2021 has seen mindblowing levels of investment in HR and Talent Acquisition technology. Work Tech, as it is now becoming known, is strategically critical to talent acquisition, and it is essential that leaders keep themselves up to date with the market.
To help us all with this, I’m delighted to welcome George LaRocque back to the podcast. George is one of the leading analysts who track talent acquisition technology, and it was great to get a market update from him.
In the interview, we discuss:
Why HR Tech is morphing into Work Tech
The trends that the pandemic has accelerated
Merges, acquisitions and the implications for employers
Advice to employers on shaping Work Tech strategies
George’s new community based Accelerator, Impact WorkTech
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Matt Alder (1m 6s):
Hi, everyone. This is Matt Alder. Welcome to episode 371 of the Recruiting Future Podcast. 2021 has seen mind-blowing levels of investment in HR and Talent Acquisition technology. WorkTech, as it is now becoming known, is strategically critical to talent acquisition, and it is essential that leaders keep themselves up to date with the market. To help us all with this, I’m delighted to welcome George LaRocque back to the podcast. George is one of the Leading Analysts who track talent acquisition technology, and it was great to get a market update from him. Hi, George, and welcome back to the podcast.
George LaRocque (1m 46s):
Matt, thanks for having me. I’m excited to be here.
Matt Alder (1m 48s):
An absolute pleasure to have you back on the show. For the people who may be listening and hearing your voice for the first time, could you just introduce yourself and tell everyone what you do?
George LaRocque (1m 59s):
Sure, I will. I’m George LaRocque and I’m the founder and analyst that publishes under WorkTech as the brand formerly HR wins. What I do is I study the market, I work with employers and vendors to help them understand each other, I do research, I track all of the investments coming in, and I’ve been in the market for about 30 years. I spent 10 years as a practitioner in staffing and employer-side recruitment, and then HR. Ten years as a tech vendor executive launching a few brands and the last 10 have been in this consulting advisory and analyst space.
Matt Alder (2m 41s):
Fantastic stuff. Now, we were just saying before I hit record, it was actually 2018 when you were last on the show. That does seem a whole different era basically.
George LaRocque (2m 51s):
The before times.
Matt Alder (2m 53s):
Yes, exactly. I’m sure that many people listening will have access to the great information and resources that you regularly share. If they don’t, I’m certainly going to recommend that they do. Perhaps for people who’ve not been following the HR tech market as closely as you and me have, I thought it might be good just to give people a bit of an update as to where things are in terms of investment in tech in the current stage of the pandemic that we find ourselves in. What have you been seeing in the market?
George LaRocque (3m 32s):
Well, it has been, for many reasons, a crazy 18 to 20 months through this pandemic. That’s not just true for us, as human beings, struggling with the pandemic and what it’s done to work, but it’s been crazy from a venture capital, private equity, and merger and acquisition perspective as well. Going back to the beginning of the pandemic, we would have thought as I did, I expected there to be a slowdown, a tapping of the brakes given the economic impact that the pandemic was definitely going to have, and ultimately did, but just the opposite happened.
George LaRocque (4m 19s):
It’s been amazing to watch, not just a record year in 2020 at over 5 billion, but then in the first half of this year to then basically exceed that over 7 billion in WorkTech, HR Tech, investment globally, and to be racing toward a 10 billion or more for the balance of the year. It’s unheard of, we’ve never seen anything like this. There were a lot of factors contributing to that, but at a high level, it’s just been jaw-dropping to watch the number of emerging technology players emerge and the investor interest in this space.
Matt Alder (5m 14s):
Absolutely. It is definitely unprecedented stuff as you say. It will be interesting to maybe talk a little bit about some of the reasons that you think might be behind it. Before we do though, it’s probably worth just spending a tiny bit of time talking about the move from HR technology to WorkTech because obviously 18 months ago, we were talking about HR technology as a very broad term that looked at talent acquisition, LND, payroll, core HR, talent management, and all of those things. In the last few months, we seem to now be talking about WorkTech. What’s going on with that change of term?
George LaRocque (5m 53s):
For me, it’s been a long transition. I moved from HR Wins to WorkTech in January. The tagline for my site has always been “the business and technology of getting work done.” I think five years ago, that was very aspirational but as technology has moved along and then external factors, societal factors that impact HR like diversity inclusion, equity, the me-too movement, et cetera.
George LaRocque (6m 43s):
The pandemic and the spotlight that has been put on employee experience, candidate experience, new models of approaching, everything from the most mundane like payroll to where we spend a lot of time thinking about recruiting, talent acquisition, and candidate experience, there’s been a shift in a lot of these categories. Two things are happening. One is their folding into each other so in recruiting, we see a blending of learning and skills development that contributes not just to external candidates, but internal mobility.
George LaRocque (7m 31s):
Then at the same time, the onus is about the work and not necessarily about the productivity gain back to the employer. It’s about the flow of work, the balance of work and life, and so forth. I think there are different views as to why people are calling it WorkTech. For me, I think HR holistically, including recruiting, is really at a place where there’s a real opportunity to deliver on its promise and it’s been a long time coming so I think that’s the shift for me.
Matt Alder (8m 18s):
Absolutely. Thinking about some of the reasons related to that, why there’s such an explosion of investment at the moment, what are you seeing, I suppose, particularly in the talent acquisition space? What’s on-trend and what’s driving that?
George LaRocque (8m 35s):
Well, it’s a great question. Like many questions about trends right now, it’s important to note that there are some hackneyed phrases already like COVID has accelerated so many trends, but it’s very true. None of the trends that are in play today were created by COVID. They were either accelerated or business issues or challenges were illuminated by COVID. Employers and technology innovators have rushed in to focus on this.
George LaRocque (9m 21s):
A great example is a remote work and the displacement of the workforce. Now in pre-pandemic, I did a global study with employers. 55% were offering some form of distributed work. That’s some form of distributed work summed up from the least flexible version of it through to the completely distributed workforce. That was something that had been evolving over decades, as technology, the internet, the world became more flat, and talent is located everywhere globally.
George LaRocque (10m 11s):
This pandemic really shifted that and it caused from a talent acquisition perspective, it put a great strain, not only dealing with recruiters now being fully remote, but also looking at the need to source talent from outside of your commutable range, given the skills shortage that has also become amplified through this pandemic. There’s been a shift in the employee mindset, which is very real.
George LaRocque (10m 53s):
The pandemic had pushed, from a knowledge worker perspective, everybody remotely from the rest of the workforce perspective. Many were in a position where they weren’t working or they were on the frontlines struggling with work, and the cavalry was never showing up. It still hasn’t shown up. It’s very difficult to staff in that workforce so there’s this great reckoning that’s happening where individuals or candidates have more leverage in this market.
George LaRocque (11m 33s):
Things like learning, training, and skills as part of what I’m offering is incredibly important along with benefits and more standard packages. Technology, for example, job boards or marketplaces that are offering credentials, training, or even full educations that are funded by sponsors that are building their talent pool. This is a model that’s emerging globally and happening more and more.
George LaRocque (12m 15s):
Also, internal mobility and the ability to show employees and candidates, not just a career path or a ladder to climb, but the opportunity to move within an organization and invest in their career from a skills perspective and learning. It may be the focus on work-life balance and wellness. Not every employee is interested in expanding their skills, but all of these things have changed the dynamics from a talent acquisition perspective, from a recruitment marketing perspective, sourcing perspective, and put a lot of strain on the organization.
George LaRocque (13m 3s):
The last thing I would add is there were several trends that we’ve been talking about. I know you talk about them ongoing around automation, conversational technology, automating the transactional part of the process, whether it’s screening, assessment, or schedule to put the recruiter in a more strategic role and have the ability to handle more of the high volume, more of the transactional volume in a knowledge worker environment, and let the recruiters really engage with candidates and hiring managers, and being more strategic.
George LaRocque (13m 47s):
Again, the pandemic did not create that trend but it’s certainly drove an incredible amount of adoption, new spending, and investment as well in that category.
Matt Alder (14m 5s):
You might be better equipped to comment on it than me, but one of the things that I think I’m seeing in the market at the moment is more acquisitions and mergers going on as the larger, better-funded companies gobbling up some of the smaller specialists. Is that the case or is that just my perception? If it is the case, do you think that is something that is set to continue over the next couple of years?
George LaRocque (14m 29s):
It’s certainly the case. There are a couple. Along with the pandemic and existing trends, another thing that’s impacting both the flow of capital from an investment perspective, as well as an acquisition perspective is, what’s the best way to put this, money is cheap right now. The interest rates are low. Mercer had a line in one of their reports that they put out that said, “Dry power meets low-interest rates.”
George LaRocque (15m 9s):
Meaning there were cash stockpiles that many investors and corporations had, and then also the ability to borrow. Interest rates are low so it’s created this incredible frenzy in the market whether it’s private equity or whether it’s individual companies making acquisitions in the space and driving mergers, roll-ups, and so forth. Tes, that’s happening. There’ve been just that. In talent acquisition, smart recruiters have made acquisitions PandoLogic in the programmatic space, acquired Wade and Wendy, and then almost immediately PandoLogic was acquired by a large tech vendor coming from outside of the space, looking to get into talent acquisition and HCM.
George LaRocque (16m 12s):
We had Paradox, a conversational AI vendor acquire Tradify, an assessment vendor, recently. These deals are happening. There are multiple acquisitions or mergers happening weekly, and it will continue to happen because thinking about that pace of innovation and change transformation, is the buzzword, that’s happening, technically larger vendors will fill the gaps in their product roadmap or their product suite by making acquisitions. In merging vendors or scale-ups like Paradox, it will extend their capabilities by making acquisitions, or move into new markets by making acquisitions, or into a new market segment.
George LaRocque (17m 3s):
That’s not going to change anytime really soon, but at the same time, I don’t really see it as a market consolidation. There may be a market share that’s being consolidated, but there is a rush of new tech vendors filling the gaps in the spaces left by those that have been acquired. It’s really quite interesting right now.
Matt Alder (17m 26s):
I think that brings us nicely on to my next question. You’ve just launched a new initiative around this space. Tell us about it.
George LaRocque (17m 35s):
Well, it’s called Impact WorkTech and is an accelerator. It’s really the culmination of everything that I’ve always done. I’ve worked across a few constituencies. The leaders and practitioners in talent acquisition and HR, the tech providers that are providing technology to them, and then investors as I’ve tracked all of the VC coming into the space. I help them make sense of the emerging tech players.
George LaRocque (18m 15s):
For the most part, this has all been done in three streams through advisory and I’ll continue to do that. As I was talking to a long time friend of mine, Gareth Jones, the CEO at Headstart, over the years, we’ve worked together. He’s done advisory work and also worked with investors and others in the space. I was looking at doing some new things with the startup community and the question became, “Well, all of these components are here. We should be pulling them together. Why don’t you put together an accelerator?” With Gareth as my partner in this, we’ve built Impact WorkTech.
George LaRocque (19m 1s):
We’re looking at companies that are start-ups from the early stage through to A round that are doing new and innovative things to have an impact on work. We are pulling together those three constituencies. We’ve got a cohort of start-ups and tech providers. We have got mentors who are operators, leaders, and practitioners or what vendors would consider buyers of HR and talent acquisition technology that are contributing their knowledge into this cohort to make them the best that they can be.
George LaRocque (19m 41s):
Then we’ve got a community of investors who are focused on this space. Our mission is really focused on impact and filling the education gap for vendors that are coming up in the space. There’s a lot about talent acquisition and HR that’s nuanced and different than say, generic B2B or a consumer product. That’s the gap that we would feel with advisory services, but in this case, it’s more of an educational experience and to really accelerate their learning curve.
George LaRocque (20m 23s):
Not just the launch of the product or their launch to funding, but really help them understand the customers that they’re serving and the needs that they have. Long-winded there but that’s what we are all about.
Matt Alder (20m 37s):
Absolutely. I think that’s a fantastic initiative because I think there can be that knowledge gap. I’ve seen people launch some fantastic products in our space but not being able to really communicate the benefits of them in a way that an HR or talent acquisition audience could understand. I’ve always felt that that’s a real shame that a lot of really great technologies and solutions perhaps don’t get the penetration into the market they deserve because of that knowledge gap. Yes, fantastic to hear that you and Gareth are working together to solve that.
George LaRocque (21m 12s):
Yes. We’re about to announce our mentor so I’ll hold back on that, but we’ve got about 20 mentors. I’m really excited about the diverse backgrounds and the diversity we’ve been able to put together. It’s a group of people that are really focused on giving back to the industry. We have folks that are operating in the market today as CEOs, C-level, and founder executives, and some that have exited. They’ve been down through that path and journey. Everybody’s focused on giving back to this industry and helping the next wave of technology as it emerges.
Matt Alder (21m 60s):
As a final question, lots of talent acquisition leaders who are listening to the podcast. This is a very confusing area at the moment with so much investment going into technology and so much money being spent on marketing. Also, perhaps some valid concerns around companies being acquired and useful products being sunsetted. What would your advice to employers be, at the moment, in terms of how they should be thinking about WorkTech and how they should be shaping their strategies?
George LaRocque (22m 30s):
I think there’s going to be a renaissance for these leaders, these buyers of HR technology. That renaissance is going to be back in the early 2000s when I was bringing emerging technology to market. We had to spend a lot of time talking about our financials, our financial stability. The whole HR tech startup thing was fairly new at that point. That really slipped away. I think the appetite for risk with start-ups increased.
George LaRocque (23m 10s):
It became very normal that this is an environment where the pace is so quick and the success rate for start-ups is so low. Then to your point, there’s this feeding frenzy from a merger and acquisition perspective. I think buyers need to bring in their partners from finance and purchasing to really look at and really evaluate based on what they’re buying. If they’re investing in an app to help source, they may have a threshold that’s a little higher when it comes to risks, the risk that they’ll take with a startup that’s doing something really innovative in that space versus let’s say, the platform that they’re going to run all of their recruiting process through.
George LaRocque (24m 2s):
They might want to have a vendor who’s innovative. They might be looking at more of a scale-up and we want more of a financial profile, or even for a startup that’s well-funded and looking at things like their spend rate, their burn rate, their roadmap, the profile of the investors that they do have so that they have an assurance of longevity or sustainability. When it comes to existing fenders, and acquisitions that happen normally, one of the things that an acquiring company is acquiring is a customer base.
George LaRocque (24m 46s):
At that point, as a customer, you do have some leverage with the new entity to ensure that your needs are met on a long-term basis. At the point where you’re made aware of an acquisition, when it becomes visible to you, that’s where I would be digging in to see, do I have leverage in this situation? What will be the future of the product? How will my world change? It’s a question I ask every CEO on both sides when there’s an acquisition. There’s normally a path that involves retaining those customers. Then again, there is some leverage and it may be a point where you need to consider making a change or it may be a point where the value of the product you’re using may increase.
George LaRocque (25m 38s):
I think that renaissance of going back and looking, not just at the features and functions of the technology, but the profile of the partner that you’re choosing is going to become even more critical in the next couple of years, and as
Matt Alder (25m 55s):
As a final point, where can people find you and how can they connect with you?
George LaRocque (25m 59s):
You can find me at oneWorkTech.com, and whether you use the number one or spell it out, you’ll get to the same place. From there, you’ll find links to the accelerator and the ability to connect with me socially. I’m on LinkedIn, I’m on Twitter, and just about everywhere you might want to connect. I’m happy to connect with anyone who’s interested in the space.
Matt Alder (26m 26s):
George, thank you very much for joining me.
George LaRocque (26m 27s):
Matt, thanks for having me.
Matt Alder (26m 29s):
My thanks to George LaRocque. You can subscribe to this podcast in Apple Podcasts, on Spotify, or via your podcasting app of choice. Please also follow the show on Instagram. You can find us by searching for Recruiting Future. You can search all the past episodes at recruitingfuture.com. On that site, you can also subscribe to the mailing list to get the inside track about everything that’s coming up on the show. Thanks so much for listening. I’ll be back next time and I hope you’ll join me.