There is a constant stream of new players who enter the human resources technology arena every year. In addition to longtime players who are reinventing themselves and their offerings, others from outside the industry are making their debut in both HR and the U.S. market. These entrepreneurs offer fresh perspectives on the power of technology and big data to transform HR.
Workforce spoke separately with three up-and-coming industry leaders in a sort of virtual roundtable. Everyone was asked the same questions and we’ve presented the most insightful answers.
One is an executive from an Austrian firm expanding in the U.S. with an employer rating site similar to Glassdoor; another is a former media and advertising entrepreneur making his mark in payroll processing; and our third “panelist” is a financial industry veteran who is shaking up the recruiting world with a video interviewing platform.
Moritz Kothe, 37, CEO of kununu US, is also senior vice president at XING, the German-language version of LinkedIn, which acquired kununu in 2013. Kununu is an employee rating site and the largest platform for employee reviews in German-speaking countries, claiming to feature more than 250,000 reviews. Kothe began taking the Vienna-based firm global a year ago.
Matt Straz, 49, is the founder and CEO of Namely, a New York City-based tech company that develops payroll processing and benefits software for midsized companies. Straz founded Namely in 2012 after selling Pictela, a content marketing platform that he launched in 2009, to AOL. Namely works with about 500 companies and more than 100,000 employees globally, and is growing rapidly, adding 40-50 new clients each month, according to Straz.
Danielle Weinblatt, 32, founder and CEO of Take The Interview, began her career in investment banking where she worked in diversity recruitment. Later she worked in private equity where she was first exposed to how companies operate. Weinblatt, a 2013 Workforce Game Changers winner, credits both experiences with her decision to launch Take The Interview in 2012. The New York City-based firm provides software designed to help companies interview candidates with a video platform.
Workforce: How is technology changing the role of HR and the workplace in general?
Matt Straz: “Technology is empowering employees to become consumers and that’s driving change throughout the HR organization. …We’re seeing technology migrating from being simply a web app to being wherever the consumer happens to be. That’s a huge change. HR is also being impacted by tremendous changes in legislation. There have been more changes to HR and HR policy in the last two years than there have been in the last 10. It’s made it almost essential for small to midsize businesses to use technology in a platform to run their business. Changes in the law around PTO, sick leave, the fact that a lot of it needs to be tracked completely, has made it virtually impossible to run a business without leveraging HR technology at this point.”
Moritz Kothe: “Years ago people were leading companies by keeping information as a scarce resource. Today, information is available to everybody. Everybody can work from everywhere and its important that you exchange knowledge with other people. … The fact that information is available on mobile devices is changing this world. What does it mean for HR? It’s about understanding that people work and collaborate in different ways. Also, how a candidate performs is getting easier to track and its easier to get information and feedback from candidates, from employees and also from employers. Speed of information and access to information is changing the landscape dramatically.”
Danielle Weinblatt: “It’s only now or in the last few years that you start to see HR, and particularly talent acquisition, get on a C-level executive’s radar and be something that they need to invest in as a business decision, versus being looked at as a cost center or an area just around compliance, benefits, payroll. Now when you ask a CEO what’s their greatest asset they say their people. Having only worked in service-based organizations where you’re competing for the best talent in investment banking across the top schools, I didn’t see technology really following suit with that shift. It makes perfect sense but very few people have decided to innovate in this area. Seeing this shift really excites me.”
Workforce: Big data has been around for a number of years, but what are companies able to do with it in 2016 that they weren’t in the past and what might be possible in the future?
Straz: “Larger companies have had access to big data and tools for quite a while but this is the first time we’re seeing small and midsize companies being able to do these things. Midsize businesses are going from analog to digital, moving data offline in spreadsheets to a database. That’s step one.
“Point in time reporting, visualizations, that’ really the next step for the midmarket, that’s what’s happing right now. The third step, which is going to be the most exciting part, is going to be the predictive analytics — informing what’s going to happen in an organization before it actually happens. … What’s exciting about Namely is our ability to use all the data that’s in the system across thousands of companies and dozens of industries and start providing data and insights and predictive analytics about what might happen to a company that’s similar to ones in the database.”
Kothe: “Big data is this one thing that everybody talks about but no one really knows how to do. It would be good to start using the small data first. I think it’s important that companies start using bits and pieces of the information that is currently available to them. To be honest, I’m not so sure that HR is able to cope with big data problems right now. We should start learning how to walk and then ride our bicycles first. For example, in the recruiting world, use the data kununu provides to you as employer, like what do people think, what’s their opinion? Try to understand what channels lead to not only the lowest cost for hire, but look at who is staying the longest.
“It’s about understanding what problems you have, what you want to solve and then see how you can apply certain technical measures. Don’t try to fly to the moon if you can’t even walk.”
Weinblatt: “I think we’re just scratching the surface. The issue with HR is that we have all these on-premise legacy systems where it’s really hard to get data out and data in to the newer technologies and crunch that data. I think the technology is there but I think that HR is behind the times. I’ve talked to so many people in the industry who want to leverage data a lot better but just can’t because of the archaic systems they were using. There’s a tremendous lack of integration between disparate systems. While I think big data is a trend, a lot of people don’t know how to use it.
“Obviously, data in recruitment is important. I’ve definitely seen a trend toward ‘let’s map out these optimal employees and hire people who are like them.’ There is so much error in that assumption. All jobs we do today involve teams, collaboration, mentorship. It’s hard to map out one person and understand what makes them successful because there are so many factors that are difficult to measure that lead to that success. But if you can understand that and start to quantify some of those factors — is the size of the group optimal, is it 5, 6 or 7 people? — organizations can start to break that down. That can be really powerful. You can understand why a project ended up being successful. I don’t think we have true access to this data. It will take companies that are way more sophisticated in data extraction and are solving the right problems in order to make big data useful.”
Workforce: What are investors saying about the HR market and what growth opportunities do you see for the market?
Kothe: “There are a variety of companies out there that are in the recruiting space. On one side you have a LinkedIn, you have a Glassdoor, you have a CareerBuilder on the job board side. On the other hand you have companies like The Muse, and a lot of small startups that are trying to get into this space. What’s happening to the HR world is that it’s being disrupted by solutions that are more performance oriented.
“The question to answer right now is what does the fact that Microsoft is buying LinkedIn do to the overall industry. I think that’s interesting. And also the fact that companies are sucking up more and more capital without making an exit. What does this do going forward for startups? There is less and less capital available for startups.”
Weinblatt: The thing about investors is that they’re big into pattern recognition. They really need to understand the problem these companies are trying to solve, and the beautiful thing about HR and about recruitment is that anyone that is an experienced investor has felt that pain. They’ve hired people, they’ve been hired, they’ve been through the interview process, they’ve dealt with inefficient teams. I think there’s been a lot of interest in HR because these are big problems that people are trying to solve and HR is one of the last frontiers for innovation.
“That’s why I think there’s been a lot of money poured into the industry.
“When I started looking into this industry I was told I was crazy. I was told that HR is all about risk management and about compliance and people are going to be afraid of the rules and regulations that restrict us from innovating. Companies are going to stick to on-premise solutions, they’re never moving to the cloud, there’s data security issues and privacy issues and none of that was true. So it’s interesting to go from when I first started and had a lot of naysayers, to now where there’s so much innovation, so much capital, so much opportunity, and we’re just in the first phase of where we can go with this technology. I think that big data is definitely the next phase of it if it can be figured out. I think the companies that can figure it out will do exceptionally well.”
Workforce: How and why did you enter the HR market and what excites you about HR?
Straz: One the major reasons I founded Namely was that I noticed that the midsize companies all seemed to struggle when it came to accessing and managing people data. Small companies had PEOs to manage their HR benefits and payroll for them. Large companies would have big enterprise software systems, like SAP, Oracle and Workday. But if you were somewhere in between you really didn’t have an all-in-one core HR, payroll and benefits system. So they might have a payroll system, a benefits administration system, an HR system or just spreadsheets and they really struggled getting the data that they needed to run their business.
Weinblatt: I was in investment banking when I first started and was really active in diversity recruitment. … I was actively involved in interviewing. I created the first women’s banking forum for Cornell and Harvard and then moved on to private equity. We would invest in high growth businesses and I got to see what it was like to actually run a company, sit on the board, go through various challenges in sales, marketing, technology. I decided I no longer wanted to be on the investment side or on the finance side of things. I wanted to be an operator. At that point, I decided to go to business school. I went to Harvard for a year and then dropped out and started Take The Interview. Starting the company was definitely born out of my experiences in recruiting and interviewing.”
Rita Pyrillis is a writer based in the Chicago area. Comment below or email email@example.com.