Events

Phenom People, a global HR technology company, recently hosted its 3rd annual talent experience conference in Philadelphia, PA. Outside the venue, there were signs of change and growth that constantly reminded me that springtime was just around the corner; trees were budding, flowers were blooming, and birds were chirping.

Inside the venue, there was a similar sense of excitement and forward movement. With its purpose “to help a billion people find the right job,” Phenom has been on an upward spiral since it was founded 9 years ago.

Our Take: Phenom Conference 2020

This year, Phenom hosted over 1,000 CHROs, talent leaders, and HR practitioners, which was double the number of attendees from last year. And its growth extends beyond the conference, with a $30 million boost from its latest venture capital round earlier this year, it recently hired around 250 employees increasing its workforce to just over 500 across the U.S., the U.K., Israel, India, and the Netherlands.

For Phenom, it all comes down to talent experience management (TXM) with a focus to simplify, personalize, and scale four types of experiences (see Figure 1):

• CX: Candidate experience – includes touchpoints during the recruitment process
• EX: Employee experience – facilitates access to career paths and development opportunities
• RX: Recruiter experience – offers tools to recognize and engage potential candidates
• MX: Manager experience – provides visibility into relevant talent information and analytics

Figure 1: Phenom’s Opening Keynote by CEO and Co-Founder, Mahe Bayireddi | Source: RedThread Research, 2020.

Now let’s dive more deeply into the 4 product announcements that Phenom shared at the conference:

• Phenom Gigs
• 1-to-1 Personalization
• Frontline Hiring Manager
• Phenom Scheduling

Phenom Gigs

Phenom Gigs is an internal talent marketplace (see Figure 2).

Figure 2: Phenom Gigs | Source: Phenom People, 2020.

It uses artificial intelligence (AI) to match short-term projects to internal employees. This is Phenom’s answer to the subject of skilling (also known as re-skilling or up-skilling), and of course to other large players with similar offerings. It looks like Phenom Gigs benefits both managers by suggesting a potential resource to fill a project need, and their direct reports by linking them to projects to further expand their knowledge and skills.

Phenom Gigs reminds me of some of the common themes we heard in our learning tech ecosystems study on the importance of providing employees with choices to learn and develop that focus on building relevant skills. But like in other talent marketplaces, the sophistication of its AI capabilities – and the opportunity to develop lagging skills – remains to be seen.

I am particularly excited to see that Phenom is helping organizations think differently about their talent. Phenom Gigs offers them another way to fill project needs without having to look outside the organization. It also sends a compelling message to internal employees that the organization cares about their growth and development by providing them with learning opportunities.

1-to-1 Personalization

1-to-1 Personalization provides personalized recommendations to candidates on relevant jobs, benefits, and perks based on their unique profile and interests (see Figure 3).

Figure 3: Phenom’s 1-to-1 Personalization | Source: Phenom People, 2020.

Phenom calls this a “true” AI-based personalization because it delivers an individualized career site experience, which may be the first time a candidate encounters an organization’s brand. In our recent report on employee experience, we mentioned that employee experience is based on “employees’ collective perceptions of their ongoing interactions with the organization.”

Phenom recognizes that employees’ journey begins when they are candidates, which impacts their experience with the organization from the get-go. By personalizing recommendations to candidates, it gives potential future employees opportunities they may not have found or considered on their own. Like Steve Jobs used to say, “…people don’t know what they want until you show it to them,” and Phenom seems to be taking this to heart.

In my opinion, this feature is not only beneficial to organizations, but to candidates as well. Most of us have searched for a job at some point in our lives, and know how cumbersome the process can be at times. So any feature that promises to ease the pain associated with searching and applying to a job, may go a long way in providing a good first impression for candidates. As customers leverage this new feature, I’m curious to find out how many candidate leads get converted to actual hires because they found the job recommendations truly personalized to their background, interests, and needs.

Frontline Hiring Manager

Frontline Hiring Manager provides recruiters and frontline hiring managers at retail or franchise locations with access to Phenom TXM (see Figure 4).

Figure 4: Phenom’s Frontline Hiring Manager | Source: Phenom People, 2020.

Recruiters and frontline hiring managers can manage their own jobs, pipelines, and candidates. It also provides large organizations with a consistent brand messaging across locations. It basically streamlines the recruiting and hiring process at the local level.

This approach to empower managers aligns nicely with the tendency of forward-thinking organizations to foster a positive employee experience. I believe that granting TXM access to frontline hiring managers will enable them to make quick and efficient decisions. I can see how this particular feature can be attractive to those on the frontlines, especially in industries with a higher than average turnover rate and numerous positions to fill. It basically takes the middle-person out of the equation.

Though I wonder if frontline hiring managers may find it tedious as it is one more thing to add to their “to-do list.” So I look forward to seeing how many organizations use this feature, the overall adoption rate by frontline managers, and if there is a significant reduction in the time-to-hire of frontline workers.

Phenom Scheduling

Phenom Scheduling is a recruiter-initiated scheduling feature that is integrated with calendars and preferences (see Figure 5).

Figure 5: Phenom Scheduling | Source: Phenom People, 2020.

We all know how frustrating back and forth emails can be when trying to schedule a meeting. Phenom Scheduling allows candidates to self-select available time slots to schedule interviews. It integrates with most calendar systems: Google, Outlook, Microsoft Exchange, Office 365, and iCloud.

This seems like a commonsense offering to add to recruiting software. But you may be surprised to learn how many organizations and recruiters still use a standard way of scheduling interviews, and how much time and energy they waste in the process. So what seems like a simple recruiting feature can go a long way in providing a more positive candidate experience and recruiter experience in the often long recruitment journey.

Final Thoughts

In my opinion and to wrap this up, 3 overall themes stand out from this year’s conference:

• A focus on simple, yet meaningful features
• An interest in scaling such features to key stakeholders during the talent acquisition process
• A targeted effort to enable access to relevant information and empower decision-making

So with Phenom’s recent announcements, it looks like our clocks aren't the only ones springing forward.

Note: This article is based on my attendance at IAMPHENOM 2020 on March 3-5. Phenom People paid for my airplane ticket and hotel room at the event. This article represents my opinions, and no one at Phenom reviewed or approved this content.

Judging by the number of analysts who were on the announcement call with less than ½ hour warning, the news that Cornerstone OnDemand (CSOD) was purchasing Saba for $1.4B came as a surprise to pretty much everyone. In chatting amongst ourselves (and water-coolering it with Stacey Harris), maybe it shouldn’t have come as such a surprise. Why?

Big Picture

Human capital management (HCM) markets aren’t what they used to be. Many of the big players have failed to adjust to new market conditions and gone the way of the world. And, whereas it used to be possible to count the major players on one hand, smaller, more nimble point solutions now have more power as ecosystems become more common and integrations become easier.

Not only that, CSOD made an interesting decision a few years ago to focus heavily on content, and while this has been a decent move in the short term, it's a risky long-term move – as content becomes more ubiquitous, and AI and algorithms get better at helping people curate it. And, just feeding content to employees more efficiently falls short of where the market is headed: understanding the skills a workforce has, helping them develop those skills that will help them personally and move the organization forward, and tying skills and development  to career opportunities.

In short, the acquisition makes a lot of sense to keep CSOD a viable player into the future, helping it compete – both with the ERPs that have been encroaching on the HCM space, and with the young whippersnappers that threaten the larger platform play. The Saba acquisition gives CSOD both market heft and revs its innovation engines. Let’s break it down.

Market heft

The acquisition of Saba increases CSOD’s heft in the market. Most obviously, it acts as an accelerator. Alone, Cornerstone’s ARR (annual recurring revenue) was $575M. With Saba, that number jumps to $818M. Additionally, Adam Miller, CSOD’s Founder and CEO mentions that the deal frees up cash by finding synergies in their data centers, operations, and administration.

Even more impressive is the increase in number of customers. This acquisition makes CSOD arguably the largest cloud company in the world. According to our mad scramble for data from many yearly reports:

Figure 1: Total HCM Customers by Company | Source: RedThread Research, 2020. *Oracle number reflects cloud HCM in 2017. Does not include on-premises HCM implementations.

The HCM market has been experiencing a bit of fear as of late, as some of the larger ERPs have made strategic investments and acquisitions that allow them to play in the HCM space. Workday, for example, recently launched Skills Cloud, which competes directly with several talent management platforms. And it is having an effect. One leader we recently spoke to told us that he is being asked to  “make Workday work” for a learning and skills solution, instead of investing in other more specific solutions.

But, the acquisition of Saba by CSOD puts them in a position to become sort of a “super” talent management system – one that provides deep expertise in talent while still being open to partnering with the HRIS or ERP that companies are currently using. Because they are now one of, if not the biggest, cloud players, it may protect them from some of the encroachment.

Finally, acquiring Saba, who recently acquired Lumesse, a leader in talent management software in Europe, increases their global footprint, which was already sizable (with CSOD being in 25 countries currently).

Innovation

We don’t think there has been a time of greater innovation in the HCM space. Ever. CSOD’s acquisition of Saba allows them to jump-start their innovation efforts in a few ways:

Data, data, data

The majority of new features and functionality in modern HCMs require a solid set of data to be valuable: who sits where, who does what, who knows what, where they want to go, what they've learned, what skills they'll need, etc. This data has the ability to help organizations vastly improve their people strategies – from who to hire, to who to develop, to how to form teams, to retention, and on and on.

The holy grail of talent management right now is successfully tying development subjects to skills and ultimately to positions – and everyone’s in a race for a viable solution – including ERPs which have not traditionally played in this space.

However, people development is easier with people development-specific data – something that ERPs likely lack; while they may claim similar functionality, specific talent management data helps tremendously in developing people. ERPs are often built on platforms focused on resource allocation and process automation – both noble causes, but maybe not the focus when developing workforces to help organizations compete.

The combined CSOD / Saba datasets of 75MM users (assuming they can quickly  figure out how to merge and use them) provides a treasure trove of data that can likely help them provide a much richer, personalized talent experience than their ERP counterparts.

Talent

Workday is an innovation machine – they spend roughly 30% of revenue on R&D efforts (if we interpreted their annual report correctly). Which is why it has been able to effectively challenge HCM providers in their own backyards. Additionally, as we mentioned above, smaller point solutions often innovate as a matter of course – through implementations and partnerships, and their continuous improvement mindset and simpler structures often make them more agile and able to pivot more quickly.

Figure 2: Percent of Revenue Spent for R&D – Cornerstone vs Workday | Source: RedThread Research, 2020.

CSOD spent roughly 14% of revenue on R&D activities in 2018 (slightly below average). Good engineering talent is difficult to find, and with the Saba acquisition, CSOD now has access to a much bigger pool of talent who can do more R&D. This gives them the ability to maintain Saba products as it makes sense while also borrowing that talent to upgrade CSOD and integrate the best from Saba.

Hungry mindset

Finally, and this one is probably a bit more opinion than the other areas we have covered, but one we think is important: When Saba went private in early 2015, some of us were taking odds on whether or not it would survive. But it did. Saba has not only done a fair amount of innovating since then, they’ve gotten into the habit of innovating. Granted, some of the stuff we’ve seen in the last couple of years has been a bit unconventional, but it indicates that they’re taking a fresh approach to the HCM space.

CSOD now has access to not just great engineering talent, but talent that has been approaching the market in a slightly different way. We’re excited to see what they do with it.

So to nutshell: We think this acquisition was a decent move by CSOD. We're interested to see what they do with the bigger footprint, the data, and the talent. As with any move, it all comes down to execution.

All of this leaves us with just two questions: How long will our Saba swag still be cool, and can we still hang out with Phil?

I’ve been following Degreed since it was only about 30 people big and the development team was basically squatting in borrowed space in downtown Salt Lake City. Their approach to the market was different enough to make me sit up and take notice. From the beginning, they have had a very distinct vision: to make sure that no individual – or company – becomes irrelevant due to lack of new skills.

Over the years, I’ve kept a close eye on Degreed. They've made it easy by being very frank with us analysts about their roadmap, and they’re consistently one of the most focused technology vendors I talk to. As the LXP market has grown up around them, they've managed make a name for themselves in the space while still retaining the focus and vision they started with – something I admire, particularly given the market and investor pressures they surely must face.

So I wasn’t surprised at all when they acquired Adepto. Adepto, like-minded and mission-driven, provides functionality that complements and even rounds out Degreed’s skill measurement offerings by helping organizations both see knowledge and skills of their employees and by providing additional skill information through jobs and projects details, not just courses. This acquisition gets Degreed closer to their vision.

I sat down with Chris McCarthy (CEO of Degreed) to talk about his plans for Degreed’s latest acquisition.  As always, it was a frank and enlightening discussion that clarified a lot. It also reinforced my initial reaction to this acquisition: I like it.

Degreed’s virtuous employee development cycle (our words, not theirs)

Degreed’s purchase of Adepto rounds out their ability to do 2 things: acquire more data about the employee and contractor skills, and tie that data to opportunities (jobs, gigs, projects). We think that this additional functionality has the ability to create a virtuous employee development cycle – something we haven't seen elsewhere.

Today, approximately 30-40% of employees access existing learning technologies at least once a month. This is hardly consumer grade, and it indicates passivity in learning – learning for learning’s sake, as McCarthy puts it. While learning for learning’s sake isn't a bad thing, in a world where needed skills change rapidly, employees accessing learning once every 2 months (if we’re being generous) likely doesn’t develop the skills organizations need to compete.

Dipping into learning every couple of months also doesn’t help organizations (and the tech that serves them) understand what employees are trying to learn, which makes it harder to direct them to resources and activities that will help them learn and grow.

Degreed is addressing this in a couple of ways:

User Interface: With Adepto’s functionality that ties skills to projects and jobs, the user interface is being redesigned in a way that will bring the reason for learning to the forefront. Instead of a “Netflix, eat what you want” mindset, the new interface focuses on the goals the employee may have. For example, addressing skills gaps for a job you may want; being considered for a project; or switching careers. The new design will put the employee's goal front and center, and the system will recognize it and provide help and guidance for achieving that goal.

will be one single experience for the employee; you can actually go in and define your learning goals. All of the learning content and things that can help you are in one place, personalized to you. You can measure your skills as you improve on them and represent them so that they are being surfaced for potential opportunities. They’re tied to jobs, projects and other opportunities on the basis of your skills.

Chris McCarthy

To put it succinctly, Degreed’s new interface aims to answer the question all employees have: “What’s in it for me?"

Data: A strong interface and personalized experience encourages employees to use the system, which in turn creates more data points, which in turn are fed back into the system to make it better, more personalized and more useful.

It also puts Degreed in a good position to actually become a system of record for skills data. Its acquisition of Adepto, along with the work it has been doing on integrating with other sources for skills data (HRISes, social networks, LMSes, and external content and certification providers), will make it, if it’s successful, a perpetual and virtuous cycle for collecting and using data on an organization’s skills and knowledge.

Degreed is also investing in increasing the size of their data scientist team, and improving their reporting and analytics functionality, making the data even more useful.

Degreed as a next gen talent platform

Stacia and I have been talking about learning, career, performance, even engagement, converging in the hearts and minds of people leaders. Why? It turns out that it is difficult to develop someone until you understand their career goals, how well they’re performing, and if they even want to learn and grow. While many of the talent platforms we see contain these pieces, some of them fail to provide a logical, helpful, cohesive experience, and we think the market is ripe for next generation ideas – ones that are data-driven and employee (rather than HR) focused.

With the acquisition of Adepto, Degreed moves past serving the L&D market exclusively. It has assembled the functionality to be that next generation talent platform. They have a strong LXP; they have partnered with LearnUpon to provide LMS functionality to their clients; and they have upgraded their skills measurement capabilities. If the world of HR truly is converging on itself, these pieces will allow a different kind of talent management – one that likely serves the employee and the organization better.

With the Degreed LXP, the LMS partnership , and now the skills measurement products we now have this complete skills product which is inclusive. It really is a talent product. All three of those things work tightly together, but any one of them could be the entry point into a new client that we choose to work with, which earns us the right to be able to expand the relationship with them over time.

Chris McCarthy

Frankly, I am interested to see what’s next.

Degreed as a grown-up

Despite almost 7 years in business and just over $153 million in funding, Degreed is still considered a start up by many. While funding and longevity are by no means a guarantee of future growth, Adepto helps them grow up some more. How? Two ways:

First, Adepto, based in Australia and the UK, increases their global market presence. While Degreed has done a lot to increase its global foot print (according to McCarthy, Degreed grew business outside of the US from 3-4% to over 30% in just a few years), the Adepto acquisition adds visibility, client service and technical resources on the ground to service local and global clients, a little gravitas, and maybe some new channels to tap worldwide.

Second, the Adepto acquisition moves Degreed from a single product to two products. While Degreed has experienced ridiculous growth (100% a year) in recent years, McCarthy rightly points out that that kind of growth is unsustainable without a second offering. Adepto not only provides them with a second offering, but also new entry points into the human capital tech market – something that will facilitate growth and ready them for a talent platform play (assuming I’m right).

When you add to that the care with which Degreed appears to both choose and handle its acquisitions, the company probably has legs.

We got so lucky with Pathgather, to compete against somebody so ferociously head to head and actually really like each other is kind of cool. And I give them a ton of credit. Our client retention from the Pathgather acquisition was 140% and the employee retention is pretty high, I think it's like 70%.

The reason I flew to Australia last week and back in two days is because I wanted to have one on ones with every single person in office and get to know them and tell them they could hold me personally accountable if we screw them up or don't do what we say we can do.

Chris McCarthy

Nutshelling it, we don’t think Degreed is going anywhere.

Degreed’s challenges

Despite how much I like this acquisition, I still see potential challenges. The first is that Degreed once again finds itself in a situation where they need to educate the market. Leaders don’t necessarily think in terms of virtuous employee engagement circles or skill measurement software. The fact that they are new concepts means that Degreed will need help leaders understand what it can do for them, how their organizations will need to change to accommodate them, and what line item in the HR budget should be allocated for them. They can do it; they did it for the LXP market. But I think it will be equally as challenging.

Secondly, as Degreed goes about redefining what a talent platform is and what it should do, they’ll be fighting quite a bit of momentum. Business has largely been done the same way for the last 100 years, and most technology accommodates and perpetuates those systems and processes. While we’re already seeing work being done differently, people doing the work handling their careers differently, tenure in organizations shrinking, overall careers becoming much more flexible and elongated, all of which challenges current systems, the momentum is great. We imagine that Degreed will be fighting against a pretty strong current.

Finally, this is Degreed’s second acquisition in the last 18 months and they continue to grow quickly. That’s a lot of change for an organization of this size to handle. It brings to mind potential questions about focus, differing priorities.

Despite these challenges, we like this acquisition. We think it’s good for the human technology space in general, we think it’s good for Degreed’s clients, and we also think it’s good for the future of Degreed.

We’d love to hear what you think too!

Will Robots Take My Job?

There is this website called “Will Robots Take My Job”. You type in your job function and it uses some solid research to tell you how likely it is that your job will be automated. It’s sorta fun. My job has about a 23% chance of being automated. Largely because it currently relies on things that only humans can do. That’ll likely change.

I happened upon this website last year as a part of a quest to understand what makes humans unique. I had read one too many articles about robots taking over the world and I decided to find out, once and for all, how likely that was.

After scouring social science literature, anthropological journals, psychology texts, and even some religious writings, I came up with a list of four things that make humans unique – or four things that robots can’t do and that other species don’t do: (you can read the full report here)

1. Envision a different future: Humans can picture a future different than their present, determine steps to make it so, and then execute on those steps.
2. Tell stories. Humans use stories to communicate information in a way that motivates and inspires and entertains.
3. Collaborate. While other animals may collaborate to survive, humans collaborate longer than it is beneficial to them personally or critical for survival. Helping others is in our DNA.
4. Use tools. Humans have perfected the art of using tools. We don’t just use them to shape our physical space; we also use them to shape our mental spaces.

It occurred to me this week that two of these four things – storytelling and collaborating – are directly related to how we connect as human beings. We connect in ways that animals don’t, and robots never will. Connections make us human. And they explain at least some of why we have been so successful as a species.

Leveraging Connection (and Tech) for Learning

L&D functions have understood the importance of connection for decades. Much of the research and literature on adult learning styles focus on learning from each other and leveraging existing knowledge – the connections if you will.

Until recently, much of this work has been done largely in the classroom; connection – particularly storytelling and collaboration – has been associated with face-to-face activities, particularly when it comes to some of the softer, more human skills (e.g., management, communication).

That said, we’re seeing the definition of “face-to-face” expand beyond the classroom and include more than formal training. We’re also seeing organizations understand how to make connections with employees through communication and personalization.

Storytelling.

Stories provide context to the data of experience. Through stories, humans cast themselves as main characters, place themselves in predicaments, and learn from their own experiences as well as others’ successes and failures. Understanding the what, the why, and the how, gives employees context and motivates them in ways that increases the responsiveness of the organization.

In order for a story to be effective, a connection needs to be made. Whereas storytelling has existed as long as humans have walked the earth (and probably as long as our antecedents have as well), in recent years, those connections are increasingly being made with the use of technology. We’ve seen a couple of trends:

• Standalone tools or additions to existing tools focusing on storytelling – video, animations, drip campaigns, micro-curricula, and other content-creation tools – all help L&D professionals to craft stories that have more impact.
• Easier ways to connect more deeply. We mentioned this briefly in our last article: L&D technologies are moving past the one-way sharing of content and instead are building in true collaboration tools. Whereas employees used to have to be in the same room to take advantage of these deep connections, collaboration spaces, communication tools, structured, and unstructured paths all occur online and with teams spread across the world.
• AI and data. Our access to data is unprecedented – we know more about our employees than ever before. AI and data make it possible to build personal stories – not generic ones, and not ones built on “personas”. We can connect with our employees on their level and meet their needs in new and more effective ways.

Collaboration.

Thomas Suddendorf, an evolutionary psychologist at the University of Queensland in Australia, says that we have a fundamental urge to link our minds together. “This allows us to take advantage of others’ experiences, reflections, and imaginings to prudently guide our own behavior.”

We are wired to help. Ask any two-year-old that follows you around picking up things you dropped. It’s innate, and it’s incredibly human.

Helping others manifests itself in some of the ways we utilize technology. A good example of this is Wikipedia. It exists because thoughtful people with knowledge want to share it – and because thoughtful people who value that knowledge fund it. Another example is GitHub – where programmers can share code with each other. Collaboration in this case has saved countless hours and accelerated development by allowing one programmer to build on top of – instead of recreating – code.

The L&D function – and the solution providers that support it – have also made some progress when it comes to helping individuals collaborate – to help each other learn – using technology. A few interesting things we’ve seen:

• The rise of the expertise directory. Several vendors (and some enterprising homegrown solutions) are making knowledge and skills more transparent in the organization. Some systems allow users to self-select knowledge and skills; others rely on AI and latent data to “guess” which skills an individual may have; but they all help employees collaborate by guiding them to who is likely able to help.
• Leaders as teachers – virtually. When I was at Deloitte, I was always impressed with their ability to leverage leaders as teachers in the classroom. Tech, however, allows us to leverage leaders as teachers EVERYWHERE. Organizations can take advantage of expertise no matter where in the world it sits through new technologies built particularly for the purpose.
• Project marketplaces. We’re seeing more organizations create opportunities for learning through the work itself. Project marketplaces allow employees to sign up for short projects that will help them to develop critical skills. The marketplace is a great example of collaboration: individuals willing to help and to learn while doing it, and leaders offering opportunities for that growth, along with some coaching and mentoring.

Likely these are not entirely new ideas – we have been talking about them for about a year. But the fact that these technologies are built to connect us, and that those connections appeal to our very humanness, and that organizations are more effective when they focus on the things that makes us human gives me hope for us. And for the robots. And for us being able to live harmoniously with them.

After we published The Makings of Modern Performance, we then hit the road to share our findings and learn from conversations with practitioners! After 4 interactive breakfast meetings, we came away with a few lessons. In wrapping up this project, we want to share with you the things we learned.

We're losing sight of the forest

Many organizations are hyperfocused on the tactics of performance management (PM) and have lost sight of the forest (why they do it) for the trees (how they do it). Many of the questions during our time on the road focused on identifying best practices or the “right” way to do PM and were similar to those we heard during our research (see Figure 1).

Figure 1: Questions We Heard During Our Research | Source: RedThread Research, 2019.

While some organizations have taken a step back to see PM as a holistic approach to developing talent and improving performance, many organizations still struggle to shift their focus. Leaders need to focus on this question:

What should my organization do to improve the performance and engagement of our employees, and the ability of us all to meet our business goals?

The following are some of the key takeaways from our road trip.

The fairness waters are a bit muddy

In our roadshow events, there was general agreement that fairness in PM is important, and some of the new practices have helped make it more so (i.e., more frequent conversations to address recency bias, involving more people in performance feedback to reduce managers’ bias). However, we discussed how other practices, such as removing ratings or implementing shadow ratings, have increased some employees’ perceptions of unfairness.

Our research found that creating fair evaluation processes – and connecting compensation to them in a transparent and fair manner – is an important part of performance management. In our (well-intended) efforts to address important concerns about ratings and evaluation methods, we might have muddied the waters. Our study gives some suggestions on how to address this issue.

A closely related topic that we also discussed was pay transparency, which our research found to be critical. Interestingly, session attendees had different levels of awareness on this topic, but one thing was certain: It doesn’t make anyone particularly comfortable.

The challenge is that pay transparency is not an all-or-nothing concept, but a continuum. At one end of the spectrum, employees have no insight into compensation philosophy, structure, and outcomes. At the other end, employees and individuals external to the organization have full access to this information and data.

Implementing pay transparency is full of “what ifs,” potential benefits, and some potentially serious drawbacks. However, employees are already having discussions about their salaries and these discussions aren’t just among colleagues in the hallway. People are more open to share the details of their compensation and benefits package to just about anyone (e.g., Glassdoor). As a result, organizations need to figure out how they will address pay transparency sooner than later.

Organizations have a choice – they can be a part of these discussions, helping to craft the narrative and using the information to better address rewards and benefits, or they can ignore it and miss this opportunity.

Engagement & performance: Increasingly intertwined

While we know that, in general, PM, engagement, learning, and career management are increasingly converging, our roadshow reinforced that the first 2 have grown particularly close. Performance practices, when done well, can engage employees by providing them with a culture in which they can thrive and with the clarity they need to perform well today and tomorrow (see Figure 2).

Figure 2: Three Levers of Performance | Source: RedThread Research, 2019.

To that end, organizations’ performance philosophies and practices need to be designed and executed to engage employees, in addition to helping them perform better. In the future, this likely means that organizations need a more nuanced and personalized understanding of what engages employees, and to then provide them with the insights, resources, systems, and metrics that are most relevant. This'll allow organizations to be more responsive to employees’ needs so they can do their best work.

PM is no longer about just measuring performance. It's about engaging employees – in a personalized and responsive way – in their work and enabling them to perform better as a result.

Where do we go from here?

While organizational leaders can certainly make significant and important changes to their PM approaches, we think there's a bigger question that can’t be answered just by changing performance practices:

How do leaders go about creating a more responsive organization?

This question is at the heart of another project: The Responsive Organization (read: the premise, the lit review, the report, webinar and slides, and the infographic).

In this study, we're looking at the changes the leaders should make to create an environment in which people – and the organization as a whole – can be more responsive to employees and customers. For example, we think that a more responsive organization will lead to changes in the following (at a minimum):

• Communication channels – Individuals at lower levels will have data and information they need to react to needs “on the ground”
• Power structures – Decision-making will be more decentralized
• Employee development – More autonomy and continuous development will ensure that employees have the skills and knowledge they need
• Metrics – Measurements of efficiency will begin to give way to other types of productivity metrics that focus more on innovation, agility, and responsiveness

Want to share your thinking on this topic? Feel free to reach out to us at [email protected] and we will find some time to talk! Also, if you want to talk more about performance management, we would love to hear from you.

Event Overview

As I wrote about in our article, "The Fight Over Employee Experience Is Finally Here," we expected the Workday team to come out swinging at their annual Workday Rising event. And, wow, did they ever.

Not only did Workday put a heavy focus on employee experience, which they're calling “People Experience” (more on that below), but they also made a wide range of other announcements, including the limited availability of Workday People Analytics, Skills Cloud, and Talent Marketplace.

Before we dive into the details below, here is my main takeaway:

Workday announced products that required them to stretch (People Analytics and Skills Cloud, in particular) at Rising 2018 and we were able to see the fruition of their efforts at Rising 2019, including some early customer stories.

Product announcements & enhancements

While we would like to see more customer testimonials – especially from end-users themselves, not just those responsible for purchasing decisions – we applaud Workday for its diligence in working toward the innovative products they promised last year.

People experience

With that said, let’s move on to some of the key announcements, starting with Workday People Experience (see Figure 1), which is a new user experience (UX). In its description, it's very similar to the new UX that SAP SuccessFactors announced recently – in that it integrates into one location conversational AI, robotic process automation (RPA), machine learning, nudges, and predictions to try to get people higher-quality information more efficiently. Workday People Experience provides information ranging from career development guidance to personalized answers to HR and payroll questions, from both within Workday and external systems.

Figure 1: Workday’s People Experience UX | Source: Workday, 2019.

The biggest differentiator I could discern between the People Experience UX and the one announced by SAP SuccessFactors in September is that Workday seems to have more significantly embraced a critical employee experience concept: journey maps.

The value in using journey maps is that they can identify critical "moments that matter" for specific types of employees and create a standard (and scalable) way of managing (and then improving) those experiences. The result is a much more employee-centric approach to designing software.

Workday identified a number of specific journeys for different employee profiles and used them to create personalized recommendations within Workday People Experience. For example, if a parent is returning to work after welcoming a new child into their family, there are likely a specific set of steps they should go through, such as informing the insurance company, filing leave claims appropriately, etc. Similarly, if someone is recently promoted, there are specific and standardized onboarding and training tasks that need to be completed, which People Experience can recommend. This information automatically populates for those employees within Workday, making it easier for employees to find critical information.

The other addition in the area of employee experience was the announcement of a partnership between Workday and Medallia to allow for the integration of customer experience data with employee data within Workday.

There is clearly value in the integration of these two data sets (see our research on the connection between employee experience and customer experience) and think that this partnership further enables organizations to manage their customer and employee experiences in closer concert and more effectively. It also gives Workday an answer to SAP’s acquisition of Qualtrics, with Qualtrics being another major player in the customer experience space.

People analytics

Let’s move on to Workday’s People Analytics (see Figure 2), initially announced at last year’s Rising event. This solution, which integrates the 2018 Stories.bi acquisition, leverages that technology’s ability to identify patterns within data, process those insights using machine learning, and then highlight the most critical “stories” in natural language. The range of topics covered includes hiring, organization composition, diversity and inclusion, talent and performance, and retention and attrition. Workday People Analytics has limited availability with the Workday 33 release; at Rising, Workday announced a number of customers using it.

Figure 2: Workday People Analytics Solution | Source: Workday, 2019.

As we have discussed in our People Analytics Technology research,

One of the areas many solutions struggle with is in telling clear and compelling stories with the data, and this is something the People Analytics solution is clearly targeting.

This should really help the HR business partners and other leaders who are less quantitatively-focused to grasp new trends quickly. That said, I didn’t get much sense from the RIsing demo of how the more quantitative folks will be able to manipulate the data. I presume the assumption is that customers will use Workday Prism to do that more sophisticated analysis – but I didn’t see an in-depth demo of how to do that at Rising, so we will have to leave that one for another post. Overall, though, this announcement represents progress for Workday on the beguiling people analytics front.

People skills

Let’s move on to Skills Cloud, which is another solution Workday announced last year and brought into production this year.

The idea is that Skills Cloud will “mine” employees’ skills by looking at employees’ job descriptions, any internal online profiles, feedback on their performance, and any other work experiences, and then infuse these skills across the entire platform, including talent planning, talent marketplace, career hub, learning, recruiting, performance enablement, compensation, and people analytics.

This information can then be used to better understand the skills within the workforce and to make more strategic decisions (see screenshot in Figure 3) via the Skills Insight analysis tool. Workday says they have more than 200 customers live on the Skills Cloud.

Figure 3: Workday Skills Insights | Source: Workday, 2019.

As many of you know, we care deeply about skills and are planning to write several pieces of research on this topic in 2020. We love that Workday is making skills such a core part of their overall platform and see huge potential for what they are doing. That said, we have a few concerns:

• Data quality. Many of the data sources Workday is using can be inadequate reflections of someone’s overall skills. We know that employees can change / augment their skills, but we worry that they will not, and that the skills data will not be as robust as it needs to be to make critical strategic decisions.
• Data bias. We know from numerous studies that women and under-represented minorities tend to under-report their skills, while majority populations often over-report their skills. We worry that these types of algorithms will perpetuate biases about people’s skills (or lack thereof).

Neither of these items are show-stoppers, as Workday clearly has to start somewhere when it comes to documenting skills. However, for folks using the technology in its earliest stages, we think these 2 items are something of which to be mindful.

People management

Finally, let’s turn to the Talent Marketplace (see picture in Figure 4), which is a single location that includes internal opportunities that are matched to employees’ skills and interests. Importantly, the solution alerts employees to those opportunities, versus employees having to look for them. The idea is that employees can more easily find internal opportunities that will help them grow, and hence stay at an organization longer.

Figure 4: Workday’s Talent Marketplace | Source: Workday, 2019.

We tend to see internal marketplaces positioned as part of an organization’s learning and development strategy, where the “gigs” give employees a chance to augment their existing work with opportunities that align to their career aspirations. Interestingly, at Rising, Workday positioned Talent Marketplace as a way for organizations to compete against external organizations who could also be sharing new opportunities with an organization’s employees. So, it is not just an internal gig-work marketplace, but also an internal job board that automatically alerts employees to opportunities.

Wrap up

In the course of my conversations with other analysts, we had two questions with internal marketplaces we think have currently gone unanswered:

• What if an employee wants to develop skills they either do not have or are currently weak on? Does the solution allow for them to indicate this, or will the algorithm only suggest things aligned with their current capabilities? And further, will this solution allow them to connect with managers who are willing to coach them, especially since they won’t be a fully committed resource?
• Is there a way to pay people for doing this extra work? Presumably, if it is possible this work would have been given to a contractor, to whom an organization would pay to do it. If the work is going to an internal employee, is there a way to compensate them for it?

Ok, that was more than 2 questions. 🙂 We think there’s great opportunities for internal marketplaces but think there are still some details to get sorted out.

All of these announcements together create a compelling case for why Workday is the competitor to beat when it comes to creating a unified and personalized employee experience.

Many of these solutions are in limited availability, so the market has yet to tell us of the impact — hopefully we will hear that at Rising 2021. Workday is clearly pushing forward with a lot of innovations and we look forward to hearing from end-user customers on how these changes are helping them meet their people and business needs more effectively.

As the year comes to a close, we’ve taken a bit of reflection time to think about some of the trends we’ve seen this year. While there's been a lot of hype about some of the big ones (AI anyone?), we think some of the most impactful ones are simple realizations or subtle shifts in mindsets that people leaders make.

One that has particularly caught our eye – the importance of connecting for learning.

The Importance of Connecting

Connecting has a prominent place in our Learning Model (see Figure 1). It's well-understood that all learning doesn’t happen in the classroom and people learn from one another¹. What types of opportunities we give our employees to do this type of connecting can have a significant impact on how successful they are.

Figure 1: Learning Model | Source: RedThread Research, 2019.

Through our discussions with both leaders and solution providers this year, we’ve identified 3 things that lead us to believe that Connecting is gaining prominence.

Thing 1: Enabling performance, not just managing it

In the fall of this year, we wrapped an extensive study on performance management (PM). The goal of this study was to understand which of the “new” practices were having an impact on business outcomes. Not surprisingly, one of the more noticeable group of practices all had to do with people development or learning. Two practices particularly caught our eye.

First, organizations are encouraging much more frequent development conversations between managers and employees. Whereas performance discussions used to happen once per year, most of the organizations we spoke with encouraged monthly or quarterly check-ins that didn’t just discuss performance, but also career aspirations and potential development experiences.

These conversations are the epitome of connecting – allowing managers to share expertise, employees to ask questions, and them both to talk about development and course correction where necessary. As performance discussions are well-established in most organizations, increasing the cadence and changing up the expected agenda has been minimally invasive and, according to the leaders we spoke with, pretty impactful.

Secondly more organizations are enabling peer-to-peer feedback and recognition. Peers are often less intimidating and often have a better idea of what is going on in the team, which means their feedback can often be more timely, more focused, and more engaging than manager feedback.

Thing 2: The rise of coaching & mentoring

One of the most exciting trends we’ve seen this year for developing people is the rise of coaching and mentoring. In the past, coaching and mentoring has been focused mainly on leaders – senior leaders really – and has been used to correct troubling behaviors or prepare promising leaders for the next step in their careers.

That seems to be changing. Organizations are understanding the value of a coaching or mentoring relationship and are implementing programs at much broader scales. For example, organizations are:

• Including coaching and mentoring activities in larger development initiatives, including new-hire training, leadership development, and level-up programs
• Leveraging technologies to be able to scale coaching and mentoring to make it more accessible to more employees – these technologies range from simple matching software to full-on use of AI and automation, and everything in between
• Offering external mentoring as a benefit – we've seen this work particularly well for younger employees trying to navigate early career moves

We’re thrilled that coaching and mentoring are gaining traction; organizations are beginning to realize the importance of one-to-one connections for employee development and the value of leveraging internal expertise.

Thing 3: Structured collaborative learning

Yep, we said it. In a world that is touting the necessity, efficiency, and beauty of micro and self-directed learning, we’ve seen an ever so slight resurgence of more structured, collaborative types of programs. We’re not saying that the majority of training is going to (or should) return to the classroom. Rather, we recognize that organizations may have gone too far, and that we’re starting to see them self-correct a little bit to ensure that opportunities for Connecting exist.

Organizations are remembering that there's value in struggling through a learning experience together. And that some insights only come from listening to those with experience and expertise. And that when people connect, storytelling can motivate and inspire. And that there are some things that are just better taught through discussion, brainstorming, and collaboration.

Interestingly, while technology has largely been associated with the self-directed and micro types of learning until now, we’re seeing it being used more broadly in helping with the structured, collaborative learning as well. We finally seem to be figuring out how to replicate or improve upon the best parts of in-person collaboration and learning.

So, while these may seem like small things – more conversations with managers, more mentoring and coaching, and a realization that there's value in structured collaborative learning – we think they constitute a trend: one that will make our workplaces more human-focused, and frankly, probably more pleasant. Thoughts?

Excerpt from: Diversity & Inclusion Technology: The Rise of a Transformative Market

On the surface, technology seems like the magic bullet for helping conscientious companies combat D&I challenges. After all, we recognize that no people are truly free of bias, so why not rely on bias-free technology? That all seems perfect until we reflect on how software is created and chosen by those same biased people. So how should we think about AI in the context of D&I?

In our recent study with Mercer, we examined the emerging market for D&I tech, and we also tackled the question of AI and raised some questions about its inherent benefits and risks.

Here is an excerpt from that report which looks more closely at the role of AI in D&I:

The potential dangers of AI in D&I technologies—and some ways to address them

To debunk some of the myths associated with the use of these technologies, we’ve outlined the potential dangers and limitations of using AI when it comes to decision making. We’ve also suggested some considerations leaders can take into account, below to become better informed consumers of AI products.

Potential Dangers of Artificial Intelligence in D&I Applications:

• Decisions based on AI algorithms have grown in complexity (often lacking a clear logical flow that humans can understand), opaqueness (as of result of limited transparency, regulation, and accountability), ubiquity (AI has become mainstream), and exclusiveness (especially if developed by small and/or homogenous teams).
• There are increased concerns around algorithmic design stemming from inadvertent human biases that can embed unintended discriminatory features into the algorithm. Introducing diversity and inclusion principles into algorithmic outcomes can be difficult if said principles are not practiced before designing the algorithms because machine learning is based on existing data.
• In instances where there is limited human oversight and involvement in the development and/or implementation of AI technology, there may be limited transparency and accountability on how predictive tools reach their decisions. AI systems are like black boxes, making it hard to identify potential bias and analyze decisions reached by predictive tools.
• AI can amplify stereotypes, adversely impacting underrepresented and marginalized populations.
• Widespread use of AI has moved fast, with little scrutiny and oversight from regulatory bodies. The responsibility of upholding ethics is often in the hands of AI developers, which brings the need to establish and sustain a code of AI ethics to the forefront.

Five Key Considerations for Using D&I AI in Organizations:

1. Recognize that AI and algorithms are not neutral because they are created and trained by humans with innate biases. Therefore, make every effort to understand their full benefits and limitations. Ask D&I technology vendors if they conduct algorithmic audits and risk assessments to determine how their predictive tools reach decisions and their potential impact on underrepresented populations.
2. Become well-versed in understanding your D&I technology data by becoming aware of how D&I data is used, stored, and processed within algorithms. Use your internal HR and workforce analytics to monitor and better understand the impact of using D&I technologies on your specific organization.
3. Establish a governance process that maintains a holistic view across sources of data and algorithms.
4. Formalize and communicate a standard organizational framework that establishes a shared understanding of how and when your organization makes decisions stemming from AI technologies to ensure transparency and accountability among stakeholders.
5. Use artificial intelligence information directionally, as one piece of the larger puzzle, rather than as an absolute. Consider the macro-level picture of AI data by incorporating other sources of information to better substantiate your decisions.

This year’s HR Technology Conference in Las Vegas was optimistic and enthusiastic, brimming with talk of humanizing work, improving the employee experience, and ever-increasing vendor growth rates. If you want to see what folks thought in general, check out #hrtechconf on Twitter.

As we left the show, we captured a few of the things that struck us from the show (admittedly, we saw relatively little) and our 30+ vendor meetings:

• D&I Tech: Given that we started the D&I tech conversation a year ago at this show, we are perhaps a bit biased on this one in thinking that it is important. However, the fact that a session on this topic in the Women in Technology part of the show had hundreds of people in it (see picture above) shows the incredible interest in the topic. That said, we were extremely disappointed that the conversation did not focus on the broader D&I tech landscape of solutions, and instead was largely focused on two types of technology that serve traditional D&I needs: pay equity and harassment reporting. We wish the conversation had focused more on the opportunity of D&I tech, which is to scale awareness of D&I-related issues and provide insight during critical decision-making moments (e.g., hiring, performance feedback, promotion).
• Ecosystems and integrations: We’ve never heard as much talk about how vendors fit within the broader HR technology ecosystem as we did at this show. (Granted, Dani spent part of her session talking about learning technology ecosystems, so it was top of mind.) However, almost every vendor we spoke with talked to us about how they fit within the ecosystem of others in their space, the partnerships they are building, and the need for better and more scalable integrations. We also heard more about how vendors are being asked by customers to “figure it out” with vendors they may not have worked with in the past, putting a new pressure on partnerships and (quite frankly) flexibility among the vendors.
• Skills: The subject of skilling (or re-skilling or up-skilling) the workforce is a huge one, and we heard about it from many different vendors. There are a range of perspectives on how to measure skills and what can be done with that information (e.g., workforce planning, learning approaches, career mapping resources, internal project or job marketplaces). We are still not confident that any vendors have cracked the question of how to skill the workforce for the future, but at least folks are thinking about it.

We were asked by many vendors for advice on what they should do moving forward. Here are a few of the themes we touched on:

• Stop asking employees for information you can get somewhere else: Nearly every vendor in the expo hall is asking employees for data, many via surveys (and as we said, no matter how pretty it is, no one wants to take another survey). Yet, vendors are able to access more latent (existing) data from internal systems and external (public) sources than ever before and our technologies for analyzing that information have never been more powerful. Vendors need to break out of the habit of asking employees to give them information and instead ask: “How else can we get the information or insight we are seeking?” And then build that capability, whatever it is.
• Push more insights down to employees: Building on the previous point, we are pulling together more data and insights on employees than ever before, but it seems that the primary purpose is to give it to management to manage the business better. While that is all well and good, it is not enough, as it limits insights, decision-making, and action to management, who often serve as a bottleneck to change. Instead, organizations need to provide more information to employees so that they can better understand what is happening and adjust their work and behavior accordingly.
• Build for the future, not tomorrow: It may sound overly grandiose, but we believe we are at an inflection point in many ways with HR technology, where we are building truly revolutionary tools that will influence generations to come. To that end, we are encouraging vendors to think beyond the short-term when it comes to their product vision. For example, don’t focus just on skilling the workforce with a certain set of skills we think will be useful, but instead focus on helping organizations create environments where people are constantly encouraged to learn whatever skills are necessary. Or, as another example, identify ethical standards for people analytics – even if it may limit what can be done in the short term – so that we can set a solid foundation of trust so we can do more interesting and profound analyses in the future.

What do you think? We’d love your reactions or questions about what we’ve written and – for those of you who attended – we’d like your own reflections on your experience in the comments.

Finally, we want to thank those of you who were able to attend Dani or Stacia's sessions. Please feel free to reach out if you'd like a copy of our presentations ([email protected]).

The term “employee experience” has become increasingly popular in the last few years — so much so that we began an investigation into what it is and why it matters. In the course of that research, we came across a wide range of perspectives on what it is, including from vendors like Medallia, Qualtrics, Service Now, and TI People.

But now, the heavy HR technology hitters are here to weigh in on the subject. Today, SAP SuccessFactors announced that their technology category, which we have long known as Human Capital Management, will now be known as Human Experience Management.

Along with this announcement comes a significant redesign of their user experience (UX) to offer a more integrated and holistic view of the information within the SAP SuccessFactors ecosystem in a more accessible format that intends to put individuals, teams, and organizations at the center of the experience. This new interface integrates into one location conversational AI, robotic process automation (RPA), machine learning, nudges, and predictions to try to get people higher quality information more efficiently. There is a lot we like in what the SuccessFactors team has done, and we applaud them for this holistic revamp of their product.

That said, the grand gesture of renaming the category begs us to take a closer look and to ask:

Is this, to borrow my friend and long-time SAPer Steve Hunt’s phrase, simply old wine in a new bottle?

Maybe.

Employee experience, as we at RedThread understand it, is about two things:

• Emotionally-laden events – These often include specific events in the employee life cycle such as the first day at work, a promotion, or returning from a job leave. During these events, employees are vulnerable because their expectations are high, which can suddenly impact their experience.
• Commonplace exchanges – These are frequent interactions between employees, colleagues, and the organization. These interactions are often relationship-based and happen on an ongoing basis, instead of specific touchpoints, milestones, or moments that matter. During these commonplace exchanges, employees are not as vulnerable as during emotionally laden moments because their expectations are not as high. Yet, these exchanges have a cumulative effect on employee experience.

The SAP SuccessFactors team certainly understands the value of emotionally laden events, also called “touchpoints” or “moments that matter”. However, we couldn't fully tell how this significant user experience redesign will enable managers to better understand – and critically, to enable and improve – how employees experience those touchpoints or commonplace exchanges. It may be that the team is on the earlier parts of the journey or that we just need to see more.

So why can’t we just call this new UX old wine in a shiny new bottle? Three reasons:

1. The Qualtrics acquisition – The SAP SuccessFactors team seems to have a strong vision and appreciation of what Qualtrics, which has a focus on both employee and customer experience, can do (I sure hope so, for $8 billion). They just don’t seem to have turned that into a reality yet, which is reasonable given that the acquisition only closed in January. There are some early indications of their efforts and direction, though. For example, with the new UX, the SuccessFactors team has integrated simple one-question surveys (from Qualtrics) on the quality of manager check-ins into their continuous performance management solution. It sounds like this is just the beginning of what they have in mind.
2. An ecosystem play – SAP SuccessFactors is making a big deal about it being an ecosystem player, meaning that they acknowledge that they don’t have a monopoly on great ideas and are trying to be better at playing well with others. As a result, the number of apps that can integrate with SuccessFactors has shot up from just 45 last year to more than 250 this year. The variety of these apps enable organizations to build a more customized employee experience that fits their unique needs.
3. SAP.io – For those of you who don’t know it, SAP.io is SAP’s start-up accelerator, with a vision toward potentially integrating them into the SAP ecosystem. There are several start-ups within SAP.io that are focused on truly transforming the employee experience. One of them, Cultivate (which I have written about several times in other formats), shows significant promise at truly leveraging the existing data and delivering new insights to managers and employees that can help strengthen their relationships (which are so much at the heart of employee experience). We think some of these solutions will increasingly become integrated with this "Human Experience Management" platform.

In some ways, this announcement simply puts an exclamation point on the fact that we are moving away from an era of seeing people as cogs and more toward seeing them as unique humans, which is something we obviously strongly applaud.

From the perspective of being an HR technology market observer, though, we see this as something different. This announcement heralds the mainstreaming of the employee experience concept, which again, is a good thing. As SuccessFactors further refines how employee experience shows up in their platform, they will heighten awareness of the need to take an employee-first perspective.

However, this announcement does also mean that the fight over what “employee experience” really means – and what it should look like from a technological perspective – has really begun in earnest.

And what is a fight without a worthy opponent?

Look out for the good folks in Pleasanton to weigh in with their perspective very soon. I imagine announcements coming from this year's Workday Rising event in October will carry at least a nugget or two on what they're thinking.