60. Leveraging HR Tech

Intro: Duration: (03:05)

Opening music jingle & sound effects

Jeff Hunt:

This is the Human Capital Podcast, and I'm your host, Jeff Hunt. Today on the show we're gonna talk about HR Tech. HR technology provides a critical service that companies rely on to run everything people; including things like recruiting, applicant tracking, payroll, learning, expense management, and of course performance management, which my company GoalSpan provides.

The last few years in HR Tech have been truly astounding with more than 15 billion in venture money poured into these tech companies. And if you look at the plethora of systems that are out there, the average large company now has more than 80 different employee facing systems according to Josh Bersin.

Think about employees using 80 unique systems. That sounds kind of overwhelming. And what's crazy is that this number has increased by more than 40% over the past five years. The HR tech market is starting to slow down now, and if you look at user satisfaction, it's actually mixed. Many players are trying to be, as William Shakespeare said, a jack of all trades, but a master of none.

So, I've invited a guest on the show today to provide some insight to this complicated topic. Phil Strazzulla is the founder of Select Software Reviews, which is a website dedicated to helping HR teams find and buy the right software. He started his career in venture capital before getting his MBA at Harvard University, and Phil is passionate about HR tech and remote work, investing, and also people operations.

Welcome to the show Phil.

Phil Strazzulla:

Thanks for having me, Jeff. It's a great introduction and I actually didn't know that person stat, so it's pretty interesting 80 solutions at larger companies. It's pretty crazy.

Jeff Hunt:

It's staggering like. It sounds overwhelming, and I want to get into that because there's a reason for it.

Obviously, companies have made decisions to add all these unique applications for a reason, and so I know you can provide some insight to that.

Phil Strazzulla:

Yeah. And some of those reasons are probably really good and some of them are less robust, I would say, and of course, sometimes we just forget, especially at larger companies, that we even have these things and we've got multiple things that do the same thing.

And it can be sort of a mess just to kind of keep track of these solutions. But I think what's also interesting, you mentioned that 15-billion-dollar stat, there's been a lot of innovation that has happened, especially in the last probably five years or so within HR technology. And it used to be that HR tech was sort of, you know, 10 years behind the rest of the enterprise.

When you looked at a solution like HubSpot five years ago, it was, you know, a hundred times better than the recruitment automation platforms that you might use. The CRMs, the marketing sort of tactics that you can use to recruit. And I think that there's been a lot of catching up in some of these core systems and I think there's also been a lot of really interesting innovations for these point solutions that are going really, really deep in something like employee scheduling or high volume recruiting or whatever the case may be.

I think the tradeoff of course for practitioners is, how many of these do you want? And do you want somebody that is basically a jack of all trades, master of none, especially as you first start out? Like, that can actually be the optimal choice if you make it intentionally. And I think that's one of the main things here is that you just need to be quite intentional about the systems that you adopt.

Topic 1. Who or what inspired you the most along the way?

Jeff Hunt:

Yeah. That level of intentionality is often not found because people make decisions in sort of a reactive way, right? For instance, all of a sudden, I realize that I'm not using good tools for any of these categories, whether it's applicant tracking or expense management or performance management. And then I have a sense of urgency that I've gotta implement something because the way we're doing it is so bad and so inefficient.

And so now all of a sudden I've found myself with an app that might not exactly meet my needs, so, I actually want to get into all this, but before we get too into the details, can you share Phill, a little bit about your, just your career, how did you end up in this place of HR tech and if you can think of anyone that inspired you along the way, maybe share about who that might be as well.

Phil Strazzulla:

Sure. It's a big question. I'll try to be succinct. I was always interested in business, started investing in the stock market when I was 12 and wanted to study finance, so I went to NYU and studied finance there and worked for this venture capital fund that invested in lots of different companies, including HR technology, businesses like LinkedIn or Cornerstone on Demand.

I think that further stoked the flames for my interest in the entrepreneurial and and startup ecosystem. I went to HPS to get my MBA and while I was there I started teaching myself how to program and I just sort of started hacking on a bunch of different things. And the thing that I was the most interested in was.

Ironically your question around career pathing. Why do people go from one place to another? And so, I built a platform where people could share these stories, and it turned out there was this actual really good use case to build it into a business because Glassdoor was sort of emerging.

And the vast majority of Glassdoor reviews back then, this was like 2014, were extremely negative. I think the average Glassdoor rating at that point for a company was like a 2.9. And I remember the average Uber rating was like, 4.8 and it's like, well, yeah, if you ask every single person that gets out of an Uber to rate it, it's gonna be a 4.8.

And if you don't ask anybody and the people that had the worst experience in the world rates it, it's gonna be a 2.9. So, we sort of built this employer branding SAS that I ran for five years and help companies tell their story about what's it actually like to work at the business, inject those stories into the career site, etcetera.

And then after five years, I was honestly pretty burnt out and wanted to start another business. I hired somebody to run my old business on a day-to-day basis as a general manager, and I still had that entrepreneurial drive. I really loved to learn. I loved to teach, and I saw that most companies were struggling with tool selection.

When I was running my prior business, I talked to five or six HR teams a day and many times those chats would in different areas just cause I'm a curious person. And we'd inevitably talk about the ATS that wasn't working, or the time tracking app that didn't integrate with the performance management system or whatever.

And I had a couple of friends that started a business called best reviews.com, helping people make B2C complicated b2c decisions. So, what standing desk should I buy? What golf club should I buy? What chainsaw should I buy? And what they did was they'd find like a lumberjack to like rate the chainsaws, right?

And I was like, oh, that's, that's kind of cool. Like they're getting this expert opinion, which in my opinion was much better than going and reading a hundred reviews on Amazon, many of which are probably fake. And so I said, let's do the same thing in HR Tech. Let's get some experts together. Let's write up really consumable, useful content, and you can always go to Capterra and read all the random reviews if you've got the time, but we hope that our content is more impactful.

So those are the people I think that inspired me along the way. And then there's certainly been a number of practitioners who just sort of get it, you know, the people running some of these talent acquisition people, ops teams who are just really forward thinking, super smart. Those are the people that we try to get to write on our website and give us their insights so we can share it with our readership.

And what's nice is that there's more and more really interesting and bright people in our space that are doing cool stuff to learn from. The people space also continues to evolve, but even before Covid, it was evolving very quickly, and then we hit sort of this massive catalyst with remote work.

And then George Floyd and DEI became more important and now AI and whatever's next around the corner. So it's definitely a cool place to get up and explore every day.

Topic 2. Do we really need or use all these applications?

Jeff Hunt:

Yeah, it's very fun. This space that we're in, that we get to play in. It's interesting to me though, because one of the things that, you know, obviously I shared in the introduction is that the average number of applications that large companies are using today is 80, which is really just an incredible number.

We talked about that. I guess my question for you, Phil, is how did we actually get to this point? Because what it makes me feel like is, I just walked into my son's bedroom and I opened a closet and all this stuff came greening out onto the floor. It's like, how do we make sense of this many different things and how did we get here?

Phil Strazzulla:

So, and another crazy sad is there are over 30,000 different HR technology vendors out there. So, there's just a lot of stuff, and there are so many different point solution. So, when I talk to people at a party or something, Hey, what do you do? I say, I run this website help people buy the right HR software.

They're like that's super niche. And it's like, well, do you get paid by your company? Right? Like that's one thing, how did you get hired? Did you find out about it on a job board? Did they reach out to you through an email? Did you take an assessment? Was it technical assessment? Was it behavioral? Was it another skill assessment?

Was it a video interview? You were in an applicant tracking system. Maybe you got nurtured through ACRM. You were onboarded, you became part of the HRIS. You have employee engagement data. There's a performance management thing that ties in your OKRs and you can really start to see like okay, there are every step of the employee life cycle.

There are all these different tools and a lot of them add a lot of value. And so if, if you're a larger company, you're gonna start having these like point solutions for each different thing. And then I think what ends up happening in these larger companies is that there are people that just don't talk to each other, right?

So, there's two or three video interview solutions and like, should there be? No but you know, the sales department started using this one and engineering used this one and the actual recruiting team uses another. And so that, that's like a massive problem. There's also issues where, hey, you know, our applicant tracking system actually has an email nurture tool, but we bought the CRM because we didn't know about that module.

And like somebody else went to a conference, they went to HR Tech last year and they saw this thing about how you're supposed to like nurture passive candidates and they went out and bought a CRM where we could have actually done that, maybe even through our marketing automation platform. And so, I think, you know, one of the main things here is like, there's not like a sort of holistic strategy many times.

Within a larger organization, and that's changing. There are people who are in recruitment operations roles, people, operations at large, talent acquisition people, analytics, these HR business partners. These sorts of more strategic roles are definitely leading to more focus on technology and having a strategy around it.

But if you don't have that sort of command and control, then people are just gonna run in different directions, and especially in a big company, they're just gonna buy lots of random systems.

Jeff Hunt:

Makes sense. And it's also, these applications are often sticky as well. So if you have an organization where maybe somebody has implemented two or three video-based interviewing tools, they get used to using these tools.

They're easy to use, they're sticky, like I said. So, then they don't want to replace them. They're comfortable using them. Right?

Phil Strazzulla:

Yeah, that's exactly right. And that's, you know, another reason why there's so much money being put into. Businesses is that they, they are very sticky. And so if you can get to 10 or a hundred million of revenue, you become an extremely valuable business.

And I don't remember what Workday's stock is trading at right now, but it's a really big number.

Jeff Hunt:

What are the biggest and most important trends that you see in HR Tech and, and why? Why are these trends happening?

Phil Strazzulla:

So, I think I'm personally really excited about artificial intelligence in general. I think if you went to HR Tech like five years ago, everybody was like, yeah, we're ai.

We're ai. And it was just sort of like this BS marketing thing. But now there's actual like really solid use cases for this stuff. So I saw a demo, uh, I think two or three days ago for this people analytics solution called Orotic, where. The, uh, interface to run people analytics reports is through chat, and so you don't have to be a PhD.

You don't need to know SQL or Python or R. You can type in, show me the least engaged unit in our office, or give me a list of people that have been promoted. In the top quartile in, in terms of their timeline, what, you know, what, what are like all, all these different things that you'd want to do from a people analyst perspective that you would've had to have a person run reports, probably do some, some data massaging.

You can just do it through chat. That's pretty exciting. High volume recruiting. So let's ask people what, let's first of all get back to them within 30 seconds of applying over text, and then let's ask them knockout questions. Let's answer some of their questions. Typical HR employee experience. Questions like, how do I do open enrollment?

How do I, uh, log? paid time off. All these like questions that people just get asked over and over and over again, and they're annoyed because they're like, Hey, I asked HR three days ago about open enrollment and no one ever got back to me. And the HR person's annoyed cuz they're, they're the 15th person that week to ask.

Uh, and so why not just have a bot do that? Like a bot can do that actually really effectively. Talent sourcing a a bot can do almost everything a third party recruiter can do within reason. It can do like a 70% job of it. But you can imagine, uh, now that a full desk recruiter can be two or three times more effective because they have these sorts of solutions.

So I think that's the, the next evolution of the world at work. And it's coming to HR Tech, just like it's coming to law firms and investment banks and everybody else.

Jeff Hunt:

I'm in the performance management space. How do you see AI being leveraged in performance management? And I can share a little bit about what we have coming in the next couple weeks, but I'm curious about what you see happening over the next, you know, year or two in performance.

Phil Strazzulla:

Sure, I'm happy to wildly speculate on this area that, you know, 10 times more than I knew about. I, I think that there will be, so performance management is sort of interesting cause it has some of this people analytics stuff in it where you wanna understand what's going on with. A person, a group, an office, et cetera.

And so querying that data as opposed to trying to build dashboards or, you know, do something through an api, I think is, is a big thing that will be in, in many solutions. Um, and, and in fact, I wouldn't even be surprised if there's a couple companies that are built that are sort of the, that middle layer between the user and the, the core solution.

I think that. In addition, we'll probably see more prescriptive, like next steps and like, so what's so you know, this person is. You know, their performance reviews are showing X, Y, Z. What's the next step here? Um, well they should be doing like this sort of coaching, or they should be going through this sort of professional development procedure or, you know, good and bad, right?

Like, this person's excelling and therefore we wanna do this. This person's a laggard and therefore we wanna do that. And probably it'll get smart enough to start understanding, hey, you know, this is sort of not obvious, but maybe this person's suffering from a mental health issue. And we've seen this in 10 other people before where if they're, you know, coming in late and blah, blah blah, then this is actually a, a symptom of depression, not somebody who needs focus on organizational skills.

And so I think, we'll, we'll probably see some really interesting, um, non-obvious stuff to a human. Um, come. and, and some creative solutions that maybe we wouldn't have thought about. And, and then I think at the end of the day, like we're, it seems like we're, we're pretty far away from this stuff being more than augmenting a manager.

I don't think that, you know, the recommendation to send somebody to counseling is, is probably gonna just like, You know, automatically go to that employee. Right. Um, I think it'll be like a recommendation to a, a manager, a human being who then interprets it and, and acts on it. Mm-hmm. . So that's an important part where this is really our exoskeleton.

It's not our replacement, at least for the next five to 10 years. And, We have no idea how fast or slow this stuff is gonna get better.

Jeff Hunt:

It's fascinating listening to what you just described, because essentially these tools could help improve employee wellbeing and help create cultures that are more compassionate, that care about people.

And I think oftentimes we don't think of ai. As doing that, we think of the opposite of this big brother sort of mentality that is not necessarily in our best interest. So that's kind of fascinating to me.

Phil Strazzulla:

Yeah, and I think , you know, this is, I don't know how dystopian this is or not, but if, if you look at some of the prompts that people are feeding a technology like chat, C B T.

to, let's say write a blog post and you can say, you know, write it in this style, right? Mm-hmm. . And so for your culture, you might want to have the technology, the bot, whatever you want to call it, be more compassionate or, um, you know, there might be idiosyncrasies about your, your corporate culture or somebody geographic or religious culture that you want to be sensitive to.

And so I, I think those sorts of things we can, we can very easily build into this. It's kind of weird to be like, Hey, like be more compassionate to a robot who doesn't really understand like what that means. Uh, and that's sort of maybe the dystopian part of this that eventually just gets a little weird.

But I think you, you make a really good point that. and I'm, I'm optimistic personally about how this can impact us.

Jeff Hunt:

And what's interesting is the, the feedback we've received from our customers on where the biggest problems lie in performance management often comes back to the writing that managers are doing around feedback.

So when I'm giving somebody feedback, , I'm gonna communicate something. And there are, there are gaps in competency and also the way that they communicate. And they also sometimes put the organization at risk, so mm-hmm. , we're, we're finding that this is really a tremendous opportunity to actually present the manager or anybody in an organization that's gonna give feedback to another person with a suggested better approach that is leveraging these AI technologies.

And so that's something that we're. We're excited about and we're gonna be implementing in the next few weeks, so that sounds awesome. It's changing very rapidly though, isn't it?

Phil Strazzulla:

It's changing so fast. And what's cool about this stuff is like, you think about 20 years ago when you had to have, you know, physical servers and like all, all, like, you know, it, it's unfathomable that like this new technology was unleashed on us.

The, you know, the latest version of it with chat b. , uh, but like two months ago, and like it's already permeating many enterprise solutions, like it's pretty crazy.

Jeff Hunt:

It It is. It's, it's kind of mind blowing actually. Out of all the categories in HR Tech, what are the hottest right now, Phil?

Phil Strazzulla:

I think everything employee experience is really hot.

Talent acquisition is not, so we're in March of 23, we just had the SVB crisis and even before that the economy was kind of cooling and we've definitely seen, you know, TA tech kind of slow down a lot, but we still have way more people, I'm sorry, way more jobs than people looking for jobs. And so, . You know, companies I think are really trying to figure out how do I keep the people that I have, how do I make them productive and how do I do that?

Whil not raising salaries a ton, cuz that's what we've been doing the last couple years when we're fighting for people and it's just become uneconomical. So employee recognition, software rewards, especially peer-to-peer recognition, employee engagement, Florence management, like these. Some of the really hot categories right now.

Jeff Hunt:

One of the things that is interesting to talk about is the r o I of these different types of HR software, so that when you're making these decisions, usually it's needing to go through the the C F O, the C-suite. There's some sort of authorization for the spend, and you have to get to that point. , but it feels with many of these technologies that it's am, it's ambiguous.

They don't, people don't really know what the tangible ROI is. And so I'm curious what your thoughts are about this and, and also if there are specific categories that provide really a clear and compelling business transformation case to be. .

Phil Strazzulla:

I always think about ROI two ways. One is the hard dollars in a base case.

So how do I become really comfortable that if I'm spending a hundred thousand dollars or a hundred dollars, I know that I'm gonna get three X back in a reasonable time period with like assumptions that make a lot of sense. So, you know, think about employee rewards and recognition. If you can increase the retention rate by x.

and that therefore decreases your talent. Acquisition cost by why decreases, um, some of this like institutional knowledge loss, et cetera. The, the biggest levers typically for HR technology are time to fill and cost per higher on the town acquisition side, and then retention and productivity on the employee side.

Productivity is a little bit harder to think about and measure, but retention is pretty simple to measure and I think it's, it's also easy to have, uh, an r o i from that, that that makes sense. . The second way that I think about it is more the, the soft ways that it changes your organization, which are probably actually more impactful.

They're harder to measure, but to your point around transformation, you know, if you're kind of living in the stone age and all of a sudden you've got a really sleek performance management system, employee engagement system, rewards and recognition, whatever it is. Then that that's a strong signal to the rest of your organization around this is the way that the business is going.

There's going to be all these different ways to leverage this tool that you didn't really think about or really, or, or understand when you first went down the journey. And it's gonna open up the world to, Hey, you know, we, we had such great results from this solution. , our recruiting system is really terrible.

Let's, let's try to sort of digitally transform that now. And we have the confidence, we, we have a little bit of a playbook. We need to iterate a little bit, but we're, we did an okay job and let's do a better job next time. So I think it's, it's hard to understate those sort of like secondary values.

They're very hard to calculate, but many times those can, those can be orders of magnitude larger than just the hard dollar roi.

Jeff Hunt:

And those are also in aggregate, kind of an opportunity to improve employee experience.

Phil Strazzulla:

They certainly are. Yeah. It throughout the entire life cycle. And it's a signal, especially for people outside of your organization, it's kind of like if you go to a website and you're gonna buy something and then the webpage looks terrible and it's hard to check out and your credit card gets, you know, bounce and you, you're sort of like, do I even want this product?

Like, what's the customer success gonna be? Like, what's the product experience gonna be like versus the exact opposite? And, and. that sends a signal for sure.

Jeff Hunt:

So when you listen to companies, at least when we do, about their frustrations about HR tech, one of the things that rises to the top occasionally are adoption rates.

And I'm wondering if you have any thoughts about how companies can achieve better adoption rates on some of this tech and what that's a symptom of?

Phil Strazzulla:

Yes, I think it's a symptom of hrs traditional role in a company as. , you know, the person looking over your shoulder, the person you sent, sending you another survey that you don't want to take, and it's like, Hey, now use this tool.

And you're just like, why? Why would I do that? So my advice is when you're buying one of these systems to form a cross-functional team, that essentially acts as like your board of advisors throughout the process. So let's say you figure out, hey are. employer brand really stinks. We wanna do some employer branding work.

Just throw it out there on Slack or whatever sort of internet you've got, and you'll find people who are in marketing, who are in product or in operations who care about this as well. And they'll raise their hand and just meet with them once a month and say, you know, here are the idea. , what do you think about these ideas?

And you get diversity of thought. You're gonna have better outcomes, right? This whole diversity thing. And then when you go to buy something, you're gonna have them in your back corner to get the budget. And so when you need that a hundred thousand or a hundred bucks, they're gonna be able to go to the CFO F and say, Hey, you know, I've actually been helping this person out, and I think we could, we should actually do this.

Here's why. And then when you roll it out, you've got an advocate in each of the key functional areas of your company to. , here's why. We are doing employee testimonials, performance management system, et cetera. I was actually a part of this. Here's the work that we did. Here's how it's gonna make an impact on your career, on our company.

You should do it. And coming that messaging, coming from multiple vectors is really impactful I've found for employees. ,

Jeff Hunt:

what a great piece of advice. And I'm also kind of reflecting on the increase in buy-in that you're gonna get from teams and people when these systems are implemented, right? Definitely.

Yeah. So before I jump into some lightning round questions, talk to me about why HR Tech will never replace the critical face-to-face conversations that have to happen in the workplace.

Phil Strazzulla:

Well, the, it's just not there yet, right? Like human beings are. We're a unique breed. We, we can just think better. We understand emotions like it, it just comes down to experience and empathy.

I don't know if ne if I, I'll never say never. Like I think that in the next like 50 to a hundred years, it's actually extremely likely that, uh, a machine could do a better job of management than a human. Um, and, and maybe some sort of like augmented person, like we're tr sort of getting into the, the realm of like singularity and like, You know, Ray Curves wheel and all this stuff, but I, I, I think we're a long ways off.

And especially if you look at the reality of, like most companies, HR tech stacks, it's like we're using a really bad at t s we're using a bad H R A s like . We don't have, we don't have best in class anything. Everybody hates it. And, and that's also a reason why there's, there's slow adoption too, right?

It's cuz it's like, man, the ATS we have stinks. So why would I want to use this employee and game vision thing? Right. But if you look at, I would say probably like, you know, 70 plus percent of HR teams are using like bad, objectively bad technology stacks that are hurting their productivity. And so are we gonna get to like replacing all people with like machines in the next five years?

Like, no, definitely not.

Jeff Hunt:

Okay. You ready for the lightning round? Let's do it. What are you most grateful for?

Phil Strazzulla:

Ooh, I'm not a big superlative person, but I think. . I'm grateful that I'm inside on a day when it's super rainy and it's about to turn into snow.

Jeff Hunt:

What is the most difficult leadership lesson you've learned over your career?

Phil Strazzulla:

I think it's that as a founder, you're gonna be the person that cares more than anybody else, and you can't get frustrated when somebody else doesn't care as much as you do.

Jeff Hunt:

Who is one person you would interview if you could living or not?

Phil Strazzulla:

I would probably interview, gosh, I mean, I'm just thinking about like entrepreneurs.

I, I would probably interview Buffet if it could just be like one-on-one with no cameras and anything and get straight answers. Yeah.

Jeff Hunt:

Do you have a top book recommendation, Phil, or have you read anything recently or any books you you wanna recommend to listeners?

Phil Strazzulla:

I'm reading that new Tim Urban book. I don't know the name of it, but he runs that web blog called Wait, but y, and he has this new book out about like, why is America so polarized, I guess.

And I think that's a pretty important topic.

Jeff Hunt:

What's the best piece of advice you've ever received?

Phil Strazzulla:

The best piece of advice. I think it's to not burn bridges. Life is long. And even if somebody, you know, kind of wrongs you or whatever, like it's just best to take a high road.

Jeff Hunt:

And if you had to summarize our talk today, what's the most important takeaway about this complicated topic to leave with our listeners?

Phil Strazzulla:

I think that despite the complication, it's something that is extremely important and you just want to start down the path of upskilling and understanding how you can leverage these tools in your organization because you can't just put your head in the sand like. . If you do, you're gonna take it out and you're not gonna have a job one day.

And not to scare anybody, but I think that's the reality. Like if, if you, in the next five years, like don't come up the learning curve pretty significantly on technology, you're just not gonna be marketable in, in where the world is going.

Jeff Hunt:

Thank you for bringing such great wisdom to the podcast and for helping us understand this complicated topic.

Phil Strazzulla:

My pleasure. Thanks for the great questions. Thanks for having me.

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Outro(37:00)

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Jeff Hunt:

Thanks for listening to Human Capital, if you like this show please tell your friends and also take the time to go rate and review us. Human Capital is a production of GoalSpan, your integrated source for performance management. Now go out and be the inspiration to other humans, and thank you for being human kind.