With unemployment reaching all-time lows and the labor market more competitive than ever, human capital management (HCM) continues to be a highly active space. Investors have poured $5.4 billion into human capital services and technology since the beginning of 2018 alone, according to Pitchbook, and several large acquisitions have already made headlines.
The interest in HCM comes from industry players as well as private equity firms. Notable deals this year include Recruit’s acquisition of Glassdoor for $1.2 billion, the sale of Alexander Mann Solutions for $1.1 billion to OMERS Private Equity and the iCims acquisition by Vista Equity Partners. The activity is exciting, and we believe the consolidation is just getting started. With that in mind, we attended the HR Technology Conference and Exhibition earlier this year with an eye toward HCM trends that will drive future acquisitions.
There is indeed a lot to take in: improvements in hiring from the use of predictive analytics to tools that help companies cultivate a bigger, more diverse talent pool. Here are three HR tech trends we will be paying attention to in 2019:
#1 Increased Interest in Intelligently Sourced Talent
In order to not only attract but retain great employees, companies now want to understand better who makes a successful employee. They are also looking for data and solutions regarding how to keep their highest performing employees engaged. The concept of “intelligent sourcing” addresses these needs by identifying the profiles of employees who have worked well for the company—as well as those who were less successful.
Technology in this arena offers a range of solutions from pre-hire assessments to entire HR suites that span the employee lifecycle. These products are not necessarily new but improved with the current innovation resting in AI and predictive analytics to make the whole sourcing process more efficient. We are already seeing the successful use of chatbots for job candidates’ initial screening.
There’s been some recent interest by PE firms in assessment companies, including the acquisition of DDI’s non-leader business as part of PSI’s continued rollup of assessment providers. We believe that the activity in the space is just heating up and that there are more M&A and investment to come in the realm of talent assessment.
#2 A Drive to Capture the Entire Talent Ecosystem
In the world of HR, there is a growing recognition that the potential employee pool is much larger than merely application submittals. Instead, smart companies are looking for ways to monitor the whole talent ecosystem—that is, all the potential, current, and even former employees who have come in contact with your brand. The measured contact goes beyond just applying for positions; it includes interactions on LinkedIn, early internship with the company, reviews on Glassdoor, and more. Startups and industry stalwarts alike are exploring ways of observing this ecosystem proactively. The startup Beamery, for instance, raised $28 million in a round led by EQT Ventures with an aim to provide a Salesforce or Marketo-like CRM solution to the recruitment process. Their approach is to build an existing database of candidates versus an applicant tracking system, which is more of a snapshot in time. Meanwhile, Phenom People is using automation and AI to streamline recruitment and hyper-personalize the application process for job hunters so that candidates are finding the best opportunities for themselves. The company has raised $22 million, in a round led by AXA Venture Partners, to accelerate its growth.
#3 Creative and Comprehensive Diversity and inclusion Solutions
Most HR teams are aware of the benefit of improved diversity across the workforce, from hires of different races, genders and socioeconomic backgrounds to candidates who bring unconventional experiences and points of view to specific roles. However, actively finding and engaging a diverse pool of candidates is still a challenge for many companies. The next generation of HR Tech may provide some answers. The winners of the HR Tech conference’s startup Pitchfest served up some key examples of how technology can further inclusion in the workplace. The top prize went to Blendoor, which is a startup that leverages augmented intelligence and analytics to reduce unconscious bias in the hiring process. The competition’s diversity prize went to TalVista, which optimizes job descriptions to attract more diverse applicants and redacts portions of resumes to eliminate names, genders and other swaying factors.
These HR Tech trends certainly highlight the opportunities arising for improved HR processes across the employee experience, starting at the very beginning of the recruitment process. They also reveal the growing need for companies to make the work of finding, hiring and retaining great talent, not just easier but more effective. And those that crack that code, likely with the help of tech tools, stand to come out ahead.
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