Artificial intelligence to advise in selection processes, video games to enhance talent and blockchain to validate soft skills are some applications of technology to talent management. The so-called ‘HR Tech’ sector is growing rapidly and is an incubator for companies with multi-million dollar valuations.
The factorial function, in mathematics, represents growth raised to the maximum power. A concept that three entrepreneurs, Bernat Ferrero, Jordi Romero and Pau Ramon, used to explain their vision as a startup: to facilitate human resources (HR) management to boost the exponential growth of any company. Now, their startup, Factorial, has just reached unicorn status (a company valued at over $1 billion) after closing a $120 million investment round. It therefore becomes the second Spanish unicorn in the HR Tech sector, after JobandTalent, a platform that connects employers with job seekers created in 2009.
The strength of the ‘HR Tech’ sector, the term for startups that harness the power of technology to better manage talent, attracted $12.3 billion in venture capital investment in 2021, an amount nearly four times the amount invested in 2020, according to TechCrunch. From 2022, it is also expected to show an annual growth rate of 5.8% .
Aarón Cogolludo, head of international partnership and country manager in Spain for Personio employee management software, states that “the application of technology in HR brings profitability because it saves time in hiring personnel, avoids resignations and manages processes more efficiently”. This German company is also a unicorn and currently one of the most valuable European technology companies: today, the company’s valuation exceeds US$8.5 billion. The reason for its success, according to Cogolludo, is “the focus on the employee, the product and innovation, as well as an after-sales service that creates a pull effect among companies”.
Another aspect that the leading companies in the sector take into account when considering the development of their technological solution is the usability of the software. “The more user-friendly and simple the registration, the better,” adds Pau Ramón, CTO (Chief Technology Officer) of Factorial, which already operates in nine European countries.
In addition to being scalable, according to Ramon and Cogolludo, the solution must be user-friendly. “We are convinced that a tool must be easy to use in order to save time,” says Cogolludo. Both workers and HR departments can be more efficient thanks to the application of technology, something that allows them to better address relevant aspects such as the well-being of professionals.
Both Factorial and Personio have expanded internationally because they take into account the scalability of their product. Instead of developing a tool for each company, they create a single tool that can grow and then be adapted for application according to each country’s legislation (e.g. time registration in Spanish companies) and the needs of each company.
Thanks to the support of tools such as Factorial or Personio, the HR department has more availability to accompany employees in their personal development. For this purpose, they use Nawaiam, which offers a ‘software’ to evaluate people’s skills in order to motivate them in a gamified way to achieve a better performance in the company. To do so, the player takes on the role of a superhero who must save humanity from a climatic catastrophe in 15 minutes. At the end of the challenges, the result is one of 24 profiles based on their behaviour in the work environment. “It is as important to evaluate technical aspects as it is to evaluate interpersonal skills to assess people’s potential,” explains Javier Krawicki, co-founder of Nawaiam. Thanks to its strategy, the company now operates in 16 countries and has more than 400 customers.
BBVA’s data-driven Opportunity platform pursues the same objective: to offer employees multiple development paths and accompany them in the process. “We have an ‘open mentoring’ tool connected to the professional development pathways offered by Opportunity. This way, you can ‘match’ with a person who has followed a professional pathway similar to the one you aspire to and who wants to help you in the process,” explains Ophélie Richard, Global Talent Acquisition Head at BBVA.
In addition, BBVA offers a training platform Campus BBVA for its employees with selected content. “The goal is to enhance professional development through tools connected to each other to complete the process: identification of objectives with Opportunity, mentoring and training to achieve goals,” acknowledges BBVA’s Global Talent Head.
Gamification is one of the top technological trends that stands out in the HR Tech sector. Pau Ramón, CTO of Factorial, highlights the application of artificial intelligence (AI) to identify which complaints come up the most in feedback sessions with professionals in order to propose data-driven solutions. AI can also be used to sort profiles in selection processes based on their compatibility for the position or to analyse a professional’s performance. However, as Ophélie Richard puts it, “AI replicates a single model of a person that has worked in the performance of a job, so its use can lead to a loss of diversity.” Therefore, it is essential to combine technology with the expertise of professionals.
Other emerging technologies are the metaverse, which can create immersive learning environments, and blockchain, although they are still in development. With blockchain technology, “it will be possible to have a CV with skills validated by the community and protected by blockchain: they will be indexed to your profile and through them you will be able to access job opportunities,” predicts Ophélie Richard, Global Talent Acquisition Head at BBVA.
In the words of Nawaiam’s Javier Krawicki, “what is advancing is not technology but humanity, and technology is accompanying this evolution”. The ‘HR Tech’ sector, with unicorns and companies as prominent as Factorial, Personio, JobandTalent and Nawaiam, combines both people and technology, and the result, like the factorial function, suggests exponential growth.