This week we are observing a few of the greatest strategic trends that may have a longer-term impact on the labor markets.
- Ford CEO Jim Farley said with the company shifting to EV, we have to look to do more things inside the company to ensure everyone has a role in the growth. In essence, Farley emphasized we have to reimagine how we execute our priorities and is reminding the same vision set by Henry Ford 100 plus years ago. Founder Henry Ford owned Forests, Iron Mines and Limestone Quarries to ensure Ford controlled the supply chain
- The World is witnessing the greatest staff adjustment experiment at Twitter. With the arguments on both sides, the World is anxious to see if this experiment will be pulled off and has triggered the question among leaders of how big a staff tech companies truly need
These are consequential strategic points of discussion that Human Resources should pay full attention to and develop a point of view. In some companies, Workforce Planning has largely been reduced to modeling Supply-Demand gaps (source – SWP conferences in Europe when discussing concerns) and how we can shift that to be more strategic. Supply Chain Redesign, Automation, Cobots, AI assistants, Low Code- No Code, there is no shortage of the strategic drivers that Workforce Planning needs to consider.
One way to be more strategic is to understand where the VCs have money across the functions and see what VC dry powder is available to deploy. This approach gives an interesting framework. Let us look at the changes in the last 18 months or so specific to just HR (for now)
- VCs funneled more than $12.3 billion into global HR tech startups across 809 deals, roughly 3.6 times the amount of capital invested in 2020, according to PitchBook data
- Data shows that global HR technology venture capital investment outperformed the rest of the market through H1 2022 – surging to $9.4 billion, with $4.6 billion invested in Q2 alone
- Payroll led the quarter with $1.1 billion in investment, driven by a surge in global payroll and “employer of record” (EOR) payroll solutions
- New “employee-first” learning models from providers that offer employees the opportunity to further their education across the spectrum
- As wage growth continues to climb and employers struggle with pay equity, compensation solution providers provide new opportunities for comp strategy
- Mentoring and coaching solutions have seen new interest from HR leaders looking to provide employees with tech that can contribute to upskilling, leadership development, and employee mental wellness
- Employee listening through technologies like Conversational AI is receiving high interest from the VCs
Knowing these trends will help you understand what skills you may need to build in HR that may be helpful in the next two to five years. The more Recruiters and Workforce planners shift to a deeper understanding of digital transformation, the better their value to the organization will be. The VCs are betting on hyper-innovative learning models (through Metaverse, perhaps), Conversational AI, and continuous innovation in compensation planning with more emphasis on the role of Equity. Some of you may know that AI dominance for Google did not come from traditional hiring channels. Google’s Alan Eustace hired the renowned AI researcher Geoffrey Hinton through an Auction. (this is an interesting story from the book Genius Makers by Cade Metz if you are interested in further reading).
Another strategic lever for HR is to understand how the data is flowing across a function/job role and what tools are platforms are influencing the same.
We recently conducted a small workshop to understand how the sales representative functions and the associated data analytics aspects are changing in pharma companies. (we picked this segment because pharma typically relies on more traditional skills in sales, unlike the tech industry). To our surprise, the emerging workflows pointed us to several digital workloads. So the supply-demand gap models at a headcount level may not make sense.