The 2019 Gartner HR Budget and Staffing Survey shows that most HR leaders plan to increase the budget for the overall function and its subfunctions in 2020 — indicating that HR leaders believe their organization values the HR function and will continue to invest in it.
If economic conditions are uncertain, HR leaders say they will try to protect three subfunctional budgets in particular — HR technology, HR analytics, and learning and development (L&D). This reflects increased interest in technology and analytics across HR, the enduring importance of skills development and a long-term view of the value of such investments.
“In the past, these three areas have been early targets for cost-cutting, but investing in all these areas can have a long-term impact on an organization’s performance,” says Amanda Joseph-Little, Director, Team Manager, Gartner. “These choices indicate that many HR leaders are now looking to optimize costs in a more future-focused way, rather than short-term cost-cutting.”
Increased interest in HR tech and analytics
Sixty-five percent of survey respondents overall said they expect their HR budgets to increase in 2020, while only 17% expect a decrease and 19% expect no change. The survey received responses from 373 HR leaders of director level and above globally.
Some of the subfunctions with the lowest current budget spend in 2019 — HR technology, HR (talent) analytics, and diversity and inclusion — are the budgets that HR leaders most anticipate increasing. This isn’t surprising, as those subfunctions are areas of increasing importance. HR technology, for example, continues to be a target for investment as organizations try to scale HR service delivery and improve the employee experience.
Also, it may be easier for HR leaders to justify the growth of these budgets, given that current spend is relatively low in these areas.
Economy may affect L&D and recruiting budgets
There is a degree of uncertainty about L&D budgets, with 16% of respondents expecting a decline in this subfunction’s budget — although 58% still expect an increase and 27% expect no change. However, this may reflect the prevailing economic uncertainty. L&D budgets tend to be relatively large and mature, so it’s not unusual for L&D spend to be reduced or reallocated during an economic downturn.
The recruiting budget outlook is similar, with 59% expecting an increase and 24% no change, but 16% a decline — reflecting mixed hiring needs. In a downturn, hiring declines and so the number of recruiters needed declines. However, fully resourced HR functions — and healthy recruiting and L&D budgets — are critical to competing for external talent and preventing skills and talent shortages across the organization and within its leadership.
Learn more: Setting L&D Leaders Up for Success
“These findings are useful insights for HR leaders looking to benchmark their 2020 budgets against peers and trying to justify an increase in budgets for their function/subfunction,” says Joseph-Little.