Josh Bersin Principal and Founder, Bersin by Deloitte Deloitte Consulting, LLP November, 2016

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1 HR Technology Disruptions The HR Software Market Reinvents Itself Josh Bersin Principal and Founder, Bersin by Deloitte Deloitte Consulting, LLP November, Global Human Capital Trends 2016 Copyright 2016 Deloitte Development LLC. All rights reserved.

3 HR Technology Disruptions The HR Software Market Reinvents Itself Josh Bersin Principal and Founder, Bersin by Deloitte Deloitte Consulting, LLP November, 2016 Copyright 2016 Deloitte Development LLC. All rights reserved.

Forces Disrupting Organizations Today Demographic

workforce, and Boomers are working into their 70s and 80s.

business models and radically changing the workplace and

Rate of change has accelerated: Business must become more

New social contract between companies and workers: Younger

4 Forces Disrupting Organizations Today Demographic upheavals: Millennials make up more than half the workforce, and Boomers are working into their 70s and 80s. Digital technology is everywhere: Technology is disrupting business models and radically changing the workplace and how work is done. Rate of change has accelerated: Business must become more agile to keep up with the rapid pace of change. New social contract between companies and workers: Younger workers demand rapid career growth, compelling and flexible workplace, and a sense of purpose at work. 4 Global Human Capital Trends 2016

5 Digital Disruption A New Industrial Revolution 90% of organizations surveyed by MIT and Deloitte anticipate their industries will be totally disrupted by digital trends. 5 Global Human Capital Trends 2016

6 The Future of Work Robotics, AI, Sensors are Here Siri Cortana Watson Alexa Viv

7 Robotics Average cost below $25,000. China purchasing 150,000 in 2016 to deal with shrinking workforce

Too much technology: The overwhelmed employee The

or answering emails The average mobile phone user

More than 80% of all companies rate their business

40% of the US population believes it is impossible to

Fewer than 16% of companies have a program to simplify

The average US worker works 47 hours and 49% work 50+

8 Too much technology: The overwhelmed employee The average US worker now spends 25% of their day reading or answering s The average mobile phone user checks their device 150 times a day. More than 80% of all companies rate their business highly complex or complex for employees. 40% of the US population believes it is impossible to succeed at work and have a balanced family life. Fewer than 16% of companies have a program to simplify work or help employees deal with stress. The average US worker works 47 hours and 49% work 50+ hours per week, 20% at 60+ hours Sources: Deloitte Human Capital Trends 2014 and Global Human Capital Trends 2016

We Are Working More Hours: The Vacation Crisis Since 2000,

dropping average vacation days from 20.3 to 16.

220 million of them in 2015 39% of Americans want to be seen

48% of Millennials want to be seen as a work martyr

9 We Are Working More Hours: The Vacation Crisis Since 2000, American workers have lost an entire week of vacation, dropping average vacation days from 20.3 to 16.2 Americans left 658 million unused vacation days and lost 220 million of them in % of Americans want to be seen as a work martyr yet 86% say it s bad for their family life. 48% of Millennials want to be seen as a work martyr Millennials 50% more likely to forfeit vacation days 9 Global Human Capital Trends 2016

10 Productivity is Suffering Is Technology Helping? US Productivity Last Ten Years i-phone Launched 100 Million Twitter users 1 billion Smartphones 10 Global Human Capital Trends 2016

11 Glassdoor ratings of employer recommendations 200,000+ respondents Engagement Remains a Challenge Average 3.2 What are these companies doing? Summer, 2016 Glassdoor Bersin Research 11 Global Human Capital Trends 2016

Leadership gaps 90% 58% 51% Culture 86% 54% 50% Engagement 86% 48% 39% Organizational learning 84%

12 How is Disruption Impacting Businesses? 2016 Deloitte Human Capital Trends % Urgent % Urgent Organizational structure 92% 55% Leadership gaps 90% 58% 51% Culture 86% 54% 50% Engagement 86% 48% 39% Organizational learning 84% 44% 40% Design thinking 78% 38% Skills of HR organization 78% 36% 39% Analytics 77% 36% 29% Digital HR 74% 32% Workforce management 70% 28% 12 Global Human Capital Trends 2016

13 Organizational structure has changed: A Network of Teams A A B Shared values and culture Transparent goals and projects B F C D Free flow of information and feedback C D E E G People rewarded for their skills and abilities, not position How things were How things are How things work 13 Global Human Capital Trends 2016

14 14 Global Human Capital Trends 2016

15 We Build Tools, then The Tools Change Us How Technology Changes Us Steam Engine Telegraph and Electricity TRS IBM PC Global Human Capital Trends 2016

16 We Build Tools, then The Tools Change Us What Could be Coming? Smart Phone 2007 Wearables 2011 Smart Badge 2013 Virtual News Global Human Capital Trends 2016

17 We Build Tools, then The Tools Change Us What Could be Coming? IBM Watson 2013 Amazon Echo 2015 Pokemon Go Global Human Capital Trends 2016

18 1 Major Disruption in Core HR Technology Markets 18 Global Human Capital Trends 2016

19 Shift in Investment toward New HR and Workplace Tools HR Technology Now A Hot Marketplace 19 Global Human Capital Trends 2016

20 The Reinvention of HR Technology ERP Vendors Now Under Pressure 20 Global Human Capital Trends 2016

From Talent Management to People Management Automated Talent Management Integrated Talent Management Engagement, Fit, Culture, Analytics Empowerment, Performance, Leadership Systems of

21 From Talent Management to People Management Automated Talent Management Integrated Talent Management Engagement, Fit, Culture, Analytics Empowerment, Performance, Leadership Systems of Automation Practice-driven solutions Systems of Engagement, Productivity-driven solutions Automate Integrate Engage Empower 1990s-2000s Global Human Capital Trends 2016

M A R K E T G R O W T H - A D O P T I O N HR Technology Shift in Focus Benefits & Compensation Process Automation Hiring Recruiting

Driven Systems of Engagement Integrated Talent Mgmt HRMS + Talent + Workforce Management Performance Management Succession Management

New Systems of Engagement Mobile Apps for HR Real Time Engagement Predictive Analytics Culture Assessment Benefits Administration

22 M A R K E T G R O W T H - A D O P T I O N HR Technology Shift in Focus Benefits & Compensation Process Automation Hiring Recruiting Applicant Tracking E-Learning Integration & New Talent Apps Recruiting Sourcing Learning Management Performance Talent Analytics Driven Systems of Engagement Integrated Talent Mgmt HRMS + Talent + Workforce Management Performance Management Succession Management Workforce Management Apps that Make Work Life Better Network Based Applications Network Recruiting Social Recognition Analytics Tools New Systems of Engagement Mobile Apps for HR Real Time Engagement Predictive Analytics Culture Assessment Benefits Administration Compensation HRIS Personality and Pre- Hire Self-Service Apps 2000 P R O G R E S S I O N O V E R T I M E Global Human Capital Trends 2016

Two biggest growth areas are Learning and Analytics (37% yty) Career, succession, onboarding, analytics hottest functional needs User

23 Risk Shift to Cloud is Losing its Luster Rip and Replace Pace is Slowing Core HR Technology spending is slowing (41% say it s flat) How Will You Upgrade Your HR Technology? 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 2015 Cedar Crestone survey and 2015 Bersin by Deloitte HR Systems Research Speed 23 Global Human Capital Trends 2016

24 HR Technology Integrated into Work Integrated Employee Experience Platforms Only 1/3 of companies have mobile selfservice today Work Management Systems Workflow Interaction Bots Case Management Content Videos Podcasts Notifications Campaigns Real-Time Analytics Talent Management Systems Core HR Systems 24 Global Human Capital Trends Cedar Crestone survey and 2015 Bersin by Deloitte HR Systems Research

25 2 New Generation of People Management Software 25 Global Human Capital Trends 2016

26 M A R K E T G R O W T H - A D O P T I O N 2016 and Beyond: A New Set of Disruptive Applications Feedback and Engagement Reinventing Performance Video Based Learning & Career Social Recognition Well-Being Work Team Management Pulse Survey Checkins with Feedback Agile, open goal management Video Learning Intelligent Learning Content Curation Recognition Everywhere Custom Rewards Programs Customer Recognition Well Being Fitness Tracking Competitions Social Sharing Points Gamification Fitness Merges w/engagement Virtual Work Management Communications Messaging Document Management Goal Sharing Goal Tracking Text Analytics Culture Assessment Gamification Accreditation Mobile Feedback Coaching Tools Career Planning Org Network Analysis 2016 P R O G R E S S I O N O V E R T I M E Global Human Capital Trends 2016

27 Market Evolution becoming Disruptive Again A New Talent Management Market Emerges Suites Learning Performance Management Payroll - Talent Social Recognition Recruitment Mid-Market SMB Culture Well Being 27 Global Human Capital Trends 2016

28 Convergence of HR Systems Ahead Mobile Feedback Pulse Survey Surveys Engagement Tools Customer Feedback Engagement Analytics Fitness Monitoring Diet Wellness Travel Time Management Fitness Challenges Health Behavior Change Engagement Feedback Well Being & Work Management Goal Management Feedback Personality Assessment Check Ins Performance Performance Review Video Learning Video Sharing Training and Certification Learning Gamified Onboarding Career Planning Social Recognition Customer based Recognition Anniversaries Work Events Community Circles Affinity Groups Recognition Rewards 28 Global Human Capital Trends 2016

29 From Application Tracking to Recruitment Success Reinvention of the Talent Acquisition Market Candidate Marketing Sourcing Video Interview Analytics Onboarding Manager Tools? Next Gen Talent Acquisition Applicant Tracking 29 Global Human Capital Trends 2016

30 Integrating HR into Work Itself And There s More to Come 30 Global Human Capital Trends 2016

31 3 Radical New Tools for Performance Management 31 Global Human Capital Trends 2016

32 Historic Perspective on Performance and Management The Evolution of Management Thinking We are Here The Industrial Corporation Hierarchical Leadership Collaborative Management Networks of Teams Operational Efficiency Profit, Growth, Financial Engineering Customer Service, Employees as Leaders Mission, Purpose, Sustainability Industrial Age People as Workers Andrew Carnegie Henry Ford Management by Objective Jack Welch Peter Drucker Servant Leadership Work Together Howard Schulz Steve Jobs Empower the Team Netflix, Google, Facebook, Amazon Purpose, Meaning, and Empowerment? The Corporation is King The Executives are King The People are King(s) The Teams and Team Leaders are Kings <1950s 1960s-80s 1990s Today Global Human Capital Trends 2016

33 GE New Performance Feedback Tool Total Redesign for Mobile: 33 Global Human Capital Trends 2016

34 New Models for Compensation and Rewards Yes Ratings Are Going Away 34 Global Human Capital Trends 2016

35 Feedback = Performance Deloitte Feedback Process Helps Drive Performance Questions that Predict High Performance at Deloitte 1 Pulse Survey items 1. I am really enthusiastic about the mission of the firm At work, I clearly know what is expected of me 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 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 6 4 Source: Deloitte pilots FYs14-15 Questions Marcus Buckingham Company. BASELINE BOTTOM QUARTILE TOP QUARTILE 5 35 Global Human Capital Trends 2016

36 4 Culture and Engagement: Always-On Feedback 36 Global Human Capital Trends 2016

Performance Review Line Managers HR Filtering and

37 The Feedback System How Does Feedback Work Today? Employees Time Per Year Engagement Survey Performance Review Line Managers HR Filtering and Cleaning Senior Management Team 37 Global Human Capital Trends 2016

38 Feedback is the Killer App The World of Feedback Apps is Here Traditional Engagement Surveys Pulse Surveys Quick Feedback Performance Management Social Recognition Culture Work Environments Anonymous Network Apps Well Being 38 Global Human Capital Trends 2016

39 Employee Vitality From Wellness to WellBeing to Performance Exercise Family Sleep Self Discovery Career Fitness Recognition Purpose Drive Skills and Training Wellbeing Mindfulness Work Environment Sustainable Performance Rewards Leadership Health Monitoring Stress Nutrition Abundance Mentality Positive Thinking Management Clear Goals Medical Benefits Employee Assistance Challenges Culture Fit Growth Opportunities Cost Reduction Labor Productivity Retention Productivity Collaboration Team Performance Leadership Business Performance 39 Global Human Capital Trends 2016

40 5 New Generation of Learning Employees in Charge 40 Global Human Capital Trends 2016

41 Why learning is so important to employees The learning curve is the earning curve Over 300 years of economic history, the principal and most enduring mechanism for distribution of wealth and reduction in inequality is the diffusion of skills and knowledge. 41 Global Human Capital Trends 2016

Expert and user authored video is taking over Video and Mobile is Taking Over Learning Video is now >55% of all internet traffic and mobile is now over 60% (KP Internet Trends 12/2015) 35 Million

42 Expert and user authored video is taking over Video and Mobile is Taking Over Learning 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 42 Global Human Capital Trends 2016

43 Consumerization of education has arrived MOOCs Forever Changed Education 400+ universities. 2,400+ courses. 35+ million students. 43 Global Human Capital Trends 2016

44 End of the Learning Management System? A New Market Emerges: Learning Experience Platform The Learning System Mobile Pathways Courses Videos People Articles Channels Search Curation Recommendations Machine Learning The Learning Management System (LMS) 44 Global Human Capital Trends 2016

45 6 People Analytics Takes Off 45 Global Human Capital Trends 2016

46 This is NOT HR ANALYTICS! The New World of People Analytics Recruiting & Workforce Planning Learning & Leadership Comp and Benefits, Rewards HRMS Employee Data Performance Succession Engagement Engagement & Assessment + Sales Revenue Productivity Customer Retention Product Mix Accidents, Errors, and Fraud Quality Downtime Losses + Location, Travel, Meeting Time Organizational Network Analysis Sentiment, Heart rate, Voice + Data management, Analytics, IT, and Business Consulting Expertise = Groundbreaking new insights and tools for managers to make better decisions (not HR) 46 Global Human Capital Trends 2016

47 People Analytics is Finally Taking Off Rapid Progress in 2016 and % Change Planning Correlation Predicting Performing multi-year workforce planning Correlating people data to business performance Correlating people data to business performance (% excellent) Using people data to predict business performance Using people data to predict performance (% excellent) 38% 48% + 26% 24% 39% + 63% 5% 11% + 120% 28% 36% + 29% 4% 9% + 125% Deloitte Global Human Capital Trends, 2016 and Global Human Capital Trends 2016

48 Bersin by Deloitte What our research discovered Bersin by Deloitte Talent Analytics Maturity Model Level 4 Level 3 Level 2 Level 1 Predictive analytics Development of predictive models Scenario planning Integration with business & workforce planning Data governance model Advanced analytics Statistical analysis to help solve business problems Identification of issues & actionable solutions Centralized staffing & integrated data Advanced reporting Proactive reporting for decision-making Analysis of trends & benchmarks Customizable, self-service dashboards Operational reporting Reactive reporting of operational & compliance measures Focus on data accuracy, consistency & timeliness 4% 7% 10% 30% 56% 48 Global Human Capital Trends 2016

49 New types of data, new ways of analyzing it Markets Converge: Text Analysis Sentiment Analysis Organizational Network Analysis Feedback Systems 49 Global Human Capital Trends 2016

AI Applied to Recruitment and Selection Video Analytics Becomes Real Video interviewing now nearly mainstream, as many as 40% of interviews are done digitally AI software (HireVue) can now detect

50 AI Applied to Recruitment and Selection Video Analytics Becomes Real Video interviewing now nearly mainstream, as many as 40% of interviews are done digitally AI software (HireVue) can now detect race, emotion, gender, and tendency to exaggerate or lie through video While use of this data is not legally defensible yet, companies are actively using this data to select candidates 50 Global Human Capital Trends 2016

51 7 Digital HR The Design Revolution 51 Global Human Capital Trends 2016

52 Design Thinking Comes to HR 52 Global Human Capital Trends 2016

53 Rapid Adoption and Engagement with Technology Success of Design Thinking in HR 53 Global Human Capital Trends 2016

54 Bottom Line: The HR Software is Reinventing Itself 54 Global Human Capital Trends 2016