Over the past five years there has been an investment boom in technology products aimed at the talent acquisition market. The industry is getting more complex by the day and making sense of it is a constant challenge for corporate recruiting leaders.
My guest in this episode is Jon Kestenbaum Executive Director at New York based think tank and incubator Talent Tech Labs. Talent Tech Labs have done a huge amount of work to map out and understand this technology market and has developed a taxonomy that identifies 27 different categories of product in the sourcing to onboarding journey.
In the interview we discuss:
• How to make sense of the complex market by cutting through the marketing spin
• Disruptive solutions versus point solutions
• The importance of analytics
• The Five key trends of 2106
• Levels of innovation and tech adoption being seen among corporate employers and staffing companies.
Jon also tells us what has surprised him most during his two years at Talent Tech Labs and gives his view on the likely future of the talent technology space.
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Transcript:
Matt Alder [00:00:00]:
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Matt Alder [00:01:03]:
Hi everyone, this is Matt Alder.
Matt Alder [00:01:05]:
Welcome to episode 62 of the Recruiting Future podcast. Over the past five years, there’s been an investment boom in technology products aimed at the talent acquisition market. The industry is getting more complex by the day and making sense of it is a constant challenge for corporate recruiting leaders. My guest this week is Jon Kestenbaum, Executive director at New York based think tank and incubator Talent Tech Labs. Talent Tech Labs have done a huge amount of work to map and understand the technology market in talent acquisition. Keep listening to hear what they see as the current trends in this space.
Matt Alder [00:01:47]:
Hi Jonathan, and welcome to the podcast.
Jonathan Kestenbaum [00:01:50]:
Hey, how are you? Thanks for having me.
Matt Alder [00:01:52]:
My absolute pleasure. I’m very good. Could you introduce yourself to everyone and tell us what you do?
Jonathan Kestenbaum [00:01:59]:
Jon Kestenbaum, I’m the Executive Director of Talent Tech Labs. We are a think tank focused on the talent acquisition technology space. We run an incubator headquartered in New York where we take early stage talent acquisition technology companies and help them build their businesses and really, most importantly, get clients.
Matt Alder [00:02:25]:
Fantastic. And how many companies have you worked with so far and how many working with at the moment?
Jonathan Kestenbaum [00:02:31]:
So over the last. So we’ve been around for about two years and over that two year period we’ve had about 15 companies come through our space. At the moment we have five companies in incubation, soon to be seven. We operate on a rolling basis, not a cohort basis. So, you know, at any given time we could have, you know, more, more or less, you know, there’s no, there’s no science to it.
Matt Alder [00:02:59]:
Okay. And I’ve seen a lot of stuff that you guys have published to try and make sense of the sort of the talent technology ecosystem. I think for a lot of, a lot of the audience, for a lot of employers, a lot of people that I work with, you know, we can all see that there’s lots of innovation going on at the moment. But it does seem kind of very complex in terms of how, how things fit together, you know, where, where the market’s going, you know, how recruitment and HR are kind of changing. Really. What’s your sort of take on, you know, the, the ecosystem that’s out there and how, how all these technologies fit together and what their, what their purpose is, really?
Jonathan Kestenbaum [00:03:43]:
Sure. So we are research driven, right. So we, you know, we actually were started. The reason we were started was the CEO of Mitchell Martin, a very progressive staffing firm headquartered here in New York. Their IT healthcare staffing firm was just as technology made its way into, into staffing or recruit the recruitment industry, he became more and more overwhelmed by the different technologies that were out there. And he knew that technology was a strategic advantage. But he no longer was able to know which technology was specifically going to solve his problems. Because if you read the marketing messages of all these different technologies, you’d think they solved everything. And frankly, some of them do nothing and some of them solve very specific problems. So our first project really was to go out there, research the space and identify all of the different technologies that are innovating in the talent acquisition space. The next step was, okay, now that we understand all the technologies innovating, let’s create a taxonomy so that we could sort them so we know what they solve. Because, you know, just because they say they solve something doesn’t mean they do it or, you know, and many of these are point solutions. So we created an ecosystem infographic. And that infographic allows us to identify there’s about 27 categories from the sourcing through to the hire, which ends up basically onboarding that we’ve identified that these technologies fall into with our ecosystem infographic. The goal is that a buyer of this technology can look at it and identify, based on where their need is, identify a technology to solve that problem. And so we use that internally to identify trends. And with the trends we identify, we then find companies that we can invest in or incubate here in our incubator. So just wanted to set the background so you guys had some context of how we look at the world and I guess to give us some credibility. And when I’m about, when I dive right now into some of the trends I’m seeing, to answer your questions more specifically.
Matt Alder [00:05:51]:
Yeah, no, absolutely, that makes perfect sense. So, yeah, so I mean, tell us about the trends. What are you seeing?
Jonathan Kestenbaum [00:05:58]:
So I see, I guess for 2016, five new trends. The first is, I think matching systems are starting to become More effective. There are a few reasons for this. One is that user behaviors are changing. And so I believe that now not only do candidates want to jobs do come to them and be delivered to them, they don’t want to go searching for them, but they want them to be on their phone. And so the way that that matching is done is unique. Through technologies like Switch Job and Talent is another example. They deliver jobs to you. So you know, we’ve moved from an on demand economy to a convenience economy. And you know, where it used to be, fine, you know, just to go to the store and pick something up. Users became used to, you know, that instant satisfaction of an Uber coming to them and picking them up exactly where they are. So now users want jobs to be delivered to them. There’s some interesting AI around matching that we’re seeing. Another trend is games, psychometric games. So the big problem with psychometric testing was that in order to get effective results, it needed to be about a 45 minute exam and no one wanted to sit through that. So now they have video games you could play that could pull out the psychometric results. We see some interesting stuff happening around temporary labor marketplaces with staffing firms. Staffing firms are starting to take their excess inventory and feature them to clients directly through temp labor marketplaces. So it’s kind of like a self service tool for their clients. And we’re seeing some of the more progressive staffing firms do that. Candidate relationship management tools are pretty exciting. This is kind of similar to a CRM. All the marketing, the stuff that’s working in marketing for corporations is now making its way into the recruitment stack. And some of these tools are doing some pretty cool things. And we see what we’re calling open architecture, a focus on open architecture. So where these technologies used to be really closed, they’re now opening up their APIs and allowing other point solutions to connect into them. And one of the key technologies that’s popping up as a result of that is what we call analytics as a service, which is connecting all of the point solutions on the map that we create like the ecosystem as we see it, allowing a buyer to use those technologies and then see analytics or data that results from, you know, candidate flow through all these apps.
Matt Alder [00:08:42]:
And what’s the, what’s the kind of market take up for, for this, for this, for this kind of vision? Because I’ve seen a number of the companies that you kind of mentioned and I know that you work with and they do some really impressive, impressive things, things that are a logical next Step for recruitment and also things that chime, as you mentioned, chime very much with, you know, seekers or people who, you know, might be interested in moving job in terms of sort of mobile and convenience. What about, what about the employers? What about the corporations? Do you, how far ahead do you feel the work that you’re doing is from the reality of what they’re actually kind of buying and demanding at the moment?
Jonathan Kestenbaum [00:09:29]:
Sure. So we’re seeing, I like to say we see two different types of solutions here. Right. So we see truly disruptive solutions, technologies that can disrupt the way hiring is done. And I guess this would be like the temporary labor marketplaces. This would be, you know, some of the e staffing technologies. And then we’re seeing these tools, recruitment tools that are additive tools that you plug into your tech stack that make you a little bit more efficient. It’s not like revolutionizing the way that you’re hiring, it’s just adding a little bit of efficiency. So, so we’re seeing a lot of adoption with the tools, especially if the tools easily plug and play into the existing recruitment tech stack. So for example, if you’re looking to find candidates, the social search tools are a pretty good way to go and we see a lot of corporations using those. Also in terms of, if we stick to sourcing some of these social networks that are very focused, like a GitHub or a dribble or even like it’s not a social network but a Harry for, you know, very focused on a specific type of job, we’re seeing some adoption there because these companies are able to get candidates cheaper than they would. We see some, we definitely are spending our time focusing on some of the, I guess the more out there solutions, you know, the crowdsource recruitment, you know, stuff like, you know, new age VMs tools that just aren’t ready for the market. But we do believe that they will be in the, you know, in the next few years.
Matt Alder [00:11:18]:
And what do you think drives innovation in the market? Is it the, is it the candidates? Is it the, the employers? Is it talent shortages? What is it that sort of pushes all this forward?
Jonathan Kestenbaum [00:11:31]:
That’s a great question. I think it’s a combination. Definitely. Talent shortages make the companies have to get more creative at how they find candidates. So I think that’s probably the primary driver. The candidates play a role because they kind of get to choose where they are looking for the jobs and what platforms they participate with. So, you know, depending on where they are, you know, kind of the companies have to go find them.
Matt Alder [00:12:07]:
Yeah, I Think the last time we spoke, you’d actually just started, you’d actually just started in this role. What’s the thing that surprised you the most in terms of the way things have developed over the last couple of years?
Jonathan Kestenbaum [00:12:21]:
Sure. To start, I thought that stuff. Staffing firms would be way more interested in what we’re doing. I expected especially because they want to find the best candidates cheaper, they’d be interested in leveraging technology. But frankly, I haven’t found many progressive staffing firms. They’re just heads down in that transaction and placing that candidate. I think that if I look at the technologies and try to evaluate. I think I’ve learned a lot myself about what works and what doesn’t in terms of technology growth in the talent acquisition space. But more importantly, I think I was surprised at the way that some of the technologies that were successful because I didn’t necessarily see the big picture, which really the way I look at this map now is I believe the winner is going to be somebody who can connect all of the point solutions. This is the reason, or one of the reasons why we were ultimately excited by the recruitment space rather than the talent management space. Because talent management already had a lot of consolidation. Recruitment hasn’t. There’s a number of point solutions. So I believe the winner is going to connect most of these point solutions together most effectively and they’ll get the most market share. And there are a few ways to go about that. So with that lens, that’s kind of how we look at some of these technology solutions. So rather than just while we do incubate and we are interested in some of these really, really focused point solutions. For example, a video interviewing technology, or more specifically maybe a technology that records the phone call, the recruit, you know, the phone call that you have when you’re vetting a candidate. You know, we kind of are now focused on looking at the technologies that can build that platform, that can scale, that have that one piece of technology that could scale fast enough to build a platform. For example, ZipRecruiter. Really interesting technology that we, you know, completely kind of went overhead in the sense that we obviously understood that just, you know, shooting out jobs on many different job boards would get you a lot of candidates. But when you think about it, if they, even though it’s, it’s become quality over quantity and theirs is really quantity over quality, if they can build, get all those candidates onto their platform, build that matching technology, build out the underlying ats, after that, they basically back their way into building the platform. So there’s some really exciting stuff like that. And we’re trying to use that lens while we look at some of the technology.
Matt Alder [00:15:04]:
That makes a lot of sense and also leads very nicely into my final question, which is what are you most excited about in terms of the future? Where, where do you think this is going? What technology do you see emerging that you think would be fantastic for talent attraction?
Jonathan Kestenbaum [00:15:24]:
Sure. So we, we’ve seen some, you know, the video interviewing space I think is pretty commoditized at this point. I, I, I, I think that, you know, psychometric testing, this stuff’s even though there’s exciting developments happening, it’s not like revolutionary new technology. No one, at least. So on the staffing side of things, I don’t think that anyone’s done a really effective job at creating a recruitment marketplace. We’re really revolutionizing the staffing business. So that, to me, is where the next really exciting innovation is going to happen. You can call it, based on our taxonomy, a number of things. You can call it E staffing, call it vms, just depending on where they fall into the tech stack. But I truly believe that there will be a marketplace that wins at that or that succeeds at getting recruiters onto the platform and creates a very collaborative way for them to work together. Which I think collaboration is one of the things that’s missing in the staffing side of the business, even within recruitment organizations. So I do believe that that is one problem that will be solved in the next five years.
Matt Alder [00:16:35]:
Jon, thank you very much for talking to me.
Jonathan Kestenbaum [00:16:37]:
Yes, thank you for having me. I appreciate it.
Matt Alder [00:16:40]:
My thanks to Jon Kestenbaum.
Matt Alder [00:16:42]:
You can subscribe to this podcast on itunes or via your podcasting app of choice. Just search for Recruiting future. You can find all of the past episodes@www.rfpodcast.com on that site. You can also subscribe to the mailing list and find out more about working with me. Thanks very much for listening.
Matt Alder [00:17:04]:
I’ll be back next week and I.
Matt Alder [00:17:06]:
Hope you’ll join me.
