The Future of PeopleTech
Look closely. This line doesn’t represent the price of Bitcoin since yesterday morning, but rather the portion of employees who quit their job each month (Data: FRED; Chart: Axios Visuals). The New York Times reported that nearly 4.3 million workers quit their jobs in August 2021 — up from 4 million in July. It’s the highest tally — by far — recorded in the two decades since the government started tracking the data.
Two. Decades. 🤯
The fun doesn’t stop there: employers are leveling up their perks to better compete. According to Axios, more than 5% of all U.S. job postings on Indeed include perks like hiring cash bonuses to attract applicants. Here’s another stat. The Bureau of Labor Statistics reported that the median employee tenure fell to only 4.1 years in 2020 from 4.2 years in 2018. That may not sound like a big deal but look at median employee tenure broken down by age. Workers aged 55 to 64 average 9.6 years while the median tenure of the Snapchat generation consisting of workers ages 25 to 34 lasts just 2.8 years.
What does this data suggest about labor trends? The Snapchat generation — which includes yours truly — approaches employment with the same ephemeral aloofness that they consider their favorite app — and I’m betting the TikTok generation will accelerate this trend. Societal norms that placed a high value on workplace tenure used to allow employers to be more complacent about talent strategy. If employers were lucky enough to snag the best talent, these people would stick around, despite a lack of investment by employers to ensure that they do. Those times are changing fast. With remote work skyrocketing, companies must now compete for a global workforce, making geographic talent monopolies a thing of the past. As the workforce turns over more frequently, increasing competition for talent is becoming the new normal.
Employers, pay attention
It’s time to re-think the employee lifecycle: acquisition, development and retention, and pruning. Technology can play a role in this evolution, and we can forecast how the tech landscape will evolve in this category by drawing some connections to the tools available to sales and customer success teams.
Software for customer-facing teams is undergoing a renaissance. The level of automation for many parts of the customer lifecycle — acquiring customers, monitoring the health of those customers, identifying expansion opportunities — means these teams can offload menial tasks in favor of more strategic work while also increasing their throughput. Customers and employees alike both represent productive assets for companies, yet customer-facing teams operate like superhumans while talent teams largely live in spreadsheets, email, and outdated HR systems. Drawing on patterns from the software stack for sales, customer success, and marketing teams, the next generation of PeopleTech tools will add automation so that talent teams can evolve into superhumans too.
Acquisition: Finding and curating talent
Finding and curating prospective talent in a competitive environment is not dissimilar to finding and curating prospective customers. Sales teams have software to help them more easily find customers (6sense, Apollo, ZoomInfo) and automate engagement with prospective customers in a scalable, personalized way (Outreach, Salesloft, Groove). When prospects visit websites, they can chat directly with the sales team (Drift, Intercom), those websites might generate personalized experiences using data enrichment (Clearbit), and may present multiple calls-to-action: contact forms, newsletter signups, free trials, and so on. Marketing automation tools make it easy to segment customer prospects according to their level of interest and tailor messaging accordingly. During the sales process, revenue intelligence tools help sales teams reveal the most impactful sales tactics and transfer those learnings to other salespeople through automated coaching (Gong, Chorus).
Contrast these technologies with the currently bleak state of tools for talent acquisition. The tech stack for recruiters typically includes LinkedIn for sourcing candidates, spreadsheets and applicant tracking systems (ATS) for tracking them, and email for outreach. The employment section of company websites is typically limited to a tired description of employee benefits, manufactured rah-rah team videos, and a list of open positions.
The next generation of tools for recruiters should mirror the capabilities of those available to sales teams, which means adding automation and personalization. These tools can help recruiters more easily identify candidates and segment them according to their levels of interest. Recruiters could enroll them in email drip campaigns with relevant company updates, collateral content, and job announcements. Would an ad on Instagram highlighting a celebration for the top-performing sales reps resonate with a prospective salesperson? I don’t see why not.
When a candidate visits a company’s job page, content should be personalized according to their interests. With automated visitor enrichment, the website could customize the page according to the profile of the person visiting. Would engineers be interested in stats about average sales quota attainment or photos from the sales enablement retreat? Probably not. Would salespeople crave content about the company’s data infrastructure tooling? Hard no. With automated personalization, the company’s website could ensure it delivers the right content to the right person.
A chatbot could provide a direct line to the recruiting team for candidates to ask questions that might shape their decision to more directly engage: What is the average employee tenure? How long is maternity leave? What is your remote work policy? The call to action shouldn’t be limited to “apply for this job.” What if a candidate could schedule a time to speak with someone from the people team, subscribe to company updates, or send a question to someone already in the target role? There are a number of ways to increase the modes of candidate engagement, and technology can help shape better experiences for companies and their recruits.
Interviews are typically an information black hole due to the lack of insights about the content and flow of interviews. The state-of-the-art process for coaching interviewers is having someone observe the interview and take notes. We’re starting to see founders solve this problem by creating software products to reveal analytics about interviews and automatically coach interviewers based on those insights. In fact, we recently partnered with Metaview to make interviews more intelligent. The result is a more consistent experience for candidates and fewer instances of bias.
Lastly, buyers of software have access to curated review sites like G2 and Capterra to assist in decisioning. These marketplaces of ideas are so powerful that software vendors regularly highlight their ratings from these sites directly on their homepages. These sites are powerful tools that amplify the reach and brands of software vendors based on common buying criteria. While sites like Glassdoor, which host generalized job reviews, are useful, we’re still in the early innings of employer brand amplification. For example, an engineer might prefer job opportunities within companies working on the most interesting distributed system problems. A salesperson might want to filter jobs according to buyer personas, industry domains, and historical sales goal attainment. One company innovating here is StackShare, which helps companies communicate information about their tech stacks, but it’s not particularly focused on talent acquisition.
Innovation is happening, but we’re still at the very start. Some of the companies innovating in talent acquisition include:
- Metaview (part of the Vertex portfolio) — an interview intelligence platform (think Gong but for interviewers)
- Guide — a system that streamlines candidate experience
- Gem — CRM for talent acquisition
- Findem — talent search and discovery
- Sense — talent engagement platform
- Crew — all-in-one recruiting platform
- Symphony Talent — recruiting automation software
Analytics, development, and retention: Getting the most out of existing talent
Net dollar retention (NDR), which measures the monetary expansion of existing customers from year to year, is the “North Star” metric for customer success teams. NDR above 100% indicates that buyers are perceiving value and purchasing more as a result. Customer success teams have software tools to help them identify early indicators of perceived value to assess if customers are on track to increase spending. Some of these tools surface observed behavior (Involve, Vitally, Catalyst), while others track customers using surveys (Qualtrics, Medallia, Kapiche). Companies might deploy software tools to improve adoption for customers whose indicators suggest they are off track (Appcues, UserPilot, WalkMe).
The same physics applies to employee engagement and development. Increasingly, companies use tools like CultureAmp to survey employee sentiment and invest in programs from companies like Udacity, LinkedIn Learning, and BetterUp to enable learning and career growth, but we are still in the early phases of these technologies. New technologies might derive insights from observed behavior to help companies identify unhappy employees when there is still an opportunity to intervene: Are they logging into their tools less frequently? Has the level of discourse with fellow employees dropped? Did they stop attending company events? Employees might have latent skill sets or leadership potential that could be cultivated with a well-crafted development curriculum. The next generation of tools could help us redefine net employee retention, which should consider both employee churn and employee advancement within the company. Moving on up!
Here are a few companies focused on talent analytics, development, and retention:
- Lattice — tools for people and performance management
- AmplifAI — transforming data into data-driven actions to replicate top performers
- 15Five — continuous performance management software
- Phenom — end-to-end talent experience management
Pruning: Deriving value from former employees
While customer-facing teams tend to be “tech-lite” when it comes to re-engaging former customers, this doesn’t need to be the case for people teams. In the case of regretted churn — employees a company wishes had stuck around but didn’t — there might be opportunities to derive value from these wandering souls. For better or for worse, we’re increasingly integrating our identities with our jobs. The net effect is a sense of loyalty toward employers who’ve impacted our career journeys positively and produced meaningful relationships. The majority of my closest relationships formed in the last few years are between people I’ve worked with. That bond inspires me to do right by the experience — the job — that brought us together. “Doing right” in this context might include sourcing replacement candidates, becoming a customer of my former employer, or even returning to the company at some point down the line. What if employers had tools to track former employees and unearth these opportunities for re-engagement?
The next paradigm: PeopleTech strategy
In some ways, people have always been the strategy. However, low turnover and smaller talent markets have made it easy for employers to become complacent in their talent acquisition and development. For companies to succeed, they must shift toward a more proactive stance in these areas — and the next generation of people technologies can help them do it. Organizational charts are leading indicators of company priorities. In the same way that IT leaders have moved up the org chart to report to the CEO, talent leaders are making the same leap. IT is no longer a cost center, but rather a strategic investment area for companies. Human Resources departments are following a similar evolution, long overdue.
As an investor, the lessons I’ve learned tell me that a well-executed people strategy is a critical ingredient of success. Investors often ask: Which matters most among markets, products, or people? I’ll take people because the best ones find ways to carve out a niche in existing markets or develop new ones, and products are only as good as the market execution behind them. Companies are made of people who execute according to their ideas and abilities. The success of companies will ultimately depend on the investments they make in finding the best people, developing their capabilities, and looking for ways to help them take the next steps on their journeys.
Special thanks to Katie Baum & Allison Vendt for their inputs.