Big corporations are entering a new era in workforce management; employee expectations are on the rise and as a result, companies are placing more importance on providing for and interacting with employees, in a more personal way. It comes as no surprise, therefore, that the HR software industry is a $14 billion colossus, with firms implementing new ways to make the our working day as enjoyable and productive as possible.
Figure 1: Deals and Dollar Investment Sizes (CB Insights, 2016)
VC funding continues to flow into HR Tech
In recent years, HR has become a new area for ambitious entrepreneurs to make their mark. This is demonstrated by the consistently high levels of funding being raised by HR technology companies ($2.4 billion in 2016). It is also true, however, that a new trend is emerging. Whilst HR tech has experienced a 10% YoY growth in closed deals since 2010, the total dollar amount spent decreased by $80 million between 2015/16.
What do these numbers mean for HR tech? Well, as unfavourable as it might first appear, the reason is just as simple as it is encouraging. The industry has witnessed an increase in early stage deals – 69% in 2016 against a historical 66% (2010-2015). Early stage deals involve smaller amounts of capital, which is reflective of the fact that more HR technology companies are being founded or startups are experiencing an acceleration in funding inflow, thanks to the sector becoming ever more popular with investors.
HR is a huge space, so where are the innovative ideas clustering? According to CB Insights, the main areas to watch out for are ‘workforce management’ and ‘employee development and workforce optimisation’. Glassdoor, the jobs and recruiting marketplace, took off mainly thanks to its value proposition of allowing employees to review their employer. Having raked in $202 million since 2012, it is now the third most valuable startup in HR behind Zenefits and FXiaoke.
The above considered, giving and receiving feedback could well be a golden nugget in a vast HR tech landscape. This is a sentiment echoed by many in the HR space, and with good reason. The Culr team has committed to creating a culture of feedback in the workplace. Interestingly enough, we have seen that thanks to Culr, employees are more aware of the underlying advantages of giving feedback and taking ownership of it; the 'WIIFM' (what's in it for me).
Emerging trends driving HR disruption
There are several emerging trends on the horizon that give rise to the opportunity to disrupt and truly revolutionize the way in which an employer deals with its workforce:
o Mobile: 51% of all internet usage happens through mobile. Society is experiencing a significant shift that affects everyday interactions and the technologies that are predominantly used. HR solutions therefore, need to be designed ‘mobile-first’. Traditional HR technology vendors are now playing catchup, having to redesign and simplify unwieldy, bloated un-intuitive products for that purpose.
o Connected World: In a world where the top 3 social networks boast over 1 billion active users each, the importance of social connections are becoming much more pronounced, whether at the workspace or in personal life. The former is becoming ever so crucial in a world where workforces are geographically scattered and employees demand a more flexible approach to the work day.
o Real-time responsiveness and validation: Building on the social aspect consumers want everything to happen in real-time; we’ve found the same can be said of employees and their attitude to recognition and learning.
o Personalisation: Employees become consumers – they expect the same personalisation at the workplace as they would find anywhere else. Furthermore, the generational change in the workforce brings new challenges where firms have to adapt to the needs of the next wave of employees. This translates into making them feel special and emphasise that they're not a small cog in the big machine.
o User-friendly design: Interfaces need to be intuitive and simple, aesthetics is just as crucial as the functionality. Corporate’s need to go one step further however, and finally realise that obsolete systems with well-known vendors are not reflective of what the people want. It is clear that relationships with vendors have become so cozy that the end-user has now been forgotten in the process – but the end-user is now fighting back. The foundations of Culr are built on the need for radical simplicity, a concept that is fully supported by the frustrated employee who’s had enough of clunky systems and opaque processes. We advocate transparency and direct interactions over back-room decision making.
Amongst all the chaos, we can be certain of one thing; 2017 will continue to bring about major disruption to the talent management space, and the Culr team will continue to fight to ensure organisations place as much value on the employee experience as they do the customer experience.