With growing talent shortages, HR technology is offering solutions

By 2030, many countries will lose 5-10% of their working-age population, leading to critical talent shortages, especially in high-skill jobs. FLOW has just published an article in The Bridge (in Japanese) on how HR technology can help companies prepare. You can now read the English translation on our blog.

http://thebridge.jp/2016/12/hrtech-world-congress

Demographic and technology trends are increasingly causing acute shortages in the supply of highly skilled talent. The next-generation of HR technology showcased at the HR Tech World Congress, held in Paris at the end of October, can help.

According to the OECD’s projections, by 2030, Germany will lose c. 5.5 million, or more than 10%, of its current working age population–people aged between 20-64–due to demographic changes. Japan will lose more than 7 million. The EU, more than 12 million. China, over 35 million. 

Technology will change HR

Even though technology will automate many jobs, it will also create new ones. The education systems of most countries are already struggling to keep up with the economy’s demand for developers, data scientists, UI/UX designers and digital marketers. According to research by the Boston Consulting Group, in high-skilled jobs, technology trends are likely to increase, rather than alleviate, the mismatch between labour supply and demand.

This will put severe pressure on societies and companies around the globe to increase productivity and adopt more diverse and global talent acquisition practices. HR will undergo a fundamental change and become a lot more strategic and, much like marketing has in the past decade, a lot more analytical and technologically savvy.

In fact, many leading tech companies in the world have already moved away from viewing HR as a compliance-driven administrative function, deploying resources to focus on employee experience and people analytics. Google’s former SVP of People Operations, Laszlo Bock, has published an excellent book about using analytics to create better workplaces. Microsoft has an HR Business Insights team dedicated to people analytics, whose general manager, Dawn Klinghoffer, gave an overview of Microsoft’s people analytics practices at the HR Tech World Congress in Paris.

HR Tech World is the world’s premier event dedicated to a hot new industry, HR technology. According to CB Insights, HR technology is capturing increasing attention and funding from VCs, with $2.4bn poured into HR tech startups in 2015 by leading investors such as 500 Startups and Andreessen Horowitz.

Looking at the exhibitors at this autumn’s HR Tech World Congress in Paris, it is not difficult to see why. Many of the startups featured at the conference’s disruptHR stage are offering solutions to problems that plague businesses all over the world, including Japan. 

HR Technology to prevent karoushi

Take the problem of employee health and well-being, for instance, so prominent in Japan now with the government’s campaign for more employee-friendly working practices and over half of Japanese companies reviewing their work hour and overtime policies, according to a survey by Reuters.

Soma Analytics, one of the startups at HR Tech World and the recent recipient of a €1.8mn EU grant, has created a smartphone application to reduce stress and improve productivity at work. According to the company, its patented algorithms can detect stress in the user’s voice and monitor movement and sleep patterns to reduce the number of employees at high risk of mental stress by 70% within just a month. 

Time and technology to rethink the shukatsu process?

Or take graduate recruitment, where there is increasing evidence that the criteria–such as grades–used in the past to shortlist applications are unreliable in predicting on-the-job performance, with the result that leading firms like EY are no longer listing academic qualifications among entry criteria.

What criteria should employers use, then, in assessing entry-level candidates?

According to Nick Shekerdemian, the CEO and co-founder of Headstart, one of the award-winners at HR Tech World’s startup competition, the answer lies in looking at a much broader set of data points and using innovative algorithms to make sense of that data. “Our clients have found that Headstart’s matching algorithms can greatly reduce the time spent reviewing candidates, which frees up resources to identify those highly talented applicants that otherwise wouldn’t get a chance. This results in a better and more diverse supply of talent,” Nick says. 

Diversity is part of the solution

Speaking of diversity, the salience of women entrepreneurs at HR Tech World was a welcome and refreshing aspect of the conference. Studies have shown that women are severely underrepresented in the management of both VCs and VC-funded startups, but HR tech could help reverse that trend, perhaps because many of the founders come from the fields of psychology and HR, where women tend to have a higher representation.

As Marianna Król, the co-founder of 313C, a Polish startup out to change recruitment by offering scientifically validated but at the same time fun, gamified talent assessment solutions to verify culture fit, put it: “As the co-founder and executive of an innovative recruitment technology company, being 100% equal with my male business partners, I realize I’m in a privileged position and a lot remains to be done to grant women in all parts of the world the same possibilities.”

Given the impending talent shortages, it’s high time companies got started! 

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About the author

Daniel Bodonyi is a co-founder of Attuned, and the Founder of peer learning community and mentorship program MotivatingManager.