With potentially groundbreaking HR technology solutions emerging, we’re seeing a tech boom that is fundamentally reshaping the way we work — and how we think about HR.
According to the 2019 HCM Trends report from The HR Federation, a network of leading HR market analysts, global HR technology venture capital has topped $3.1 billion this year, more than triple the amount invested in 2017. While there’s a range of technologies, some of the most interesting — and disruptive — examples are powered by artificial intelligence and automation.
“AI and machine learning are opening the door to a whole new world of possibility for the human capital space,” CareerBuilder CEO Irina Novoselsky says. “Our research shows that more than half of HR managers feel AI will become a regular part of HR within five years.”
Novoselsky says her company has developed AI technology that can build a job description or resume in less than a minute, and also tell companies which candidates match jobs and are likely to respond. “What is exciting is that we’re just at the cusp of what this technology can do,” she says.
Here are five other ways technology is changing the face of HR.
1. AI Is Making Recruitment Smarter
Recruiting new hires is a time-consuming and costly process, but thanks to automation and AI it’s getting easier to find skilled people who are a great fit for your company. From automated resume screeners to robot interviewers, a wave of these tech solutions for recruiting has hit the market.
“AI is starting to outperform humans at making hiring decisions in certain areas, such as evaluating hard skills,” says Harj Taggar, co-founder and CEO of Triplebyte, which offers a credentials-blind process for evaluating engineers. “AI then frees up recruiters to focus more on conducting soft-skill and culture-fit evaluation in a more structured way.”
Mikaila Turman, director of people at background check company GoodHire, says machine learning and AI are changing the way the company recruits, hires and onboards new employees. For example, she says, the company recently used a tech tool called Entelo to find qualified engineers in a more targeted way during a high-volume hiring period.
“We were able to reach out directly via email versus posting on LinkedIn, and subsequently increased our candidate pool,” she says. “Leveraging technology helps us to be proactive in our efforts to get responses instead of spinning our wheels and getting nowhere.”
2. Compliance Is More Efficient and Sophisticated
Staying compliant has often been a major challenge for HR teams. Laws and regulations are constantly changing and often require vast amounts of paperwork and information.
Compliance once required organization and dedicated IT storage capacity, but cloud-based solutions have streamlined the process.
Derek Jones, vice president of enterprise solutions at employee scheduling firm Deputy, says that as technologies continue to improve and labor laws evolve, companies will increasingly turn to technology to navigate complex and sometimes politically charged compliance issues.
For example, he says, the Fair Workweek movement has emerged as a major working-class issue, with cities like New York and San Francisco passing laws that limit unpredictable work hours that can demoralize workers and make it hard for businesses to retain talent. He says companies that have employed tech solutions for this issue have been able to more effectively navigate these changing rules.
“Businesses that embrace technology for compliance will come out on top, with more attractive recruiting and retention efforts, as well as better working conditions that improve employee engagement and increase sales,” he says.
3. Analytics Drive Better Performance Management
Performance management has long been an important HR function. HR pros have driven the process, monitoring performance, collecting supervisory feedback and facilitating regular employee reviews. Technology has streamlined the process and eliminated a lot of unnecessary steps, but the next data-driven phase of performance management is upon us.
Betterworks CEO Doug Dennerline says HR will see a new level of data competency in 2019 with the rapid and widespread adoption of people analytics that help managers and executives make decisions about their workforce. “The raw data pulled from analytics can be used to create actionable insights and ultimately support data-driven decisions around promotions or compensation, development and success planning, and agile cross-functional team staffing,” Dennerline says.
He says HR teams can apply analytics to sentiment data generated from hundreds of interactions between employees and managers as part of the performance management process. Analyzing sentiment data helps HR to identify opportunities for coaching, Dennerline says, and allows managers and employees to benchmark their performance.
“Though people analytics won’t replace the human elements of HR, 2019 will see them complement humans more than ever before and become an extension of the team,” he says.
4. Better Analytics Boosts Diversity and Inclusion
McKinsey & Co.’s 2017 Diversity Matters II report says there’s a positive correlation between a more ethnically and gender-diverse leadership team and an increase in profits. Consumers are also more frequently looking for companies that value diversity, and that will have an impact on recruiting strategies.
Parijat Sarkar, senior director of product management for Zenefits, says that as awareness of the value of diverse teams grows, organizations will increasingly leverage workforce analytics to tackle diversity and inclusion issues.
“This is important as more companies — especially with today’s political climate — are pressured to take a stance on D&I workplace issues,” Sarkar says. “For example, companies can use people analytics to get a clearer view of pay gaps and discrepancies so they can do a better job to promote fair salary compensation.”
As the spotlight on workplace D&I continues to grow, Sarkar says, it will put pressure on HR software vendors to offer more of these types of offerings.
5. A More Strategic Role for HR
Technology has given HR professionals tools that reduce the time they have to spend on administrative tasks, allowing them to focus on issues that require more hands-on attention.
Before mobile apps and cloud computing, HR was defined by piles of paperwork and a constant struggle to keep up with compliance, hiring and unending stacks of employee information. By simplifying responsibilities like recruitment, record keeping and payroll, technology has significantly improved efficiency, accuracy and even employee morale.
“HR’s role as an administrative function will continue to shift to HR being a strategic advantage for the organization as the department continues to be supported by technology that simplifies administrative tasks and frees up our time and resources to make a more strategic impact on the organization,” GoodHire’s Turman says.
EDITOR’S NOTE: This article was originally published in February 2016, and substantially updated in December 2018.