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Digital Transformation and Talent Shortages Roil the HR Tech Industry

July 20, 2022 Talent Management
Mark Feffer
By Mark Feffer

Recruiting, hiring and employee retention are giving employers fits right now.

That, in turn, is causing them to rethink their approach to the workforce and work itself, according to “Workforce and Learning Trends,” a yearly report from the technology trade association CompTIA, based in Downers Grove, Ill. For example, the report found that nearly three-quarters of HR professionals, 73%, expect hiring to become more challenging over the next year. 

“Hiring and talent development practices that worked a decade ago are no longer adequate in an era of digital transformation and rapid innovation,” said CompTIA CEO Todd Thibodeaux.

That means employers need to examine how they’re preparing, recruiting and retaining workers. That includes making sure educational models keep pace with skills requirements, modernizing outdated evaluation and hiring criteria, recruiting from the full talent pool and putting people in positions where they can make the best use of their skills and talents. The same holds true for recruiting, hiring and retaining high quality HR professionals.

5 Movements Shaping Workforce Education

CompTIA identified five movements shaping both the workforce and business learning:

  • Employers and workers are negotiating a resetting of expectations on both sides.
  • Challenges with talent pipelines highlight the need for human infrastructure investment.
  • More employers are dropping the four-year degree requirement in favor of skills-based hiring.
  • The need to crack the code of soft skills with new approaches.
  • HR is working toward balancing data-driven and people-driven approaches to talent management.

Given all this, HR executives are paying close attention to reskilling and upskilling their current employees. More than six in 10 believe increasing the skills of existing workers will offset the need for outside hiring, even as it helps their organization’s retention strategy.

With that said, it’s no surprise that the adoption of skills-based hiring practices continues to increase. Support for eliminating or relaxing four-year degree requirements increased from 76% in 2021 to 85% this year, for example. CompTIA said this could contribute to less “over-specing,” or specifying more skills and credentials than are necessary to fill a particular job. More than anything else, over-specing results in job descriptions that few, if any, candidates are qualified for.

Meantime, two-thirds of HR professionals expect to place greater emphasis on soft skills in the future. Among their reasons: a desire to develop well-rounded employees with more growth potential, create an environment of innovation and collaborative problem-solving, and build a healthy corporate culture.

Related Article: Learning & Development Climbs to the Top of the Corporate Agenda

Staying on Top of a Moving Tech Landscape

All of this is even further complicated by the challenge facing HR technology providers, said Ward Christman, co-founder of the HR Tech Alliances, a Philadelphia consulting firm that advises HR technology vendors on a variety of issues.

“It’s particularly noisy out there for the average solution that’s in the HR tech and work tech space,” he said. Vendors are under pressure to both cut through the noise and find the right “fit” in the industry’s ecosystem. In addition, the COVID-19 pandemic has “definitely changed” the dynamics of the HR technology business.

As for employers, they’re in a tight spot, Christman said, because most struggle to keep up with the industry’s changes. A majority of companies have “dozens, if not hundreds” of HR solutions in-house. They're in a pickle, he said, but there are people with both experience in HR and IT that are now consulting and advising employers.

“Somebody needs to help keep them from making a mess of what sounds like a good thing in a press release from Microsoft, but then they start changing things and it could get better and it ends up a spaghetti mess,” Christman said.

Meanwhile, the line between collaboration software and HR software is becoming increasingly blurred, Christman said. Slack and Microsoft Teams have both made inroads into the HR tech ecosystem, positioning themselves as delivery vehicles for HR solutions. Employers have to realize platforms like those aren't built purposely for HR. 

However, “I do hear more and more people talking about them in the context of HR,” Christman said. “There’s definitely a movement there.”

Related Article: How HR Tech Is Adapting to the Digital Workplace

HR Tech Vendors Finding New Directions

Undoubtedly, some pivoting is going on within the HR ecosystem, and bear in mind that the notion of enterprise technology companies pivoting is neither new nor far-fetched. During the 1980s, Unisys was formed as a hardware company but decided to move into offering services. It was a dramatic change and took a several years to complete, but in the end the company succeeded. Today, a number of HR technology vendors are attempting similar transitions. 

Those transitions will help employers align their operations with the times by, for example, cross-connecting to the freelance world “with the Upworks and Fiverrs and all those different platforms out there,” Christman observed.

By making such moves, vendors are essentially tracking their customers, Christman said. However, that indicates the desire for a range of solutions implemented to address various HR and recruiting chores will remain with us, which may not be a good thing.

“The adage of, ‘Hey, one solution is all you need,’ which the Workdays and even Oracles would say historically, has never proven itself,” he said. 

Inevitably, point technology providers will continue to pop up as demand for this solution or that makes its appearance, Christman believes.

“And of course, their flagship platform just can’t bring that tomorrow," he said. "Even if they buy the company, it takes time to bring that innovation into the fold of a larger platform.”

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