Sector Report Archives

February 3, 2020June 29, 2023

The future of recruiting technology

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There are more open jobs than talent to fill them and companies are willing to try anything to win this war. That’s great news for recruiting technology firms that promise companies innovative solutions to find, engage and hire quality candidates.

Venture capitalists continue to court the recruiting tech sector, delivering yet another record-breaking year of investment. By the end of the third quarter of 2019, VCs had invested more than $4 billion in recruiting technology firms, and the industry was expected to cross $5 billion by the year’s end. Many of those investments went to recruiting platforms, including Jobvite, which received $200 million in February to acquire three new recruiting platforms for its portfolio; SmartRecruiter, which raised $50 million in May; and Fountain, a platform to hire gig and hourly workers that landed $23 million in October.

“The war for talent is not going away,” said Denise Moulton, vice president of HR and talent research at Bersin, Deloitte Consulting in Boston. However, companies are getting smarter about how they select and validate the impact of their recruiting technology.

“There are new solutions coming to market all the time,” she said. That is putting pressure on vendors to demonstrate value if they want clients to stick around.

Some companies need tools that will help them more effectively uncover passive candidates, figure out how to mine the former applicant pool and identify internal talent who might be perfect for a current opening. Others are more focused on automation tools to help them engage with candidates, conduct video recording or improve and track the candidate journey.

AI Is Finally Paying Off

Many of these tools now feature artificial intelligence to add to the value proposition. And that’s finally a good thing.

The industry has been talking about AI in recruiting for years, but the current generation of tools are actually making an impact, Moulton said. “AI is boosting productivity, helping to analyze candidate pools, and making it easier to keep track of people who you want to keep in your funnel,” she said.

The use of AI and automation is freeing recruiters to become advisers, focusing on building relationships and capturing data to track outcomes, said Jared Goralnick, group product manager for LinkedIn in San Francisco. “Analytics are helping them set realistic expectations about the size of the talent pool, and the ability to reach new talent.”

AI driven analytics are also reducing the time to fill key roles, and helping companies address diversity and inclusion goals. “These tools can be game changers,” Moulton said. Though as always they only work if you have the expertise to ask the right questions and enough data to generate meaningful unbiased analysis. “The more data you can feed (a system) the smarter it gets over time,” she said.

Skills Versus Experience

The other big trend in recruiting tech is the rising use of assessments, as companies look for ways to vet candidates’ skills and attitude, along with their qualifications and experience. “Assessments are critical if you want to build a funnel of candidates that will be relevant today and for the long term,” Moulton said.

Several vendors have acquired assessments companies, including SHL’s November purchase of Aspiring Minds, an AI-driven talent assessment and interviewing platform; Hired’s February acquisition of Py, an app that assesses candidates coding skills; and Mercer’s 2018 acquisition of Mettl, an India-based talent assessment firm.

And other firms are building their own assessments. Most notably, late last year LinkedIn launched its Skills Assessment feature, which lets users complete dozens of free skills assessments that they can add to their profiles. The early assessments focus primarily on technical skills, but the company plans to introduce soft skills and personality assessments over time.

“It will make it easier for candidates to highlight their skills, and for recruiters to filter their searches,” said Goralnick. It will also make the search process more relevant for candidates and companies. He noted that LinkedIn research shows 69 percent of professionals think their skills are more important than their college education, and 76 percent would like to be able to verify their skills as a way to stand out in a candidate pool. The assessments will help them do that, he said.

Moulton urged companies to be thoughtful about the technology they choose and to be sure it will add measurable value to the talent acquisition process.

“You can’t pick up every shiny new penny,” she said. “You have to figure out what your team will really use and how it will integrate into the workflow.”

September 17, 2019June 29, 2023

Technology and the Talent Shortage

Little seems to have changed in the past year for the staffing industry. There is still more demand for talent than there is supply, the gap continues to widen, and there is no end to both complex issue in sight.

“If anything, the skills shortage is having a dampening effect on the industry, because it’s even more extreme,” said Barry Asin, president of Staffing Industry Analysts headquartered in Mountain View, California. Clients are seeking out their services more than ever but they just can’t fill the roles fast enough.

Yet there is a subtle difference from last year as staffing agencies make some innovative changes to adapt to the new normal. The biggest investments are around agency-hosted reskilling programs to fill a variety of talent needs. At the high end, agencies like Adecco are creating or acquiring coding bootcamps to train promising candidates for hard-to-fill STEM roles — in 2018 Adecco acquired digital retraining firm General Assembly for $412 million.

Other agencies are more focused on training for lower level labor jobs that come with specific skill requirements, said Steve Bercham, chief operating officer of the American Staffing Association in Alexandria, Virginia. For example, last year staffing firm Hamilton-Ryker launched TalentGro, which uses virtual reality to train forklift operators. The technology has led to a 40 percent increase in successful placement of forklift drivers. “These skills can be learned quickly, which helps agencies fill these roles,” Bercham said.

Digital Transformation: Reality or Hype?

Virtual reality is one of many innovative technologies that staffing agencies are adopting to meet client needs. Many others are focused on streamlining sourcing, said Vinda Souza, vice president of global communications for cloud computing company Bullhorn in Boston. “Sourcing is their top priority,” she said. Bullhorn’s 2019 “Recruitment Trends” report found 57 percent of agencies plan to spend more in tech this year, with 31 percent focused on digital transformation efforts to achieve these goals.

While most believe that artificial intelligence and automation solutions will help the staffing industry in the long run, almost half question their ability to deploy and use these tools effectively. “Only 5 out of 10 staffing processionals understand what artificial intelligence and machine learning are,” Souza said.

This suggests that these digital transformation efforts will take a lot of time and will likely begin with simple automation tools that eliminate manual tasks but don’t optimize decision-making. Early movers are already using tools like catboats to engage with candidate, automated résumé screening tools, and job board posting tools like Jobiak’s AI-based recruitment marketing platform that links job boards to the Google for Jobs ecosystem.

Staffing agencies are also hiring their own AI experts to drive innovation in this space. Bullhorn recently added its first head of artificial intelligence to support development of Cleo, its AI platform. “It is on us as an industry to get to the next level of AI so that we can do predictive sourcing and improve the candidate experience,” Souza said. Bullhorn hopes that adding senior AI talent to its team will help them get there first.

Money Matters

No matter how good the sourcing and recruiting technology is, the lack of available talent means companies need to be practical about who they are looking for and what they can offer. “For roles that are always in demand, wages need to go up,” Souza said. Bullhorn’s survey shows 78 percent of staffing professionals believe employers must increase pay if they want to compete for qualified candidates.

Employers should also be open to exploring new talent pools, including candidates with a criminal record, Bercham added. The American Staffing Association is participating in the Getting Talent Back to Work pledge, an effort led by the Society for Human Resource Management to provide employment opportunities to qualified people with criminal backgrounds. “So many companies avoid these candidates for fear of liability,” he said. A big part of the initiative is to educate companies about how the court system and policies makers ensure these criminal histories can be set aside.

“Now is the time to quash the stigma of incarceration,” said Richard Wahlquist, ASA president and chief executive officer. “Employers need to embrace greater inclusivity when recruiting and hiring and give qualified individuals a second chance at success in life — particularly when the U.S. labor market is the tightest in history.”

It’s one of many ways employers and staffing agencies are opening their minds to new talent pools, and where candidates can come from.

“There is qualified talent out there that employers don’t give the time of day,” Souza said. The challenge for staffing agencies is figuring out how to convince employers that these are the right people for the job.

June 3, 2019June 29, 2023

The Business Benefit of Employee Assistance Programs

Employee assistance programs were originally created to address alcoholism and drug use in the workplace.

These programs have since matured to address a broad range of issues that can affect all aspects of employee performance and engagement. From the misuse of drugs and alcohol to stress, anxiety, sleep disorders and depression, they take on “virtually every problem an employee could have,” said Gregory DeLapp, CEO of the Employee Assistance Professionals Association.

This evolution has also changed who runs the programs, he added. In the beginning, most EAP leaders came to the role through the training department or because of their own recovery. But today, most EAP professionals have a social work background or mental health training.

“It reflects what’s being offered and when,” he said.

Today, mental health is a leading driver of EAP investments and the services provided, and thanks to the growing social dialog about depression and anxiety, employees are more open to taking advantage of these offerings, said Barbara Veder, vice president of employee support solutions for Morneau Shepell, an HR technology and consulting firm in Toronto. “That leads to more early engagement, which is always the focus for EAPs.”

She noted that stress, depression and anxiety are among the top reasons why employees access EAP services, and she encourages employers to provide tools and services that help employees to be more proactive in their mental health care. These may include online assessments to gauge risks, rapid access to counseling rather than waiting weeks for an appointment, and wellness apps and self-directed programs to help “get people back to their best selves,” she said.

On the employer side, EAP providers are offering more data and analytics to help them understand whether these programs are being used, and what impact they may have on the business. “Having access to meaningful data allows employers to tailor their programs to the needs of the workforce,” Veder said. It isn’t just about gauging whether employees use these services. Good metrics also help them understand what intervention types are most appealing and how their use breaks down among employee groups. “A lot of people want to take ownership of their care, while others respond better to human interventions,” she said.

DeLapp noted that companies should be sure the data they are getting demonstrate actual business impact. “So much of what is sold today is based on measures of activity, like number of therapy visits, or calls to a call center,” he said. He argued that employers should be asking for outcome measures that demonstrate results.

Workplace Outcome Suite Impact

Many benefits leaders are finding this kind of data through the annual “Workplace Outcome Suite” report developed by Chestnut Global Partners, which uses workplace surveys to demonstrate the effectiveness of EAPs in business terms related to absenteeism, presenteeism, work engagement, workplace distress and life satisfaction. For example, the most recent WOS annual report found that before implementing an EAP program, companies saw an average of 10.92 hours of work missed over a 30-day period due to mental health related issues; after the implementation, it dropped to 5.64 hours — or an improvement of 48 percent. “It helps employers anticipate what impact an EAP will have on the business,” DeLapp said.

Also read the 2018 Sector Report: Anxiety and the Employee Assistance Program

Also read the 2017 Sector Report: EAPs are Valuable but Underused

While EAPs are often considered separate from other benefits programs, it is also important to find synergies between EAPs and benefits offerings, he said. For example, financial pressures can cause stress and anxiety, so offering financial planning services, student debt repayment and other voluntary financial benefits can have the knock-on effect of easing workplace anxiety. “It’s an interesting dichotomy that should be considered when crafting any EAP program.”

March 28, 2019June 29, 2023

Sector Report: Wellness Valuable as a Recruiting Tool

Wellness benefits have officially changed teams. These health-inspired programs and resources are no longer viewed as health care initiatives, but rather as a “new talent value proposition,” said Mike Maniccia, specialist leader for Deloitte in Los Angeles.

“The origins of wellness programs were about saving money by creating a healthier workforce,” he says. But the financial returns on wellness investments have been notoriously difficult to measure, which diminished their value and caused them to lose the backing by cost-conscious execs.

However, in a low unemployment economy where millennials dominate the talent pool, wellness has gained new life as a powerful recruiting tool. Offering on-site yoga classes, healthy food options in the cafeteria, and a suite of physical and emotional wellness apps can help win over hard-to-land new hires. “Appealing to millennials is dominating the wellness conversation,” he said.

Companies like Google, Apple and Patagonia win constant accolades for their innovative wellness efforts, which often include over-the-top offerings like on-site massage therapy, weekly cooking classes, and free outdoor-inspired daycare centers. Maniccia worries a bit that the hype generated by a handful of mission-driven and well-funded wellness programs will make it impossible for others to keep up. “It’s difficult to replicate that kind of culture in manufacturing, retail or a small business,” he said.

However, in reality, companies don’t have to spend a lot of money on wellness to impress talent, as long as they are creative and offer programs that employees actually want. Deloitte’s 2018 “Human Capital Trends” report found that the top two wellness benefits desired by employees are flexible schedules and the option to telecommute, both of which require no real financial investment and can actually cut overhead costs.

Also read the 2018 Sector Report: Is Wellness Just an Employee Perk?

Also read the 2017 Sector Report: Workplace Wellness Programs Continue Healthy Ascent

Benefits Come From Within

Beyond flex time, employees are seeking wellness tools that fit their unique needs and interest. That’s has caused an evolution in the types of programs offered and how employees are encouraged to take part, said Linda Natansohn, head of corporate development, meQuilibrium, a resiliency training company in Boston. Most companies have evolved past things like incentives for biometric screenings, in part because of negative publicity that saw incentives as a form of coercion, but also because they didn’t generate the desired results.

“No amount of extrinsic rewards will drive people to change their behavior,” she said. “Employers have to figure out what is meaningful to their people.”

To connect with these personal drivers, companies have begun curating an assortment of offerings to address employees’ physical, social, emotional and fiscal needs. Many of them come in the form of apps and wearables that encourage healthy behavior and offer intrinsic motivators, like leader boards and positive messages when users hit daily goals.

Though not everyone is motivated by an app, said Steven Noeldner, head of total health management for Mercer. Some employees like self-directed programs, but others will prefer real-time workshops, consulting, or small group classes. “The idea is to have a broad array of services designed for different segments of the population.”

That includes social and emotional wellness programs, which are gaining popularity as companies realize the value of having a happy and well-adjusted workforce, noted Natansohn. These offerings can range from on-site therapists, to meditation apps to “kindness clubs,” where employees work together to create a better and more inclusive culture, she says. “It’s a more holistic approach to well-being.”

Regardless of the scope of offerings, managers and executives have to show their support for using these programs if employees are going to get on board, according to Noeldner. “Organizations with strong leadership support have higher participation and better health outcomes,” he said.

He recently completed work on a joint study between Health Enhancement Research Organization and Mercer that found organizations whose leaders actively participate in health and well-being initiatives reported higher median rates of both employee satisfaction with health and well-being programs (83 percent) and employee perception of organizational support (85 percent) compared to organizations whose leaders did not actively participate (66 percent and 67 percent, respectively).

“The C-suite and management create the climate around wellness,” he said. No matter how carefully companies select their wellness offerings and vendors, leadership support for the program will be critical to their success.

March 27, 2019June 29, 2023

Vision: The Must-Have Benefit for 2019

Vision care benefits have become a mainstay of the employer benefits package.

“Virtually all companies now offer vision,” said Peter DeBellis, head of the total rewards practice for Bersin by Deloitte in Washington, D.C. “It is table stakes, especially for companies of a certain scale.”

Vision care is listed as one of the 10 essential benefits included in the Affordable Care Act, and employees have come to expect it as part of the core employee benefits package. “Health, dental and vision are the benefits triad,” DeBellis said. These programs have a very high rate of participation, which further reinforces the value they bring to employees.

This category of benefits has evolved in recent years in the care options offered and the way these treatments are accessed and paid for. Telemedicine, for example, is a new trend in the vision benefits space, noted Paul Piechnik, senior vice president of group benefits for MetLife. A growing number of organizations now offer basic examinations to check visual acuity and the need for eyewear via do-it-yourself applications or through a physician-led online virtual exam.

“Some are even offering virtual walk-in exams with an optometrist to mirror the same comprehensive examination steps one would encounter at a standard brick-and-mortar optometrist’s office,” he said. The interest in telemedicine is being driven by the digital generation, who prefer self-service for everything, as well as addressing the needs of remote workers. “Telemedicine is just emerging for routine vision care, though it’s too soon to say whether this will become a vision care standard in the future.”

Preventive care

Companies are also offering a broader array of treatment options, including laser surgery, blue light protection on lenses to reduce the impact of light emitted from digital devices, and proactive vision exams to identify risks for glaucoma, hypertension, diabetes and high cholesterol. This last benefit is viewed as a useful preventive care intervention, particularly in an aging workforce. “Vision has a role to play in a lot of chronic health conditions,” DeBellis said. Encouraging employees to have vision exams can help them identify bigger health care risks so they can get prompt treatment.

Piechnik suggested that companies offer sunglasses coverage as part of their vision plan as a way to get more employees to take advantage of these wellness visits. MetLife, for example, has a SunCare rider as part of its vision care benefits that allows members who don’t need corrective eyewear to use their frame allowance for non-prescription eyewear. “This encourages them to get their routine ‘wellness’ vision examination and spot those early issues that can become costly medical expenses for the member and employer alike.”

Also read the 2018 Sector Report: The Bright Shine of Dental Benefits

Also read the 2017 Sector Report: Rising Health Care Costs

Vision Comes at a Price

The other steady trend in vision care is who’s footing the bill. The rising cost of offering any health care benefits has pushed employers away from supporting fully employer-paid vision care to cost-sharing programs, or providing vision as a fully employee-paid/voluntary benefit. Piechnik said this hasn’t caused outrage among cost conscious workers.

“Employees for the most part see the value in nonmedical benefits such as vision care, so are willing to pick up some or all of the cost of these benefits.”

Regardless of the payment structure, benefits administrators should look for a comprehensive plan that provides annual vision examinations and eyewear benefit levels that employees value.

“With many employers offering vision on a voluntary basis there is no reason not to offer this benefit,” Piechnik said. “It’s a key product for creating a benefits package that truly increases employee satisfaction and loyalty.”

Once the program is in place, benefits administrators should educate employees about what the program covers, and the value of getting annual exams and keeping their glasses up to date. “It’s not just about getting a new pair of readers,” DeBellis added. When employees take care of their vision they are healthier and more productive, which benefits everyone.

January 28, 2019June 29, 2023

Recruiting Technology Is a Hot Commodity

Recruiting technology continues to be a hot investment space, with venture capitalists and global enterprise solution providers investing millions in developing and acquiring innovative new point solutions. By the end of the third quarter of 2018, investment volume in HR technology had nearly tripled what was invested in 2017.

“There is a lot of money going into all aspects of recruiting and talent acquisition,” said David Mallon, vice president and chief analyst with Bersin, Deloitte Consulting. “It’s generating a lot of innovation, but also a lot of noise.”

Trends around social recruiting, mobile apps and video interviewing are now the norm, noted Barbara Marder, senior partner and global innovation leader at Mercer. “We are still seeing improvements in these areas but they are now entrenched in the talent acquisition process.”

Newer trends focus on implementing artificial intelligence, machine learning, gamification, and chat bots into the recruiting platforms. “These are all still leading edge and we expect to see a lot more adoption in the coming years.”

Diversity Drives Innovation

How these tools will be applied varies based on the challenges clients face. One area gaining a lot of attention is diversity in recruiting. Diversity ranked as the top hiring priority in LinkedIn’s 2018 “Global Recruiting Trends” report, with 78 percent of companies citing diversity as important to their strategy. However, the majority of these companies also report that finding diverse candidates to interview is their biggest obstacle, said Monica Lewis, product manager for LinkedIn. “They are not getting enough diverse candidates in their funnel, and they are looking for ways to reach a broader audience,” she said.

See 2018 Sector Report: Recruiting Tech Is Expanding, Unlike Recruiters’ Willingness to Use It

See 2017 Sector Report: Branding, Building Relationships and Getting Social

This challenge has won the interest and innovation of aspiring HR tech start-ups, who have been launching a variety of potential solutions. Vendors like Hired and Gapjumpers offer platforms that hide candidates’ names, universities and other defining features that can lead to bias in hiring. Other vendors forgo résumés all together, forcing companies to choose candidates based on their performance in coding challenges or assessment results rather than college pedigree.

More recently, vendors have begun adding virtual job fairs and analytics tools to help clients expand their talent pool and to be more holistic in honing their short list of top talent. “If companies want more diverse candidates they have to scout in more places,” said Marder. Virtual technologies allow them to canvas on more campuses and to connect with more candidates. “Once they are able to flood the pipeline, they can use machine learning algorithms to screen the data and find the best people.”

These algorithms can track any combination of individual and industry trend data to figure out who will be the best fit for a position, and they get more targeted with every search, she said. “It levels the playing field for diverse talent.” Companies need to be certain their algorithms aren’t also biased. Amazon recently discovered its recruiting algorithm was biased against women, because it was based on the traits of past high performers, who were predominantly male.

Chatbots Add a Human Touch

Vendors are also continuing to develop tools that improve the recruiting experience — for candidates and clients, said Mallon. That includes using chatbots to provide “human” interactions to keep candidates up to date on their applications, or to answer questions about the process. He noted that chatbot technology has gotten a lot more advanced in recent years, making these interactions more engaging than just waiting for an email. “It provides a lot of value while reducing the number of actual humans in the process.”

As these small vendors continue to demonstrate the value of their solutions it will surely lead to another flurry of acquisitions in this space.

“The recruiting industry is currently at ‘peak boutique’ with a lot of little players showing a lot of innovation,” Mallon said. That is often the point where enterprise providers start acquiring all the innovative point solutions to expand their own talent acquisition suite.

For companies wondering whether to implement these new technologies today or wait until they mature, Marder urges them to think about their recruiting pain points, and whether a best-in-class solution is the answer. “If one of these tools solves your recruiting problem and creates daylight between you and your competition — that can give you an edge at least for a while,” she said. That can make the investment in a startup solution worth the risk.