Road Report: HR Tech
October 20th, 2023
Last week thousands of people—including the 4 of us—descended upon the Mandalay Bay in Las Vegas for the annual HR Tech conference. It was a full event: schedules were packed, energy was high, and food was plentiful. We had an absolute blast!
Here are our high-level takeaways from the event:
- Fresh air. Seriously—this was one of our biggest takeaways: If you’re in Vegas, don’t let yourself spend the whole time indoors. We had lunch with RedThread members outside, and it was game-changing.
- Energy & community. Face-to-face meetings are still rare enough that people were super jazzed to meet old friends and make new acquaintances in person.
- Skills & AI absolutely dominated hallway conversations, session content, and provider messaging on the show floor, as expected.
- Manager effectiveness also showed up as a running theme as providers aim to better support managers with tech and AI.
- Vendor partnerships. Many providers said they were using the conference as an opportunity to explore or solidify partnerships with other vendors.
- Surprises. There were more providers from unlikely places offering skills tech and more earned wage access providers than we expected, but fewer frontline tech providers.
- Keynotes. Skills is an ongoing care-and-feeding process; companies need to help people fall in love with their work; and although HR tech spending will go down overall in 2024 it’s likely to rise for learning and people analytics tech.
- Next year. We think the vendor booths in the expo hall may be different next year as some vendors cut marketing spend and new AI vendors enter the market.
Now for the details…
Fresh air, energy & community
If you’ve ever been to a conference in Vegas, you’re probably familiar with this phenomenon: You land at the airport, get into a taxi, go to one of the hotels on the Strip, stay inside for 2-4 days straight, get back in a taxi, head back to the airport. Ugh.
We broke that streak with an outdoor lunch with RedThread community members and wow, did it make a difference! Join us next year because we’re sure to do it again.
Figure 1: RedThread community members at lunch at HR Tech | RedThread Research, 2023
We also got tons of energy and a feeling of community from the Tech Consortium members we talked to during the Moveable Feast of Insights interviews. We asked leaders about what they were seeing at the conference, what surprised them…and, yes, their views on skills and AI. You can check out the recordings here:
- Claro Analytics
Skills are still hot
Everyone’s still talking about skills. It came up over and over (and over) again in our conversations with leaders and vendors—and not just because both of our team’s sessions were about skills. Vendor booths, session topics, and ad hoc conversations covered skills nearly as much as they did AI. For example, a few sessions in addition to ours were:
- Madeline Laurano of Aptitude Research and Xabier Ormazabal of Eightfold spoke about skills-based talent intelligence
- Caroline Ford, formerly of Novartis, Mike Howells from Pearson, and Mallory Martino from BIC shared how to strengthen a skill strategy
- Antony Shields from EY and Conor Volpe from Eightfold talked about AI and skills
But the most visible skills presence at the conference came from the vendors. There were loads of vendor-led sessions, demos, presentations, and case studies on skills from Cornerstone, Degreed, Eightfold, Lightcast, Neobrain, Phenom, Seekout, ServiceNow, Skyhive, Visier, and Workday. And we saw the word “skills” (along with AI, below) on many, many booths.
So it was interesting to note that, despite the chatter, many organizations are still in the early stages of developing their skills strategies. This was evident during Dani and Stacia’s skills session, where the audience was asked where they were in their skills journeys. Nearly half of folks raised their hands, saying they were thinking about it but didn't have a strategy yet. That aligned with the survey results that Dani and Stacia shared during the session: 58% of HR leaders surveyed said their organizations have no skills strategy (Figure 1).
Figure 2: Survey results on skills strategy | RedThread Research, 2023.
RedThread research hub members can access the above image and the full slide deck from Dani and Stacia’s skills presentation in the member portal here.
AI: Features, demoware, ethics
AI was the other hot topic at HR Tech. We saw a lot of AI-focused features being demoed at vendor booths, especially features using generative AI. We heard about how AI can enable skills-based approaches, improve hiring, increase productivity, transform the employee experience, and more. There were sessions on the potential of generative AI and pretty much every session in the conference touched on AI in one way or another.
Based on our understanding of the tech, much of what was being touted at the show was demoware. Demoware is designed to show the potential of AI / Gen AI, but it’s not actual code integrated into the products. (Or at least not code that could do much more than what was being shown in the demo environment.)
This is ok, because so much of the capability of AI is new, and most vendors are unlikely to invest heavily into integrating Gen AI until they are certain it is something their customers want, have clear use cases for, and know it will work. However, it is important for buyers to beware: Just because a vendor showed Gen AI capabilities at HR Tech does not necessarily mean it has those capabilities ready to roll out at an enterprise-grade level. If you are buying HR tech software right now, ask questions about the actual extent to which AI or Gen AI capabilities exist within the product—and ask for the opportunity to test those capabilities.
Ethical AI came up as a concern in many of our Moveable Feast conversations, including with Cornerstone, Degreed, Eightfold, Lightcast, Seekout, Techwolf, and Workday. Vendors and organizations seem to be experiencing both pressure to move fast on AI and the need to minimize any adverse effects of the AI they use—and there’s a tension between those two things. The people we talked to were thinking about how to ensure that:
- Organizations make good decisions about when and how to use AI
- Any AI is trained on clean and debiased data to the largest extent possible
- Decisions based on AI recommendations are explainable
- Personal data remains secure and private
A prediction: AI will increasingly be a commodity, the way that mobile capabilities are now a commodity. This commoditization is already occurring, as evidenced by the fact that nearly every vendor advertised that they have AI. A specific example of this is the proliferation of conversational chatbots, which were everywhere at HR Tech. Next year, we expect to see text summarization, suggested language prompts, and natural language inputs everywhere, all of which leverage generative AI.
Managers still need more help
One recurring theme was the ongoing challenge of manager burnout. Managers are often tasked with balancing the human and operational aspects of work, and they have more on their plates than ever.
In response, many HR technology providers are prioritizing support for managers. This support enables managers to be more efficient and agile in their roles, reducing their burden and enhancing their ability to lead effectively. The HR tech landscape is responding to the pressing need for tools that empower managers. A number of sessions at the conference focused on helping managers get the support they need, improving their effectiveness, and helping them drive employee engagement.
Some of the vendors we spoke with are focusing on managers by using AI to automate administrative tasks and redesign work, allowing managers to spend more time on meaningful activities and avoiding burnout. Others are using AI to help with performance management.
For example, one of the vendors we spoke with, beqom, is using AI to help employees with goal-setting and suggest questions that employees and managers should discuss in their check-ins so that they are able to better use their time together. Another vendor we spoke to, Beamible, is focusing on jobs and work design to help address manager burnout. A session by the people analytics technology vendor Visier highlighted the metrics that can help companies measure manager effectiveness and the insights that can help managers make better decisions. Another session by the workforce management vendor Legion showed how automation can reduce the administrative burden on managers and focus on what matters most (Figure 4).
Figure 3: Top 3 things managers say will make their lives easier | Source: Legion, 2023
Vendors are emphasizing partnerships
Notably, compared to previous years, more vendors at HR Tech emphasized their partnerships with other vendors. This reflects a trend we’re seeing more broadly: More and deeper vendor partnerships.
For years, anyone would say, “Of course we integrate!” when asked, but they weren’t necessarily promoting their integration capabilities and the quality of those integrations was often uncertain. Sometimes “integration” meant the ability to ingest a .csv file.
This year, we noticed the extent to which providers were actively advertising their integrations, promoting the depth and breadth of their partnerships with other providers as a benefit or differentiator of their solution. More and more people—from vendors and organizations alike—seem to have converted to the idea that no solution can provide all the needed tech. Even the biggest platforms can’t offer everything. This is why so many folks mentioned they have an “open and extensible ecosystem.” This is a good thing.
For example, Nag Chandrashekar from Degreed, Karthik Suri from Cornerstone, and Mikael Warnoo from Techwolf all emphasized during their Moveable Feast interviews that skills require an ecosystem approach (Figure 5). Many different platforms—human capital management systems, applicant tracking systems, learning systems, talent intelligence and management systems, and so on—generate and use skills data. Successful skills-based approaches will depend, at least to some degree, on providers’ ability to make different tech systems work well together.
A few surprises
We were surprised to see 3 things:
- Skills tech vendors from unlikely places. We’re used to hearing of skills tech vendors hailing from talent acquisition, learning, and people analytics categories. But from compensation, traditional assessment, or org design vendors? No, we didn’t expect that, necessarily. But that is what we saw. Across many of our briefings, vendors shared with us unexpected ways they play in the skills story, and that will show up in our skills tech update, which we will be publishing within the next quarter.
- More earned wage access vendors than expected. Earned wage access (EWA, also known as on-demand pay) is one way for organizations to support workers’ financial wellbeing without actually paying them more. As such, it’s been growing in popularity over the last few years. We expected to see some EWA vendors at HR Tech this year, but we were surprised at just how many there were. We noted at least 8 specialized EWA vendors—Clair, DailyPay, EarnIn, Immediate, Instant, Payactiv, and Tapcheck—not to mention the larger payroll/HCM vendors who also play in this space, like Ceridian and UKG. The vendors we talked to expect to see significant growth in 2024, so we should see even more of them at the conference next year.
- Fewer frontline offerings than expected. We’ve been researching frontline workers a lot this year. We know organizations continue to struggle with frontline talent shortages, and they’re looking to tech for solutions. We also know that frontline tech vendors are doing all right financially—for example, many expect to grow in the next 12 months and/or close funding rounds, as we’ll report in our upcoming frontline tech study. Given that there’s high demand and supply, we expected to see more frontline-focused vendors. That’s not to say there weren’t any frontline tech vendors—UKG and Workday’s Moveable Feast interviews highlighted their frontline offerings, the EWA vendors mentioned above primarily serve frontline workers, and there were a few frontline-focused vendors like Denim, Escalate USA, and Workbuzz. But there were a lot fewer than we thought there’d be. We hope there’s more next year.
It'll be interesting to see how these 3 surprises shape up next year.
Highlights from the keynotes
We missed Geena Davis’ keynote opening the conference, bummer! But we were glad to catch the other 3:
- Josh Bersin, HR analyst and author, opened the festivities on Wednesday with some framing thoughts on skills and AI. We appreciated his emphasis on skills as an ongoing, adaptive journey rather than a one-and-done exercise. He said skills are “an ongoing care-and-feeding process for your company” and gave the example of a large defense contractor that annually identifies upcoming critical skills, then hires and trains its workers accordingly. He also predicted the 4-day workweek is coming.
- Marcus Buckingham, author and motivational speaker, kicked off Thursday. He spoke about the declining trust among people in institutions that surround us, including government and media, and the rise in burnout among the younger generations joining the workforce. He called out the need among companies to help their people fall in love with what they do. The key to doing that, according to him, is to identify the outliers – those that are extremely engaged, performing to a very great extent, excited to go to work everyday – and figure out what their characteristics are and why they love working for the company. Understanding and further developing that can help companies establish trust and help others love what they do as well.
- Stacey Harris, industry analyst and Chief Research Officer at Sapient Insights Group, closed the conference on Friday morning. She presented some results from Sapient’s annual survey of over 2000 HR leaders, which framed some of the macro trends facing HR. Notably, she highlighted the fact that HR tech investments will likely go down overall in 2024, not just because of the economy but because many companies spent heavily on HR tech in recent years and buyers are looking to understand impact/ROI before they invest more. However, investments in people analytics and learning tech will likely go up—with more organizations planning to replace their learning tech systems than any other HR tech system.
We thought these keynotes framed the conference and each day nicely.
Vendors’ presence may be very different next year
Looking ahead to next year, we guess the expo hall floor may look different than it did this year—some of this year’s vendors might be missing; we might see some fresh new logos; and the booths may be somewhat less grandiose.
Here's what the floor looked like this year:
Figure 5: HR Tech show floor in 2023 | RedThread Research, 2023
Yes, there were live animals on the expo floor (kittens). We hope that'll change next year.
More broadly, we think vendors' presence and the view on the floor may look different next year for 3 reasons:
- Consolidation. Right now, many relatively small HR tech vendors who secured investment funding back in 2021-2022 are starting to run out of those funds, and it’s much harder to raise a new round right now. At HR Tech, we heard a lot of chatter that some vendors are looking to be bought, while others are looking for good deals on companies to buy. We expect to see some market consolidation in the next year—and those deals will be reflected in the logos on the show floor next year.
- Smaller marketing budgets. In her keynote, Stacey Harris reported that HR tech spending will likely decrease by 11% next year. And when we talked to vendors on the show floor, many of them said the booth traffic this year was light compared to 2022. Neither of those data points bodes well for vendors’ revenue in 2024. Although some vendors said they’re hoping for strong H1 2024 sales, we expect many will be more conservative in their marketing spending next year, and that’ll mean many may opt for less costly booths (read: smaller, less design, less construction).
- New AI vendors? This year, generative AI mostly showed up as features that had been added to existing offerings. We wonder if in the next year, we’ll start to see new vendors who started from scratch and developed completely new products and completely new ways of leveraging AI for work. We don’t know, but we can hope!
We were thrilled at the thoughtful conversations, warm greetings, and helpful insights we found at this year’s HR Tech conference. We can’t wait until next year!