HRO Today March 2016 - 9

Opinion
HR Leaders Victimized by Global Investment
Community and the Last Unicorn
By Elliot Clark
There are hundreds of aid organizations for victims of abuse and
neglect, yet none have attended to the tragedy that the investment
community has foisted on HR leadership. The HR executive teams
have been stranded in the technology jungle for the past few years
and no path of escape is evident. Who has abandoned them to the
beasts of the wild? Private equity fi rms.
The plethora of new software technologies for " human capital "
(yes, I feel degraded being called " capital " don't you?) for recruiting,
engagement, communicating, content distribution and other
" problems " has left even the analyst community confused. Most
of the products solve one tiny piece of the process chain in any of
the overall processes of HR. One I just was contacted by is just for
grievance reporting using mobile phones in the healthcare sector.
That's a bit narrow. HRIS professionals, OD and TA leaders are
scratching their heads trying to fi gure out how to create a coherent
infrastructure from all of these different competing products and
many are just buying Workday or Employee Central and foregoing
the headache.
Why is this happening? The early stage investment community is
investing in " business solutions, " using a simple formula. If it sounds
like something that is out there it must be good. Now, they may
look at other things but I am not kidding. I joked at one of the HRO
Today Forums that I was forming a new company called " Me Too HR
Software " and I had unlimited access to funds. This is not new. When
we were raising money at the old Kenexa company (now IBM) we
were consistently asked, " Who are you like? " When we answered
we were unique and we were shown the door by most investors.
Everyone talks about boiling the ocean, but no one wants to bring a
hotplate.
The truth is I just watched this. I have been very transparent about
our company's portfolio investment program and we invested in
the predictive analytics company, Joberate, which won our iTalent
competition in 2014. It is a new way to use publicly available
social media information to predict the likelihood of an employee
making a job change, which is valuable for recruiters and employee
engagement issues in real time (rather than annual survey time)
and valuable for OD to know. It works, and I used it myself before
investing. A number of recruiting fi rms, large technology fi rms and
fi nancial services fi rms have bought into the system. However, I
watched the CEO, Mike Beygelman, bang his head on the wall trying
to raise money because the system " wasn't like anything out there. "
I guess if Edison had tried to raise money for the lightbulb in modern
day Times Square, it would have been a bit late.
The investment community foists a host of these Me Too products on
the market while ignoring true innovation. Joberate was, fi nally, able
to raise institutional money from the venture fund of the Corporate
Executive Board, CEB Ventures, and I believe it is specifi cally because
CEB Ventures does not operate like a classic venture fund but as an
extension of the solutions-driven culture services of the Corporate
Executive Board. Otherwise, a very innovative product would not
have had its chance to challenge the market with a new paradigm.
Myth and pop culture tell us that the last unicorns died out because
people stopped believing in them. Actually, the unicorns probably
just could not raise the money to sustain their existence from the
investment community. So here are some suggestions for both
sides of the problem because we fi nd ourselves in this quagmire of
products and sales calls from software vendors fi ghting for survival.
For the point solution software companies, stop selling HR on the
problems you will solve. It's insulting. CHROs and other leaders know
what the problems are, so telling the " why " wastes everyone's time.
Get right to " how, " and for HR leaders, make them show how their
product can do more than one thing. If it cannot, you probably
should not use it because you'll have dozens of systems to integrate.
For venture funds, news fl ash, you're not that smart or you wouldn't
have helped create this mess and launching a hundred companies
hoping 50 get bought out doesn't do the industry any good. Do
we really need another employee survey tool or ATS system? My
favorite example is Branchout, which came in second at our fi rst
iTalent competition in 2010. It lost to Smart Recruiter which is doing
well. Branchout was a Facebook information scraping app. They
had raised $17M just before iTalent and I asked them what would
they do if Facebook closed their access and they responded it was
'unthinkable.' Then in 2014, Facebook closed their access and the
business died and the assets were sold to 1 Page. Oh well, what
is $17M between friends. People in the recruiting and sourcing
community understood the risks better than the investors. Venture
fi rms need to spend more time with the HR community really
understanding what is unique and innovative, and you need to
comprehend the " why " as well as the people you hope buy from
your investment portfolio companies.
Otherwise, we are not just driving HR people crazy but we are
actively slaughtering unicorns and someone should hold a telethon
for both victimized groups.
We will discuss this issue of HR investment and other topics at the
HRO Today Forum in Chicago, May 2 to 4 (visit www.hrotodayforum.
com). We hope to see you there.
MARCH 2016 | www.hrotoday.com
[9]
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HRO Today March 2016

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