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Hosts Stacey Harris and John Sumser discuss important news and topics in recruiting and HR technology. Listen live every Thursday at 7AM Pacific – 10AM Eastern, or catch up on full episodes with transcriptions here.

HR Tech Weekly

Episode: 61
Air Date: March 10, 2016

 

This Week

This week John and Stacey discuss:

  • Ultimate Software Connections Conference Link
  • HR software startup Culture Amp raises $10M more Link
  • Algorithm Beats Humans In Hiring Candidates Link

About HR Tech Weekly

Hosts Stacey Harris and John Sumser discuss important news and topics in recruiting and HR technology. Listen live every Thursday at 7AM Pacific – 10AM Eastern, or catch up on full episodes with transcriptions here.

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Begin Transcript

John Sumser: (Music Intro) Good morning and welcome to HR Tech Weekly, One Step Closer, with Stacey Harris and John Sumser. We are coming to you today live from both ends of the country. Stacey is in Atlanta and I am in beautiful downtown Las Vegas. With a magnificent view of the highway.

 

How are you Stacey?

 

Stacey Harris: I’m doing good. I’m doing good. Atlanta’s got nice weather today. So I can’t complain. Although I got in at two in the morning from Las Vegas yesterday and did a great presentation here for the Atlanta Iram Group. I am happy to say that I have no more presentations for the rest of today. So it’s a good day now.

 

John Sumser: That’s great. So you probably have set some sort of jet set model that[inaudible 00:01:02] coast and get’s up to do a presentations of the morning.

 

Stacey Harris: (laughing) Yeah.

 

John Sumser: Very impressive.

 

Stacey Harris: I did take a few moments out after I gave my presentation to see what was going on in the HR Tech space. We don’t have a tone of articles but was have some information about what’s going on with the Ultimate User’s Conference that we were both at. I was there for about a day and a half. You’ve been there for a couple of days now.  I think there’s some interesting conversation there. We also have some news on Culture Amp. If anyone knows about them. I think you’ve got some insight on that and raising ten million dollars.

 

Some interesting conversations taken place across the market around algorithms now being sort of touted as beating humans at hiring candidates. There’s been some data and surveys show that … They’re making better decisions with algorithms then without algorithms. If we really run into some extra time this afternoon we can talk a little bit about the first robot-based hotel opening up in Japan. But I think we’ll have a lot to talk about before we get there.

 

John Sumser: Great so let’s start with the Ultimate User’s Conference. What is about Ultimate[inaudible 00:02:21] is there?

 

Stacey Harris: I was there for the first days so you might have to fill me in on some of the things that you talked with the team about yesterday but, or the first part of today, but I was quite impressed with how first of all their User Conference has just grown dramatically over the last several years.

 

They have over two thousand participants there this year. They’re counting around three thousand two hundred companies now that are using their current technology which means they’ve got almost all of their company sort of participating in their User’s Conference. They said that about fifty percent of the people were brand new, who were attending the User’s Conference this year. They’re very focused on the ‘People First’ motto. That was one thing that I definitely took away from the keynote presentations and our discussions as an analyst firm. I didn’t see any big updates.

 

Maybe you got some more insights today, John, but the big things that I saw yesterday that they sort of trotted out as far as new updates really were sort of additions to existing stuff. We’re talking about their updates for their onboarding tool. Some more predictive analytics that went along with existing ones that they rolled out last year. They’ve got recruiting and they’ve got predictive analytics in the leadership space. They were mentioning that in the Spring they’ll be launching a new org charting tool as well as a leadership actions tool. Those were the big things that I took away from this week. Besides the fact that Mike Rowe is one of the funniest keynote speakers I have ever met. Mike Rowe is the actor for the Dirty Jobs show, and he was hilarious as a keynote.

 

Does that match with what you got out of last week, or have some new things come out today?

 

John Sumser: I don’t anything new came out, but what I took away this week … so I get to the Ultimate User’s Conference every couple of few years, and I think I came away this time thinking I probably need to see it a little bit more regularly. It turns out that there are two things that are true about Ultimate.

 

One is, it’s a very unique, very tightly-knit culture, full of upbeat, positive people. It’s really uncomfortable to say something negative at this place. So that cuts out half of my conversation.

 

Stacey Harris: (laughs)

 

John Sumser: That’s a joke. You shouldn’t have laughed, Stacey. Now my feelings are really hurt.

 

Stacey Harris: I know, I’m so sorry.

 

John Sumser: (laughs) This morning, the guy who founded the conference, Scott Scherr, gave a talk. The company’s twenty-six years old, and many of the people who were on the original team are still here. Many of the people who were the earliest investors are still around the ecosystem and they work here, and he knew them all by name. I’ll bet he talked for an hour just going through the list of thank-yous to the people who helped build the company. It was awesome.

 

It was awesome because you could see that what’s going on here is this culture where all of the people involved in the culture are valued in some interesting ways. I think that bakes into the product. The other thing that I noticed is that these guys are really good technically. Because they’ve got this position in the marketplace that says, “We’re the people people.” People First is their motto. You don’t hear so much about their technical prowess, but they are … I think, defining the next generation of software development conferences, for instance, and doing it very gracefully.

 

I think they’ve built up … I bet it’s the largest, I can’t say that for sure, but a very large and robust ecosystem of people who supply services and technical content to customers of Ultimate. Very interesting to see. So I walk away way more impressed with Ultimate than I’d been in the past.

 

Stacey Harris: Yeah, I think your comment about how longstanding both their employees … and I think, their relationships with their clients have been … every time they introduce a client they comment, “So, tell people how long you’ve been with the organization.” And you get the eleven years, and the sixteen years, and that’s quite impressive, right? When it comes to a technology organization, particularly one that is dealing with things like core HR and talent management and payroll, where we often see that the client base turns over every seven years or so, or eight years.

 

So we’re seeing that longevity, I think is playing out in their customers as well as in their employees. I think probably the most defining of all their employees, sort of along the lines of what you’re talking about with their approach to development, is Adam Rogers, who is their Chief Technology Officer, and they always sort of bring him out as the first intern that ever started working with the organization. I’m not sure if that’s the actual case or not. But he’s fairly young for the industry to be a Chief Technology Officer, and I think what always impresses me when I do have the opportunity to speak to him, and to hear him speak, is that he’s not a polished presenter, not a polished executive, but he’s definitely willing to listen and learn and take feedback. Probably more so than anybody else in the industry, I think around the work that he’s doing.

 

And it’s always fabulous to hear him present … to say, “Here’s how we’ve changed, here’s how we’ve adapted because of that.” I think part of the reason they might be defining how things are developed, and designed, and technology is managed is because they’ve learned some of the hardest lessons, but they’ve kept moving forward. They didn’t throw out the team that learned the lessons, they actually moved those team members up and throughout the organization. So it’s been quite interesting.

 

John Sumser: I really like that it’s a polished, professional billion dollar, will be a billion dollars in a couple more years, company. It’s been astonishing to be here. They’re doing what I think lots of people are doing with analytics, and that is trying to take the data that they have and use it to tell the clients about their employees.

 

We’re in the very earliest stages of that stuff. It’s easy to not notice that what’s going to happen, if you have some sort of analytic tool, in your HCM Suite, it’s going to change, it’s going to get better. And you’re going to have to explain to your employees how come the way they were evaluated next year isn’t the way they were evaluated last year. One of the things that they’re running into is not straightforward to teach customers how to use these things. I think that what I saw this week is something that lots of companies are going to have to figure out. If you deliver products that give information that’s beyond the capacity of your customers to use wisely, what do you do?

 

That’s one of my questions to take away from this. Because they’re building tools that make comments about employees about employees, and if you are not really well-trained it’s easy to screw up using that stuff. Certainly Ultimate isn’t alone, but it seems to me that they’re taking a more informed view, which is that if you’re going to install that stuff you’re going to need some help modifying the way your organization works.

 

Stacey Harris: I think that the other side of what they’re doing, and this maybe sort of plays into the conversation about Artificial Intelligence in culture-building, is that their design approach seems to be one very grounded in research. A lot of what the decisions about what they’re including and what they’re not including in the platform comes from of their own internal research that they’re doing versus assumed expectations of what should be inside of a system, like a core HR or talent management. That means that things might change over time, right? It might mean that they put out their things that aren’t quite completely finished yet to get some feedback from their end users.

 

I think the other thing that they’re doing with that, is that they are trying to put some almost blank slates, like this leadership insights activities things they’ve put out there, it’s fairly … you know, it’s a coaching and mentoring tool for leaders. It’s giving some feedback to leaders about what they should do once they get they certain information about their employees.

 

If your employee is continuously late, or if your employee is a high performer, or if you get information about your employee needing opportunities for training or wanting to develop or grow, or struggling with the fact that they feel like their compensation is too low, they’ve created sixty some recommendations on what’s the next thing that the manager should do. Not very detailed at this point, and these are coaching and mentoring tools, and I asked them specifically, “You know there’s a lot of coaching and mentoring stuff out in the market, that have been developed in handbooks and tools and built along with things like [inaudible 00:13:07]. And other chief global coaching and mentoring programs.

 

It was a really interesting conversation with Cecile that they didn’t want to create something that was too massive for their clients, and she felt like some of the coaching and mentoring programs were too full of pages-long information. So they’re starting with less versus more, in that case? In that context. They had thought through it. They had really put some strategy behind how they were going to develop their products with that concept, versus just ‘we’re gonna take what the industry is doing and just try and add it into our system’. Very thoughtful.

 

John Sumser: So this is not a boastful bunch. It’s easy to miss the fact that they’re ahead of lots of people, maybe ahead of everybody on certain elements of the idea of making HR software more receptive to users and more able to help users be successful around the job. Do you see anybody who’s at the same level with them? Of having embedded content that coaches line supervisors?

 

Stacey Harris: I think I see other organizations that take different approaches, right? Part of what you see with Ultimate is that they build with an idea of that continuous improvement model built into their development. I think there’s talent management organizations like Halogen who have done sort of similar, really thinking about the manager’s role in the organization, right? And what they need. Now they’ve tied up or connected with some content providers for that kind of stuff. They sort of pre-define what that might look like in their environment, but I’ve seen interesting organizations … Ceridian does an interesting job when it comes to content on the compliance side, right? On the EAP side.

 

So I think other organizations are doing somewhat similar things, but in different places and with different content, but Ultimate is taking a very strategic approach to it. And thinking about how they’re going to change the work environment, with that whole conversation. I think it’s someplace to watch, right?

 

John Sumser: Right. It is, and this is where differentiation is going to start to happen again. So the [inaudible 00:15:59] Culture Amp just got another ten million dollars in funding, which is kind of interesting because funding has slowed way down in the wake of the significant re-evaluation of tech stock. So it’s interesting to see them on the receiving end of money. I spent some time talking to them last week, and Culture Amp is a … I’ll call it an engagement company. I don’t think they would, and God knows what engagement company is going to mean a year from now, but what they do is they product surveys and then deliver those surveys and offer reporting and critique and suggestion, but they don’t ever go into the full ‘here’s how we’re going to fix it for you’ mode that other companies do.

 

So it’s got a lot of software-y kind of press, but it’s really not dissimilar from … at least one of the founders, maybe both of the founders, are organization psychologists from [inaudible 00:17:16]. On some level the business model is the same business model.

 

Stacey Harris: You know a lot more about them than I. I guess you went back through my notes when I got this article. I couldn’t even recall if I had briefed with them, but I think the conversation about these organizations that are doing a assessment-based model towards defining culture within your organization. Or sort of helping you build a culture in your organization, depending on how you want to look at it. We’re continuing to see more and more of these organizations. The first one I had briefed with back in the day was RoundPeg, and I know Glint’s doing similar things, and we’ve got multiple other organizations who have done similar work. The question I think is, is there a need to define, build, and improve cultures within organizations? Is that something that requires a technology answer? Like you said, this may not be so much technology as it is, so much organizational design with technology support almost, right?

 

John Sumser: Right. I also spent some time … this is going to be another area where names are horrible, I spent some time talking to the people at Deloitte, who are pushing their CulturePath solution. CulturePath is a eight-dimension cultural measurement. You build your own survey. The survey goes out and comes back, and then Deloitte helps you move your culture from wherever it measures in to wherever you want it to be.

 

It’s a full encampment, large scale, big consulting company approach to Human Resources transformation. It seemed pretty disciplined, and it was like taking the engine of Culture Amp and plugging it into a large machine. I think we’ll see lots of that. The claim they make at Deloitte is that you can fix productivity and profitability with the level of culture. What you want to do from a leadership perspective is move the culture, not move the transactions.

 

Stacey Harris: I don’t know that I … with my background from organization effectiveness and organizational design, it definitely is a big company conversation, right? Every time you get past a certain level of employees, two-thousand or three-thousand employees, the conversation about culture sort of rears its head in most organizations. The challenge is, I think, that for many organizations there’s this idea that there’s a good culture and a bad culture. The one thing that I found in all of these systems or tools is that on some level seem to prescribe what culture is or what a culture should be. Don’t know Culture Amp or some of the other tools, so I can’t say if that’s for sure.

 

But I think there’s an interesting conversation to be made about, is there a bad or good culture, is there a goal to try and create your own culture, whatever that might be? Is that sort of more of what Deloitte’s doing, do you think, with their sort of Pathways? Or do you think they have some defined cultures?

 

John Sumser: I think where Deloitte is heading, and it’s a very interesting idea, is … so there’s these eight variables like honesty and transparency and some other y’s. You get your score and the score is on a scale on each of those dimensions. They say our assessment is, if you want more profitability you need to have more honesty in the culture. So let’s look at how you’d move the needle on honesty. Or the example they like to use in the conversation was, we want a more agile culture so we have to teach people how to learn to [inaudible 00:21:45]. How do you take a stiffer formal culture and make it adaptive by teaching it how to learn [inaudible 00:21:53] thinking?

 

You do that by having every manager in the company learn to talk about, three or four times or they just really completely blew it, and talk about that comfortably, and work it into their conversations with people, so that you can hear that the leadership is made mistakes, and profited from making those mistakes.

 

That seemed interesting, that seemed almost on the edges of branding for me. It almost … that’s how you do branding and employment branding in large information work or organizations. It seemed to be that [inaudible 00:22:36]. If you’ve got a two or three-thousand person company, it’s really hard to kill those things. But it’s also really hard to change them, so when you’re at that level of the game, this sort of solution from Deloitte, which is a full-on consultant solution, actually makes a lot of sense. It would kill a small company, but it’s like getting braces for a large company.

 

Stacey Harris: That’s the kind of … where I think I’ve been at with this whole conversation, which is that for that larger organizations at a certain level, you have to have to maybe do what you’d call culture maintenance on some level. You have to sort of oftentimes re-figure out, or re-address, what is your culture. For small organizations I think the conversation is much more maybe about being okay with your own culture, and figuring out what that is so you can hire for it, or that you can sort of make people prepared for it when they join your organization. Because those cultures that some point, particularly if you’re a growing organization, is what’s driving your growth in many cases. That sort of leads us into the next conversation which is this idea that algorithms beat humans in hiring candidates.

 

This was an interesting article. It was put together based off of some research that Gartner had put together that basically found that in their surveys, in their reviews, that those organizations using algorithms were having more performance outcomes from their hiring process. It was sort of backed up by some research done by the National Bureau of Economics that also found that those organizations who were using algorithms basically had employees that stayed longer within organizations.

 

John, you’ve been working in the recruiting space a lot longer than many people. What do you think about this? Do you think this is just the research went out looking for it and found what they wanted, or is there a reality to this? Is there some real meat behind the idea that algorithms are doing a better job than the humans in hiring their employees?

 

John Sumser: Tough question. Tough question, and it’s even tougher to generalize. Let me say that much of hiring is done pretty badly, so you routinely hear, although I can’t cite data right now, but you routinely hear that at the end of the first year most line managers are most happy with about fifty percent of the hiring decisions they made. A line manager has twelve to twenty direct reports, [inaudible 00:25:29], and in the worst case companies, hiring twenty or thirty percent of the people is what you do, so that means so that means out of six hires, at the most extreme case for a line manager, out of six hires three of them are bad.

 

That’s pretty ineffective. That’s pretty ineffective, and I believe the consensus is the result of confirmation bias. Meaning, you like to hire people who are like you, or who you think are like you. Allowing that kind of thinking to run unfettered through an organization results in bad decisions. These same people who can’t figure out how to stay married are making, and I’m one of those, are making decisions about who’s going to be an employee with the same toolkit that they make long-term relationship decisions with. We’re not good at this stuff generically, and my guess is that an algorithm can do some things better than people can.

 

Stacey Harris: My concern about algorithms, and not knowing the in-depth detail of all the various versions of this in the market I guess, is that algorithms are basically built off of our perspective, our data, and what we think is the right answer, right? Sometimes it’s built off of historical data and sometimes it’s built off of views about what worked in the past, depending on how you’re getting your data into that algorithm.

 

So my challenge to algorithms oftentimes, particularly on the hiring side is, how are algorithms preparing you for the future? How are they envisioning what will an organization will need down the road. I’m happy to hear some organizations that might maybe counter that for me, but I don’t feel like an algorithm that sort of takes the circle data, or even sort of existing current data, can really get a perception of what’s gonna happen for an organization down the road.

 

Now the question is can people or managers do that as well? My hope is that that’s going to be the real value preposition of humans in the future, is that we can imagine what an organization could be and think about it that way.

 

John Sumser: That could be interesting to see. There’s gonna be a lot of stuff like this in the market in the very near term. It’s all going to be extremely primitive, and that raises the question of whether or not, even if an algorithm is a better way of doing something, of whether or not you can actually deploy it. I think that that’s what we’re going to see over the next couple of years. Is the question of: are people smart enough to use the tools that they’re being sold?

 

Stacey Harris: Yup. Definitely. John, we’ve already moved through our thirty minutes. (laughs)

 

John Sumser: That’s great. That’s great. That’s because we are doing it from two coasts. Thanks for being here, Stacey, and thanks everybody for listening. You’ve been on HR Tech Weekly, One Step Closer, with Stacey Harris and John Sumser, and it was our sixty-first show. Thanks again, Stace.

 

Stacey Harris: Thanks, John. Thanks, everyone. Have a good week. (end music)

 

End Transcript

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