What HR teams are investing in this year

Investments are important for facilitating growth, and HR teams will need to be smart in their decisions in order to successfully leverage development.

With this in mind, Gartner outlined its top four investment trends, with a focus on growth being of key concern amid an unstable economy.

“Now more than ever, CHROs need to focus on driving profitable growth. This will require them to ruthlessly prioritise investments that support business growth and talent retention while pausing or stopping funding for low ROI activities,” Hanne Nieberg, director in Gartner’s HR practice, said.

1. HR technology

Tech should be a top priority for any leader. As digitisation ramps up, those who disregard tech run the risk of falling behind the competition.

Some are recognising just how crucial tech adoption will be, with 48 per cent of HR leaders noting they plan to increase their 2024 HR technology budget.

This tech is used for a variety of reasons, namely automation, driving business outcomes, enabling growth, and reducing costs. Conversely, however, Gartner’s research revealed that according to respondents, HR technology solutions were not at all successful (26 per cent) or only slightly successful (32 per cent) in reducing the cost of HR operations.

“The digital transformation of HR will take time as many HR technology implementations are complex multiyear, multi-country projects. The expected ROI is yet to be seen and the hype around emerging technologies creates inflated expectations that are difficult to meet,” Nieberg said.

2. Learning and development

Skills shortages have prompted an increased focus on learning and development, not only to plug skills gaps through existing staff but also to keep workers happy and engaged, benefiting retention.

According to an August 2023 Gartner survey, business disruptions due to skills shortages are the top workforce-related risk to organisational growth in 2024 and 2025.

Thankfully, one in three HR leaders plans to increase learning and development spending this year.

The most effective of these opportunities, according to Gartner, include agile learning methodologies, adaptive learning, mentoring, manager-led coaching and technology, including generative AI, immersive learning/simulations, AI-enabled skills management tools and learning management systems.

3. Total rewards

Cost-of-living pressures and worries about pay inequities are keeping rewards top of mind for employees. In fact, just 32 per cent of employees believe they are paid fairly.

A Gartner survey from the last quarter of 2023 revealed that employees consistently cite compensation as their number one reason to accept or leave a job.

Nieberg said: “Over the next two years, pay transparency legislation will rapidly take effect, which will require HR leaders to invest in employee recognition programs and rewards communication to ensure pay equity and to comply with new legal requirements. To improve employee wellbeing and ensure a productive workforce, HR leaders need to invest in wellbeing support that goes beyond traditional offerings and is embedded in the daily flow of work.”

4. Talent management

As noted earlier, skills shortages are a rampant issue across just about every industry. Developing an effective talent management strategy is on HR leader’s radar to help reduce the strain.

In fact, talent management has increased in importance and is the fourth-largest investment area planned for 2024, moving up from the seventh position in 2023, according to Gartner.

The three main talent management areas of focus for HR leaders are performance management, employee experience and growth, and leadership development.

“To drive retention and performance in an increasingly complex environment, HR leaders must bolster investments in areas such as transparent and flexible career paths, internal mobility opportunities, [and] agile upskilling. To effectively close skill gaps, facilitate growth and enhance the employee experience, talent management technology investments should target internal marketplaces, AI-enabled skills management tools, succession planning technology and more,” Nieberg said.