Legacy federal government HR systems: A billion dollar problem, says Workday survey

There’s no doubt that the US federal government operations contain inefficiencies. But a new report from MeriTalk and Workday reveals just how bad things are from an HR perspective: Outdated systems are wasting employees’ time and costing taxpayers billions.

In fact, 89% of federal HR leaders say legacy tools hinder their agency’s mission, while nearly half (48%) of HR teams’ time is spent fixing errors, reconciling data, or navigating clunky manual processes. Staggeringly, the report notes that just halving that lost time could recover up to $1 billion a year.

“Outdated HR systems are failing federal agencies, forcing HR leaders to work around system limitations rather than advancing workforce strategy,” the report notes. “Legacy systems are stalling progress when the government needs to be more agile than ever.”

Lacking roadmaps, detailed data for informed HR decisions

MeriTalk and Workday surveyed 100 senior HR leaders across federal civilian and Department of Defense (DoD) agencies for Future-Ready Feds: Modernizing Human Capital Management to Empower Government Service.

The report is presented against the backdrop of a Trump administration Executive Order to reform the federal hiring process and restore “merit” to government service. Notably, this calls for modernized human capital management (HCM) systems, and comes as the administration’s Department of Government Efficiency (DOGE) continues its aggressive push to streamline operations across the board.

Federal HR leaders are well aware of the benefits of HCM platforms and practices: 96% of survey respondents said they are required for effective public service. However, just 48% of agencies prioritize HR modernization, according to participants, and many lack modernization plans; in fact, 83% have no roadmap.

“Despite clear needs, HR modernization lacks urgency,” the report notes.

Typically, agencies lack integrated systems, with more than a quarter of HR teams encountering downtime, 42% receiving delayed or inaccurate reports, and 47% having data updates held up by manual processes. Poor interoperability and limited analytics are among top frustrations expressed by HR leaders.

Across agencies, access to basic personnel data and metrics is hampered: For example, only 42% of respondents said it was easy to track down total headcount numbers, while just 37% can quickly pull out performance and skills data, and 40% can readily find turnover and time-to-hire metrics.

Information gets even more opaque when looking at the external workforce: More than half of leaders surveyed said they had no clear visibility into contractor roles and redundancies. HR managers also struggle to get detailed information when it comes to employee engagement, remote versus in-office productivity, hiring velocity, project experience, and training completion.

“Workforce data is the foundation of strategic HR planning, yet many agencies are making critical hiring, reskilling, and management decisions in the dark,” the report points out.

On the flip side, contractors aren’t terribly enthusiastic when working with the federal government, either: A separate report from Deltek found that overall sentiment among government contractors has dropped to its lowest level in six years, with the Government Contractor Confidence Index (GCCI) falling to 138.0, a 4.8-point decline from 2024.

Deltek points out that this is not catastrophic, but it reflects growing unease over sweeping spending cuts, changing agency missions, and fewer face-to-face engagements with decision-makers.

Improving HR workflows with automation

HR leaders surveyed by MeriTalk and Workday said modernization could be accelerated through:

• Improved vendor tools;
• Greater interagency collaboration and shared services models;
• Streamlined compliance and regulatory requirements;
• Improved workforce training and change management support;
• Stronger leadership buy-in.

Respondents estimated that 61% of their team’s processes could be at least partially automated. Top opportunities they cited for automation included resume screening and interview scheduling, skills assessments and career planning, employee/applicant engagement, security/fraud detection, and compliance reporting.

Many federal HR leaders also seem to be amenable to shared services, with 37% saying federal HR processes are a good fit for that kind of model, and 98% reporting they are open to it if implementation is well-planned.

Shared capabilities could include, for instance, AI-driven skills-matching systems, standardized payroll/benefits, centralized recruiting/hiring platforms, unified employee records, and shared analytics dashboards.

Moving federal HR departments into the digital age

To capitalize on the report’s findings, Workday and MeriTalk advise federal agencies to make HR modernization a strategic priority and treat HR systems as mission-critical IT investments.

“HR systems are no longer just administrative tools — they are essential for ensuring an agile, high-performing workforce,” the report emphasizes. Leadership should integrate HR modernization into their broader digital transformation plans and support it with policy and investments, Workday and MeriTalk advise.

It is important to automate and digitize HR processes, moving away from paper and spreadsheets to cloud-based platforms and AI tools, according to the report. For instance, automated talent acquisition, onboarding, and workforce-management modules can allow HR staff to focus on planning rather than data entry.

Advanced analytics and shared data environments are also important drivers of HR modernization. Analytics can provide real-time workforce insights through dashboards that aggregate personnel, skills, and performance data so that leaders can track trends and predict skills gaps. Agencies should also consider shared services for standardization and visibility, according to Workday and MeriTalk.

Finally, agencies must incorporate security and compliance into their HR systems, the report emphasizes. This should include the adoption of zero-trust principles such as multi-factor authentication (MFA), least-privilege access, and AI-powered threat detection. Further, automated compliance tools can help streamline regulatory reporting.

“HR systems house sensitive employee data, making them prime targets for cyber threats,” the report notes. “Agencies must ensure that cybersecurity is at the core of every HR IT investment to protect workforce data and maintain trust.”