HR technology is showing a massive boost, spanning across everything in recruitment from hiring to performance reviews. Various studies estimate the value of this market at $400 billion. In the past two years, venture capital and private equity investors have invested almost close to $2 billion into this market, with more than $900 million of that in the first seven months of 2017. With so many new entrants emerging to attack individual segments, the incumbents will have to defend their positions in an increasingly competitive space. And so, already well underway, an era of inevitable HR tech consolidation will soon be in full force.
Evolution of HR Tech
The entry of ‘technology’ in HR started with the mainframes, which were used for administrative tasks like record keeping and payroll management. These systems were not only difficult to use and manage but also occupied a lot of physical space. Those were the days when such systems filled up rooms and managing records was a herculean task. Then came the time of ERPs (like SAPs and Oracles of the world), where the problem of physical space was resolved but it was still difficult to implement and manage systems. Change management and customization remained the biggest challenges and success ratio was very low – as hardly 1 in 3 implementations saw the light of the day. This was followed by the phase of point solutions which were on-premise software on top of which internal teams build HR systems. Organizations used many of these solutions depending on their digital maturity and extent of budgets available.
This phase continued until a few years ago when the ‘cloud’ revolution touched HR. This is when HR understood the importance of ‘user’ or its employees in the ecosystem and important features came into existence like scalability, usability, and interoperability (which were sort of antidotes to the pain of legacy systems). And the jump to the next innovative technology (from on-premise to cloud, reporting to analytics, transactions to AI and from people managing data to robots/bots) became much easier and faster.
The industry had not seen the HR tech revolution in the previous 50 years. Today, organizations are again in different phases of cloud and mobile adoption. However, the belief of HR community in cloud and mobile is increasing day-by-day. According to a recent study by Sierra Cedar, there has been an increase of about 21% in mobile adoption globally and a forecasted increase at almost the same rate in the coming year. It is going to be an interesting story as HR technology moves from cloud to mobile to artificial intelligence.
HR Tech trends for 2019
Following are the new trends of HR that are set to change the face of recruitment in 2019.
The technology of Robotic process automation (RPA)
The robotic process automation (or RPA technology) is looking to compress time-consuming processes like employee onboarding, so that new employees can spend more time on the job function than with the HR department. While Artificial Intelligence has managed to automate the Talent Acquisition process, Robotic Process Automation aims to transform the manual processes involving the HR department.
RPA technology is targeting at the 93 percent of HR executives time repetitive tasks like creating a new employee record in the employee database, gathering employee documentation and adding a new employee in the payroll system.
Analytical analysis for the Human Resource
HR Tech aims to improve company productivity by studying data about existing and potential employees. Analytics models help company unearth important metrics related to employee performance. Using analytics companies can predict employee retention, identify employee job changes that are likely to result in high-performance outcomes and recommend the necessary training for employees to close the skill gaps. Data has attained marked significance in the last few years. HR Tech will completely transform the HR role into a data-driven function. This applies to everything right from hiring candidates by leveraging talent acquisition analytics to giving promotions and from employee management to employee performance.
However, the validity of the predictions from the analytic models is completely dependent on the data that it is fed with. Moreover, organizations will require resource people to understand these models and apply them effectively.
Organizing and Optimizing the Workforce
Companies are putting in a lot of effort to properly plan their workforce as constituting skills which can help them to quickly respond to business needs. Also forecasting the requirements for future requirements is playing an essential role in increasing the utilization of employees.
Further, there is an expected increase in bench utilization as most of the resources on the bench will be matched to existing demands internally, thereby reducing the dependency on external recruitment.
Companies are increasingly realizing the value of a people-first approach to business. This has resulted in not just investment in good talent, but active support for both the personal and professional development of their employees. Companies are using HR Tech to provide clarity to employees on how their contributions impact the business. This results in memorable employee experiences that drive recruiting and retention.
However, the most important change that is expected in this domain is that of performance ratings. The age-old process is expected to be completely replaced by a dynamic goal setting, continuous performance check-ins, and crowdsourced feedback. Using HR Tech, employers will be more active in pushing accountability down to the employees, valuing conversation over documentation, measuring iterative progress.
This level of employee engagement along with data analytics will help organizations access gaps to future-proof the workforce. This transition into a digital workforce is expected to aid in solving the retention problem.
Learning and development of the workforce
While learning and development are conventionally concerned with skills required on the job, several new initiatives offer it externally to candidates that identify themselves with interest in a career path, thereby helping companies identify and assess which candidates are committed to the path. With a gamified learning and development system, companies are trying to incentivize the online training experience for even the most jaded learner using badges, points, leaderboards and community involvement.
In the process of creating a digital workforce, learning and development will receive a huge boost. Employee training will be made digital and technology will change the way employees immerse themselves with learning and development using AI and AR/VR solutions. Also moving away from primary core competencies, companies are now also developing their employees’ soft skills, such as emotional intelligence, collaboration, and negotiation.
Technology will continue to have a huge impact on payroll management. Basic calculations and processes like tax deduction and benefits will be completely automated, leaving no room for error. There will be more focus on deeper integration with the Human capital management (HCM) software offering two-way communication between the systems. When managed correctly, HCM integration will enable organizations to achieve a global perspective on the workforce with the security of local compliance.
Also, the transition to cloud-based services makes payroll management for organizations spread across the globe, making it universal managed while being processed locally.
Better Recruiting Experiences
Talent acquisition has seen a lot of disruption over the last few decades. However, with technology, it is now being perceived as an experience. This year will see candidate participating in a fully immersive experience that is a blend of current onboarding practices and virtual, illusory experiences.