HCM Market Agenda: A Focus on Experience and Engagement

Ventana Research recently announced its 2023 Market Agenda for Human Capital Management, continuing the guidance we’ve offered for two decades to help organizations derive maximum potential from workforce- and people-related technology investments and initiatives. In crafting this Market Agenda, we focused on three critical themes top-of-mind for both HCM vendors and buyers: Organizational resiliency, employee engagement and utilizing digital technology to derive deeper insights into the state of the workforce so that leadership can take action to promote retention and growth.

We craft our market priorities through a combination of deep subject matter expertise, intimate knowledge of business trends and a solid understanding of technological advances and vendor products. Through our continuous market research, we offer insights and best practices for both the lines of business and IT across industry verticals, helping organizations realize maximum potential. HCM focuses on engaging workers and managers with applications and processes that elevate workforce contributions and engagement, creating and sustaining sources of business value and competitive advantage. Organizations must maintain a degree of agility, and access to information is required to respond to changing macroeconomic and business conditions impacting the workforce. But backward-looking charts and dashboards are no longer sufficient to support this agility. By 2025, one-third of organizations will optimize HR-related work by using adaptive HCM systems that respond in real-time to broad-based data signals and triggers by alerting and nudging relevant stakeholders.

HCM applications and technology platforms must balance the requirement for automation and workflow across human resources and business processes. Also important are the intelligence and insights that enable the workforce to act on existing skill gaps and forge new career paths while still achieving managers’ expectations. Key to this balancing act is increased emphasis on engagement and experiences that give the workforce confidence that the organization is vested in their success. In 2023, we’ll conduct Benchmark Research into the HCM suite market, and publish a Value Index on supporting application suites.

Our Human Capital Management Market Agenda includes six focus areas that address these business results: Employee Experience, Learning Management, Talent Management, Total Compensation Management, Payroll Management and Workforce Management.

Employee Experience

Employee experience is defined by what employees observe, encounter and feel throughout their tenure at an organization. Positive employee experience leads to better engagement and productivity, and organizations are investing in technology to support personalization of experiences to drive business outcomes. By 2025, two-thirds of organizations will require artificial intelligence in all HCM and adjacent systems to curate personalized experiences for workers, resulting in engagement, productivity and retention. Our continuous market research through our Employee Experience Dynamic Insights provides targeted guidance to help organizations improve and achieve worker resilience and commitment.

Learning Management

Learning management is the process of enabling the workforce to develop skills and competencies needed to maximize the impact of work while providing desired productivity and effectiveness. To improve business results, organizations are embracing the learning technology platforms that do the best job of enhancing the learning experience. This requires personalization of content, medium and pace to resonate with learners as individuals seek to advance their skills and define career paths within the organization. By 2025, learning management systems and learning experience platforms with embedded skill and job ontologies that recommend optimal learning paths will guide one-half of organizations to elevate employee engagement, retention and productivity. We will continue our Benchmark Research in Learning Management, providing education on best practices and strategies, including insights on building business cases and achieving better return on investment by maximizing them. Our vendor assessment and Value Index research will guide organizations on the products that best fit business needs.

Payroll Management

Payroll management used to be conducted only in standard cycles, with workers being paid on the same day and in the same, repeatable, predefined periods. Now, AI and automation have reduced or eliminated many labor-intensive, error-prone payroll tasks so organizations can leverage payroll technology investments to do more than just pay people accurately and on time. By 2025, one-half of organizations will offer earned wage access to the workforce as on-demand payroll offerings gain favor and bolster employee engagement. A focus on improved employee experiences with pay and related benefits is essential, as is ensuring reliability and timeliness of payroll processes. We will maintain our continuous Benchmark Research in Payroll Management, providing education on best practices and strategies in payroll processes, and will publish the Payroll Management Value Index of vendor and product research in 2023.

Talent Management

Talent management encompasses activities to ensure employee experiences — from hiring to onboarding to career and work engagement — are governed and managed in ways that are as effective for the worker as they are for the organization. These areas of investment span candidate engagement in the recruiting process, hiring and onboarding, internal mobility, establishing and monitoring expectations through performance management and the use of skills development to ensure succession-planning goals are fulfilled.

To win or keep the best talent, organizations must make the hiring process personalized and enjoyable, and a traditional applicant tracking system simply cannot support that mandate. Responding to market demands, technology providers have evolved offerings to the point where the right system underlying candidate-focused processes can be a competitive differentiator when it comes to recruiting and retention. The very activities that define talent acquisition have grown beyond what used to be advertising, interviewing and extending an offer of employment. Personalized employment marketing campaigns, skill and/or interest-based dynamic job presentation, interview self-scheduling and even onboarding (to some degree) now all fall under the heading of talent acquisition, and rightfully so. Further, organizations are looking at the talent pool more holistically than ever, considering external, internal and contractor talent equally, marketing opportunities directly to all, with messaging specifically curated to individual needs. A traditional ATS does not have a robust enough feature set to meet all those needs, but an advanced talent acquisition suite does. We assert that by 2027, the majority of organizations will abandon the traditional ATS in favor of a talent intelligence platform, combining external and internal talent evaluation, skills matching and people analytics.

We will continue to research how organizations use applications to support the merits of talent management. In 2023, we’ll conduct Benchmark Research into the area of talent management, examining how organizational views have changed on total talent, and the evolving expectations of the applications used to support its acquisition and management.

Total Compensation Management

Total compensation management is the practice of managing the processes and information that ensure an integrated and more comprehensive approach to incentivizing, rewarding and recognizing workers for work provided. Recent regulatory and legal mandates, combined with social pressures and changes in organizational values, have put the need for fair and equitable pay at the core of many compensation strategies. Our research leads us to assert that by 2025, the majority of organizations evaluating compensation management software will list automated pay equity modeling and anomaly detection as required system functionality. In 2023, we will build upon our released Benchmark Research on Total Compensation Management and deliver an assessment of vendors in our Value Index research to meet ever-increasing demands for evaluating vendors and products.

Workforce Management

Workforce management is a broad range of activities used to oversee the work of directly employed or contracted workers. It includes features like time and attendance, forecasting and scheduling, absence management and integration with the payroll process for non-exempt or hourly workers. Workforce planning has become much more dynamic and accurate via artificial intelligence-infused systems, and scheduling optimization capabilities now enable organizations to factor in employee preferences to mitigate typically high turnover in hourly jobs. By 2025, two-thirds of organizations using workforce management will benefit from real-time visibility into the cost of schedules, including rates and worker types. We will publish continuous Benchmark Research on Workforce Management in 2023 as well as a new Workforce Management Value Index to guide the assessment and selection of vendors and products.

Overall, as we enter 2023, I expect to see HR leaders focusing on ensuring organizational resiliency to continue to meet the rapidly evolving expectations of the workforce. They will do so with the same advanced analytics their operations counterparts use to inform decisions and take actions that impact business outcomes.

Be sure to subscribe to our Ventana Research community to stay up-to-date on our 2023 research efforts. Check out the Human Capital Management topic and focus area pages for our detailed market agenda and continuously updated 90-day calendar as well as more research facts and best practices.

Regards,

Quincy Valencia