HR Tech 2020 - Murky signs of what’s next in HR, with a hint of clarity
- The annual HR Tech conference is a place to get sorted on the newest innovations and thinking in this crowded, evolving space. This year's virtual version made the desired clarity harder to divine, but here are some themes and vendors to note
For many years, I have penned an annual piece that highlights the vendors, themes and more after each HR Technology Conference. This year's recap has to be different as the event was virtual. That meant it was harder (or impossible) to have those great, spontaneous meetings with vendors, speakers, customers, buyers and other industry analysts at the same scale or intensity of prior years.
That's a shame as the expo hall alone often contained almost 200 vendors. Here was a chance to get acquainted with scores of all-new vendors, solving a mix of old and new business problems. And, no show I attend had the swag potential of this event. If you couldn't score a suitcase full of tote bags, pens, t-shirts, etc., you were spending too much time elsewhere in Vegas.
What this virtual event world creates is a less certain environment. There is a lot of guessing and wishing occurring about when ‘normalcy' will return to work and what that will look like. There are also a lot of questions like:
- Are HR vendors building the right applications now?
- Are HR vendors overly focused on short-term applications (e.g., employee safety and tracking apps) at the expense of building out long-term value creating apps?
- What will work look like in the future? Most everyone will concede that it will be different but specifics are quite scarce with little factual underpinning.
- What are the HR technologies that customers are actually buying now? Suites? Analytics? Cloud apps?
Old HR issues like engagement, talent wars, diversity and inclusion (D&I), correct use of AI, etc. are all still there albeit a bit more sub rosa due to the coronavirus. Nonetheless, these old issues still require attention despite current events.
What we can divine through this are the following observations:
Cautious AI for now
One item came up in many of the vendor briefing calls I did last week: the Washington Post piece on HireVue's use of facial recognition technology in the recruiting/hiring process. This story is top of mind for many vendors as it is making HR vendors, especially those involved in recruiting applications, think carefully as to how they will use advanced technologies.
What I heard was that many firms will use machine learning technologies to schedule interviews and automate processes. Some will use advanced technologies to score/rank jobseekers' applications or resumes. But, no one I spoke with will touch the use of facial recognition to assess a person's truthfulness, intelligence or other characteristics. Why? The current state of the technology does not ‘read' the faces of persons of color well and certain cultural differences may not be within the experience set of the technology either.
A more cautious approach to the use of AI/ML appears to be the order of the day.
Time to stand back and really look at what's happening to work
Management guru Tom Peters and colleague Ray Wang of Constellation Research had an interesting exchange at Constellation's Cosmic Experience last week. Tom argued that the curriculum of many MBA programs was designed back when businesses and economies were quite different. We've seen economies shift from agrarian to manufacturing. But shifts to digital and service-based economies are not core to the course work. Today, much of the work force is involved in projects and other people-based activities. Yet, almost none of the MBA course work is designed to help managers and executives get the most from people or to run projects well.
One of the HR vendors I spoke with last week, Moovila, brought this point home with a graphic showing that only 1 in 24 managers knows how to manage a project. I concur. I was once called in to evaluate the progress of a large custom application development project because the project leader had claimed it was 85% complete. The problem was that it had remained 85% complete for three years and no amount of funds going into the effort moved that assessment. This project was a textbook failure. They did steps out of sequence, had no idea what the critical path was, etc.
I've been a quality assurance partner on projects around the world. I've learned that all the project management certifications in the world won't necessarily make a project successful. Having a great project leader is key and that assessment is something that is often intangible but I can sense it when I encounter one. My point is that there are project tracking and planning activities that must be present for a project to have a chance at being successful. But there are also soft-side leadership skills that go miles to pushing the effort and the team over the finish line. I learned the planning skills in courses but the people-side issues came from experience and great mentors.
I still remember my ONE management science class when I got my MBA. It was taught by a Harvard educated professor who never had a real job prior to teaching. All of us working stiffs in the back of the classroom found his idealism and naivete disturbing to say the least.
If your management training is lacking, please find a copy of Strategy Safari by Mintzberg. It will get you current on what passed for management theory (I won't call it a science) then and where it's headed. Peter Drucker's The Effective Executive is a fast read by a down-to-earth and practical executive. It's harder to find a copy of this book but it's worth it.
Bottom line: The nature of work as well as kinds of work are fluid and quite different from even a few years ago. Accelerated change is being driven by pandemic-induced digital and business transformations. If your executive ranks aren't current technically and managerially, re-skill (or replace) them.
Fix the brand damage!
In June this year, I foretold the damage firms were doing to their employment and hiring brands. I said then:
Fix the brand damage — In the rush to cut costs, halt the spread of the disease and to conserve cash/capital, employers made many decisions involving hiring, employment levels, office closures, salary/wage cuts, etc. Those decisions, while understandable, will create problems down the road.
Specifically, employers can expect a drop in their Glassdoor and other employment/career site reviews. Individuals who had their job offers rescinded or their career cut short are not going to like what happened to them and will likely vent about it on employment and social media sites. Expect this. Now, decide what you're going to do about it.
Each tactic your firm employed to cut costs and headcount has its own unique challenges. When employees are let-go/laid off, did your firm consider how it would deliver the message and how that message would be received? Did your firm consider how long-lived the event would exist in media, web pages and more?
Oddly, I heard no acknowledgement of this issue or of solutions to this issue being offered up from show participants. Maybe it got covered somewhere and I missed it. But the silence on this matter is problematic.
I did hear lots of recruiting solution providers wanting to help employers reload the top of their recruiting funnel/pipeline. While I get that this is an important activity going forward, doing so without attending to the brand damage is wasteful as the best talent will not engage. It will seek a better-quality employer.
Programmatic recruiting job board spending
I did an HR Tech briefing call with PandoLogic last week. They play in the programmatic recruiting job board spend space. I thought these stats on PandoLogic's website tell their story well:
Our talent acquisition solutions connect publishers, employers, job board operators and job seekers across a shared talent network using the most advanced programmatic platform available. Since 2007, over 125,000 employers and more than 700 digital publishers have benefited from PandoLogic's programmatic solutions resulting in over 5.4 billion programmatic job campaigns based on more than 199 billion historical job performance data points.
This is another HR space that's undergone a lot of M&A activity. This time last year, I wrote briefly about a competitor of Pandologic: Appcast.io
Appcast is what smart recruiters can use to better manage their spending re: job ads. If recruiters aren't careful, they'll funnel too much spend to the wrong or low value job boards or destination websites or overpay for the best sites.
85% of Appcast's shares were recently sold to a German firm StepStone/Springer.
As the economy recovers, hiring will undoubtedly pick up. Since recruiters don't have unlimited funds to spend on job postings, employers will want to minimize the waste in job listing spend & avoid missed opportunities to acquire great talent.
New urgency in payroll
HRMS vendor Ceridian has been promoting the launch of their new daily payroll product, Dayforce Wallet. It's now available - see image below.
As a result of this week's HR Tech, I also got to meet with DailyPay, a provider of a similar solution but with some other capabilities, too. I challenged DailyPay's team as to the relevancy of this kind of solution. I used to think this kind of a product was for the lowest earning employees to help them avoid predatory payday lenders. DailyPay executives pointed out that these solutions jumped in popularity recently as the number of people needing fast access to their earnings increased during the pandemic. This was due to many households seeing a reduction in income because of:
- One or more workers experiencing reduced hours, pay or benefits
- A family member having lost a job
- A family member was still waiting on unemployment benefits to begin
- Businesses were closed and employees without direct deposit could not pick up physical checks
All of these situations added financial pressure on families. A daily pay capability is one of several financial wellness capabilities that employees could benefit from. Any solution that helps people improve their credit, improve their quality of life, reduce stress, etc. should also be good in driving up engagement and reducing turnover.
The best immediate pay solutions should offer:
- Many different payment methods not just one
- Communication support
- Payroll support
- A solution that adds zero workload onto Payroll/HR department
- Support more than pay (e.g., support for a savings program, investments, etc.)
It appears now is the time to have a daily pay employee offering after all.
The Unified Theory of Recruiting
Recruiting is a multi-step process that has many players and technologies. The operative word is many. There are vendors who sell access to passive jobseekers and huge datasets. Some solutions evaluate candidates for technical and cultural fit with your firm. Other firms automate scheduling of interviews while other solutions help capture resumes/applications. And the list goes on and on.
Recruiting is often portrayed as a funnel process where raw candidates/jobseekers enter the top of the funnel with more and more individuals culled as the process narrows the field to the chosen candidate(s). In the end, one or more people are processed as employees into the HRMS and leave the recruiting solutions.
Recruiting talent is going to be rough in the near-term. In-person interviews will have to be done virtually for many roles. Some critical positions are in great demand (e.g., nursing staff) while the supply is negligible. Ideally, companies would like several great recruiting solutions to meld into one recruiting suite (e.g., the passive jobseeker data within Entelo, connected to a programmatic Job Board apps, with advanced recruiting process technology and assessments like HireVue or Modern Hire, etc.). Ahh, that would be great!
Some of that suite development is happening via inorganic means. And, a lot of that M&A activity in the last year or so has been in the talent acquisition/recruiting space. This isn't too surprising as there have been a ton of startups that have popped up in recent years with innovations in this area.
What's interesting in these firms has been their use of advanced technologies like machine learning, bots, video and big data. These solutions bear little resemblance to the transaction processing focus of traditional HRMS solutions.
Each of these newer firms often filled a niche and their solutions were great at solving one point in a larger problem set. Yes, pioneering firms did buy a lot of these solutions but software buyers often prefer the convenience of an integrated suite over a collection of best of breed applications. It's that buyer preference and the economies that come from a vendor selling lots of apps at once (instead of one at a time) that have driven the M&A activity of late.
Just some of the recent deals include:
- Montage and Shaker merged to become Modern Hire
- HireVue and AllyO recently joined
I also had time last week to chat with the folks at OutMatch. OutMatch represents the M&A phenomena mentioned above as it recently acquired FurstPerson and LaunchPad. According to OutMatch, FurstPerson, a pre-hire simulation assessment vendor, offers "hiring managers and job candidates the critical information needed to make the smartest hiring decisions". These will complement "OutMatch'svideo interview offerings, as well as the broader suite ofOutMatchassessments, which measures communication skills, motivation, and other key traits." LaunchPad provides automation and AI solutions. Altogether, the three solutions in combination "ties candidate screening, assessments, video interviewing, and artificial intelligence into a single integrated, automated experience — driving speed, efficiency and engagement, while removing bias and improving hiring decisions for both the candidate and recruiter."
OutMatch's goal isn't just to acquire lots of products. They told me it is to create a more modern recruiting process that automates assessments, facilitates video interviews and allows candidates to self-schedule interviews. Most of this is done without consuming a recruiter's time. It's a productivity play not just a technology deal. Their executives also stated that when it comes to advanced technologies (e.g., AI/ML), they will use textual and verbal data and are currently avoiding the use of facial recognition technologies. As designed, they are solving decision making and process problems at the same time.
More M&A activity in the HR space is likely and buyers should consider adding appropriate Material Change of Control language into any new contracts with vendors.
Finally, let's discuss Socrates.ai. Here's a vendor that is going in a different direction than those firms doing lots of acquisitions. Specifically, Socrates recognizes that many employers have 30 or so HR apps and employees will struggle to log-in and navigate each of them. (Note: In my experience, I've seen HR environments with over 100 integrations.)
Socrates is more than a single sign-on (SSO) solution. It takes an employee's question (e.g., how do add a new child to my insurance benefit?), determine what the appropriate system(s), data, etc. are needed to answer it and automate the daylights out of the process. A consistent UX is part of the solution.
But they're doing more. They are NOT, thankfully, another service ticket solution that prioritizes queries where maybe someone might get back to you with a fix or answer someday. Socrates is using machine learning to understand who is asking the question, which systems apply to that person (e.g., your home country may suggest a specific set of benefits and systems), and how urgent is this while also presenting an answer or completing a transaction for the employee. Socrates can also help other constituents (e.g., jobseekers, contractors, etc.).
The example they used made me think. What would a service ticket system do if a person asked "Can I bring a gun to work?" Even if the system had an answer available, would it be timely?
Socrates makes us wonder if a solution that integrates all the country-specific rules, systems, etc. is better than waiting on a vendor to acquire/build all of this into a massive suite? Maybe value now is better than value deferred….
We're in an interesting time where imperfect and incomplete knowledge is the nature of the application software space. It feels like driving at night while wearing dark sunglasses. You might spot an emerging trend but you'll possibly see it too late to react well. Readers should carefully assess any strategic moves and, by all means, collect as much data, pre-decision, to inform your actions.
The next move you make (or vendors make) will depend on whether you want/need:
- Short-term pandemic solutions (e.g., safe office management)
- Long-term post-pandemic solutions
- Solutions to assist in digital transformation of HR processes (e.g., automated workflows)
- Solutions that align with your firm's business transformation (e.g., support for new businesses and business models)
- Recruiting and employment brand repair
The next year will be defined in the kinds of choices you make, the data you used to make these choices, and the value they bring to the firm.