HR technology is undergoing one of the most disruptive periods it has seen in a decade. Investors, seeking the next big thing in breakthrough technology, plunged more than $2 billion into HR tech systems and platforms in 2016, according to CB Insights, a venture capital database. While investment to date is on track for a slight decline from last year, deal activity in HR tech has grown consistently in the last 5 years and at the current rate is expected to increase more than 15 percent over 2015. This amazing investment growth—much of it spent on integrated human resource management system (HRMS) platforms for midsize companies—illustrates the industry’s volatility.
That instability is being driven by the shift from cloud to mobile; the explosion in analytics and artificial intelligence; and the emergence of video, social recruiting and wearables in the workplace. Everything is changing, and quickly—including the types of technology HR professionals use, the experiences those systems deliver and the underlying software designs—making many of the traditional HR systems purchased only a decade ago seem out of date.
With these developments and more reshaping HR, business leaders would be wise to understand the following nine technology trends that will shape the year ahead and beyond.
1. The Performance Management Revolution
For almost five years, companies have been throwing away ratings, adding check-ins, developing agile goal systems, and making performance management much more data-driven and team-oriented. But there have been almost no tools in the market to automate this—until now. Today, there are at least a dozen companies selling cloud-based, team-centric performance management applications that connect to HR management or enterprise resource planning systems, many of which:
- Manage performance by team, rather than only by hierarchy.
- Allow for dynamic team management—that is, the ability to create and change teams quickly.
- Make goals transparent and easy to change and track.
- Feature check-in mechanisms.
- Have built-in pulse surveys, end-of-period surveys, and ad hoc feedback presented via tags and word clouds.
- Incorporate development plans that are prepopulated, simple to build and based on data derived from employees in similar roles.
- Feature online assessments, help conducting personality assessments and resources to guide managers through difficult conversations.
- Can be used with activity streams and other gamification features that make them engaging and browsable.
- Are integrated with employee directories and other HR tools to become part of everyday work.
2. An Explosion in Real-Time Engagement Evaluation
Customer and marketing teams have been developing innovative ways to measure customer input for decades. Today, companies are starting to do the same with their employees by making use of always-on, pulse-based feedback systems. Some employers now survey workers quarterly, monthly or even weekly, and many modern systems enable event-based feedback that can be gathered whenever there is a major organizational change.
Not only are these tools becoming critical infrastructure for businesses trying to understand their employees’ needs, they are being integrated with performance management systems, succession planning initiatives, change management strategies and just about every other people practice.
Indeed, feedback-based tools and systems will become a major theme in HR platforms in the coming years.
3. The Rise of People Analytics
I can’t talk about disruptive technology without discussing the enormous strides that have taken place in the field of people analytics. Over the years that I’ve researched this market, organizations have moved from back-office HR data warehouses to advanced analytics and reporting dashboards to predictive models and more.
As analytics models become more prevalent, companies are slowly moving away from building their own solutions to buying them from vendors. Oracle, SAP SuccessFactors, Workday, ADP, Cornerstone, Visier and Ultimate Software all have employee retention predictors (among many other modeling features) embedded in their software. Workday’s system can identify employee job changes that are likely to result in high-performance outcomes (as well as what job moves not to make). The products from Oracle and SuccessFactors can recommend which training employees should have based on their roles and activities at work, and Workday will soon have this functionality as well. Cornerstone’s system can predict which workers are likely to become noncompliant or lapse in their mandatory training and certification. As these embedded models continue to mature, HR departments will need to hire teams that understand them and can apply them effectively.
New approaches for applying feedback and models of performance management have also emerged. One vendor, Starling Trust, offers a system that can analyze patterns of e-mail and other communication to build "trust networks"; it can actually predict where a security leak or fraud is likely to occur. Another company, Humanyze, sells smart badges that monitor workers’ locations and voice tenor to gauge when and where they experience the most stress. This data can be used to help companies reorganize facilities, change meeting times and formats, and drive engagement.
A third recently-acquired vendor also provides tools that analyze e-mails to assess how people’s communications and time management practices differ. The platform can determine, for example, that high-performing salespeople spend more time than their lower-performing peers with certain groups and customers—and that data can be used to nudge others to change their behavior.
It’s time to double down on your investment in analytics. My friends at big companies tell me that it takes a few years—and often a big budget—to clean up HR data, bring it into a consolidated environment and hire an analytics team to start doing the work. Organizations that don’t make this investment are likely to be disrupted by competitors that do.
4. Maturation of the Learning Market
While most big companies have legacy learning management systems (Cornerstone, SumTotal, Saba, Oracle and SuccessFactors, for example), there are many new options available. Products are being reinvented by vendors issuing major new releases. New solutions like Workday Learning, Fuse Universal, SAP Jam and other tools focus on scaling video learning to the enterprise.
There is another category of learning products coming that I call "learning experience platforms." They focus on delivering a "learning platform" and not just a "learning management platform." In other words, they are places to go to browse and learn, and not merely to register for courses.
These new platforms bring YouTube-like video experiences to employees and include features for curation, recommended learning and data-driven recommendations. I predict that this new category of software will become huge as every major company realizes it needs these systems as a complement (or, someday, replacement) for its core learning system. Vendors include Degreed, Pathgather, EdCast, Everwise, LinkedIn Learning and others.
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5. A New Landscape for Talent Acquisition
Today’s recruitment and talent acquisition market is enormous—an estimated $240 billion in the United States alone based on research by Bersin by Deloitte. This massive market focuses on tools to help companies:
- Find strong job candidates.
- Market and brand themselves.
- Post and distribute job postings.
- Manage and interact with job boards.
- Conduct prehire skills assessments.
- Perform background screening and psychological testing.
- Interview candidates.
- Manage the entire complex process from end to end via applicant tracking and recruitment management systems.
These tools are highly strategic for many businesses. Fast-growing technology companies, for example, can make or break their business plans based on how quickly they can find the right engineers, marketing professionals and salespeople. Retailers and seasonal manufacturers need to hire hundreds to thousands of people at critical times during the year, so it is key that they be able to find workers as quickly and effectively as possible at scale.
Today, a new breed of platforms, including those from vendors such as SmartRecruiters, Lever, Greenhouse, Gild and others, have started from scratch, building end-to-end recruitment management systems that handle everything, including sourcing, ad management, analytics, online interviewing, interview management, candidate scoring, ongoing candidate relationship management and onboarding. These tools were designed to directly connect to LinkedIn and other job boards, and they can store candidates’ information so that it can be revisited year after year. In addition to managing applicants, they keep track of candidates and even alumni. Further, they focus on building tools that are easy to use for hiring managers and candidates, and not just recruiters and HR.
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6. The Growth of Contingent Workforce Management
Roughly 40 percent of workers in the United States are contingent in some fashion, according to government sources, and many of them look for jobs on special networks. Employers use those same channels to post jobs and find people with specialized skills.
There are two emerging markets that support this new way of working. The first is contingent workforce management systems, such as Fieldglass from SAP, Kronos, Beeline, PeopleFluent, Workday and many others. This sector, which includes software for vendor management, as well as time-tracking and scheduling systems, is highly fragmented with only a few leaders.
The second market is the gig-work networks that match workers to projects. There are dozens of such solutions, including Upwork, Freelancer, Fiverr, Workpop and many others. These platforms have morphed from job networks to recruiting and skills-management sites. Companies such as GitHub (for software engineers), Pixelapse (a collaboration platform for designers) and others are building similar tools for technical domains.
HR professionals interested in exploring new options for finding contingent talent should start by monitoring these affinity sites to build a network of experts for contract work.
7. The Adoption of Team Management Tools
A wide variety of software tools have been designed to facilitate collaboration by making it easier for teams to track their work with features such as real-time messaging, archiving and search. These include Slack, Workboard, Trello, Asana, Wrike, BetterWorks, 15Five, Basecamp, Rallyteam and others. While not all of these applications would be categorized as HR technology tools, most are starting to enter the HR space. (BetterWorks, for instance, is actually an enterprise-class goal management platform.)
The biggest trend taking place in this sector is the steady shift away from solutions used strictly by HR to those that help employees and managers do their jobs. For example, Workday’s new learning management system and talent management system are designed to enable employees to find their next position in their company, and to then locate and view training and video learning appropriate for that job. There is also a shift toward integrating this type of functionality with Outlook or the workflow management tools employees use every day (such as Slack or Asana).
8. A Wealth of Wellness Apps
The next major area of disruption we can expect in 2017 is the accelerated growth of tools to manage wellness, work/life balance, employee activity and—ultimately—personal performance.
Over the next year, applications for wellness, engagement, recognition and performance management could converge as each of these areas collects information on employee feedback, activity and goals and tries to improve the work environment.
Here’s how this data could come together in the next few years: Core platform providers (such as Oracle, SAP SuccessFactors, Workday, Ultimate Software or others) have built-in analytics engines that correlate data from many sources into a global employee database. These new tools inform the company about what people are doing, how happy they are and how well they are taking care of themselves. Soon we could have a truly integrated view of employee wellness and be able to give workers insights, nudges and advice on ways to make work better, improve productivity and advance their careers.
9. Accelerated Automated HR
HR technology is making bold advances into artificial intelligence, natural language processing and robotic process automation. This huge area covers products that can listen to our voices (such as Amazon Echo, Siri and Viv), augment call center work and connect many systems into a new workflow.
The result of these technologies, including software development tools for mobile devices, is that most HR transactions can be redesigned, not as a series of transactions that people need to perform but as "journey maps" that automate:
- The entire employee joining process, not just hiring. That process may include prehire assessment; interviewing; onboarding; new-hire orientation; and the first six months of training, meeting people and learning. One of Deloitte’s clients now gives all candidates an app that helps them apply for a job, accept a position and learn their role, all as part of an integrated experience.
- Processes for employee career and job transitions, including assessment, internal job search, job recommendations, interviews, job offers and acceptances, employee moves, level or compensation changes, and orientation and onboarding.
- Exploration of retirement options, decisions about retirement plans, exit processes, joining the alumni network, and creating an ongoing relationship between the company and the employee after his or her departure.
- Assessment of an employee’s potential, including modules for leadership development, education, networking and coaching, as well as ongoing performance management practices for new supervisors.
Artificial intelligence tools, robotic process automation and self-service transaction integration can facilitate a total redesign of the employee experience, dramatically reducing costs and improving the value of HR.
IBM, for example, now has an artificial intelligence application that helps employees do their own onboarding, finds nearby employees as mentors, and addresses the top 200 questions employees ask in any new position. The entire experience is driven by a natural language bot and has proven successful in driving employee engagement.
Almost every HR tech market will face disruption in 2017. The convergence of mobile computing, video, sensors and artificial intelligence is taking place simultaneously with an intense focus on employee engagement, culture, wellness and productivity. The result will be a new breed of products that will totally reinvent what HR technology—and HR itself—can do.
Josh Bersin is a principal and the founder of Bersin by Deloitte, Deloitte Consulting LLP, a research and advisory consulting firm in enterprise learning and talent management. He is also the keynote speaker at the SHRM India HR Tech '17 Conference & Expo in April.
As used in this article, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.
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