The Top Four HR Investment Trends for 2024

For the third consecutive year, HR leaders cited HR technology as their top investment priority, according to a survey by Gartner, Inc.

A December 2023 Gartner survey of 113 HR leaders revealed the other top three investment areas in 2024 are: learning and development (L&D), total rewards and talent management.

“Now more than ever, CHROs need to focus on driving profitable growth,” said Hanne Nieberg, director of the Gartner HR practice. “This will require them to ruthlessly prioritize investments that support business growth and talent retention while pausing or stopping funding for low ROI activities.” To fund faster technology transformation, while retaining critical talent, HR leaders are focusing on the below investment areas:

HR Technology
Forty-eight percent of respondents said they plan to increase their 2024 HR technology budget. HR leaders often see technology - from automating administrative HR tasks to implementing the newest technology, such as generative AI - as the key to driving better business outcomes, enabling growth and reducing HR costs. But according to the Gartner survey, HR technology solutions were not at all successful (26%) or only slightly successful (32%) in reducing the cost of HR operations.

“The digital transformation of HR will take time as many HR technology implementations are complex multi-year, multi-country projects,” said Nieberg. “The expected ROI is yet to be seen, and the hype around emerging technologies creates inflated expectations that are difficult to meet.” To successfully drive the desired outcomes from HR technology investments, HR leaders must critically assess the potential benefits, carefully evaluate vendor offerings and install measurement mechanisms early. To accelerate user adoption, which is key, HR leaders should consider:

• Installing employee feedback loops
• Dedicating resources to change management
• Aligning HR technology investments with stakeholders’ digital maturity

Learning and Development
Organizations today face a proliferation of skills needs due to continuous business and technology change, especially the wider use of generative AI. Now, employers not only need employees to have more skills, but they are demanding they possess newer skills.

According to an August 2023 Gartner survey of more than 280 global boards of directors, business disruptions due to skills shortages are the top workforce-related risk to organizational growth in 2024 and 2025.

Organizations are addressing this by investing in L&D - the December 2023 Gartner survey found that one-third of HR leaders plan to increase L&D spending in 2024 to develop evolving skills at speed and scale.

To meet heightened skills demands and accelerate learning success, HR leaders must shift investments to focus on 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.

Total Rewards
Issues around pay transparency, forthcoming legislation across the globe and an increasingly fractured employee-employer relationship continue to keep total rewards initiatives in the spotlight. A 4Q23 Gartner survey of more than 18,000 global employees found that employees consistently cite compensation as their No. 1 reason to accept or leave a job. Additionally, persistent workplace and societal disruptions over the last five years have taken a toll on employees’ mental and physical health.

“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 communications to ensure pay equity and to comply with new legal requirements,” said Nieberg. “To improve employee well-being and ensure a productive workforce, HR leaders need to invest in well-being support that goes beyond traditional offerings and is embedded in the daily flow of work.”

Talent Management
Talent management has increased in importance and is the fourth-largest investment area planned for 2024, moving up from the seventh position in 2023. Within talent management, HR leaders plan to invest in three main areas: 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,” said Nieberg. “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.”