Increasing employee productivity has always been a key selling point for managers when considering the adoption of new HR technology. However, according to a recent study by Forrester, it has been found that investing significant amounts of money in new tools may not always result in the desired productivity improvements for organizations.
According to Forrester, productivity growth across industries in the US has plateaued to about 1% over the past decade, despite organizations investing in emerging technology.
According to analysts, tech investments have been growing at an average rate of 5% over the same period. However, there seems to be a decline in productivity, indicating that the relationship between tech investments and productivity has weakened. It appears that tech spending is no longer providing the same level of productivity boost as it used to.
According to Andrew Bartels, a principal analyst and vice president at Forrester Research, it is important for CIOs to find alternative justifications for tech spending, as US productivity growth no longer appears to be influenced by increases in tech spending.
As productivity gains continue to stagnate, leaders in information and technology will need to revise their strategies for gaining management buy-in.
“According to Bartels, it is advised to prioritize enhancing business effectiveness. This involves increasing the likelihood of positive business outcomes and reducing the likelihood of negative ones,” suggested Forrester.
Based on our analysis of productivity growth over the past decade in various industries, it was found that higher investments in technology are linked to a decline in productivity growth.
A cautionary message for Chief Information Officers and Chief Human Resources Officers
The report serves as a cautionary message to enterprise tech leaders. “CIOs who persist in justifying tech investments primarily based on enhanced productivity run the risk of undermining their own credibility,” Bartels cautioned.
With the increasing visibility of the impact of stagnant productivity, CIOs will face scrutiny. In order to be well-prepared for this examination, CIOs need to provide justifications and defend their technology spending by demonstrating its impact on business effectiveness.
According to him, although the analysis focused on industry-wide figures, certain tech investments may still be deemed worthwhile due to potential productivity improvements.
When developing a digital transformation strategy, CIO/CTOs and CHROs should take a comprehensive approach to understanding how technology affects the entire organization. It’s important to consider workforce productivity as a crucial aspect of successful business operations, rather than just a standalone goal.
For CHROs, business effectiveness involves focusing on long-term capability rather than just short-term productivity. They will need to evaluate the connection between their investments in HR technology and the impact on employee experience and workflow, as well as how these factors influence their organizational culture.
