How We Work: PeakSpan’s Thesis for HR Tech
As a Human Capital Management team, we’ve had a ringside seat to more than a few tectonic shifts in the land of HR Tech. From recruitment and onboarding to payroll and employee engagement, HR Tech has streamlined how organizations, both large and small, interact with their employees. While many of the trends we’ve seen unfold in the HR Tech arena predated the pandemic, COVID-19 forced employers to rethink their talent acquisition, development, and management strategies indefinitely. These shifts are often compounded by other factors including economic chop and geopolitical uncertainty — two headwinds that result in a challenging market for skilled talent.
We’re excited to share our views on why and how organizations are adopting HR technology to streamline employee engagement, efficiency, retention, and performance.
#1 Meeting the demands of the deskless workforce
Deskless workers today represent about 80% of the global workforce and are critical to overall economic output, yet they are being dramatically underserved by technology solutions to help maximize productivity. These workers are typically on the proverbial frontline of service, production, or end client engagement and have a lifestyle often characterized by inconsistent hours with poor communication channels with their respective managers. To truly engage and retain frontline staff, organizations must align on what matters most — namely well-structured compensation strategies, engagement channels, adequate training, leadership, community, and recognition programs.
For years, deskless workers employed a “BYOD” (bring your own device) lifestyle — meaning they had to bring their own tools to work to fill the void their employers failed to address. As managers began to realize the criticality of this segment of their workforce, they also began to appreciate how under-resourced they were. Enter deskless workforce software — a technology meant to optimize communication, efficiency, and satisfaction among this often-neglected segment of the workforce. These tools have seen massive adoption among organizations of all shapes and sizes, ultimately leading to an opportunity for expansion and disruption.
There exists a tremendous opportunity for technology to aid in frontline worker communication by consolidating workflows, synthesizing information, and enhancing worker-manager feedback loops.
#2 Virtual workforce optimization
One of the most notable trends we’ve seen in the HR industry is the move to distributed/remote and “hybridized” (both onsite and remote) teams. With more employees working remotely, organizations need technology that can facilitate seamless communication and collaboration between teams, yet employees are also grappling with an “always on” engagement expectation given the continued shift to gig, virtual, and distributed team models. While this evolution has undoubtedly created challenges and friction points, we also believe it has created opportunities for nimble organizations to adopt new technologies such as video conferencing software, project management tools, and employee engagement platforms to deliver both exceptional impact and results.
Although the value of flexibility isn’t anything new, a staggering 93% of recent survey respondents said flexibility was top of mind when deciding to apply or accept a job, and 64% of the global workforce would consider leaving if their employer wanted them in an office-full time (Axonify). And while remote work is satisfying the voice of employees’ needs, 55% of employees report feeling somewhat lonely while working at their kitchen table, and therefore employers must find a way to encourage collaboration and communication to i) remediate feelings of isolation, ii) increase productivity and iii) reduce turnover — a pernicious issue so many companies are facing. Luckily, L&D leaders’ voices are getting louder around the table and have begun prioritizing investment in tools that bring a sense of “normalcy,” connection, and collaboration to a virtual workforce. Even though the data suggests that employees are increasingly returning to the office, it is our expectation that hybridized and distributed teams are here to stay across most industries and businesses.
As more employees embrace a hybrid schedule, demand for optimizing workflows is higher than ever.
#3 Freelancer economy
To quickly fill labor gaps, organizations are turning to freelancers and gig workers. Technology solutions allow for complete visibility into these specific employee journeys — from hiring and onboarding to workstreams and payment for both freelancers and hiring organizations. Today, 35% of the US workforce participates in the freelance economy, and this is expected to grow at a ~15% CAGR through 2026. Much of the freelance sector’s growth can be attributed to i) increased flexibility around location and hours, and ii) a sizable increase in income generation by freelancing. At PeakSpan, we believe this sufficient yet growing market will see significant innovation over the coming years and play a big part in the next phase of workforce evolution.
As businesses increasingly depend on freelancers to meet workforce demands, software to manage these employees becomes a table-stakes.
#4 Learning and development emerges as a top priority
To help employees thrive and develop, companies need to build learning experiences that are a) focused on career paths; 2) digestible and delightful; and 3) in the flow of work. With shortening attention spans and constant distractions from multiple screens, bite-sized content that meets employees where they are has been shown to boost business, people, and innovation performance. In fact, a recent study showed that microlearning can improve information retention by up to 80% and engagement by 50%. In the Spring of 2022, we partnered with Arist, a business that delivers microlearning in the flow of work (Slack, Teams, SMS, etc.). This partnership embodies our thesis of meeting learners where they are: if learning organizations want to increase engagement and adoption, information must be put into the hands of employees.
L&D teams are increasingly focused on meeting employees in the flow of work with relevant content and engaging modules to maximize impact and information retention.
#5 The importance of a skills-based workforce
To keep a workforce nimble, employees must develop with the organization through reskilling and upskilling. Tapping into an existing workforce’s skills can be a powerful tool: by leveraging the unique talents and abilities of their employees, organizations can improve current operations and, more importantly, prepare their workforce for future challenges. A recent Deloitte study found that 47% of HR execs cite skills-based learning and development as their top area of investment across 10 skills-based practices.
This marked transition from jobs to skills is a response to the great resignation, the great attrition, and quiet quitting. When employees feel valued and supported because their employer is investing in their career path, they are more likely to stay with the company. Moreover, a top reason employees quit their jobs is due to a lack of reskilling and upskilling opportunities. This trend has served as a catalyst for how HR leaders approach their workforce.
Above all, employers are building a foundation for the future of work: shifting HR-based strategies to skills-based practices to unlock agility and human potential. A Deloitte survey found that 55% of HR executives have transformed into a skills-based organization to increase agility. This not only helps companies become more efficient by tapping into their existing employee base, but it allows companies to empower employees with a range of unique skills and abilities — ultimately leading to great fulfillment and job satisfaction. And, early results are in: skills-based organizations are 98% more likely to retain high performers, 52% more likely to innovate, and 79% more likely to achieve a positive workforce experience.
Companies that offer services (like coaching, for example) to help employees learn a new skill or enhance their current skillset can boost overall engagement and productivity, yet doing this at scale has proven to be quite difficult. Technology to help streamline the delivery of employee development not only helps retention, but it also provides managers with visibility into their employees’ skills.
The need for employee development opens up an opportunity for software to provide unmatched upskilling and reskilling opportunities.
#6 Employee Recognition
Showing value through recognition has been shown to boost employee morale and company culture. We believe software can play a powerful role in sustaining this trend, especially as managers and leaders seek to do this at scale. 13% of employees worldwide report being truly engaged at work, and the average employee changes jobs every four years. To retain workers in today’s environment, companies must go above and beyond day-to-day employee interactions. The ability to give and receive recognition puts purpose and excitement in day-to-day tasks, and innovation in this space seeks to do just that.
We’re excited by the advances in this market as the need for social connection and positive reinforcement becomes more pronounced. This is a thesis we have been focused on, and investing in, for a few years now. In 2021, we invested in Kudoboard, a digital engagement and recognition platform for distributed users.
To create a phenomenal employee experience, companies must recognize workers through thoughtful praise, which is streamlined through modern technology such as recognition platforms.
#7 Diverse Workforce — Scaling DE&I initiatives with the help of technology
Visibility into the makeup of a workforce has long been a caliber of success for DE&I initiatives, yet achieving visibility into a complex workforce at scale has been a thorn in HR leaders’ sides. Technology that gathers data on — and analyzes — a workforce’s unique attributes, keeps companies accountable to their DE&I missions, while also doubling as catalysts for change.
However, gaps still exist in sustaining an inclusive culture, and companies still have a ways to go in prioritizing a sense of belonging at work. In fact, only 43% of employees feel a sense of belonging in their current role. The work that still needs to be done opens up an opportunity for technology to help companies scale their DE&I initiatives, such as providing a straightforward and real-time view into workplace diversity. HR leaders have shown increased adoption of next-gen technology like AI to help mitigate bias, improve employee awareness, and ultimately go far beyond quarterly or one-time demographic measurements.
The focus on inclusion in hiring and in workplace culture is not going away. The opportunity for technology to ignite and sustain meaningful change is quite energizing.
#8 Compensation Management
To make informed hiring decisions and remain competitive in today’s battle for top talent, managers and TA leaders need full visibility into compensation trends and offer-letter data. A competitive labor market existing alongside job security uncertainty has underlined the importance of pay transparency in recruiting — yet robust offer intelligence and market trends largely still live in spreadsheets and emails. Technology applications can increase transparency, optimize the talent organization, and — in some cases — help companies stay compliant (a fifth of all US workers are now covered under pay transparency laws as of January 1, 2023).
Compensation management’s wide reach across the entire employee lifecycle gives us further conviction on this segment’s future traction. Increasing and streamlining access to pay data breeds a culture of transparency, which, in turn, helps improve employee retention and morale. Further, 70% of employees believe pay transparency is essential for employee satisfaction. This sentiment lays the groundwork for future C-suite buy-in as they seek to boost employee engagement, retention, and productivity.
The push for fair and competitive compensation is becoming more pronounced, leading to increased demand for tools that help companies navigate pay transparency and pay equity.
#9 Driving a superior candidate experience from day 1
In addition to competing for top-talent, hiring managers today must execute upon an unmatched candidate experience to maintain and increase conversion rates. Applicants have come to expect a superior UI/UX as well as transparent and regular communication. To do this at scale is extremely difficult, but software can help build an engaging experience throughout interviewing and onboarding. Interactive video, text messaging, and automated recruitment marketing are just a few of the many ways software has enabled a highly personalized yet scalable recruitment process.
Maintaining a superior experience for an employee post-hire is even more important. Technology that enhances onboarding has been shown to increase employee retention by 82%, yet only 10% of employees believe that their employer offers a great onboarding experience. This underlines the opportunity for solutions to fill a critical gap in the employee journey, and our sense is that tech adoption in this node of the worker’s lifecycle will continue to rise.
Additionally, an efficient onboarding process can impact ramp time and overall employee efficiency. In fact, new member productivity sits at 25%. Starting off on the right foot will pay dividends in future retention as well. 70% of employees that had exceptional onboarding experiences report “having the best job ever!”
Providing a seamless, personalized hiring experience across every node of the pre-hire journey has emerged as a top priority for organizations today. More importantly, delivering a best-in-class onboarding experience is key to meaningful long-term employee engagement and retention.