Unleash Your PotentialHere are five incredible gems of insight about the HR tech sector from Otter.
Over the past six months, Dr Thomas Otter, a leading analyst in the HR and future of work space, has been spoiling us with fascinating insights and advice for HR professionals navigating the constantly evolving world of work, and particularly the choosing and implementation of tech tools.
Ahead of Otter’s presentation at the upcoming UNLEASH INSPIRE European summit with iCIMS on 21 October – he will be speaking about the tech trends in the talent acquisition space and how to fit the latest tools into employers’ existing HR tech ecosystem – we thought we would reflect on some of our favorite gems of insight from his columns to date.
Collaborate well with HR tech startups
In his first column for UNLEASH, Otter called on enterprise buyers in large companies to collaborate and work with HR tech startups.
This is because fresh minds and perspectives are crucial to addressing “old and new challenges”, therefore, if large corporations encourage startup success, this will help them overcome and solve problems.
As a result, Otter recommends that large companies adapt how they work with HR tech startups from how “you treat large vendors”. There is no need for unnecessary bureaucracy – in fact it can be very wasteful when you are only spending $150,000 rather than tens of millions annually with that vendor.
In the same vein, Otter believes that pilot projects with startups should be short and focused; what you determine equals success should be clear from the outset. Linked to this, he notes there is no need to play contract politics, that “delaying payment is petty” and do not tie startups into non-disclosure agreements.
Otter writes: “When you don’t let the startup mention the deal, you limit their opportunity to land more customers, which is in your interest.
“And when you go live, then let them make some serious noise. Eat the go-live cake, and take lots of pictures.
“The better reference you become, the better support and roadmap influence you will have.”
This links with a gem of insight from his latest UNLEASH column about how big companies must prepare for their vendors to be acquired by or merged with others.
Ultimately, if you have that good working relationship in place already, surely that makes the conversations around the M&A easier, as well as makes it more likely that your concerns and your needs will be prioritized better during closure of the deal.
One of the things that makes Otter’s UNLEASH columns so engaging is his extensive use of metaphors.
In his April column, he discussed the differences between sunflower, daisy, dandelion and cactus organizations with regard to their HR tech and IT systems.
He warns that companies must attempt to be either a sunflower or a daisy – those with either a big core system and some edge apps to fill in gaps (a sunflower has a big core and small petals) or a smaller core system for core processes and extensive use of innovative vendors to make the final outcome best of breed (a daisy has a small core and large petals).
But they should avoid being dandelions or cacti, according to Otter. This means they are wedded to one core vendor and do not look to be innovative with their HR tech stack – cacti have no leaves – even if it would be positive for employees and financial outcomes.
Or these are organizations that are over-reliant on small vendors and are constantly chopping and changing – which is very disruptive for employees and HR alike, as well as expensive.
Otter states that a dandelion “is wispy, and the smallest of breezes means the Dandelion disperses its seed”, so “any financial headwind destroys the..strategy”.
Going back to having good working relationships with vendors, and particularly startups, Otter calls on HR teams to be transparent about what type of plant they are with their tech partners – and to emphasize that they want to stop being a cactus or dandelion.
While Otter is clear not to burden startups with unnecessary bureaucracy, he also believes that employers must be careful choosing which core HR vendors they want to work and collaborate with.
In another of his beloved metaphors, Otter describes the core HR procurement process as like choosing a wedding cake, rather than an everyday cupcake.
While you will, hopefully, only choose one wedding cake in your lifetime, choosing which cupcake to eat could be a daily, weekly or monthly occurrence.
“While some cupcakes are indeed beautiful to look at and taste lovely, the purchase decision typically doesn’t take weeks, rather seconds or minutes,” writes Otter.
However, Otter also notes that it is possible to over do the decision-making processes for less core HR tech – choosing these vendors can be approached more like choosing a cupcake.
So, the question HR teams need to ask themselves is “are we buying a cupcake or wedding cake?” and then adapt their procurement process and timeline accordingly.
Artificial intelligence (AI) and machine learning (ML) have transformed how all of us work. But do all tools that claim to use AI or ML live up to the hype? Otter doesn’t think so, but how do HR teams figure out what is real and what is useless, and potentially dangerous?
This is obviously a multi-million-dollar question, but Otter shares his advice on what HR teams should ask vendors.
He focuses on the need to do proper due diligence, particularly around GDPR and data privacy, as well as ensure that ML is not just the same as predictive analytics and that there is a genuine scientific backing for the algorithm and its effectiveness.
Another concern is around ethical AI. There are many issues with bias in the world of HR – particularly recruitment – and in some cases AI and ML can make this worse as it simply mirrors the bias (usually unconscious) of the humans who programmed the algorithms.
Ultimately with AI and ML, Otter suggests that When software vendors suggest that AI/ML is going to dramatically improve hiring, internal mobility and employee wellness, you need to ask the tough questions. Do your research.”
Maybe this is one of the tools that should be treated as a wedding cake, rather than a cupcake.
Flight risk indicators can discriminate
Like AI and ML, Otter isn’t sure that flight risk indicators – tech that tries to identify how likely each employee is to resign and leave the organization for a new job – are necessarily useful for organizations.
In fact, he warns that flight risk indicators could be discriminatory, which is a major concern given that diversity, equity and inclusion must underpin all of HR’s work.
This is an important insight given that we are currently in the middle of a so-called ‘Great Resignation’ – so employers might be tempted to rely on flight risk indicators more and more.
Otter says: “The idea that by looking at the data lurking in the HR system you can accurately predict the likelihood that someone will leave the company is roughly the same as using their star sign to predict the same. Scorpios are more likely to switch companies, whereas Leos tend to stay for the long haul.”
Instead, Otter argues that organizations should spend the time they are wasting on assessing flight risk on actually fostering a better employee experience, so that workers want to continue working for you. At the end of the day, even if someone is deemed a high flight risk, they might not be if you are proactively listening to their needs and valuing their opinions.
Remember that happy, valued employees are the most productive and successful employees.
Thomas Otter is a leading advisor for emerging HR tech vendors and their investors, guiding them to build better products and be more successful. Read his new column every month at UNLEASH. Visit, otteradvisory.com.
Register now for your complimentary seat at Inspire HR European Summit on 21 October.