Let’s start this blog post by saying that I have no idea what 2019 specifically holds for HR training and compliance programs – nor does anyone else. If I were that prescient, I’d invest in lottery tickets and hit the beach. However, there are some general trends and corporate realities that give us an idea of where to look for successful start-ups affecting human resources and where start-ups are facing trouble.
Technology Affects Employee Communications and Training and Compliance
The first trend is the generation-long disruption of business activity by computers and technological advances. Technology has the power to make key HR duties and actions easier, but when it’s used poorly, all the employee communications tools and apps in the world will only get in the way.
HR departments will continue to implement technological solutions because they must. When the finance department analyzes HR, it sees a cost center not a profit center (which may well be the most short-sighted perspective in business, but it is true nonetheless). Cutting costs by leveraging the time of HR professionals is going to continue. Any technological solution that makes training and compliance more streamlined and cost-effective will get serious consideration.
HR Improving Training and Compliance, and Other Essential Functions
A second trend is the expansion of the HR function from the HR basics of hiring, retention, employee communications, training and compliance, through leadership development and more. With new technology and artificial intelligence, more is being expected of HR departments. This, too, will continue as AI and robot use become more widespread. HR professionals can always do much more, but there are only 24 hours in a day, and so priorities must be set. As technology frees them from the mundane drudge work, they will be able (and expected) to engage in more strategic activities.
Emphasis on Integrated Solutions
The third trend is really more of a human state of being – we prefer integrated solutions to a panoply of patchwork fixes. The simple fact is that you want your HR professionals doing HR work. You don’t want them on hold with the IT department that is trying to develop a work-around because one program won’t talk to another.
Fourth, we have to consider the kind of change that HR is undergoing. Usually, this is divided between radical changes (paradigmatic change as my old Greek instructor would have said) and incremental change. Radical change is entering a brave, new world, whereas incremental change is more evolutionary. Human nature is largely more comfortable with incremental change (in my experience, most people would prefer no change at all), and computerization has already disrupted the business world in a radical way.
Where Do We Go From Here?
My opinion, for what it’s worth, is that we’re done with radical change for a while. HR departments understand that technology can make them more effective, and that was the huge paradigmatic change. From here, we’re looking at building a better mousetrap rather than inventing a mouse trap in the first place.
Finally, there’s the market size issue. HR departments are never flush with cash because they’re viewed as cost centers. Sales and marketing are better funded, so firms selling to them are more likely to succeed. But a start-up company with a technological solution to HR problems that can also sell the solution to other departments has effectively expanded its market exponentially. Think of it as a vending machine. Put in the HR department and you have ensured that your customers work in HR. Put it in the lobby of your building, and the guy delivering packages might be your customer. Looking beyond HR is important.
So, pulling all of this together, what do we get? We have a market hungry for technological solutions to HR issues – issues that are likely to continue expanding. This puts a lot of emphasis on being a first adopter and being a first adopted.
Change resistant as humans are, the market is likely to favor integrated solutions that make incremental rather than radical change. In addition, solutions that have applications outside HR are more likely to succeed because of a much larger market for those solutions than for those restricted to HR.
The last thing to consider is just what this means for a start-up offering such solutions. If you have the kind of solutions that the market favors (integrated, incremental and applicable outside HR), you have the inside track on market success, even dominance. If you don’t, if your market offering doesn’t quite fit the bill, that doesn’t necessarily mean you are doomed.
I used to work in credit ratings, a business that was a duopoly of Moody’s and S&P. There were some smaller ratings agencies around, but those were the Big Two. Fitch was a smaller one, as was IBCA and Duff & Phelps. Thompson BankWatch had a unit in the game. These smaller agencies had their niches and they had their fans, but they didn’t have the scale to compete consistently with Moody’s and S&P. Then, someone at Fitch got the idea to buy up the others. Suddenly, there was a third force in the business.
I bring this up because HR tech start-ups that have a good, but narrow offering aren’t doomed to fail. They are acquisition targets that may well make their acquirer stronger and more effective.
Based on all of this, I think the winners for employee communications in 2019 seem to be AI and robotics. Clearly, they have applications far beyond HR (“Alexa, put on ESPN”) and they handle gate-keeping functions to give HR professionals more time to devote to strategic issues. Those that are easily integrated into existing technology will have a few steps on everyone else.
Above all, those offerings in AI and robotics that improve on their own either by heuristics or machine learning or a combination (most likely) of both. You won’t need to customize your software much, as it will customize itself over time. I would keep an eye on this year-old list from Fortune. The important thing to notice – only one out of 100 is engaged directly in HR tech. From that, I deduce that these trends are still in their infancies.