As the pandemic normalizes across day-to-day life, NelsonHall expects HR service delivery to adapt to a whole new set of challenges, both through legislation and HR best practices.

The convergence of three key themes are likely to see new HR solutions being developed: staff welfare and resilience, operational efficiency, and automation.

Staff Welfare and Resilience

Pre-COVID, HR priorities looked something like this:

1. Attraction and retention of talent: by the end of 2019, the EU was experiencing the lowest unemployment in 20 years
2. Upskilling workforces and identifying skills gaps, taking into account jobs that are increasingly being replaced by robots and automation
3. Employee engagement and experience, in particular supporting Gen Z and multi-generational workforces
4. Pay: reporting, gender diversity, and addressing the gender wage gap, and removing bias from processes
5. GDPR compliance: the General Data Protection Regulation (GDPR) is the toughest privacy and security law in the world and was put into effect in May 2018 across the EU.

A 2021 study by SD Worx¹ looking across 21 HR challenges has found that the top five European HR challenges in the coming years are as follows (with the percentage of respondents placing each challenge in the top 3):

1. Staff welfare and resilience: 27%
2. Employee engagement and experience: 20%
3. Attracting and recruiting talent: 20%
4. Sustainable employability of employees (retention): 17%
5. Talent development and internal mobility (retention): 17%

The number one priority in the coming years is not surprisingly welfare and resilience, which is the most significant change from previous years. Staff welfare and resilience in this context means supporting workforces through added pressures to avoid burnout/resignations and supporting healthcare and wider work-life needs.

Prior to COVID-19, staff welfare and resilience was not a concept many HR service providers, platforms, or processes had to give much focus to, except as it related to workplace safety, accident reporting, OH&S, and sickness policy design and implementation.

Through the pandemic, individual staff ‘check-ins’ have become key. Without basic health information on their staff, how can organizations address staff welfare and resilience effectively? And today, organizations need to acquire even more information about employees – home location, travel preferences, vaccination, and medical information.

Is this asking too much? As we normalize our new ways of working and adapt to new HR practices, the GDPR provisions create unique challenges for HR, which faces a dilemma of how to respond to welfare and resilience issues while respecting GDPR rules. GDPR obligations need careful attention in this regard, as health information has the protected status of ‘special’ category data under data protection law. Various European countries are introducing local recommendations to help businesses navigate the next stage.

When NelsonHall interviewed HR service providers in 2020, we asked them how they were adapting. Most were creating communication tools to support employee outreach and manage business continuity and furlough during the crisis. Companies and service providers were initially timid to record health information such as vaccination status, but with legislation in various jurisdictions, organizations and HR tech providers are finally stepping up to implement robust solutions to record vaccinations.

NelsonHall expects that the HR priority given to employee welfare and resilience will likely stay for the longer term, so we expect more to be done to implement stronger processes in this area. HR service offerings expected to develop over 2022 and beyond will increasingly address vaccine uptake, mental health support, flexible working, and work office restructures with new procedures.

Operational Efficiency

The SD Worx study also identified that the highest priority in 2021 was addressing operational efficiency. It found that ~50% of organizations recognize operational efficiency as being the top priority or project for 2021. Similarly, NelsonHall’s 2021 Cloud HR Transformation market analysis report² identified the top driver for cloud HR transformation as helping organizations stay competitive with improved cost, process improvements, and a superior employee experience.

Going forward, managing staff welfare and resilience should ideally be more than a line manager function performed through informal ‘check-ins,’ and it is imperative, to keep operational costs down, that HR revisits tactical solutions to build stronger processes to support resilience and welfare across employee populations. Without an HR response, talent attraction and operational efficiency will be challenged. The HR-specific COVID responses and workplace practices of organizations are critical now, especially given that many employees have experienced new-found benefits in working from home and have increased work-life balance demands and/or preferences.

Automation

Finally, what hasn’t changed? The SD Worx study found that in both 2020 and 2021, looking across 19 different HR functional and cross-functional areas, the top priority and the projects most organizations looked for help with from external specialists was improved HR process automation.

Looking across the cloud HR transformation market, NelsonHall’s 2020 report found that 5% of organizations interviewed were using robotic/AI automation services from providers, and this increased to 18% in 2021. The satisfaction level across organizations serviced also increased from a score of 4.0 out of 5.0 to 4.3/5.0. Automation can’t solve all needs for all processes, but in times of increased stress and to support the mass disruption that many businesses have had to face, a service partner strong in automation and technology as well as compliance can certainly save the day, and arguably should be table stakes when selecting a provider.

Summary

NelsonHall expects that in 2022, more HR offerings will be developed to support improved automation around staff welfare and resilience and help organizations drive greater operational efficiency while supporting employees’ individual needs with personalized HR service offerings. Part of addressing individual needs will also include a longer-term emphasis on flexible or remote working, a key factor in attracting and retaining talent over the next year. Finally, given the complexity of European legislation and storing data, providers need to be very savvy with the GDPR and help clients establish robust processes to make an impact. 

HR may be cautiously putting in place new processes that store more personal data, but unless HR steps up, operational inefficiencies are likely to persist; HR can no longer afford for the management of staff health and welfare to be primarily a line management responsibility. Further, a lack of coordinated action could exacerbate staff burnout or resignations at the management level and discourage new talent if the organization is not seen as an employer of choice.

1 SD Worx 2021 ebook: Ride smarter not harder, Towards people-first digital HR

2 NelsonHall’s 2021 market analysis report: Cloud HR Transformation Services

Pete Tiliakos presents a round-up of the latest developments from Workday and the key discussion points from the Workday Rising annual user conference held in Las Vegas, Nevada.

This past week, I attended two HR events at opposite ends of the Las Vegas strip: HR Technology conference and SuccessFactors’ SuccessConnect client event. Together, they attracted ~14k HR leaders, practitioners, vendors, analysts, thought leaders, and clients, and had the common theme and purpose of showcasing the latest HR technologies and innovations that are enabling employers to compete for, engage with, and maximize the impact of today’s top talent – in a vastly different workplace than we knew just five years ago. 

Here are my key takeaways on the HR technology trends showcased during the past week.

Advances in employee UI/UX

Not only is the employment market starving for skilled workers and top talent, there is a sharp focus on bringing about innovations that fundamentally reshape the way HR manages its human capital and engages with employees. HR applications are being developed with a ‘user first’ focus, whereby the employee experience is heavily influencing and shaping roadmaps for future enhancements.

At both events, the drive toward more consumer grade HR applications came through consistently. Each vendor I spoke with is laser focused on delivering robust HR capability, but also a world class UI/UX that will provide employees with experiences that match their personal life experiences and offer preferred channels of connection to the organization (particularly mobile).

HR tech vendors remain steadfast in their efforts to create a simplified, guided, and prescriptive user experience. AI, machine learning, NLP, and prescriptive analytics have become table stakes in today’s HR tech, and are driving advancements in UX design and performance.

Example:

SAP introduced a new digital assistant for SuccessFactors. Leveraging the SAP CoPilot Web application bot framework and SAP Leonardo machine learning, the digital assistant learns and comprehends user needs and acts accordingly. The digital assistant is further enabled to support conversational interaction with the HCM platform by leveraging NLP, allowing users to engage the platform through verbal commands. Further, the assistant integrates with popular collaboration apps Slack and Microsoft Teams and is mobile-enabled through Apple and Android apps.

Talent management technology

Without doubt, the key priority for many organizations today is competing for, acquiring, developing, and retaining top talent, in what has become a highly competitive marketplace. Thus, organizations are focused on boosting their talent management technology, with an emphasis on talent acquisition, performance management, and learning management. Providers are bringing to market broader, more capable talent management solutions and insights into their platforms and offerings.

Examples:

• Paychex launched a new LMS (Learning Management System) module, further deepening the talent suite of their Flex HCM platform. In addition to hundreds of pre-loaded learning modules, clients can upload their own learning content, create new content, and import content or materials from external sources (e.g. YouTube). Further, the learning application is available in full native form by mobile
• Infor introduced an update to its Talent Science solution and Predictive Talent Analytics, which supports recruiters and managers in sourcing top candidates by leveraging machine learning and predictive analytics. By leveraging behavioral and performance data, the application uses a data-driven process to identify success drivers within the business and identifies internal and external candidates who share those success drivers.

App marketplaces are rapidly expanding

While all modern HCM platforms currently offer robust APIs (integrations) which connect critical business applications to the HCM platform and extend its capability, the demand for more robust options for connecting solutions, services, and applications is in high demand. 

Open platform approaches are becoming standard with HCM providers, allowing for clients, partners, and third parities to connect APIs for consumption through a marketplace/app store-style delivery system. This open approach is allowing for integrations to a deep pool of external solutions that extend the power of the HCM platform, allowing clients to connect the apps that make the most sense for their unique business needs and user population.

Examples:  

• SuccessFactors announced that it intends to triple its marketplace apps in the near term. Additionally, it launched a new HR community which builds on its existing SAP App Center and offers connected partner solutions around six key areas: well-being, pay equity, real-time feedback, unbiased recruiting, predictive performance, and internal mobility 
• Namely launched the Namely Connect Marketplace, which offers its clients access to partner solutions for recruiting, learning management, employee feedback, identity management, etc. and includes vendors such as Okta (identity management), Greenhouse (applicant tracking), CultureAmp (employee feedback platform), and Vestwell (401k).

Not everyone is sprinting to the cloud

Throughout the week, I spoke to companies of different sizes and complexities, and from various industries. Most were either in the process of moving their HR to the cloud or were planning the move in the next 12 months.  

However, what stood out is just how many companies still haven’t made a move to a cloud-based HR solution or are doing so with a modular approach (but are not starting with core HR). For example, I spoke with a handful of mid- and large-sized enterprise employers who said they had deployed a mix of cloud-based modules across their landscape, most commonly talent-focused modules. When asked what they use for core HR, the response was often “a leading on-premise platform”. When I asked why they hadn’t done so for core HR or payroll, the response was often “I’m not sure” or “We plan to get there… eventually.” 

This is consistent with findings in NelsonHall’s recently published market analysis, Cloud & Multi-Process HR Services: Journey to the Cloud and Beyond, which reveals that only ~40% of the multi-process HR services market is operating in a cloud environment. This could be attributed to client apprehension, but also to vendor solutions being geared to incremental moves to the cloud rather than a single shift. For example, SuccessFactors’ Upgrade2Sucess targets its on-premise customer base, enabling a move to the cloud, but as and when it makes sense for the business. This modular approach allows the client to reduce risk and realize ROI incrementally along their transformation journey.

HR innovation is no longer just for “HR companies”

Human capital management has become a very profitable market in the past several years, and only seems poised to continue its growth as organizations become more talent-focused. Historically, innovation in the HR space was left up to the HR vendors and tech providers themselves (e.g. ADP, Ceridian, Kronos, etc.) – i.e. those directly serving the HR practitioners with services and solutions.

However, this has changed as the largest, richest, and most capable software companies in the world (e.g. Google, Facebook, Microsoft) are targeting, developing, and selling human capital management solutions and stepping up the competition across the industry. 

Examples:      

• Google Hire: an AI-enabled talent acquisition platform for G-Suite
• Workplace by Facebook: Mobile-enabled tool for workplace communication, collaboration, including groups, chat, and video call capability. With integration to HR platforms including, ADP, Kronos, and Paychex Flex
• Microsoft Teams: Workplace collaboration tool which combines chat, meetings, notes, and attachments with integration to Office 365 and leading HCMs (e.g. SuccessFactors)
• Microsoft Dynamics 365: cloud-based ERP and CRM solution with HCM capabilities, including Core HR, talent acquisition, and onboarding.

NelsonHall’s recently published (July, 2017) Targeting Cloud-Based HR Services market analysis report estimates the global cloud-based HR services market to be $15.2bn, and this is expected to continue its growth trajectory (~6.3% CAGR) to reach $20.6bn by 2021. 

With the largest portion of the market coming from cloud implementations (~44%), it’s interesting to find that less than half of the current multi-process HR outsourcing contracts are being delivered on cloud-based systems. Despite the growing appetite for cloud-based HR platforms, vendors continue to encounter organizations hesitant to leave traditional on-premise systems and make the switch to the cloud.

Our research finds that the top inhibitors to moving to cloud-based HR systems and services include:

• Lack of business case or funding to replace existing HCM technology
• Desire to maximize previous legacy technology investments 
• Perception that the change impact on the organization’s operations is too great or too risky.

A major challenge for vendors remains in helping prospective customers to overcome and successfully navigate the impact of change to operations from a cloud-based HR transformation initiative, particularly for larger, complex, highly-customized client environments. And the lack of a successful business case that shows ROI is often a roadblock that some deals do not overcome. 

As a result, vendors are continuing to invest in, and actively market, branded tools and enablers that make the move to the cloud simpler, faster, and less cumbersome. By offering pre-configured, standardized wizards and tools that shrink the deployment time and make implementation of cloud systems much easier, value realization and ROI are being achieved much sooner than before.

Examples of HR BPaaS vendor offerings that expedite deployment include:

• Ceridian’s Dayforce Activate:
  • Platform: Dayforce HCM
  • Description: Guided implementation wizard/tool configures ~80% of implementation based on responses and data leveraging RPA. It prepares system for testing and go live
  • Key benefit: Simplified implementation; reduces implementation effort up to 60%, cycle time up to 50%; quicker ROI realization.

• Neeyamo’s Rapid Deployment Solution:
  • Platform: SAP/SuccessFactors
  • Description: Leverages a standardized, pre-configured fixed-scope model for implementing SAP/SuccessFactors Employee Central
  • Key benefit: Streamlines implementation of SAP/SuccessFactors; reduced time, effort and cost of implementation; quicker ROI realization.

• NGA HR’s cleaHRsky:
  • Platform: SAP/SuccessFactors
  • Description: HRaaS including analytics that tie in HR, Payroll, as well as HR service center interaction data; pre-configured/’plug-and-play’ ready, for rapid deployment in 145 countries; range of HRaaS service models for post-deployment support
  • Key benefit: Live on SAP/SuccessFactors in ~100 days; reduces implementation cost ~30% on average.

Looking forward, in addition to improving the deployment of cloud-based HR systems and services, cloud-based HR service vendors will continue to make investments that drive value for clients in the following ways: 

• With demand for post-deployment application management services (AMS) now a leading gateway to new clients for vendors, ~70% of vendors expect to add or expand their post-deployment (e.g. AMS) support services. Many now offer AMS services on more than one system, and most now offer AMS as a standalone
• Enhancing the user experience by offering intuitive, easy-to-use, consumer grade (mobile-enabled) applications that make day-to-day HR transactions simple
• Providing access to on-demand HR data through descriptive and predictive analytics that is easy to access and provides accurate real-time views of the workforce; vendors are investing heavily in HR analytics as a service, which will become a more common vendor offering in the future
• Developing and deploying advanced automation capabilities (e.g. RPA/bots and AI) throughout the delivery model to reduce operating costs, increase efficiency and accuracy, and improve the user experience.