Episode Transcript
Speaker 1 00:00:08 Hey, everyone. I wanna start this podcast with one question. Has the HR tech market gone crazy? Well, maybe let me give you some insights into this and give you a little sneak preview of some of the things I'm gonna be talking about at the HR technology conference in two weeks. So the first thing you have to understand is the HR tech market is very big, very stable and almost recession proof. It doesn't really matter what happens in the economy. We have to pay people. We have to hire people. We have to train people. We have to do performance appraisals. We have to do succession management. We have to give people benefits. We have to do time tracking. These things never go away. So HR tech vendors that successfully carve out a niche in the market can grow for many, many years. A good example of this to me is ADP.
Speaker 1 00:00:58 ADP stock just hit its all time high and ADP in very similar mode to other payroll companies has outperformed the S and P 500 by almost three to four times over the last decade. And I think if you go back further in time, it outperformed even further while paying dividend during that entire process. Now I'm not saying ADP is the best company in the world. It happens to be a very, very well run company with some very smart people, but it shows you that if you succeed in the HR tech market and you hang in there during ups and downs and competitive battles with other vendors, you can do very, very well. Number two, on the other hand, it's not gonna be as easy now as it was in the past. If you go back to 2008, 2009, we have lived in a near zero interest rate near zero inflationary environment for almost 14 years.
Speaker 1 00:01:54 It's been great. I don't know if you guys appreciated it, but I hope you did. But those days are over. The fed is not going to let the economy grow like this anymore. We have run outta workers. Inflation is at a 30 to 40 year high and interest rates are going to go up. There's going to be other places to put your money besides speculative investments in software. And so the venture capital community is pulling back. Even companies like SoftBank that threw around hundred million or $200 million checks all over the HR tech market are now looking at their portfolio and saying, wow, we haven't even kept up with the S and P either because all of our investments tanked. And that unfortunately is the state of non-publicly traded HR tech companies. I know many of you work for companies that were looking to go public or perhaps get acquired.
Speaker 1 00:02:44 You're gonna have to wait a little bit longer. And my guess is the stock market as a whole has probably another nine months to a year of floundering around before we go back to a growth cycle. Again, what that means to you as a corporate buyer or an HR tech architect is a lot of these smaller vendors are likely to be acquired. And that doesn't mean they're gonna go away, but there's a lot of acquisitions going on. Cornerstone. I'm gonna show you the data on cornerstone has acquired almost a dozen companies in the last two or three years. Biometrics was acquired. Recently. Lever was just acquired. I might could go through all the lists. A lot of the HR tech companies that seemed like darlings during the growth cycle of the economy are now looking like they're having a hard time coming up with an exit.
Speaker 1 00:03:29 And that of course means that there will be fewer going forward, which takes me to the third point. If you look at the number of employee applications that companies use, it has gotten out of control. I like to use the kitchen drawer analogy. When I talk about HR tech, if you've ever opened your kitchen drawer and looked around in there, there's all sorts of stuff that you're not sure how it got there and you don't even use it anymore, but it's still there and it's cluttering everything up. And unfortunately that's the state of employee apps, according to Okta's new business apps report that just came out about a last month. The average large company has increased the number of employee apps by almost 20% in the last year. That's a lot of systems tools, platforms that you have to deal with. I don't think that's easy for companies and I have a feeling that's gonna go down.
Speaker 1 00:04:19 There's gonna be much more consolidation in the vendor community. And also for you as a customer, you're not gonna wanna buy a whole bunch of little things. You're gonna wanna buy big platforms that integrate all these things together. So that's a little bit about the market. Now, the next thing I wanna talk about is sort of the space what's going on and what are the hot areas? Number one is the architecture for many, many years, I come from sort of a tech background. I spent a lot of time at IBM and then at Sybase. And so I worked on backend architectures during early stage of my career. And a lot of the HR tech innovations were really done at the backend, the creation of PeopleSoft, the creation of integrated talent management, the learning management systems market, the applicant tracking systems market, the market for candidate, relationship management, the cloud.
Speaker 1 00:05:06 And then of course this new world of integrated cloud, supposedly AI based HCM systems, while all that is great. And it's been very, very interesting to watch. And all of you have really had to spend a lot of money, maybe once a decade, upgrading your HR technology to deal with these architectural changes. But that's not really where the action is anymore. The action right now is on the employees side, the employee experience. And so in many ways, as you'll see from the presentation in Vegas, the architecture's flipping towards employee centric systems and employees are complicated animals. There's lots of different shapes and sizes and cohorts and countries and cities and part-time and full-time and remote and hybrid employees in a given company. And they move around a lot and they change jobs and they work on teams and they might have multiple roles. So we need HR technology that facilitates the daily, weekly, monthly, quarterly life of employees, not just does a great job of storing all sorts of data and managing the transactional parts of HR.
Speaker 1 00:06:10 Now we're in the sort of middle stage of this transformation, but what's taking place. As you'll see from the architecture is explosion of employee experience platforms, journey, tools, talent intelligence systems, which I'll talk briefly about and apps and integrated super apps that make it easier for employees to find what they need. And those are getting smarter. And if you look at your consumer life, individuals have moved away from platforms like Facebook. And to some degree, Instagram towards things like YouTube and TikTok, we're really moving to a world of a new paradigm. The paradigm is short videos, instant access to information, very intelligent algorithms that recommend things that are needed. And that's really what's going on in HR. And that's a lot of R and D that wasn't done in the past though. There's a significant shift in architectural emphasis towards this much more intelligent front end and much more intelligent system than was originally conceived by any of the E R P vendors.
Speaker 1 00:07:11 Now talking about E R PS or HCM, the ACM vendors, Oracle SAP, success factors, Workday Ceridian, ADP ultimate software. They've been doing a lot. And one of the articles I just wrote about this last week is what I call NextGen HCM. There really is a set of NextGen features coming. These include integrated employee experience tools, much more intelligent interfaces that can take advantage of data a much, much more open API so that you can buy an ACM and plug things into it. And then a user experience that is more like Instagram and less like Yahoo portal. The example I give on that front is a company called hi Bob. That I've been a big fan of for years, that really reinvented what an ACM is around the needs of employees, managers, work groups and teams with HR as one of the users, but not the primary user.
Speaker 1 00:08:08 And, and if you look at hi, Bob, as an example, you'll see some of the great things you can do in ACM. All of the ACM vendors are growing. Interestingly enough, you may not know this, but by far, the largest is success factors, which has 73 million licensed users Workday at around 60 million. So they're catching up, but with sex factors is also growing at a pretty good rate. Oracle's probably maybe one quarter the size of Workday in terms of the number of licensed users, but Oracle of course has this massive PeopleSoft base. So they're gonna start picking up speed too. There's ADP, which has come up with a whole new NextGen architecture, which is now has more than 50 customers. Some really cool new companies like Darwin box. I mentioned, hi Bob, and all of the mid-market payroll companies, all of whom have built HCM systems.
Speaker 1 00:08:52 So this is a massive trend in the market too. Now to meet the needs of employee experience. We have the new gorilla in the market, really two of them, ServiceNow and Microsoft. And I'm gonna talk a lot about both of them in the conference ServiceNow, as many of, you know, really came out of it. Self-service and it service delivery and has one of the smartest product and engineering teams I've ever run into. And they have built an employee experience platform, which is sort of the must have technology for large organizations that have multiple backend systems and wanna make the employee experience easier and more scalable around the world. Of course, coupled with them and matching them in ambition is Microsoft who is going crazy with Viva. Viva is a spectacular set of technologies. It now has a seven individual modules. It does everything from learning to analytics, to employee portals, to remote work, to sales enablement, and a new version of Viva called Viva engage, which is really an entire social network designed for belonging experiences.
Speaker 1 00:09:58 So you don't mix up pictures of your dog and your kids with all sorts of work related project information and your project management files and everything else you need to do to collaborate on your work. So Viva is very different from service. Now, it's not really a workflow engine. It's much more of a plug-in play experience engine, but I think since 70 to 75% of companies or Microsoft shops, it's gonna end up being massive. So anyway, we're gonna hear a lot more about that at the conference. The next thing I want to talk about is the skills tech market. And boy has this taken off. You know, I remember back in the mid 2015, 2014 era when path gather and degreed were in the market and agreed, started talking about skills and we were gonna have skills centric, everything, and people were kind of scratching their heads and thinking, it sounds like, kind of a good idea, but what is the skill anyway?
Speaker 1 00:10:48 Well now you've got skills tech in virtually every company skills tech is not only a part of the learning infrastructure. It's part of the talent, mobility and talent marketplace infrastructure. It's part of your recruiting and sourcing and assessment and infrastructure. And it's now being used for pay and rewards where companies are beginning to incent people based on skills. So you'll see some pictures at the conference on the skills architecture. Unfortunately, this is still a frustratingly immature market. There are about 20 to 25 vendors who sell different forms of skills technology. And they've really come into three categories. There's embedded skills, tech applications like ATSs and, and learning platforms and talent mobility systems. There's middleware, which is designed to be a in independent skills engine that consolidates data from other systems. And then there's talent intelligence platforms, which are really data systems designed to infer skills and take data from many, many sources.
Speaker 1 00:11:50 And I firmly believe that the talent intelligence concept is going to take off like a wildfire across HR and across business. And so that's all part of what's going on in skills. And I won't spend a lot of time on that in this podcast, but stay tuned for more. And we're gonna be producing a talent intelligence in depth guide, middle of September, right after the HR tech conference, I'll be going through this at my keynote. And we will also be introducing our global workforce intelligence research on September 14th. And you can learn all about skills tech and what it means for your company there. The next topic I wanna talk about is recruiting and the recruiting industry is sort of similar to the learning industry in that there are hundreds of tools and many, many vendors, and that's a good reason for that because it's very complex and there are many, many aspects to recruiting what's been going on in the last decade is lots of innovation, lots of AI.
Speaker 1 00:12:48 I think AI has been proven in recruiting far better than almost any other part of HR intelligence systems like eightfold that can source and find candidates, chat bots like Maya or Eva or others that can communicate with candidates, vendors, like paradox that allow you to apply for and identify jobs on your phone. Those have really been successful and what's happened in the HR tech market is many, many vendors have started up. And I think there's gonna be a lot of consolidation, job VI and jazz and lever. And next thing have become a company called employee IIMS has been buying up companies and been very successful in this market. Beamery just acquired a company called fuse to expand its business Harvard, which used to be called outmatch just acquired biometrics. And then you have the sort of big players, eightfold, pheno people, and another company I'm really high on Alexander Mann solutions, which is really a technology and outsourcing company because, you know, recruiting is really a hybrid business area in most companies and parts of it are always gonna be outsourced to contract recruiters.
Speaker 1 00:13:56 So technology is not the only part of the solution. Now, one of the things that's happened in recruiting is the explosion in the need for internal candidates and the research we did on recruiting last year by Janet Merton's, what we found was that there were a whole bunch of things that were driving great recruiting, employment, brand candidate experience, but also internal mobility and internal mobility was initially kind of a little bit of a sideline. Nobody paid a lot attention to it and long come vendors like fuel 50 and gloat, and they launch a talent marketplace and whoa, there's a market. And the talent marketplace to me has one of the biggest opportunities as a new category in HR tech. What is a talent marketplace? Well, look at Airbnb versus Marriott. Airbnb is a company that doesn't really have any real estate, but they can instantly find or send signals on availability of rooms to people that want to go on vacation or travel.
Speaker 1 00:14:56 And then suppliers of those rooms will create a marketplace for them because they have every incentive to make a great experience so that they'll get more business. They don't have to buy real estate. They don't have to invest in all sorts of sunk cost. And they don't have to predict where travelers are gonna go because the system will dynamically send signals in near real time as to where people are traveling to. Well, this is exactly what's been happening in mobility. It used to be back when I started doing research, that if you wanted to build a career path for your people, you sat down in a whiteboard and you designed it and you created it and you told people here's your career path. Every two or three years, you're gonna get a promotion, hang in there, stick with us and we'll take care of you from pre-hire to retire.
Speaker 1 00:15:41 Well, you know, that's just not the way business works anymore. That's not the way people wanna manage their careers. Employees are living longer. We have careers that span 50 or 60 years. You know, if I live to a hundred, I'm gonna have had a 70, 80 year career, hopefully. And so we need ways for people to move around inside of companies that are smart, that are intelligent, that are deterministic, that we can use for strategic change and reorganization. And we can't be redesigning these career paths all day by hand because actually the great career path is more likely to get, to be discovered by AI than it is to be invented by a bunch of HR people sitting around in a conference room, voila, enter the talent marketplace. Now the original talent marketplace vendors all came from different sources. And I think the two leaders in this today are gloat and fuel 50, but Workday is a big player in this space.
Speaker 1 00:16:37 Phenom is building a solution in this area. iSims is offering a solution in this area. Avature is open up a solution in this area as is people fluent and most of the recruiting tools. But the basic problem is we need to move people around. We need to create better career pathways. By the way, a career pathway is a branch to a new career based on your skills, as opposed to a current career. And we need a way to find projects, to find mentors, to find coaches, to find developmental assignments. And frankly, no company was very good at that before they had a system. If you talk to companies who have talent marketplace systems, they become one of the most compelling, interesting employee-centric systems in their organizations. And so this is a major market and I'll talk more about the cultural aspects of that at the conference.
Speaker 1 00:17:25 This leads me to my home area, which is corporate learning. Corporate learning has exploded with growth. In fact, interestingly enough, this is the only economic disruption we've ever had, where the corporate learning market didn't even take a blip. It went up and grew by probably 10 or 11% last year. And the reason for that is when people got sent home for the pandemic and they were working in their, their offices or desks or coffee shops or wherever they were, they had extra time and they went online and they tried to take courses and they looked for content. And this is what we've seen. The content business has been explosive. The corporate universities that are in place of all experienced growth and the vendors have done amazing things. There's a whole bunch of new vendors in learning that have come to market. The big themes in learning for the next year or two are adaptive learning, learning in the flow of work, virtual reality, augmented reality.
Speaker 1 00:18:20 And what I call capability academies capability academies are a new way of bringing together, learning into a business focused area and coupling formal and informal learning with developmental assignments, credentials, access to mentors and all the things that really matter in your growth and learning as an individual and the research that we just published last week by NHA NJA. One of our directors is we looked at corporate learning. We looked at, spent almost a year interviewing more than a thousand companies about their training. And what we found is the most successful learning organizations are not just focused on training and content delivery, but employee growth. They are familiar and coupled with the talent marketplace, with the career growth, with the transitions that companies need people to go through. And that is a big part of corporate learning. So the learning space is very hot and I'm gonna show you lots and lots of interesting vendors and cool things that are going on there.
Speaker 1 00:19:18 You know, one of the other areas of learning that I think is fascinating that I just wanna take a minute on in this podcast is the creator market. If you're not aware of it, the fastest growing companies and the tech space are creator economy companies, TikTok, which is worth, I don't know, billions of dollars, YouTube, Instagram, and others. And they are really unleashing the power of creators to accommodate the information learning and entertainment needs of us. Well, why don't we do that in corporate training? That is a big theme has been growing little by little year, over year, and now it's taking off companies like you to me, which are spectacularly well positioned for this 360 learning articulate, and others are really unlocking this potential to share content and learn from others inside of your company. And this is particularly true in sales enablement and onboarding in wellbeing and applications like even diversity and inclusion and virtually every business area, even call centers and operational jobs.
Speaker 1 00:20:20 So that's a big theme in learning. I'm gonna be talking about that. I'm gonna show you a bunch of new technologies and I'm talk a little bit about what's going on in the content market. The next thing I wanna talk briefly about is employee listening and people analytics. Now the listening market I've been writing about for a long time, started out as the annual employee survey. And when I was at IBM in the 1980s, we had this massively interesting project once a year called the IBM opinion survey or the IBM employee survey and took three, four months to do it. But every year, every manager had to look down and look at their ratings and see where they compared to their peers. And if their numbers were low, they probably got taken outta management, but that was once per year, it was a massive project.
Speaker 1 00:21:04 And it was an institutionalized set of questions that were benchmarked year over year. Well, as you know, that's a very common but old fashioned mob. We need feedback from employ on a near real time, if not real time basis. And so that's given birth to this enormously interesting market of listening tools and analytics tools and action tools. And all of those have come together. The big players here are companies like Qualtrics and culture amp and Medallia momentum, Gallup Glen, which is now owned by Microsoft Workday bought Pecon vier is getting into this percepts. And what they've basically been doing by the way all these companies are growing is because there's really a big pent up demand in organizations to apply the disciplines of listening and design thinking to employees like we have to customers. If you think back about the customer journey and how that's evolved over the years when I was at Sybase in the early 1990s customer systems were basically databases.
Speaker 1 00:22:04 We spent most of our time trying to figure out if somebody bought product a, why were they buying product B? So that was back end processing. Since then companies have moved to dramatically improved efforts at studying and understand customer experience from beginning to end. And that's, what's going on with employees and we need listening tools. We need design tools and we need good data to do that. So this is a hugely important market and one that's growing very fast. And I'll show you a little bit more about it. One of the things that's new about it is these tools that do what I call passive list, where you can not only run analysis and reports on what's going on in the employee base, but the system will actually monitor conversations and feedback and then give developmental information directly to employees as well as the HR people.
Speaker 1 00:22:48 So you can understand where there's problems CRO up inside of the company. And that's really why the listening and the survey market and the analytics market and the AI nudge market is really all finally coming together. A couple more points I'm gonna be talking about in the conference performance management. Now performance management is a tricky space. Many of the vendors that build performance management tools either got bought, or they tried to become talent management companies because it's not always clear of standalone performance management systems are needed because most of the HCM systems have that, but there have been some really innovative vendors they've been very successful here. Lattice is one better works is 1 15 5 culture ramp. And what you see in these companies is they're moving beyond performance management as their core to really end to end management, which means growth and developmental planning as well as feedback and productivity measurement.
Speaker 1 00:23:44 And these tools are becoming really core central hubs for lots and lots of other technologies that people use at work, your project management, your check-ins, the information that comes from Salesforce can be brought together into these tools. Sometimes they use OKRs to consolidate information about the workplace and give managers, employees a better set of tools to improve and develop themselves as well as manage the performance appraisal process. What about wellbeing? Well, wellbeing is one of the most interesting growth markets I've ever seen. And you know, it sort of never stops. I'm astounded at the number of wellbeing companies constantly ending the market. I'm gonna be showing you a whole bunch of these vendors, but the big theme on wellbeing is really expanding the definition of what wellbeing is. You know, it started out as fitness. And then we talked about financial wellbeing, and then we talked about emotional wellbeing.
Speaker 1 00:24:39 And now we're talking about mental health. And if you really bring this all together, it's really a focus on what I call and what our research defines as building a healthy organization, healthy in all respects, healthy and individual level, healthy management practices and healthy and organizational practices and organizational design. So I'll show you what a lot of those vendors do, but you know, to me, this is a market where you have to try a lot of things and implement the ones that are most successful for your organization. Certainly some of the bigger vendors better up is getting into this spring health, ginger light. They're really consolidation platforms that do a lot of things for you to make your employees happier and give you better and better information about what's going on. I think the last thing I wanna talk about briefly, and we're gonna talk about this at the conference too, is how do you manage all of this stuff?
Speaker 1 00:25:29 You know, we have lots and lots of conversations with the company. Lots every week and vendor selection is of course a very strategic part of this because you're always trying to fit these puzzle pieces together, but it really isn't the most important part of HR tech. What really makes your HR tech succeed is setting up a good process to manage the HR technology. And, and there's really sort of six things here and let's briefly touch on them. One is you need a technology roadmap, nothing stays still in HR technology. So you need to regularly look at your one to three to four year roadmap on where you're trying to go because you can't switch out and replace and upgrade every the same time. And that's really a product management type of function. Second, you have to work with HR, it finance facilities and probably legal because a lot of these HR technologies impact all of those aspects of work.
Speaker 1 00:26:26 They don't stand alone anymore, and you really can't make these decisions in a vacuum. The third is data, you know, the volume of data being collected in HR technology is accelerating at an unprecedented rate. So if you look at can data sentiment, email, data, location, data, job, mobility, performance management, learning skills. This is a massive amount of data. So if you're in a big company, you really need to have data governance, data standards, and a data platform outside and around the technology platforms themselves to store and manage that data effectively. And that is a domain of expertise in it that you need to bring onto your team. The fourth area is journeys and experiences, employee experience. Isn't just an employee engagement survey anymore. It's a design process and a design expertise to build globally the right employee experiences and tools, and self-service so that people can get their jobs done in an effective and efficient way.
Speaker 1 00:27:26 And we can focus on the areas where the company needs help. Unfortunately, that is all tied up in technology. So that's the fourth area of focus. The fifth area is having stewardship of the employee experience and making sure that manage and exec and leaders are involved those decisions. And it isn't just a tech project because employee experience is really 80% management and rewards and culture and behaviors and probably 15 or 20% tech. So that's all part of success in employee experience too. And by the way, we've done studies of successful HR technology projects and the ones that succeed the best are the ones that focus on ex first, not at the end. So you have to get all of your HR technologies are from an employee first lens. And the final part is service delivery because no matter what you buy and what technology you turn on, there's a whole bunch of HR and it, people behind the scenes that are gonna have to support it.
Speaker 1 00:28:20 Where are they? Are they trained? Are they organized effectively? Can they get real time data? Can they talk to each other? Have we thought through the service delivery nature of the HR tech decisions, all of these are important and they have to be considered in your HR tech strategy. So, you know, getting back to my first comment is the HR tech market going crazy. Yeah, it kind of is. But honestly, it's always like this every year I do this. There's some disruptive thing that's happened. There's some major merger, some great new idea. Some of them flame out, I mean, did blockchain become a part of HR tech? No, it really didn't will it? I, I don't know. Will the metaverse absolutely. It's already taking, hold in training in a very big way. AI, it was nothing more than a bunch of great ideas. Five years ago.
Speaker 1 00:29:12 Now it's running and working and delivering value and talent intelligence and sourcing in all sorts of employee experience applications, passive listening, these technology take years to develop and they seem like they're going nowhere. Then all of a sudden they take off like a rocket and that's kind of where we are right now. So it's a really exciting time. I hope this gives you some good ideas and some concepts. I wanna encourage you to come to the HR technology conference for a whole bunch of reasons. One is, of course you can hear my keynote, but you'll see all sorts of vendors there. You meet lots and lots of people. We have two massive announcements going on. I'm going to be signing. Pre-release copies of my book, compliments of Workday. We're gonna give away, I think a thousand copies there. So please come. If you'd like to get my new book called irresistible, we're gonna be introducing our global workforce intelligence research Wednesday at 11 o'clock.
Speaker 1 00:30:02 We're gonna talk about the healthcare industry and the impacts of that research on the banking and other industries. And we're gonna be around talking to many, many of you of all these questions, and I will look forward to meeting so many of you again in person after being remote for these three long years, working from home. So have a great couple of weeks, and I hope to see most of you in Vegas. If I don't see you in Vegas, we're gonna be in Europe later in the year and traveling around the world next year. Thank you for listening. And please send me any comments or feedback. Thank you.
