By: Tom Wisniewski, Managing Partner, NVP
Human resources is one of the last corporate functions to fully adopt data-driven decision making. However, as the labor market continues to tighten, and traditional recruiting channels (e.g. Job Boards, LinkedIn, etc) continue to lose effectiveness, more and more HR executives are looking to HR tech to provide new solutions that can fit within the already complex and crowded suite of 20+ HR applications most corporations are already using.
The daily operations and responsibilities of an HR manager have shifted in the last decade. Workforce needs now require HR teams to maintain flexibility and evaluate employee potential and success with new – more exacting – metrics. There are also new demands of HR: teams are required to be more diverse; employee engagement has become integral to job satisfaction and long term commitment; and millennials have proven to be a hard generation to recruit, and even harder to retain. These trends, which we think are likely to stick around, have caused a surge in HR tech startups, and have made it an exciting investment vertical, with new solutions taking shape.
Upsider, for example, is an HR Tech platform that turns candidate sourcing into a science. Instead of relying on traditional overused channels–LinkedIn, Job Boards, etc– focused on recruiting from the same tired set of competitors, Upsider uses artificial intelligence (AI) to analyze the job recruitments more deeply and identify key characteristics/needs of company to create a robust proprietary 100+ data point job profile. Upsider then uses AI and NLP to compare this detailed target profile to jobs and people within its proprietary database of 70 Million companies, to both surface new target companies, and locate higher quality candidates. The candidate list and target profile is further improved based on input from hiring managers use a “tinder-esque” approve/deny one-tap to refine the machine learning model. The result is a data-driven sourcing system that helps their clients find more higher quality candidates and get them 5x faster. It’s not only saving companies money and time on fruitless job-board advertising, its helping them to match with quality candidates that are the most likely to produce and become long term assets.
Similarly, Talentegy is tackling recruiting from the candidate experience side – which is becoming more and more important. Talentegy sits on top of the increasingly complex HR tech stack to monitor a candidate’s progress through the application. How many times has a recruiter pursued a great candidate, only to have them disappear halfway through the hiring process? It’s beyond frustrating – and can even be damaging. Leading industry research indicates that over 50% of candidates will sever a business relationship with a company due to a poor candidate experience and over half will abandon an application process because of a technical issue. Not only will you lose a candidate, and potentially a customer, but it’s nearly impossible to know what caused the change of heart. Talentegy shows recruiters why a candidate abandoned their application and how to fix it.
Beyond recruiting, we are seeing more solutions that can help understand and direct employee performance, like RankMiner. RankMiner is an AI tool currently being marketed to call centers to analyze staff/customer conversations, beyond the spoken word. Unlike speech analytics, which analyzes conversations based on word use and frequency, RankMiner’s patented algorithms analyze 383 voice features. By monitoring and measuring qualities like energy, intensity, and frequency, RankMiner is able to extract the emotions and behaviors expressed during a conversation with more preciseness and a greater sense of authenticity. (Adheres to the old adage, “It’s not what you say, but how you say it.”) From here, RankMiner is able to predict future outcomes, such as employee attrition, as well as customers likely to be up sold, collection agency success, and more. RankMiner is the only company in the market today able to provide predictive insights from voice data – and their clients have realized business improvements of up to 200% over previous methods.
To further explore the outlook of HR Tech as an industry as well as an investment vertical, we invited Daniel Chait, CEO of Greenhouse Software to speak with our current cohort of founders. Greenhouse Software, a Series D startup, which has raised just over $100 million since its launch in 2012, makes software tools that help companies automate all aspects of hiring throughout their organizations, helping them compete and win for top talent.
Chait said, “With over $2.38B of venture capital investments in HR tech so far already this year, and new entrants from Google and Microsoft, there’s a huge amount of energy in HR Tech right now. Greenhouse has always understood the massive opportunity in helping companies grow quickly, and a major part of that enablement comes when companies have the right hiring capabilities to help business leaders make better, more informed hiring decisions. People and talent are what make companies succeed which is why there is so much interest in the HR Tech market right now.”
Competition to hire and keep top talent today is fierce, and the growing HR Tech market is making it easier for HR teams to identify, hire and retain the highest quality candidates. In the cases mentioned above, these disruptors are changing and updating traditional processes, but they are also helping employers and employees work more efficiently and to greater satisfaction than ever before. As the HR Tech market expands, we can expect to see companies in the space empower more people to excel at jobs that they enjoy, while allowing companies to enhance their balance sheet and build better communities for those on the payroll.
Disclaimer: Upsider, Talentegy and RankMiner are part of NVP Labs Fall 2018 cohort.