company, it must take into account both the soft and hard dimensions of any change. Therefore, it often needs to resort to temporary solutions that intentionally create technological debt in exchange for future compensation.
On the other hand, unintentional debt mostly stems from a lack of awareness regarding existing irregularities and primarily affects companies that lack an HR department and dedicated HR personnel. This is a common occurrence in SMEs, where "human resources" are often erroneously defined as "human assets." For example, when an employer requires an employee to submit a paper-based medical certificate, even though the employer has an electronic medical certificate system, the employee is not obligated to provide a paper-based certificate - adds Karolina Korzeniewska, ReX Manager at Antal.
The Price of Technological Debt: Costs and Consequences for Organizations
According to PITax, a tax portal, the average salary in Poland in 2023 is 6,733.49 PLN, and the cost for an employer in this case amounts to 8,111.92 PLN. These are just the employment costs. When adding expenses such as electricity, workstation equipment, equipment depreciation, facility maintenance, management salaries, cleaning, or other specific business-related burdens, the total cost per employee in an enterprise with up to 200 employees averages around 35,000 PLN. This means that one work hour for each employee, including HR, is worth 218.75 PLN.
It is worth asking whether it is better to automate a process or allocate someone to tediously search for candidates on websites for over 200 PLN per hour. By doing so, we increase technological debt, wasting time, potential, and the skills of people on tasks that could be simplified and accelerated multiple times. We multiply vacancies to perform necessary tasks, and we still pay only the interest because instead of focusing on increasing efficiency, employee satisfaction, and safety, HR professionals in the most technologically indebted companies work overtime to meet imposed requirements - informs Karolina Korzeniewska, ReX Manager at Antal.
Innovative Technology in HR
The latest HR technologies and tools, such as artificial intelligence (AI), big data analysis, and automation, have revolutionized the way HR departments manage human resources. Based on feedback from our clients who have implemented automation in various areas, these technologies can reduce the time spent on HR-related tasks by an average of 10 hours per week and take over up to 70% of routine HR and recruitment tasks.
For example, AI is used for conducting complex recruitment processes, providing accurate results, ensuring equality policies, and increasing efficiency. On the other hand, big data analysis enables the prediction of talent acquisition trends and needs, enhancing the attractiveness of the company to potential candidates.
Automating routine tasks not only saves time but also helps reduce technological debt. For example, automating processes such as time management or onboarding allows HR specialists to focus on more complex tasks that require human interaction. Regardless of the sophistication of these tools, investing in HR staff training and development is a crucial element. HR employees need to understand how these technologies work and how to effectively utilize them to manage human resources in the modern world of work. Implementing technology does not eliminate the need for qualified personnel; on the contrary, it emphasizes its importance - adds Karolina Korzeniewska, ReX Manager at Antal.