Imagine it’s ten years ago. Your HR department has limited technology, nearly no data, and a team full of folks equipt to only answer questions about your benefits and maintain compliance.

My, how things have changed. It’s 2022, and there are more HR Tech vendors than ever before, more capital invested into HR Tech than ever before, and more adoption of HR Tech across companies than ever before. In 2021 alone, over 12 billion dollars were invested into HR Tech companies. That’s more than triple the year prior. Over thirty HR Tech companies have unicorn status - that’s a private valuation of over a billion dollars. Needless to say, it’s a hot space.

But why? Well, the value proposition of HR has changed significantly. It’s been said before, but HR is undergoing a transformation from a back-office support function to a strategic leadership function. HR Tech helps us get there.

‍The value of Strategic HR

It is pretty impressive how HR has shifted in recent years. The pandemic certainly accelerated this journey, amplifying the strategic value of HR. Companies literally could not keep the lights on without HR teams to craft and advise on remote policies, devise survey strategies to understand employee productivity and sentiment, and track and analyze employee performance during remote work. The HR leader was in demand, looped into key business initiatives to ensure the workforce could execute.

Strategic HR is more than just paper-pushing, but applying critical thinking and problem solving to anticipate employee trends. It’s thinking about the skills of the future, remote work strategy, how to reduce bias in the workplace, and more. It’s asking the key business questions (e.g. “With a target to shift the business into new markets in the next 3-5 years, how can we develop a hiring and location strategy to support these new markets?”). It’s leveraging data and technology to help answer these key questions.

This shift in visibility and demand has resulted in sustained investment. New capabilities are cropping up all the time - like Strategic Workforce Planning or People Analytics. These are functions that didn’t exist just a few short years ago. These functions give visibility to employee trends and quantify their impact.

How HR Tech Supports Strategic HR

Historically, HR Tech systems managed foundational employee data and approvals, but lacked capabilities to improve processes, develop dashboards, and customize configuration. With so much time dedicated to manual efforts, there was little time left to be strategic.

The HR Tech landscape of today enables so much more. For instance, with tools like ServiceNow, so many employee questions can be answered with self-service and chatbots. This technology frees up resources to engage in more proactive activities. Another example is the emergence of the talent marketplace, supported by tools like Gloat, Degreed, and Eightfold.ai. Now, HR has the ability to identify internal talent with relevant skills and migrate them into new roles. This capability reduces the number of open requisitions and speeds time to fill new roles, plus it saves on recruiting costs.

Considering HR Tech

Despite a plethora of tools, the selection of this technology is critical to get right. It’s easy to pick siloed tools, but less easy to think about the whole HR Tech ecosystem. How does each tool integrate with other tools? How much support is needed for the implementation? What is time to value?

Ultimately, HR Tech selection should be driven by the People Strategy. For instance, if the strategy is focused on building the best universal employee experience, then you’ll look for tools with high user adoption, simple interfaces, and intuitive interactions. Microsoft Viva comes to mind.

Alternatively, if the strategy is focused on building the most inclusive organizational culture, then tools should assess and mitigate bias, and support inclusive processes. Here, I think of Mathison, Textio, CultureAmp, and more.

Ensuring Data-Driven HR

Just because you have HR technology does not mean that you have all the data you need to make informed decisions. There are a key set of requirements to address with vendors when understanding the data and reporting capabilities of a tool.

• What reporting is available in the tool? How customizable are these reporting capabilities?
• How much manual effort is required to extract the data? Are reports in dashboard form or downloaded into spreadsheets?
• What fields can be extracted from the tool? For instance, is identifying information available? (Identifying details is critical in order to connect output to other data sources.)
• Are integrations available to other tools in your tech stack? What data can be transmitted via the integration?

If a tool has an amazing process but limited reporting capabilities, think twice about whether this is the tool for you. Reporting offers critical insights, and no matter how optimized the process is, if you can’t measure success, it has limited benefit.

Instead, if a tool uses AI, ask questions about how the AI works? Is the algorithm available to view? What process is used to debias the algorithm? Can the tool be explained easily to stakeholders?

As a Final Thought

It’s a crowded HR Tech landscape, with new tools brought to market constantly. There are two options for the future:

1) consolidation, or

2) integration of user experience (and not just process integration).

I personally hope that a single front-end allows employees to take advantage of many disparate technologies that operate behind the scenes. Each vendor is incredibly specialized, and consolidation would temper that expertise. Either way, it’s an exciting time to leverage HR Tech in your company!