Most of the start-ups addressing the talent management function have ‘engagement’ as a core element
Providing Do-It-Yourself solutions which can be easily operated even by the technology Luddites is the new USP the market hasn’t given any conclusive hints on its readiness & by far, the adoption of new technologies and products by HR has been slow
Parker Conrad “deeply resented” the few hours of monthly HR administrative work. He felt, “if it was all connected and integrated then a lot of it would go away. It could run on its own.” Regular visits to Kinko’s to fax enrollment forms of employees gave birth to the “fastest-growing” start-up in history, Zenefits. Conrad’s Zenefits is living proof of how a taxing task like insurance filing can actually lay the seed of a $100 million tree (and that is only the projected revenue for its third year!).
Zenefits is a typical entrepreneurial anecdote. A story which illustrates that innovation always stems from a problem. The HR space is riddled with such problems— a word that entrepreneurs interpret as opportunities. And like Zenefits, there are many start-ups in the HR space, particularly HR technology, all of which have seen ‘talent challenges’ as product and market opportunities.
There is a growing curiosity of entrepreneurs in the HR technology space. Based on the primary data from the Spotlight Awards, the number of start-ups founded in 2015 has already surpassed the numbers from the last year. All these TechHR start-ups aim to be solution providers across HR verticals (both admin and strategic).
Challenges as opportunities
Broadly, TechHR start-ups are catering to challenges in both the talent acquisition and talent management space. Based on our analysis of the Spotlight Award applications, 55 per cent of start-ups are talent acquisition companies, and 45 per cent are scattered across the talent management vertical, with start-ups in L&D making for the maximum at 26 per cent (12 per cent overall) share of the talent management market (see Fig. 1).
The set of problems these start-ups are catering to is diverse, but the analysis shows some clusters of problems in the talent landscape these start-ups are aiming to address.
Within the talent acquisition vertical, TechHR start-ups are looking at the following domains:
Speed of hire. Time to hire is the most critical hiring metric of organizations, according to the Aon Hewitt ‘Decoding Hiring Trends in India’ study . Contrarily, the turn-around time per hire is very high as a lot of time is wasted in sourcing, screening, and interviewing candidates. According to the Dice-DFH Vacancy Duration Measure, employers (in the US) take an average 25 working days to fill vacant positions. In companies with more than 5000 workers, the average time escalates to 58.1 working days. Speed of hire is thus extremely vital for organizations and entrepreneurs visualize a product opportunity in this space. Based on our analysis of the Spotlight Awards data, as much as 25 per cent of the TechHR start-ups are attending to this problem by using proprietary algorithms, analytics, and assessments (both for behavioral and technical skills). Here is what some of the start-ups are doing — A particular company in CoCubes has built a Cognitive Ability Speed Test that filters suitable candidates within 12 minutes; TalentRecruit has automated the time consuming process of sourcing (by developing an advance heuristic based parsing algorithm) and follow-ups with candidates on email, telephone calls, and messages; Talview, a mobile-video hiring solution, enables companies to accept applications, showcase the company, conduct automated and live interviews, video proctored written tests as well as code tests, and complete on boarding formalities on mobile/tablet/PC remotely.
Skill-matching. Organizations are grappling with finding talent that fulfills the demanding job profiles and the functional skills required. The ‘Higher Education in India: Vision 2030’ study by Ernst and Young reveals that the number of “employable” graduates across industries is agonizingly small (as low as 75 per cent for IT industry, 85 per cent for BPO voice and 55 per cent for manufacturing). There is both a lack of skilled candidates and the unavailability of the candidates with requisite functional skills. There is a glaring skill mismatch. Start-ups are aiming to bridge the talent gap by mapping job roles with skills, doing pre-assessment tests, creating a talent pool of skilled candidates, and even doing job-role specific training. 21 per cent of the applicants are addressing the skill-matching problem today. To give some examples — HackerRank, a tech talent hiring platform, conducts automated code evaluations and ranks applications based on performance. Recruiters can choose to interview the top performers for they have the requisite skills. AssessHub, an online skill assessment platform, enables companies to scientifically evaluate talent for functional, behavioral, cognitive, domain, and technical skills. Other assessment start-ups are also addressing the problem. RippleHire, the winner in HR Analytics category in Spotlight Awards, can identify top talent for any open position with an sutomsted sourcing process.
Right-fit hire. There are two dimensions to having a right fit hire – a job fit, and a cultural fit. A candidate is right-fit when both the criteria are fulfilled. Based on the Leadership IQ study, 46 per cent of newly-hired employees will “fail” within 18 months, while only 19 per cent will achieve “unequivocal success”. The dominant reasons for the low success rate are behavioral traits and inability to fit to the culture; the technical skills are down the list. Even if companies are able to find job-fit candidates, the task to find cultural-fit talent is challenging. TechHR start-ups are addressing this by enabling the assessment of a candidate based on behavioral traits and emotional quotient, and then evaluate if the individual is the right-fit for the organization. For some of these start-ups, technology is substituting human judgment, and for some others, technology is acting as an enabler to the process of identifying a right-fit hire. For instance, Video Recruit, an online web service, enables recruiters to screen candidates for functional and behavioral traits by allowing them to record automated, yet spontaneous video interviews to preset questions. Another start-up, eHelium Advisory Services enables employers to find “right-fit, entry level candidates”. They map aspiring candidates with job role specific skills for BFSI, IT, ITeS and retail sectors.
Quality of hire. The ultimate conversation in the talent acquisition function converges to the quality of hire. It is an important determinant of the company’s performance and an imperative too. The US Department of Labor estimates that “the average cost of a bad hiring decision can equal 30 per cent of the individual’s first-year potential earnings”. The real ramifications go beyond finances. According to a survey by CareerBuilder, 39 per cent companies lost worker productivity, 39 per cent lost time in recruitment and training another worker, and 33 per cent stated that bad hires have negative effects on employee morale. Start-ups in the talent acquisition space have identified this ubiquitous problem, and 31 per cent of TechHR start-ups are addressing the challenges faced with the quality of hire. This is carried out by using algorithms and analytics for better sourcing, integrating referrals seamlessly with everyday activities of employees, streamlining the screening process, pre-assessments, creating jobseekers’ profiles and rankings, improved skill matching, identifying preemptive cultural fitness & readiness of jobseekers, creating a filtered talent pool, verifying past employment records, etc. Most of the aforementioned example companies are also attending to improve the quality of hires. It is worth noting that most of the start-ups in the talent acquisition space are solving multiple of the aforementioned problems with a single product. In the talent management space, it is difficult to discover patterns or clusters as the space is diverse and scattered. But within this unpatterned space, a few patterns were observed:
Engagement. Most of the start-ups addressing the talent management function have engagement as a core element to the product. It is even integrated to the products which are not solely employee engagement platforms. For instance, rewards and recognition, performance management systems, and learning and development platforms are built as engaging tools. These new age companies are giving an engaging experience to employees and employers alike to improve completion and impact rates. KNOLSKAPE and Epiphany Learning are two examples giving an engaging experience to employees in the L&D function. TyDy is a dedicated employee engagement platform that is giving an attractive, interactive and uniform experience to all employees. Such start-ups realize that having an engaged workplace has become a high priority for organizations since it drives improved results. According to the Gallup Employee Engagement study, companies with highly engaged workforces outperform their peers by 147 per cent in earnings per share. There stands both the product and the market opportunity for start-ups in the talent management space; and 19 per cent of such TechHR start-ups are solving the problem of engagement, either primarily or secondarily.
Efficiency. TechHR start-ups, predominantly those in the talent management space, are simplifying and expediting processes and eliminating hassles faced by HR teams in organizations. This is not happening only in HR administration work, but also in strategic HR functions such as rewards and recognition, performance management, and learning and development. These products automate most of the manual processes such as data collection and collation, emails, follow-ups, etc.
SecureNow, a Spotlight Award finalist, addresses the cumbersome task of delivery of employee benefit insurances; and HiFives, an R&R platform, addresses the administrative hassles in managing employee rewards and recognition programs. It streamlines and automates various processes such as budgeting, nominations, approvals, communication and redemption based on their R&R policies.
However, aforementioned categories, by no means, constitute an exhaustive list. There is a multitude of technology start-ups in the HR space that are solving very specific and diverse problems. They have created a niche category of their own. For instance, there are start-ups that bridge the gap between employer and flexible workforce (Flexing It and Flexy are two examples), and one start-up in TalentWoot, is an online acquihire marketplace.
What these new-age companies bring to the fore are innovative approaches to tackle the challenges that ail the HR. “In the last two years, things have improved dramatically because of technology. The value of disruption happens when it is 10 times better than the previous solution. You want to be 10 times better rather than being 10 per cent better, and for that you have to solve problems in a different way. And that is what is happening,” says Sanat Rao, Partner, Corporate Development and M&A, iSPIRT.