It seems HR software is transforming at warp speed. From AI developments to virtual reality, the way organizations conduct operations with HR tech is constantly shifting and evolving. That, in turn, leads to an HR technology landscape that’s saturated with innovation but can be hard to pin down.
How can your company stay current while adequately meeting the demands of an increasingly complex environment?
The thing everyone likes to talk about right now: digital transformation.
The Hackett Group’s 2019 CHRO Agenda report found that 55% of respondents had a digital transformation strategy in place and were executing it. That number was expected to rise to 84% over the next two to three years.
However, digital transformation as a concept can be elusive and insubstantial. You need to approach transformation from a practical level within your organization.
To help you accomplish that, this article will delve into several major tech developments you should keep in mind.
The key areas of impact we’ll explore exist within three interconnected spheres in the HR tech landscape: operations, strategy and people. Each of these broader strokes has its own categories that are undergoing innovation, reinvention and transformation.
- The majority of HR professionals believe technology will play an increasing role in recruiting
- Saving time and removing human bias are the two main benefits AI brings to recruiting, according to talent acquisition professionals
- 8 in 10 companies have difficulty finding skilled talent to fill vacant roles
- 48% of organizations are using on-premise deployment for their HR systems
- 65% of companies expected to invest more in mental health wellbeing in 2018 than in 2017
- 75% of companies are sourcing alternative workers
HR Tech Landscape: Operations
1. Enhanced Recruiting Tools
Difficulty filling roles and high turnover is a duo that has put recruiting squarely in the spotlight for companies. Recruiting is already a time-consuming process that covers a range of activities and includes multiple steps. And there’s more data to sift through than ever.
In answer to these complex demands, recruiting tools are becoming more sophisticated. The 2019 Deloitte Human Capital Trends survey found that the majority of respondents expected technology to become more ingrained in various recruiting tasks, as the graph below shows.
Virtual reality tools offer promise in the recruiting area — more on that in the next section.
Video is another rising tool. Glassdoor data suggests that job postings will receive a 12% boost in views if they contain a video icon. And that translates to a higher application rate.
In a visually-driven environment, videos can have widespread appeal. They also offer recruiting teams more creative freedom to stand out among all the competitors vying for the same job hunter’s attention and skills.
Of course, no exploration of HR recruiting technology would be complete without mentioning AI and chatbots (which we’ll cover in the next section).
AI has arrived. And it will only become more embedded in how companies operate.
It’s easy to see why. AI brings a range of applications that improve the HR function. For example, research suggests a direct correlation between top-performing organizations and investment in AI. That finding came from The Sierra-Cedar 2018–2019 HR Systems Survey White Paper, 21st Annual Edition.
So what are some practical ways companies can leverage AI to make a difference?
LinkedIn conducted a study in 2018 that revealed AI can support recruiting in a variety of areas. And using it was considered most helpful at the beginning of the process:
- Sourcing candidates
- Screening candidates
- Nurturing candidates
The research also showed that AI could save time, help tackle the human bias problem, deliver good candidate matches and save money (see below).
Sounds promising. However, as your company looks at ways to implement AI, it’s important to be aware of pitfalls. AI can help promote diversity and inclusion, but can still be prone to bias, even if unintentionally.
Here are a couple factors to consider:
- Data quality. AI tools are only as useful as the data they process, so it’s important to ensure that the inputs (past resumes, keywords, etc.) aren’t already tainted with bias.
- Job ads. If there’s a bias built into the algorithms that target candidates, it will skew the application results by default.
- Assumptions. Just because technology can improve a process doesn’t mean it will provide the precision needed. It’s dangerous to blindly take action based solely on the system’s analysis.
Miranda Bogen emphasizes the dual duty between vendors and users in a recent Harvard Business Review article. “Vendors building predictive hiring tools and employers using them must think beyond minimum compliance requirements. They must clearly consider whether their algorithms actually produce more equitable hiring outcomes.”
Chatbots, also known as a conversational user interface (CUI), are another popular tool that can help organizations operate more effectively. Though they’re mostly applied to recruiting processes, companies are also using them for internal purposes.
Using chatbots to support hiring tasks is becoming much more common. Equipped with natural language processing (NLP), chatbots can act as the first point of contact for candidates applying for a job.
AllyO is one example of the tools in this growing recruitment market. It can deploy across multiple channels, such as text and job boards, where it engages job hunters in conversation to speed up their application.
The platform can suggest job openings based on the candidate’s desired location and can gather initial requirements such as desired role and age. It can even provide preliminary screening. By asking basic questions, it determines the candidates most qualified for the job.
Another area organizations are employing chatbots is to provide greater service to employees. Chatbots are becoming part of employee self-service portals and other service delivery interfaces. Now, instead of directing questions to HR and waiting hours or days for a reply, employees can turn to a chatbot to get answers instantly.
The result? Happier employees and a more productive HR team that can spend time on tasks instead of fielding questions.
While the internal-facing market isn’t as mature, it has a lot of potential according to the HR Technology Market 2019 report from industry analyst Josh Bersin.
Despite the hype, chatbots can be a two-edged sword.
Some systems, such as Mya, have deeper functionality that allows them to field complex questions or easily transition between topics. However, the field is still evolving. Often, the interface is best suited to handle simple interactions. Your company should look carefully at any application to understand its capabilities and how it can support your goals.
3. Virtual Reality
Virtual reality used to be the sphere of gamers and geeks. But no longer. While it hasn’t received the widespread attention of AI, virtual reality — and it’s close cousin, augmented reality — is one of the more exciting HR tech trends happening.
And no, it doesn’t involve donning a headset that transports you to a beachside tiki bar during the middle of the afternoon lull.
When looking at some practical applications, there are a range of promising possibilities across three main areas:
Virtual reality tools can play a vital role in how your organization handles recruiting in the coming years. For example, employing VR makes sense for hands-on jobs where hiring managers can use VR simulations to test candidates’ skills.
A similar application is useful during the onboarding phase. Companies can use VR to recreate training environments that are more practical or less dangerous than in the real world. Think construction, firefighting and similar jobs.
Educating employees is a third way organizations can use VR. One specific area is using it for sexual harassment training. An environment can be programmed to give employees an understanding of how to deal with situations and take preventative measures. It can also make employees aware of how to react if they see sexual harassment taking place.
Before we move on, it’s important to mention a general benefit of VR: its appeal to tech-native Gen Z workers.
Gen Z is expected to account for nearly a quarter of the workforce by 2020. Organizations can’t afford to overlook this pool of young talent, and VR offers an enticing combination of two things Gen Z values: digital technology and personal interactions.
A 2018 survey by EY found that 90% of Gen Z want a human element at work, either working alongside innovative people or having access to both co-workers and new tech. VR could help companies find this middle ground by incorporating cutting-edge software into the physical office environment.
HR Tech Landscape: Strategy
4. Leveraging Data and Analytics
HR systems store loads of information. Applicant resumes, employee profiles, payroll records, performance reports … there are hundreds of data points to consider.
There’s no slowdown to the volume of data being created. For HR practitioners, there needs to be a twofold approach in how to handle the volume without getting overwhelmed.
First, organizing the data in a way that makes it easily accessible. And second, leveraging programs that can glean insights to inform strategies and help improve every HR touchpoint.
We asked Sabrina Baker, founder of Acacia HR Solutions, for her thoughts on the future of the HR tech market. She believes, “Strategic thinking will become more and more of a crucial skill for HR practitioners. Because of this, technology that continually brings employee and workplace intelligence to HR will be crucial. HR will need real-time, reliable, detailed information about the workforce that allows them to create strategic plans.”
One such technology that’s developed over the past few years is augmented analytics. It helps decision-makers by removing the burden of digging into what the data actually means, which often requires a data analyst or data scientist.
In effect, augmented analytics uses AI and machine learning to do the heavy lifting of cleansing and analyzing the reservoirs of data.
Such programs ungate insights, so to speak, by making them readily accessible without the accompanying complexity and need for expertise. Furthermore, they do it automatically and then deliver insights via what Bersin calls a “conversational interface.”
Instead of doing things the traditional way via data warehouses, reports and analysis, Bersin explains, these tools scan multiple types of data to pinpoint trends, changes and anomalies. Bersin says this allows us to “find data and show us problems we didn’t even know we had.”
5. Learning Market Demand and Development
One of the hot topics in the HR space has been the war for talent. With employment rates dipping to record lows in the U.S., companies are scrambling to find skilled workers. The SHRM Skills Gap 2019 study found that over 80% of respondents are having difficulty finding suitable candidates.
At the same time, businesses are dealing with high turnover rates and the ongoing retirement of the boomer generation.
Combined, these factors are the recipe for a storm of demand in the L&D space, a trend reflected in organizational focuses. The 2019 Workplace Learning Report from LinkedIn shows the favorable attitude toward L&D:
- 82% of talent development teams have executive buy-in for learning initiatives
- 43% of respondents expect budgets to increase in 2019, up from 27% in 2017
- The number of talent developers who say budget constraints is their biggest challenge has dropped from 49% in 2017 to 27% in 2019
If your company is struggling to fill roles, you have three options: invest more in recruiting, turn to the alternative workforce or hire internally.
Deloitte suggests that moving current employees into new roles to cover open positions should be a primary strategy. And according to SHRM, two of the best ways to address the skills gap are to provide onsite training and start or broaden training programs.
Naturally, reskilling current employees or developing the skills of new hires lead to the need for training capabilities.
However, the traditional LMS is no longer sufficient to shoulder the increasing and diverse learning demands occurring. Both Deloitte and Bersin refer to a new paradigm: learning in the flow of work or life.
Bersin goes so far as to say that the entire learning market is going through a period of reinvention. Organizations now have access to a variety of systems that fall into several categories. These include but aren’t limited to learning experience platforms, microlearning platforms and learning content platforms — think LinkedIn Learning and Udemy as examples.
What does this mean for your company? The LMS is by no means obsolete. But as you consider implementing or innovating learning within your company, it’s wise to consider the range of training applications on the market today.
6. An Evolving HR Ecosystem
There are a couple points worth noting within the HR ecosystem at large. Not necessarily because they’re new trends but because they reflect the current direction the industry is headed when it comes to deploying solutions.
The cloud holds a lot of promise and is the way of the future. Data from the Sierra-Cedar 2018–2019 Survey White Paper shows that overall, companies are increasingly shifting to SaaS and cloud environments.
As of the survey in 2018, seven in 10 respondents had at least one application in the cloud. And overall adoption was up 14% over the previous year. At the same time, adoption rates for on-premise software are falling (see below).
However, the move to cloud technology — and more specifically SaaS — has been slow for HR. ISG found that as of 2018, nearly half (48%) of companies were still using an on-premise solution, with only 20% having fully adopted a SaaS model or hybrid.
While the shift may be happening more slowly than anticipated, it hasn’t undermined the need organizations have identified to move their HR platforms into the cloud. ISG’s research also showed rapid SaaS growth, with more than 40% of companies expecting to be using either hybrid or SaaS by 2020.
A Move Toward Point Solutions
A second piece to the HR ecosystem puzzle is the prevalence of applications — despite the promotion all-in-one platforms receive on many vendor websites.
The promise of a single system of record for all HR needs — talent management, payroll, core HR, etc. — has appeal. It’s hard to overlook the benefits of a holistic approach that eliminates data silos and creates a smooth user experience.
But as the Sierra-Cedar 2018–2019 Survey White Paper points out, the hype isn’t always well-founded.
An all-in-one approach isn’t viable for every organization. It’s simply not possible for companies to always get the complete functionality they need from a single HR platform.
The report’s survey data backs this up. The average number of individual applications used across businesses of all sizes was more than seven.
Bersin believes this trend will continue. Talent management — recruiting, L&D and so on — is one area where he sees all-in-one vendors having difficulty competing, due to the deep innovation happening. Platforms that attempt to do everything can’t offer the kind of enhanced functionality, and therefore user experience, that point solutions do.
The fact that companies are still solving specific pain points with specific tools has driven vendors to double down on efforts to support integration. Many are already have or are in the process of opening up their platforms, and that’s something that will continue, Bersin says.
As you evaluate your own HR tech stack, keep your particular requirements in mind. A unified solution may work for you. But that’s not the only path.
As long as you can effectively stitch together different systems, there’s a lot of value to be gained from deploying multiple solutions that perform their individual functions better than an all-in-one platform could.
HR Tech Landscape: People
7. The Employee Experience Platform (EXP)
Perhaps one of the most acute trends shaping the HR software landscape right now is the emergence of a new market. Bersin refers to the underlying technology as the employee experience platform (EXP).
Several factors are driving this development, he says. Among them are:
- Increased need for employee productivity
- The complexity modern workers face
- The number of applications used across HR functions
- Employee expectations of consumer-grade experiences at work
At a basic level, EXP seeks to make work easier and more productive by simplifying the chaos and bringing everything together in one user-friendly system, Bersin says. You can think of EXP as a layer between HR practitioners and the backend system, and the end user — employees. It unifies the employee experience while giving them a single place to go with issues.
In his whitepaper, The Employee Experience Platform Market Has Arrived, Bersin explains that with an EXP implemented, the software should exist behind the scenes, enabling employees rather than limiting them.
EXP also addresses every touchpoint across the employee journey. Everything from role changes to selecting a new benefits package due to life events.
And, unlike previous iterations of employee service tools like the self-service portal, these systems are more automated and intelligent. They bring chatbots, AI, analytics and other technology into the mix to facilitate a more enjoyable employee experience.
For example, AI can provide what are known as nudges — reminders to employees that they’ve been at their desk too long and should go for a quick walk.
Coaching is another dimension EXP offers. IBM’s Watson Career Coach is already doing this. It provides employees with career guidance, helps them seek new opportunities and enables them to pursue continued learning.
Since this is a new market, there are a lot of uncertainties in play. However, Bersin believes EXP has wide-reaching potential and is the wave of the future in HR tech.
If you haven’t already started looking into the employee experience platform and the role it can play in your organization, now is the time to start.
8. A Focus on Wellbeing
Wellness isn’t a new concept. But multiple sources indicate it’s moving to a more prominent place, with the market anticipated to be worth $90.7 billion by 2026.
Furthermore, this expansion isn’t one that merely involves offering employees a monthly spa day or promoting healthy habits. Writing in the 2019 HCM Trends Report from HR Federation, industry expert Trish McFarlane says that total wellbeing is the new focus. This encompasses all aspects of an employee’s life, from mental health to financial planning assistance, she says.
A 2018 survey by Wellable revealed the top wellness areas companies expected to invest in more than the previous year:
- Mental health (65%)
- Telemedicine (64%)
- Financial wellness (61%)
- Mindfulness and meditation (57%)
- Stress management/resilience (52%)
The move toward a comprehensive wellbeing approach isn’t an accident. With skilled employees at such a premium right now, retaining talent is a priority for organizations. Investing in a robust wellness program can help incentivize employees to stick around.
Going even further, wellbeing applies to performance improvement, according to Bersin. As companies hone in on helping employees remain engaged and productive at work, Bersin thinks it’s likely the market will develop in parallel.
9. The Alternative Workforce
Research by both Bersin and Deloitte has highlighted the growing importance of what Deloitte terms the “alternative workforce” — gig workers, freelancers, contract workers and others. For a more thorough examination, you can check out our recent article on trends in talent management.
HR has stepped up to meet the rising tide, according to a Deloitte survey:
- 75% of respondents support sourcing alternative workers
- 66% of respondents say HR participates in training alternative talent
- 51% of respondents indicated their company will tackle recruiting strategies
However, as the graphic below shows, how companies currently handle external workers leaves a lot of room for improvement.
The number of freelancers in the U.S. alone was nearly over 57 million in 2017. That number is projected to top 90 million by 2028.
Hiring contingent workers is a more viable option than ever before and can improve performance in many cases, according to Deloitte. But in order to be successful, your company needs to have a strategy and process in place.
- How will freelancers fit into the overall puzzle of your workforce?
- What processes will you put in place for onboarding, training and so forth?
- How will you incorporate diversity and inclusion?
The tools and systems you adopt will go a long way in facilitating best-in-class practices. And that will enable your organization to better target people with the right skills at the right time who can fill critical gaps and drive results.
Wrapping It Up
We’ve covered a lot of ground. From advances in recruiting to the onset of a new market, the HR technology landscape is undergoing significant change and transformation.
The evolution of HR is impacting how companies operate, informing the strategies they use, affecting whom they work with, bringing a holistic view to wellness and supporting a more engaged, productive workforce.
Change will keep coming. The speed at which your organization can keep pace will play a key role in defining your place in the market.
If you need help navigating the ever-evolving world of HR software, be sure to check out our free analyst comparison report. You can also use our proprietary selection management platform to find the right HR system based on customized requirements.
What are the top trends you see affecting the HR tech landscape? Did we miss anything? Share your insights and thoughts in the comments!
Contributing Thought Leaders
Sabrina Baker, SHRM-CP, PHR is the founder of Acacia HR Solutions, an HR outsourcing firm she started in 2011 after being laid off while on maternity leave. She uses her expertise and experience, including seven years as Director of Human Resources, to help startups and small businesses streamline HR processes and create a legally compliant HR infrastructure. Baker also speaks and writes on recruiting strategies, training and development, and leadership & communication.