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HR Technology Trends 2021 (And Beyond)

Posted by Mathew French

9 February 2021

After all the disruption to work and the workplace in 2020, HR technology matters more than ever this year. That's according to Josh Bersin in "HR Technology 2021: The Definitive Guide." He believes that during the last 12 months, HR technology has moved from 'good to have' to 'essential to survival' and any technology which might have been previously purchased as an experiment has likely become mission-critical. In the first HR Blog for the year, let's look at the highlights from Bersin's guide so that you can get a better understanding of exactly why #HRtech matters more than ever in 2021 and beyond.

The Key Trends For 2021 and Beyond 

According to Bersin, the biggest shift in terms of how technology will be used to enable and enhance work going forward is what he calls the shift from HR technology to work technology, or, from #HRtech to #Worktech. What this essentially means is that all technology investments going forward should feel useful and important as a tool for getting work done. He advises businesses to consider everything that happens from the minute you leave home to the minute you clock out at night. Each part of the process is a step, stage, or series of activities that he believes can (and will) be facilitated and improved by technology. To that end, he's betting on a massive convergence between HR tech and work tech this year and into the future.

Bersin also believes that the other big shift in 2021 is something that has been coming for a long time - a bigger focus on Employee Experience (EX). Throughout 2020 he says, employees did not have the time, interest, or attention span to log into an HR system, poke around looking for the right page, and then enter their vacation schedule. At most, they had the bandwidth to talk or chat with the system. Going forward he says to keep an eye out for easy-to-use apps that fit right into existing tools at work to create ecosystems of complementary tech that enhance and improve the employee experience.

The Evolution of HR Tech Continues Apace

The HR technology market has moved in waves throughout the last two decades, largely driven by changes in technology, culture, and the economy. Bersin identifies four major waves, including the one that's emerging now and is set to consume  at least the first half of this decade.

  • Systems of record: In the 1970s and 1980s, companies acquired HR systems to automate paper transactions, creating the employee system of record. Initially, these were mainframe computers, then client/server systems, typically presenting the HR user with a screen that looked like a form.

  • Systems of talent: in the 1990s and 2000s, a new market emerged, tools for applicant tracking, learning administration, employee surveys, and employee self-service. These moved the market beyond automation to a focus on talent outcome: hiring people faster or cheaper, tracking or improving training and skills, understanding employee engagement, and giving people better information to do their jobs.

  • Systems of engagement: when the internet, mobile, and cloud computing arrived, vendors shifted their focus toward employees in an integrated way. Vendors built cloud-based systems  to integrate all these talent applications into a single suite, with an easy user interface intended to engage employees. These systems were designed to make employees more productive and they would help the company with digital transformation.

  • Systems of work (aka systems of productivity): as we enter 2021 and beyond, the market is shifting again. Now businesses need tools that make work easier enabling workplace productivity and HR. Performance management tools are now team management tools; applicant tracking systems are now candidate experience platforms; training systems are now talent marketplace platforms; and all the tools you use for pay, rewards, wellbeing, and recognition are being integrated with Teams, Slack, and Workplace as add-ons you can use as apps.

The Big Challenges in Digital Transformation for HR

The problem for many organisations is that you cannot build a digitised system of work for your employees until you have a digitised system of record, and the system of record you decide to use has to contain accurate and clearly organised data. Since there are so many different applications in HR, companies need sound architectures and integrations to bring all these things together into a digital ecosystem that will enhance and improve the workplace experience. According to Sierra Cedar, the average organisation now has 11 systems of record: the typical recruiting department has more than 10, and the typical L&D department has almost 20. So the capacity to architect an ecosystem through integration of solutions and Apps continues to be important.

However, despite companies throwing money at HR tools throughout 2020 out of sheer necessity, the number of different systems being used is creating chaos. The number of systems being bought is going up. The average large company now has 9.1 core talent applications (up from 7 in 2018), and is spending $310 per employee per year, a 29% increase over last year. Given the economy, that's not an insignificant increase. Meaning that businesses will probably start to push for more ROI and productivity analysis when the economy cools off a bit.

Bersin also highlights the people challenges companies face today since these are generally the driver for the development of, and investment in HR tech. While HR has always had the responsibility for staffing, payroll, employee relations, and general employee development, today, a new set of talent issues have appeared, which can be summarised as follows:

  • Fairness and transparency, including challenges like are people being hired, promoted, and paid in a fair, unbiased, and transparent way?

  • Are businesses being honest and open about the data they're capturing about employees?

  • Are people practices inclusive, diverse by design, and respectful of gender, age, race, nationality, educational background, mental and physical ability?

  • Does the organisation act in a responsible way for society and the communities it serves and does business in?

  • In a world of never-ending digital interruptions, does the business reduce clutter and noise, and distractions in the workplace so employees can get their work done? Is there awareness about how and why people are wasting their time

  • How does business help people come to work safely, avoid infection, and travel to and from work locations in an ever more safe and protected way?

  • Does the organisation make sure the external brand is attractive, authentic, and relevant to both job candidates and existing employees? How is it possible to monitor all the websites where people can rate the company?

  • Is the business building the practices, tools, and reward systems that enable the company to be agile, team-centric, and built like a network? Is it possible to flex the ERP system to really manage the company as a network?

  • Does the organisation actively helping employees up-skill, move into new roles, and build a purposeful, meaningful career so that they want to stay with the business? Is it possible to improve internal mobility, regardless of being promoted?

  • Does the business have the capacity to to embrace part-time, gig, and side-hustle workers who want to work on their own terms regardless of who you are as an employer? Are there tools in place to manage contract and contingent work within HR, or does this have to be outsourced to procurement?

  • Does HR and the wider business respond to employees’ demands for a more humane, healthy, and friendly workplace, where they feel developed and rewarded while they work extra hours? What tools are needed and where does where's the boundary between organisational responsibility and individual ownership?

  • Has the way the organisation pays and rewards become more generous, holistic, and more frequently reviewed as the job market continues to be competitive? Can you deal with the demands for 'real-time pay' and a new generation of highly flexible rewards?

  • Is your business developing a new generation of leaders, and do you really understand what leadership in a networked organisation actually means? Do you have tools and data that guide and illustrate tol leaders how to improve on their own?

  • Does HR have the capacity to guide the C-suite team better as business models change? Has your organisation addressed the big people issues as automation and AI continue to rapidly change jobs and make the workplace more augmented, data-driven, and technology-savvy?

Bersin says the above list are some of the big issues he talks about with CHROs, HR teams, and leadership teams all over the world. They are consistent across the globe, they're hard to address, and many of them are new. Interestingly, each and every one of these issues is dependent on technology in some way shape or form. Adaptability, resilience and transformation across these areas can be aided by technology, which is why HR Tech matters more than ever this year (and beyond).

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How Secure If Your Employee Data?

The security, transparency, and social nature of all data, but especially employee data, is now a risk. Every organisation is capturing massive amounts of data, sharing some of that data, and identifying type sof external data that may alienate employees, leak company secrets, or perhaps, through AI, recommend or suggest behaviour that is damaging. A recent study by the major UK unions found that 56% of employees are afraid of workplace monitoring, and more than two thirds have an extremely negative view of mood-monitoring, keystroke monitoring, or other forms of data collection in the workplace. Business needs to be more open, transparent, and ethical about what it does with all the data collected about employees.

The Cloud Now Contains (And Holds) Everything

As more and more software products migrate to the Cloud, the question is, 'whose cloud is it anyway?' If you’re a large enterprise, you probably have your own IT department. Which means that every time you buy an HR technology solution, your team has to integrate that solution with your financial solution/s, time and attendance solution, payroll solution, and all the other solutions in your business ecosystem.

With this move to the Cloud, a new level of complexity has been created. It might be easier than ever to integrate applications through APIs, however, we there are now multiple Clouds to consider:

  • Public cloud: these are the type of IT infrastructures provided by the likes of Amazon, Microsoft, Google, and IBM. They are considered safe and scalable because of their enormous power and capacity. However, that does not mean that they are failsafe all of the time.

  • Private cloud: these are the IT infrastructures developed internally by your own IT department. Banks, insurance companies, and retailers all have in-house systems that reside in a somewhat ring-fenced environment. Many of these large organisations are moving to public clouds to reduce cost and increase scale and availability.

  • Multi-cloud: these are the applications that span public clouds. For example, when you buy a new HR system that is hosted on Amazon, and you have other business solutions hosted on Microsoft, you are operating in a multi-cloud environment. When your IT department wants to integrate data or develop a security agreement, it has to do so across multiple cloud vendors.

  • Hybrid-cloud: these are applications that load balance and share data between clouds. This may not seem important yet, however, they hybrid cloud tech is the future of cloud computing. Many application vendors are considering these options, and there are dozens of new tech firms that help companies move applications between clouds.

The other big trend to watch out for is what's called 'edge computing.' This means moving data and processing into your own systems (the way IT used to work). It again requires a hybrid architecture and is often used for high-bandwidth applications that are too voluminous for the internet. If your business uses a large ecosystem of applications to run your business, that data is likely to reside on local servers, which from there, can communicate to a hybrid or cloud application.

The Cloud is ultimately a way to outsource IT, taking money spent on your own internal staff and outsourcing it to a software vendor. These software companies, in turn, either try to build their own massive data centres or in turn, outsource the effort to public Cloud providers like Amazon or Microsoft.

How much does all this HR Tech cost?  According to the latest Sierra-Cedar report, the average large company now has 11 core HR systems or more. Larger organisations might also have five or more systems to manage the recruitment process, up to ten different platforms for learning, and a variety of platforms for communications, reporting, compensation, and payroll.

It is not unusual for larger organisation to be spending several thousand of dollars per employee per year (often more than is spent on training and enablement), which is a lot of revenue to generate to get a decent return on your investment. To avoid this trap going forward, Bersin recommends that you make sure you select vendors and products carefully and keep the number of tools to a minimum. The more basic and essential functionality you can get under one roof, the better.

Tech Transformation To Watch Out For

Bersin spends the majority of the book covering off the major #HRtech trends he sees emerging throughout 2021 and which will carry over into the next few years. The most critical success factors are clarifying 'what problems you want to solve' before you go out and subscribe to a new platform. Doing this work will help you to prioritise your  investments and ensure that you choose solutions that have maximum integration and configuration capacity.

You also need to be very clear about who will do what once the system goes live, making sure that your HR business partners are intimately involved in the development of your HR technology strategy. That way, HR platforms are seen as strategic business solutions, not just as the latest toys that HR wants to buy.

If you're considering an #HRtech purchase this year, here's what you need to watch out for:

  • Core-HR platforms expand and grow: The essential foundation of any HR technology (and business) ecosystem is the core HR platform, including cloud-based HRMS, payroll, and core employee management systems. It is important to choose a solution that is highly configurable and gives you as much functionality as possible.

  • Employee centric technology: Business needs to provide HR technology that makes it easy for employees (and managers and HR staff) to find each transaction or process they need without have to jump between different solutions. Bersin believes that any little task or process that a person wants to do at work should have its own little widget, wizard or app that does that particular thing. Even better, you should find software that enables you to configure your own wizards, widgets or apps.

  • Safe, productive workplaces: There is a new theme in the workplace technology market, which is oriented around how to keep people safe, productive, healthy, and resilient at work. This will see the convergence of productivity tools and HR tools.

  • Talent management is reinvented: The market has exploded with new apps, including applications for wellbeing, work sharing, gig work, contingent work management, agile team and goal management, and the emerging new world of safe workplace management. A significant amount of the workforce work part-time or on a temporary or gig basis, resulting in a need for solutions that are flexible enough to manage a broad range of work arrangements..

  • The employee experience is reinvented: Last year brought into sharp focus that the survival and growth of the business is totally dependent on the health, wellbeing, and productivity employees. As a result of changes to the way many people work during the last twelve months, employee experience now covers the workplace, the employee’s commute and travel experience, the experience at home (office, family, technology), and the employee’s mental, physical, emotional, and financial health.

  • Engagement and culture tools: Employee feedback, sensing, and action platforms are helping businesses to stay on top of employee performance and wellbeing in the new world of work. Employee communications, listening, and employee experience is a core business capability, so is managing real-time intel about safety, wellbeing, or coming back to work.

  • Data and AI lead recruitment: Statistics indicate that almost a third of hires don’t work out, despite extensive testing, assessment, and job fit analysis. That is a significant cost to business that really hurts culture as well as the bottom line. The problem most companies face is finding the right people and managing a complex set of activities, as well as cultivating an adaptable workforce and an adaptable business.

  • Gig work management: Alternative work arrangements are becoming the norm. In Australia approximately 365 and in the US about 40% of the workforce do not work full time (they are a contractor, part-time worker, gig worker, or contingent worker). This is set to increase and tools are needed to manage this broad range of employment types.

  • The talent marketplace: Just as the external market has shifted toward gig and contingent work, so has work inside the company. Meaning talent management is no longer just a pre-hire to retire process - it’s a process of helping each individual find their own optimum career through projects, developmental assignments, new roles, and mentorship. It is much better to hold onto employees and provide internal development opportunities than to source new staff from outside the business.

  • Performance management tools evolve: Many of the different options that have been used thus far, including continuous performance management, OKRs, open two-way feedback, check-ins, growth mindset, development coaching, talent marketplace, are all starting to converge. Your performance management tools must be simple, highly connected, and very aligned to your corporate culture.

  • Learning technology: Learning in the flow of work, especially with a distributed workforce, is more crucial than ever after last year's disruptions. Once designed to be learning portals, these tools now have LMS features, skills inference engines and more, but their core feature is easily finding, arranging, and recommending content.

  • Wellbeing takes centre stage: Bersin's research indicates that 38% of all wage dollars are now spent on insurance, health, and other benefits. A growing percentage of this is going into what is called workplace wellbeing. As stress and anxiety become one of the biggest challenges in business, these offerings have become essential.

  • Analytics transform: AI, ONA and natural language systems have completely change the world of analytics. Data analysis is one of the highest priority interest areas among HR professionals around the world. This part of HR is like a moving target. The technologies are making analytics easier than ever, but the number of data elements and the scope of the issues being analysed is expanding at the same time.

  • The shift from tools, or solutions to platforms: If you are a large company, Bersin advises that you try to pick one core HR platform and consider the niche products somewhat replaceable.

Have You Future Proofed Your HR Technology?

If 2020 taught us anything, its that #HRtech is integral, not just to a well-performing HR function, but also to a well functioning organisation. In this day and age it is impossible to manage people without the right tools. All businesses need systems for record-keeping, pay, recruitment, learning, and many other things. Once you've got your people managed, the next question is how do you manage all this technology in the most effective, streamlined, efficient way?

The answer according to Bersin is: HR in the Flow of Work. HR technology that disappears into the background makes it useful to employees, managers, and leaders. If it’s useful, and it fits into everyone's day to day work life, and people find it valuable. That way everyone, including HR benefits. The shift that's underway now, he says, is from HR Technology as something you have to do and which creates an interruption to the flow of work, to HR Technology as a solution that makes work better.

HR technology is shifting beyond simple systems of record and systems of engagement to become systems of productivity. There will never be one system that does everything, but if you can architect, select, and implement your technology so that you get as much as possible under one roof and it stays simple and truly increases productivity, everyone will benefit.

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Topics: HR Cloud, Josh Bersin, Digital transformation, Digital transformation of HR, #hrtech, Employee lifecycle, Employee lifecycle management, HR technology 2021, #Worktech

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