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Being early stage investors at Indicator Ventures, we are on the forefront of many different industries being augmented by new technologies. These technologies aim to either compliment traditional operations or replace them all together. One of the industries that we have made investments and have experience in is Human Resources, aka “HRTech.”
HRTech has evolved over the years as more and more businesses shift away from legacy, on-premise software to more efficient cloud-based solutions. In parallel with this shift, we have begun to see companies in the space explore various avenues and new technology solutions when it comes to recruitment, talent management, and even internal business communication.
Early on, recruiters would rely on LinkedIn, Monster, Indeed, and their own networks to source candidates. Startup founders recognized this recruiting system wasn’t optimal and began to penetrate the space with alternative offerings; now, recruiters (and candidates alike) have more tools at their disposal to make the recruitment process more enjoyable and more efficient.
One such company that has made a foray into recruiting is Wade & Wendy. Wade & Wendy are artificially intelligent assistants which leverage machine learning and big data to make hiring more human and efficient. Wade is a machine intelligent assistant (chatbot) that helps candidates navigate their careers and find the right opportunity, while Wendy helps companies identify the right talent to fill their open roles. The Wade & Wendy platform essentially aims to automate the drudgery and repetition involved in the recruiting process (sourcing databases, sending hundreds of emails, etc.) through technology, allowing all parties to focus on the best parts of recruiting such as interacting with candidates and diving deep into company specific needs.
HR Tech tools like Wade & Wendy’s AI recruitment chatbots are changing the recruitment landscape for the better. Forward looking, as automation becomes the norm within the industry, recruiters will be able to dedicate more time to strategizing rather than laboring on the execution. And as they do this, the KPIs in the industry will naturally shift - performance will no longer simply be about time-to-fill and roles closed; it will be about more granular metrics like time-to-onboard new hires or more macro metrics like the LTV (lifetime value) of a candidate.
When it comes to talent and talent management, it’s clear that the way employees interact with the companies they work for is changing. Specifically, we have begun to see a monumental shift in the US workforce and their tendencies within the job market. A new-aged workforce seems to have emerged where, instead of working one steady job throughout one’s lifetime, people are gravitating towards a more dynamic and distributed work-life, sometimes even working multiple part-time jobs at once. As such, the emergence of the “gig-economy” has given rise to a plethora of freelance jobs that allow for greater quality of life and flexibility than previously imaginable. As per the IRS, the use of contract labor by small business is growing rapidly: U.S. sole proprietors spent about $56.8B on contract labor in 2016, up from $34.4B in 2010 (an increase of 65%).
Human resource departments are now dealing with the influx of part-time 1099 workers that have emerged alongside the traditional W2 worker, and new technology companies are sprouting up, eager to assist with this shift and support both the corporations in charge of hiring and the employees classified as 1099 contractors. Take Boston-based Catch for example – Catch provides traditional benefits for the gig-economy worker and offers a simple platform to handle taxes, retirement, time off, health insurance, and student loan refinancing all in one place. The company is providing a much-needed safety net for the future of our workforce, and they are currently working with some of the largest tech companies in the US to propagate their message.
Catch’s offering is becoming increasingly important as 1099 status continues to be exploited as a labor protection loophole – for example, venture-backed on-demand companies use it to forgo requirements to provide healthcare, to get around minimum wage laws, or to rid themselves of liability. Understanding and catering to these 1099 workers should now be top-of-mind for HR departments in the US. Needless to say, we expect to see increasingly more companies attempt to tackle this issue in the not-too-distant future.
"The modern-day workforce is evolving and as a result, human resources technology companies are dynamically adapting with it"
Finally, it has become abundantly clear that the way employees communicate internally is rapidly changing due to the advent of new technologies. From Slack to Zoom, businesses now have a surplus of tools at their disposal to assist with everything from day-to-day chat to long-distance video conferencing. More importantly, however, new technologies targeting communication have allowed for the rapid spread of information from a bevy of different sources. This proliferation of data provides an inside look into the operations of different companies and their departments, and even allows executives to form best practices based off of others’ experiences.
Real-time collaboration, project management and documentation platforms like Google Docs, Asana, Trello and Dropbox support real-time digital teamwork and help teams organize all the data at their disposal. Furthermore, new platforms like Almanac allow you to make sense of this information and locate the most relevant aspects for your company needs in addition to offering a robust platform for documentation. For example, if a growing technology company is ramping their team but the person responsible for HR doesn’t have experience hiring at scale, they can turn to Almanac, search for how other companies have gone about that particular process in the past, and apply this new knowledge to the task at hand.
Clearly, the modern-day workforce is evolving and as a result, human resources technology companies are dynamically adapting with it. As with innovation in other industries it’s been exciting to watch new technology solutions come to fruition in HR Tech, and we’re eager to see what the next wave of tech startups in the space will look like as employers and employees alike continue their quest to drive meaningful efficiencies across the ecosystem.