HR Tech 2017 Keynote 17 The HR Technology Market: Trends and Disruptions for 2018

Josh Bersin Principal and Founder, Bersin™ Deloitte Consulting LLP October, 2017 Copyright © 2017 Deloitte Development LLC. All rights reserved. The HR tech market reinvents itself HR technology disruptions

HR Tech 2017 Keynote 2 Copyright © 2017 Deloitte Development LLC. All rights reserved. 90% of organizations surveyed by MIT and Deloitte anticipate their industries will be totally disrupted by digital trends. Source: G. C. Kane, D. Palmer, A. N. Phillips, D. Kiron and N. Buckley, “Aligning the Organization for its Digital Future” MIT Sloan Management Review and Deloitte University Press, July 2016. Digital disruption A new industrial revolution, but people matter

HR Tech 2017 Keynote 3 Copyright © 2017 Deloitte Development LLC. All rights reserved. Robots Can cost as low as $25,000* 250,000 purchased globally in 2016** *Source: Robots: The new low-cost worker, Dhara Ranasinghe, CNBC, April 10, 2015. https://www.cnbc.com/2015/04/10/robots-the-new-low-cost-worker.html ** Source: China Can’t Buy Enough Industrial Robots, Jethro Mullen, CNNTech, June 23, 2016 http://money.cnn.com/2016/06/23/technology/china-industrial-robots/index.html The future of work Robotics, AI, sensors are here now

HR Tech 2017 Keynote 5 Copyright © 2017 Deloitte Development LLC. All rights reserved. US productivity last ten years Productivity is suffering – is technology helping? 1 billion smartphones iPhone launched 100 million Twitter users Since 2011 productivity gains have slowed to crawl Source: U.S. Bureau of Labor Statistics 108 106 104 102 100 98 96 94 2007 2009 2011 2013 2015 2017 Index points US nonfarm labor productivity

HR Tech 2017 Keynote 6 Copyright © 2017 Deloitte Development LLC. All rights reserved. The “average” US worker now spends 25% of their day reading or answering emails Fewer than 16% of companies have a program to “simplify work” or help employees deal with stress. More than 80% of all companies rate their business “highly complex” or “complex” for employees. The average mobile phone user checks their device 150 times a day. The “average” US worker works 47 hours and 49% work 50 hours or more per week, with 20% at 60+ hours per week 40% of the US population believes it is impossible to succeed at work and have a balanced family life. Sources: Deloitte Human Capital Trends 2014 and 2015 Employees are overwhelmed

HR Tech 2017 Keynote 8 Copyright © 2017 Deloitte Development LLC. All rights reserved. Average 3.2 AON research (March 2017) shows global engagement dropped by 4% Graph source: Summer 2016 Glassdoor and Bersin Research Stat Source: 2017 Trends in Global Employee Engagement, Aon Hewitt http://www.aon.com/chile/attachments/2017-Trends-in-Global-Employee-Engagement.pdf What are these companies doing? Glassdoor ratings of more than 2 million employees Employee engagement not improving 160 140 120 100 80 60 40 20 0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 Overall Rating

HR Tech 2017 Keynote 9 Copyright © 2017 Deloitte Development LLC. All rights reserved. Steam engine Telegraph & electricity Personal computer We build tools, then the tools change us How technology changes us

HR Tech 2017 Keynote 10 Copyright © 2017 Deloitte Development LLC. All rights reserved. We build tools, then the tools change us How technology changes us Smart badge Virtual newsSmart phone Wearables

HR Tech 2017 Keynote 11 Copyright © 2017 Deloitte Development LLC. All rights reserved. Artificial intelligence Augmented realityVoice recognition What’s next? We build tools, then the tools change us

HR Tech 2017 Keynote 12 Copyright © 2017 Deloitte Development LLC. All rights reserved. HR Tech 2017 Keynote 12 Copyright © 2017 Deloitte Development LLC. All rights reserved. How things were How things are How things work • Tribes, Squads, and Guilds • Shared values and culture • Transparent goals, projects, and strategies • Open feedback, any-time • People rewarded for skills and abilities, not position • Collective thinking and interdependence as strategy A B DC E C B D G E A F Source: Rewriting the rules for the digital age. 2017 Deloitte Global Human Capital Trends The modern organization: A network of teams The way we work has changed

HR Tech 2017 Keynote 13 Copyright © 2017 Deloitte Development LLC. All rights reserved. • 38% of companies believe they will be “fully automated” within five years • In 77% of companies automation results in “better jobs” and retraining of workers (only 20% see job reductions). • Over 50% of companies expect to retrain workers to side by side with robotics and AI • Yet, in 65% of companies HR is not involved at all. Source: 2017 Deloitte Global Human Capital Trends: Rewriting the rules for the digital age, Deloitte Consulting LLP and Deloitte University Press, 2017. And the future of work has arrived

Presentation title [To edit, click View > Slide Master > Slide Master] Member firms and DTTL: Insert appropriate copyright [To edit, click View > Slide Master > Slide Master] 14 Continued growth in core HR technology market 1

HR Tech 2017 Keynote 15 Copyright © 2017 Deloitte Development LLC. All rights reserved. HR technology now A hot marketplace Shift in investment toward new HR and workplace tools $5.5 billion in VC investment in HR startups since 2014 Source: CB Insights

HR Tech 2017 Keynote 16 Copyright © 2017 Deloitte Development LLC. All rights reserved. 1990s-2000s 2004-2012 2012-2017 2018+ Automated talent management Integrated talent management Engagement, fit, Culture, analytics Productivity, performance, teams Automate PerformIntegrate Engage Shift from talent management to team and work management Talent management: integrated processes and systems, talent as core to HR and business agenda Systems of automation Practice-driven solutions People management: focus on culture, engagement, environment, leadership, and fit Systems of engagement Empowerment solutions Team and work management: optimizing productivity, alignment, connection of the “network of teams”, tools to make work better. Systems of productivity Productivity-driven solutions

HR Tech 2017 Keynote 17 Copyright © 2017 Deloitte Development LLC. All rights reserved. Benefits & compensation Hiring recruiting E-learning Performance talent Network based applications New systems of engagement Core HR is shifting its focus Marketgrowth-adoption 2000 2018Progression over time Compensation HRIS Benefits administration Applicant tracking Recruiting sourcing Learning management Workforce management Succession management Performance management Integrated talent mgmt Analytics tools Social recognition Network recruiting HRMS + talent + workforce management Self-service Apps Personality and pre-hire Culture assessment Predictive analytics Real time engagement Mobile apps for HR Process automation Integration & new talent apps Analytics driven “Systems of engagement” Apps that “Make work life better”

HR Tech 2017 Keynote 18 Copyright © 2017 Deloitte Development LLC. All rights reserved. • Core HR Technology spending is slowing (41% say it’s flat) • Clients not fully satisfied: only 21% of customers say talent systems “always meet their needs.” • Two biggest growth areas are Learning and Analytics (37% yty) • Career, succession, onboarding, analytics hottest functional needs • User satisfaction is 2/3 lower than vendor satisfaction How will you upgrade your HR technology? Sources: Sierra-Cedar 2016–2017 HR Systems Survey White Paper, 19th Annual Edition, and Sierra-Cedar 2017–2018 HR Systems Survey White Paper, 20th Annual Edition used with permission and 2016 Bersin by Deloitte HR Systems Research Multiple pathways to an HR tech transformation todays state of replacing HR technology HighriskLowrisk ReactiveFocused Current state 22% Rip & replace Move everything all at once to the cloud 25% Hybrids Move ONLY TM or WFM apps to cloud 22% Parallel / Patchwork Combination licensed and cloud solutions 19% Hosting / Outsource Single tenant or BPO Shift to cloud is important, not sufficient Rip and replace pace slows

Presentation title [To edit, click View > Slide Master > Slide Master] Member firms and DTTL: Insert appropriate copyright [To edit, click View > Slide Master > Slide Master] 19 A new generation of people management software (Soon Team & Work Management) 2

HR Tech 2017 Keynote 20 Copyright © 2017 Deloitte Development LLC. All rights reserved. The evolution of management thinking Historic perspective on performance and management We are here The industrial corporation Hierarchical leadership Collaborative management Networks of teams <1950s 1960s-80s Today1990s Andrew Carnegie Henry Ford Netflix, Google, Facebook, Amazon, Etc. Jack Welch Peter Drucker Howard Schulz Steve Jobs Profit, growth, financial engineering Customer service, employees as leaders Mission, purpose, sustainability Operational efficiency 2020 Industrial age People as workers Management by objective Servant leadership Work together Empower the team The corporation Is king The executives are king The teams and team leaders are kings The people are king(s) Citizenship, growth and learning Productivity, wellness, networked business Unilever, patagonia, Airbnb, wholefoods, etc. People, communities, global networks Growth & citizenship

HR Tech 2017 Keynote 21 Copyright © 2017 Deloitte Development LLC. All rights reserved. Feedback and engagement Reinventing performance Video-based learning & career Social recognition Well-being Work – Team management 2018 and beyond: A new set of disruptive applications Marketgrowth-adoption 2016 Pulse survey Text analytics Mobile feedback 2020 Culture assessment Coaching tools Checkins with feedback Agile, open goal management Org network analysis Recognition everywhere Custom rewards programs Customer recognition Progression over time Video learning Content curation Intelligent learning Career planning Gamification accreditation Well-being fitness tracking Competitions social sharing Points gamification Fitness merges w/ engagement Virtual work management Document management Goal sharing Goal tracking Communications messaging

HR Tech 2017 Keynote 22 Copyright © 2017 Deloitte Development LLC. All rights reserved. A new talent management market emerges Market evolution becoming disruptive again Social recognition Well-being LearningTraditional Payroll - talent Culture Performance management Mid-market SMB Recruitment Examples of firms

HR Tech 2017 Keynote 23 Copyright © 2017 Deloitte Development LLC. All rights reserved. Reinvention of the talent acquisition market From application tracking to recruitment success Applicant tracking Candidate marketing sourcing Ai-based intelligent recruitment Redefining assessment and interview Onboarding manager tools integrated sourcing Alt Examples of firms

HR Tech 2017 Keynote 24 Copyright © 2017 Deloitte Development LLC. All rights reserved. Video and AI based assessment arrives Cell phone camera can identify 40,000 facial location points Video-based assessment can capture up to 1 million data elements in a 15 minute interview Facial recognition has been studied since the 1960s and is now well understood Cartoonists have understood how faces reflect emotion since 1950s Language Tonality Facial Expression Source: http://www.apa.org/science/about/psa/2011/05/facial-expressions.aspx

HR Tech 2017 Keynote 25 Copyright © 2017 Deloitte Development LLC. All rights reserved. Smart chatbots are here AI comes to HR (hourly and shift work) What Pay?What Role? What Shifts?What Experience?

Presentation title [To edit, click View > Slide Master > Slide Master] Member firms and DTTL: Insert appropriate copyright [To edit, click View > Slide Master > Slide Master] 27 New industrialized tools for performance management 3

HR Tech 2017 Keynote 28 Copyright © 2017 Deloitte Development LLC. All rights reserved. New generation performance tools are here The new World of performance management Check-ins Transparent goals Peer feedback Feedback to manager Engagement survey Individual assessment Team assessment Continuous micro- learning Regular evaluation Integrated into workflow Mobile app Vendor A Vendor C Vendor D Vendor E Vendor G Vendor F Vendor B Annual process Continuous Manager-centric Team-centric Hierarchical Multi-directional Competitive Developmental Subjective Data-driven Secret Transparent Single rating Richer rating Fundamental changes are enormous

HR Tech 2017 Keynote 29 Copyright © 2017 Deloitte Development LLC. All rights reserved. And… continuous performance management works 27 companies that redesigned their process, found overwhelmingly positive outcomes: • 100% said conversation quality improved • 83% said conversation frequency increased • 90% said employee engagement increased • 91% say data for evaluation is better • 96% say tools are easier and simpler • 77% expect continuous feedback • 45% are using check-ins to assess managers • 50% say training process is easier and shorter • 67% doing feedback quarterly • 80% expect employees to drive check-ins Source: NeuroLeadership, Is Transforming Performance Management Worth It?

HR Tech 2017 Keynote 30 Copyright © 2017 Deloitte Development LLC. All rights reserved. Deloitte feedback process helps drive performance Feedback = performance 1. I am really enthusiastic about the mission of the firm 2. At work, I clearly know what is expected of me 3. In my team, I am surrounded by people who share my values 4. At work, I have the chance to use my strengths every day 5. My teammates have my back 6. I know I will be recognized for excellent work 7. I have great confidence in the firm’s future 8. In my work, I am always challenged to grow 3 Baseline Bottom quartile Top quartile 1 2 4 5 6 7 8 4.4 3.2 4.2 4.0 3.8 3.6 3.4 Pulse survey items Questions that help predict high performance at Deloitte Source: Deloitte pilots FYs14-15 Questions © Marcus Buckingham Company.

Presentation title [To edit, click View > Slide Master > Slide Master] Member firms and DTTL: Insert appropriate copyright [To edit, click View > Slide Master > Slide Master] 31 Wellbeing market explodes4

HR Tech 2017 Keynote 32 Copyright © 2017 Deloitte Development LLC. All rights reserved. Workplace culture is hot: well-being Google trends search for wellbeing since 2004 0 25 50 75 100 January 1, 2004 February 1, 2008 March 1, 2012 April 1, 2016 Jump since 2008 recession Source: https://trends.Google.Com/trends/explore?Date=2004-01-01%202017-10-09&q=wellbeing

HR Tech 2017 Keynote 33 Copyright © 2017 Deloitte Development LLC. All rights reserved. Employeevitality Business performance Cost reduction Labor productivity Retention Productivity Collaboration Team performance Leadership Health Monitoring Employee assistance Medical benefits Fitness Challenges Nutrition Exercise Sleep Stress Sustainable performance Recognition Skills and training Work environment Rewards Leadership Management Clear goals Growth opportunities Drive Wellbeing Self discovery Career Purpose Mindfulness Abundance mentality Positive thinking Culture fit Family From wellness to wellbeing to performance

HR Tech 2017 Keynote 34 Copyright © 2017 Deloitte Development LLC. All rights reserved. Wellness apps now used more than Twitter 290% reduction in workers compensation claims 65% more engaged than non-users 9% greater work productivity Source: VirginPulse Client Research, 2017

Presentation title [To edit, click View > Slide Master > Slide Master] Member firms and DTTL: Insert appropriate copyright [To edit, click View > Slide Master > Slide Master] 35 Culture and engagement: “always-on” feedback 5

HR Tech 2017 Keynote 36 Copyright © 2017 Deloitte Development LLC. All rights reserved. How does feedback work today? Engagement Survey Senior Management Team Employees Line Managers | HR Performance Review Filtering and Cleaning Time Per Year

HR Tech 2017 Keynote 37 Copyright © 2017 Deloitte Development LLC. All rights reserved. Building an enterprise feedback architecture Social media monitoring Job boards & adsEmployment brand Customer satisfaction Pulse surveys Performance appraisals Integrated reporting & analytics Sentiment analysis Network analysis Anonymous feedback tools Annual survey Performance check-ins Exit interviews

Presentation title [To edit, click View > Slide Master > Slide Master] Member firms and DTTL: Insert appropriate copyright [To edit, click View > Slide Master > Slide Master] 38 New generation of learning market growing rapidly again 6

HR Tech 2017 Keynote 39 Copyright © 2017 Deloitte Development LLC. All rights reserved. Video is now >55% of all internet traffic and mobile is now over 60% (KP Internet Trends 12/2015) 35 Million people have enrolled in MOOCs in the last four years, with 2015 enrollments doubling 2014 (Class Central) Over 50% of learners use mobile for more than 1/3 of their learning (Degreed) India is estimated to be a $3-4 billion market for corporate learning and MOOCs Video and mobile has taken over learning Expert and user authored video Bersin High Impact Research: The Net-Promoter Score for L&D is now -8 and lower for non L&D professionals The MOOC Report, Summer 2016

HR Tech 2017 Keynote 40 Copyright © 2017 Deloitte Development LLC. All rights reserved. We are here E-learning & blended 1998-2002 2005 20172010 Self-study online learning Course catalog Online university 2020 Intelligent learning Intelligent,personalized, machinedriven Instructional design Kirkpatrick LMS as E-learning platform Talent management Career focused Lots of topics Learning path Career track Blended learning Social learning LMS as talent platform Digital learning Everyone, all the time, everywhere Micro-learning real-time video courses everywhere Design thinking learning experience LMS invisible Data driven, mobile Continuous learning Learning on demand Embedded learning Video, self-authored mobile, YouTube 70-20-10 Taxonomies LMS as experience platform Formats Philosophy Users Systems From e-learning to digital learning in one generation Evolution of L&D has been blindingly fast

HR Tech 2017 Keynote 41 Copyright © 2017 Deloitte Development LLC. All rights reserved. Result: explosive growth in micro-learning Micro-learning Macro-learning I need help now. I want to learn something new. • 2 minutes or less • Topic or problem based • Search by asking a question • Video or text • Indexed and searchable • Content rated for quality and utility • Several hours or days • Definitions, concepts, principles, and practice • Exercises graded by others • People to talk with, learn from • Coaching and support needed Is the content useful and accurate? Is the author authoritative and educational? Videos, articles, code samples, tools Courses, classes, MOOCs, programs

HR Tech 2017 Keynote 42 Copyright © 2017 Deloitte Development LLC. All rights reserved. Career models in disruption 58% of companies are redesigning or planning to redesign their career model 83% of companies expect to have an “open” or “highly flexible” career model within the next 3-5 years While 33% of companies promote vertical career moves, 67% now promote horizontal or project based career progression 31% of companies expect careers to be 3-5 years long 60% expect them to be 10 years or less Learning and career management software is the #1 fastest growing segment in HR technology (Sierra-Cedar 2016– 2017 Survey HR White Paper)

HR Tech 2017 Keynote 43 Copyright © 2017 Deloitte Development LLC. All rights reserved. The learning tech market starting to shake out Learning experience platforms Degreed, Edcast, Pathgather SAP Jam, Fuse, etc … Program experience (delivery) platforms Intrepid Novoed Edx, Everwise, Openedx, etc… Micro learning platforms Axonify, Grovo, Qstream, Practice, Rehearsal, etc… LMS platforms Traditional: Cornerstone, Saba, Successfactors, Sumtotal Modernized: Workday, Oracle Cloud Learning, Litmos, Docebo, etc Assessment, development, delivery tools Video authoring, intelligent assessment, spaced learning, gaming, virtual reality, collaboration, simulations, etc… Content libraries Lynda, Udacity, Coursera, Edx, Udemy, Pluralsight, Skillsoft, Crossknowledge, hundreds of others Learning record store Grassblade, Learning Locker, Saltbox, Watershed, etc…

Presentation title [To edit, click View > Slide Master > Slide Master] Member firms and DTTL: Insert appropriate copyright [To edit, click View > Slide Master > Slide Master] 45 People analytics becoming mainstream 7

HR Tech 2017 Keynote 46 Copyright © 2017 Deloitte Development LLC. All rights reserved. 2017: where people analytics is going Projects Based on Problems and Strategies Embedded Applications That Drive and Inform Work Interesting experiments, models, and studies Practical, useful dashboard and tools

HR Tech 2017 Keynote 47 Copyright © 2017 Deloitte Development LLC. All rights reserved. Progress steady and accelerating % Change Plan Performing multi-year workforce planning + 23% Correlate Correlating people data to business performance + 56% Predict Using people data to predict business performance + 50% % of Companies “Good or Excellent” Increasing (Deloitte Human Capital Trends 2017)

HR Tech 2017 Keynote 48 Copyright © 2017 Deloitte Development LLC. All rights reserved. But… new types of data, and new issues arise Markets Converge: Text Analysis | Sentiment Analysis | Organizational Network Analysis | Feedback Systems 8% of companies are now doing some form of Organizational Network Analysis (ONA)Scan Badge

HR Tech 2017 Keynote 49 Copyright © 2017 Deloitte Development LLC. All rights reserved. Emergence of “relationship analytics” Organizational Network Analysis (ONA) Teams Organizations The Enterprise

HR Tech 2017 Keynote 50 Copyright © 2017 Deloitte Development LLC. All rights reserved. AI based diversity, coaching, recruitment systems AI, analytics, sentiment, and organizational network analysis will converge

Presentation title [To edit, click View > Slide Master > Slide Master] Member firms and DTTL: Insert appropriate copyright [To edit, click View > Slide Master > Slide Master] 51 Bringing it all together A new architecture emerges 8

HR Tech 2017 Keynote 52 Copyright © 2017 Deloitte Development LLC. All rights reserved. believe their employees are fully aligned with the corporate purpose 23% believe internal processes for collaboration are working well 14% are excellent at building a differentiated employee experience 22% are using design thinking as part of crafting the employee experience 10% Say problem is urgent 38% Culture, engagement, and beyond Focus on the employee experience Source: Deloitte and Facebook, “Transitioning to the future of work and the workplace,” November 2016

HR Tech 2017 Keynote 53 Copyright © 2017 Deloitte Development LLC. All rights reserved. Where Is This All Going? Systems of Record 1980s HR Systems Client/Server Menus, Screens Systems of Engagement 2000s Cloud, Web Talent Management Panels, Dashboards Systems of Productivity 2020+ Predictive, Intelligent Agents, Nudges Conversations, Messages

HR Tech 2017 Keynote 55 Copyright © 2017 Deloitte Development LLC. All rights reserved. Self Service Intelligent ServicesCase Mgt. AI/Voice App Interfaces Engagement Feedback Recognition Learning Career Coaching Performance Goals Succession HRMS Payroll/Time Communications Analytics/AI ONA Workforce Mgt Wellbeing Rewards Benefits Sourcing Recruitment Assessment White collar Hourly Senior leaders Line managers Candidates Contractors External network Alumni Senior Geographic Business Partners Talent Specialists (OD, sourcing, recruiting, learning, organized in networks of excellence) Wellbeing, safety, culture, engagement, recognition Analytics, Monitoring, Predictive, WF Planning HR Tech, App development Research, Market Best Practices, Comp, Ben, Rewards HR Prof DevelopmentHR Ops, AI and Bots, Intelligence Junior Geo Bus Partners Teams@Work (productivity, services, team management, wellness, feedback, recognition, learning) People@Work (productivity, services, team management, wellness, feedback, recognition, learning) Candidates@Life Candidates (products, jobs, projects, opportunities) Leaders@Work Alumni@life The HR Technology Architecture Of The Future

HR Tech 2017 Keynote 56 Copyright © 2017 Deloitte Development LLC. All rights reserved. Source: HR Technology Disruptions for 2018: Productivity, Design, and Intelligence Reign Bottom line: the HR technology market is reinventing itself

HR Tech 2017 KeynoteCopyright © 2017 Deloitte Development LLC. All rights reserved. 57 How are you transforming the way you work, navigating the complex digital landscape, and creating a differentiated experience to capture the workforce of the future? Share your insights on the 2018 Deloitte Global Human Capital Trends survey today: deloitte.com/hctrends-survey Your insights needed: Help chart the future of work

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