Enterprise Talent Intelligence Arrives, Disrupting The HR Tech Market

Of all the AI innovations we’ve seen in the workforce, perhaps the most significant is Talent Intelligence. Talent Intelligence, as we define it, is the use of massive amounts of employee and workforce data to understand skills, job fit, performance, leadership potential, career pathways, pay equity, and organizational capability.

As we introduce new research today, we take a position that this is one of the most existential changes in HR technology in decades.

What exactly is talent intelligence? This technology, based on AI, allows companies to analyze vast amounts of data about employees, match it against data in the external labor market, and learn things they never knew before.

In many ways it’s similar to advertising technology where companies like Meta, TikTok, and Google analyze data about individuals to serve up ads tailored to individual consumers.

In the case of business and HR, talent intelligence gives companies deep understanding of an employee’s skills, interests, career trajectory, geographic preferences, certifications, technologies they know, and experience in leadership, industries, and types of companies.

In the past we used industrial psychology, assessments, and interviews to determine this information. Today, driven by AI, companies can leverage this massive corpus and let the AI models identify the relationships.

Let me give you an example. In recruitment every company faces the same issue: is this candidate a good fit for the job, the team, the tools we use, and the company’s culture?

Recruiters assess this from interviews, testing, and reference checks. Yet despite these approaches, nearly 20% of candidates don’t work out. Using talent intelligence we can analyze people who succeed in this role and let the AI figure out the quality of fit. Not only is this unbiased, it’s accurate and the more data we collect the smarter it will get.

I remember when Liberty Mutual faced high turnover in their auto insurance team. They spent months studying high performers to see what educational backgrounds or skills were correlated with success. Their analysis discovered a secret: the highest performing insurance sales people were those who loved cars. No amount of psychographic assessment would have figured this out.

I just talked with an investment bank struggling to understand high turnover among young employees. Talent Intelligence could look at who’s staying vs. leaving and immediately help source candidates with a better fit.

This type of analysis is very difficult today. With traditional HR tech the only data we have is an employee’s resume or work history. Often this is less than the data available in LinkedIn.

Using talent intelligence companies can tap into vast amounts of public information about a person’s prior work experience, the people they worked with, the periods of time and technologies they used in different jobs, the articles they wrote, the organizational changes they experienced, as well as the impact of their educational background, location or other signals we don’t even understand.

This reduces bias and gives us information we’ve never had before.

Up until the last year, talent intelligence technology was primarily used for recruiting. Vendors like Eightfold, Seekout, Beamery, Gloat, HiredScore, Phenom, and Paradox built models to predict who would be a good fit for a given job or company. Now, as those tools have matured, talent intelligence can do much more.

As you will read in our research report, enterprise talent intelligence can be used for internal mobility, technical skills development, leadership assessment, and performance evaluation. It can actually help determine an individual’s performance by comparing internal operational data against their peers, discounting for tenure and level.

It can be also be used for pay equity analysis (compare pay across an entire workforce against experience skills, and other credentials). It is being used for organizational design and job analysis (look at the constellation of skills within an individual or a team and how they compare to other jobs and other teams across the company).

And there’s more. When you tap into the external data available from companies like Lightcast, Draup, Revilio and Skyhive you can perform competitive assessment of your company’s skills and capabilities against competitors. You can see trending technologies and skills in your industry. You can locate skills by location and decide where to put the next plant or engineering facility. You can look at demographic changes affecting your organization that you didn’t see before. And you can see what skills and capabilities your competitors have compared to your own.

Imagine the power of GM or Ford assessing its engineers against those at Tesla or Rivian. That data alone (we are soon to publish our Auto industry Global Workforce Intelligence study) is worth millions.

Disruptive To HR Technology Vendors

Up until the last few years companies never had access to this information so they didn’t develop the teams or the internal skills to even use it. Now that this information is available we have a new profession and domain in HR, the talent intelligence professional. Already there are more than two thousand talent intelligence professionals in the world, and many more when you consider people doing people analytics and workforce planning.

These are people with analytic backgrounds but business people at heart. They can look into this data and make decisions that managers could never make on their own. And as our research paper points out, they are creating groundbreaking solutions within their companies. Companies using these systems are radically improving hiring, identifying a deeper pool of leaders, finding critical skills buried in the organization, and giving employees the opportunity to find new jobs and opportunities that were never made available to them in the past.

Talent intelligence is also disruptive to incumbent HR tech providers. Last month’s acquisition of HiredScore by Workday is only a small indication of the disruption to come. Virtually every HR tech vendor must consider this space because this it’s a market that leverages hyperscale improvements in AI.

The chart below gives you a sense of where these vendors are going. And if you don’t believe me, read BusinessInsider’s latest screed on what’s wrong with Workday. (I remain a fan.)

When OpenAI, Google, or Meta launch new large language models talent intelligence products get faster and more efficient. And as new AI algorithms are developed, these vendors can leverage them immediately. Traditional HCM platforms, which have no knowledge of outside data, cannot possibly keep up with the insights.

But this isn’t easy. It takes time and engineering expertise because it turns HR software companies into data companies.

Most HR tech companies do not have experience managing such massive volumes of data. Over time many of them will have no choice. Just as we buy computing over the internet now, most of us will soon reach a point where we don’t want to buy software that doesn’t have data and benchmarking within it.

If I think about our company and how we use financial and CRM systems, I would be thrilled to have my financial system give me benchmarks and direct advice better run our company. I would love our CRM system to tell me whether I’m getting the right number of leads and automatically optimize the data set. This isn’t available yet but I bet Intuit and HubSpot are working on it.

In the case of HR,  our report describes how this new market has exploded. It’s simply something we cannot ignore.

I’m very excited about this space and look forward to talking to you about at the various HR technology conferences around the world. (We are conducting a Talent Intelligence bootcamp at Unleash and Irresistible.) Please call us if you’d like help putting your strategy together.

Additional Information

AI in HR: Certificate Course in The Josh Bersin Academy

Enterprise AI At Work: The Talent Intelligence Primer

Will Chatbots Take Over HR Tech? Paradox Sets The Pace.

Workday To Acquire HiredScore, A Potential Shakeup In HR Technology