May 15, 2018  •  3 min read

Harnessing humans: the impact of technology within the human capital management sector

Introduction

Traditionally, technology has been viewed as a threat to human employment – currently it’s estimated that 35% of the UK workforce does a job that is at risk of some degree of AI automation. But increasingly, advances in technology are also being used by companies to improve hiring processes, engage with their workforce, and identify future leaders already within their organisation. While the cost of using technology is coming down, fears of complex and time-consuming implementation can put clients off – particularly when some older leadership groups maintain a lingering suspicion that technology cannot replace the human touch. It remains as crucial as ever for businesses to explain in simple terms the benefits – both tangible and intangible – of their platforms, to their clients.

DC Advisory’s Business Services team explores the issues surrounding human capital management and its digital revolution

There is an increasing recognition that successfully predicting future performance, improving engagement and developing talent throughout the full lifecycle of an employee is crucial to winning the so-called ‘war for talent’. As companies look to create and sustain a competitive advantage in this area, and as the internet generation start to move into positions of power within their organisations, they are increasingly turning to technology and tools that can help them create this edge.

Stage 1: Recruitment

Organisations and recruiters have long been leveraging a simple ‘CV search’ functionality in-house. Companies are now far more sophisticated, with platforms like Nurole developing solutions to harness the power of AI for understanding not just broad brush requirements, but personality/interest matrices – something missing until now. And with the average tenure of employees declining across most mature markets, the number of candidates per job increasing, and grade-inflation increasing the challenge recruiters have in selecting the best candidates from a simple CV, any solution that helps to identify talent more accurately and efficiently is positioned well for the future.

Stage 2: Assessment, training and engagement

Optimising the candidate experience for any assessment, training or engagement platform is a key focus for companies operating in the sector, as clients increasingly recognise the importance of ensuring their employees view ongoing assessment and training as a benefit to them and not a chore. Systems like CoachBot – an app built by UK start up Saberr and trialled by organisations including Unilever, the NHS and NFU Mutual – provides team-building work traditionally done by a coach, asking team members simple questions about their communication style, work goals and team dynamics. In the same vein, Thomas International – a psychometric assessment provider – deliberately designs its tests to be candidate-friendly, with a strong emphasis on test design, short time to complete, and easy-to-interpret feedback.

It’s unsurprising that larger enterprises have also identified the broader sector as attractive. Amazon continues to make its a bid for the corporate space by exploring how products like Alexa can be integrated with more mature Human Capital Management (HCM) systems. The technology can now provide answers about HR issues such as pay, benefits and annual leave – similar to chatbots being developed around the world as the ‘first line’ of HR support.

There is no escaping technology in some form; with the scalability of consultant-led business models inherently limited, even organisations which pride themselves on the ‘human touch’ are looking for ways to use technology to help them deliver the face-to-face services their business models demand. People development and leadership companies such as Insights or YSC (whose business models focus largely on an enterprise client base and significant face-to-face contact time), are considering how technology can help to improve their solutions.

Stage 3: Management – early identification of factors affecting satisfaction

Data generated by ‘first line’ chatbots also provides central HR teams with the ability to spot trends – for example, resolving complexities around specific work policies where there has been an increase in employee enquiries. A more controversial approach has been AI’s capacity to mine comments on internal messaging apps/social networks to build up an understanding of firm-wide sentiment. The recently announced $1.2bn takeover of Glassdoor by Recruit demonstrates this trend for data analysis well, with large HR corporates and assessment companies increasingly aware of the vast quantities of the information they hold and the power of it to help clients improve decision-making and employee development outcomes.

Conclusion

The use of technology within HCM and the global tailwinds underpinning broader sector growth are unlikely to reverse; it is therefore up to businesses operating in the sector to determine how they want to adapt to the quickly changing environment.  Some organisations will have the culture, confidence and know-how in-house to develop their own solutions. Others will prefer to look to M&A to create capability, with efforts concentrated on acquiring the right platform to complement their existing client services.  In either situation, the future looks bright for the industry and the consolidators and independent platforms within it.

Contributors

James Nichols
United Kingdom
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