HR Management Systems Special Report: Separating Fact and Fiction

By Sarah Fister Gale

Oct. 5, 2016

Today’s human resources leaders are focused on creating a more engaging culture and connected workforce — and they are looking to their HR technology vendors to help them get there.

“The goal is to make the HR system addictive,” said David Ludlow, vice president of solutions management for SAP SuccessFactors. That means creating ongoing performance management tools, enabling employees to virtually connect with peers and mentors across the enterprise, and providing them with more personalized tools to guide their career development journey. “It’s all about creating a better employee experience.”

But this desire to be a “destination of choice” for busy employees is forcing HR leaders to change the way they think about technology, and the kinds of features they want to offer. HR departments have historically used technology as a system of record rather than a tool to engage and interact with employees, said Karen Minicozzi, Workday’s vice president of HCM product strategy for Europe, the Middle East and Africa — the region known as EMEA. “To be a system of engagement, you need to give people something of value,” she said. Rather than offering generic career maps, or lists of possible training courses, these tools need to be more customized and make suggestions that are unique to that employee. For example, Workday recently launched opportunity graph, which generates custom career path options using the employee’s data and the career paths of people who held similar jobs.

Such next generation tools support HR’s desire to offer employees and managers continuous process improvement options, and employees’ demand for more personalized tools. It also ties into the three biggest trends in HR technology: cloud, mobile and workforce analytics.

“Cloud is still on the top of the list of trends in HR technology,” Ludlow said. “It makes it a lot easier for HR to consume new innovations and reduce their reliance on IT to maintain their systems.” Indeed, the move to the cloud is the most established technology trend in this space, with almost half (44 percent) of companies now using cloud-based HR systems, and more making the switch every day. “We are a long way from everyone being cloud-based, but we are nearing the tipping point,” he said.

Mobile and analytics however, are still more hype than reality. For the past three years, analysts and vendors have been talking about how HR technology is going mobile and human capital analytics will change the way HR leaders manage employees. Yet recent surveys suggest that the technology hasn’t kept pace with ambition for the future.

Apps to Fill the Gaps

A recent report from PricewaterhouseCoopers shows that while 86 percent of CEOs feel they should champion the use of digital technologies for HR, less than half (40 percent) of employees say they are able to leverage mobile for even simple tasks like workflow approvals, and less than 20 percent have access to more interactive HR tools, such as performance management apps (18 percent) and recognition programs (10 percent). This dearth of performance-driven applications suggests that vendors are falling short in delivering the engaging HR experience via mobile that HR leaders are seeking.

Experts, however, say it’s just a matter of time. Many of the major HR software providers have spent the past several years expanding their core suite of tools and building out their cloud solutions, and are now beginning to focus on the next generation of mobile apps, said Josh Bersin, principal and founder of human resources advisory and research firm Bersin by Deloitte. That created room for a new generation of start-ups to bring innovative new talent management, recruitment and onboarding apps to market, including GreatHire’s candidate experience app, Small Improvements’ performance management and employee feedback app, and Hyphen, a mobile-only app that gives employers a chance to listen in on anonymous conversations among employees to find out how they really feel. “It is causing many companies to look beyond their core HR vendors for mobile solutions,” Bersin said.

Many of the app vendors are new to the market, though other more established vendors are also offering apps worth considering, said Ray Wang of Constellation Research. He points to ClearCompany’s talent alignment platform, which links recruiting, onboarding and performance management in a mobile environment; and Halogen Software, which recently released mobile versions of its feedback, goal management and talent director tools.HotList

But these mobile options are so new that they haven’t yet achieved scale, Wang said. “They need to be adopted by the masses to go mainstream.” Once these apps gain enough customers, it’s likely the best of them will be acquired by the larger HR vendors, but that’s still a few years off, Bersin predicted.

Until the big vendors start building or buying these innovation mobile applications, customers will need to do more research and make decisions about whether they are willing to work with an unknown start-up to fill their mobile HR needs.

Alternatively, they can do it themselves, said Bersin. He noted that GE recently replaced its performance review process with a custom app called PD@GE that lets managers give employees ongoing feedback about their work. Deloitte is developing an app to help employees manage their work-life balance by tracking their hours and travel schedules compared to their peers.

“If they are working too much, it can nudge them to slow down,” Bersin said. “People love stuff like this.”

Workforce Analytics Gain Traction

Companies will likely be making similar decisions about analytics in the coming years, as they struggle to balance interest in this technology with their ability to implement it. Deloitte’s 2016 Global Human Capital Trends report shows that 77 percent of executives rate “people analytics” as a top priority, and that many companies have begun to apply analytics in key areas. According to the report, more than half correlate business impact to HR programs, and 44 percent say they are using workforce data to predict business performance — up from 29 percent in 2015.

They are also beginning to utilize external data gathered through social networking platforms, employment brand data and hiring results to predict workforce trends and target top talent. Yet so far, executives are not thrilled with the results. Only 8 percent of companies using external data for analytics rate themselves as “excellent” and another 29 percent believe they are performing well in this area, which leaves almost two-thirds of companies still struggling to integrate new data into their analytics capabilities.

The reality, however, is that workforce analytics is still in its infancy. In many cases the tools and technology exists to deliver workforce analytics, but many companies are just not ready for it, according to Wang. “A lot of folks just don’t have the skills or resources to do human capital analytics,” he said. “You need tons of data to find patterns, otherwise you’ll get a lot of false positives.”

And the data is only half of the equation. Companies also need the skills in-house to figure out what questions they want to ask and how to interpret the results. It’s not enough to have analytics tools, companies need sophisticated analytics expertise to use these tools effectively. Yet more than half of organizations have no dedicated HR Analytics team, and nearly 40 percent have no HR analytics strategy, according to the PwC report.

Unless companies are willing to add analytics experts to their staff and build employee databases that are all structured the same way and can all be integrated and analyzed, they will continue to struggle with analytics. “Vendors and customers are thinking a lot about how to do this, but they are just getting started,” Wang said.

As analytics technology becomes more user friendly, these gaps should close. There are tools that can recommend career paths, suggest courses and link employees with mentors based on analysis of HR data. And these tools will likely become more commonplace and effective in the coming years, Ludlow predicted. “There is a realm of possibilities in the way data is used today that can translate to HR applications,” he said. The industry may not be there yet, but it is moving in that direction.

In the meantime, Wang encouraged companies to review their vendors’ roadmaps as they relate to cloud, mobile and analytics, and to be wary of signing multiyear agreements. “There is a lot of innovation going on in the HR technology space, and companies may not want to be locked into a five- or seven-year contract,” he said. “Be willing to negotiate, and use logic — not emotion — when making these decisions.”

Sarah Fister Gale is a writer living near Chicago. Comment below or email

Sarah Fister Gale is a writer in Chicago.

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