Dive Brief:
- Despite investment in new platforms, 77% of large organizations using an HCM system continue to rely on previously implemented processes, including manual checks, parallel systems and legacy backups in order to handle daily HR operations, according to research from business technology firm Strada released May 27.
- The research found that fewer than 3 in 10 companies saw significant improvement after implementing new HCM programs, with only 23% of respondents saying the systems had “meaningfully reduced manual payroll tasks.”
- In addition, just 21% of respondents said they had seen “a marked improvement in compliance confidence,” per the report. Strada said the findings underscore a significant disparity between what newly installed are systems designed to do and what they’re actually accomplishing.
Dive Insight:
The report data was culled from a global survey of senior HR, finance, operations and technology leaders and found that “expected gains from transformation programs are not being realized at scale.”
While companies are attempting to implement systems designed to simplify HR duties, there’s “a broader confidence gap” in terms of usage, which in turn reduces ROI and increases the potential for operational risks, Strada said.
“We're seeing strong and sustained investment in HR and payroll technology, but many organizations are still in the process of realizing its full value,” Jenni Flaherty, director of payroll product strategy at Strata, said in a statement. “Our research shows that manual checks and legacy processes persist where systems are not fully optimized or integrated."
After spending significant amounts of time and money to integrate new HR and payroll platforms, companies generally expect to get more reliable data and see improved compliance and scalability, per the report. However, operational complexity has consistently prevented employees from taking advantage of recently updated systems.
This lack of take-up has real business repercussions. According to the research, 81% of companies said “workforce complexity is now affecting their ability to execute business strategy.” As employees use workarounds and revert to manual strategies to accomplish tasks, these underused platforms are “becoming a barrier to growth.”
According to HR Dive’s 2026 Identity of HR survey, more than a quarter of respondents said technology was their biggest challenge, up from 1 in 5 respondents who said that in 2024.
Furthermore, poorly managed or implemented systems can pose real financial risks. Payroll can represent between 40% and 60% of a large employer’s operating expenses, yet companies reported losing between 2% and 4% of total labor spend each year to problems with process, system limitations and fraud, according to a March report from workforce management firm UKG and accounting firm KPMG.
