Let us first talk about some trends in the workplace that have emerged post the pandemic and see how these are impacting HCM technology
We are seeing the emergence of the ‘Hybrid workplace’ model with employers and employees experiencing benefits from the blended ‘work from anywhere’ option. As physical offices have started to open, many companies have announced a permanent work from home option as well. Organizations are transforming their practices, processes and policies towards employees as the focus has now shifted from the employer to the employee. This new model is challenging HCM players to adapt, develop and accelerate to what I call as ‘Exponential HCM technology’ that asks them ‘how nimble they are’? how adaptable they are? and how flexible they are?
We have seen companies accelerating their digital transformation process in the pandemic. In the bargain many tasks that do not require human intervention have been automated. Likewise, job roles have changed given the new operating circumstances. A study by Edelman found that 49% of employees now believe automation and re-skilling are their biggest threats at work. Enterprises have seen a huge uptake in consumption of ‘learning platforms’ during the pandemic. The challenges of ‘learning and re-skilling’ will have a huge impact on HCM platforms as the new mantra is ‘learning in the flow of work’
DEI is now being discussed at the board-level, as laws in many countries now mandate disclosures in this area. Diversity hiring, reporting, tracking, and tools that identify non-diverse talent practices are now mainstream. There have been several start-ups in the past 12 months that have solutions in the DEI space. This is another reason for ‘Exponential HCM technology’ as traditionally HCM platforms were not designed to meet DEI standards of various countries
As per some research reports, over 40% of the U.S. workforce is employed in an alternative arrangement. And over 66% of millennials practice side-hustles or Gigs. We are moving into an era where an employee could have multiple employers. HCM platforms are not designed to manage the alternative and Gig workforce. They will have to develop new capabilities to manage this changing trend in the workforce
The ‘work from anywhere’ model has brought with it challenges for organizations who need to transform the way they engage with employees and look out for their well-being. Employee engagement and well-being tools, recognition, and other platforms to help employers regularly monitor the health, safety and happiness of their workforce have taken center stage.
Given these trends in the workplace, there is tremendous pressure on HCM platforms to re-look at their roadmap, fast track relevant new capabilities and make things happen. This has set the pace for ‘HCM Technology trends in 2021’.
We saw the mega acquisition of Qualtrics by SAP in 2019 and many more in 2020. Some of the acquisitions in the US included, Paylocity and Samepage – an all-in-one team collaboration solution, Justworks and Boomr – a leading cloud-based Time and Attendance solution, Paycor and 7Geese – a leader in goal setting and performance management.
We will see many more acquisitions and white labelled deals in 2021. We can expect significant venture funding in HCM platforms given the need to rapidly expand their offerings for a hybrid workplace with the related workplace issues we discussed earlier.
Firstly, we spoke about several ‘best of breed’ niche players in Talent acquisition, Engagement, Performance management, Learning, Rewards, and so on. Customers will continue to buy best of breed given that they offer considerable depth as against the HCM platforms that may have a width of offerings but limited depth. Enterprise customers are looking for specialist platforms to address specific pain points, so this investment trend will continue.
Secondly, the emerging trend of integrating HRTech into WorkTech is something we need to watch out for. WorkTech is a combination of three main spaces: HRTech (Tech for managing & empowering employees.), Collaboration (Tech for operating the workplace eg: Teams, Zoom, Slack, Storage solutions etc), and Productivity (Tech needed to perform tasks and measure productivity eg: Salesforce, other CRM tools, Trello).
Thirdly, the emergence of WorkTech has also brought the big players into the scheme of things. Most of the other enterprise software companies have now started building systems for HR, because the line between HR software and workforce productivity software is getting thinner. We have examples of Microsoft (Linkedin, Glint), Facebook (Workplace by Facebook), Salesforce (Trailhead learning platform).
These trends are forcing HCM suites to take an ecosystem approach that necessitates an open architecture that is easily integrated. As per Josh Bersin, “HR has to be a feature of the work, not a destination outside of the work,”
“Well, Data is the new Fuel”. Having said that, it comes with its own set of challenges. And therefore, Data analytics and Insights could be the next frontier.
In my conversation with several CHROs, one of the main points that emerged was,
Are HCM platforms up to the challenge?
I was speaking with Activ 8, a Data Analytics and Insights platform out of the UK, and they echoed this same sentiment. Seeing an opportunity, they have started this play of drawing data from various systems using the HCM as the basic platform to get all this data in. Their engine in turn delivers the relevant insights, trends, and action planning to make it impactful and meaningful for the enterprise leadership.
Having this data analytics engine (either built in) or integrated with a best of breed 3rd party is a clear HCM trend emerging and of great relevance.
This will be the norm and not the exception as HCM platforms continue to evolve from the operational and experiential into decision making solutions.
Finally, we want to talk about the opportunities for HCM players in the SMB space.
So, watch out for plenty of HCM action in the SMB space in 2021.