This column is written by Stacey Harris, Chief Research Officer and Managing Partner of Sapient Insights Group, an independent research and advisory company focusing on HR technology.
One of the most uncertain areas of HR technology is adoption. News of M&A deals and strategic partnerships reach our desk every week. That's not an exaggeration. One driver of activity is the ongoing trend of consolidating across HR Tech. Large companies are gaining smaller companies to gain new customers and market share due to lack of functionality in legacy solutions.
The other trading driver is AI. Recruitment is the area of HR functionalities where AI can have the largest and most pressing potential. Instead of investing time and money to add AI capabilities to existing solutions, major players aim to acquire companies with AI-supported capabilities and integrate AI capabilities and tools into legacy products.
Sapient's 2024-2025 HR Systems Survey (runs every year for 30 years) analyzed usage trends in recruiting tool categories, exchange plans, user experience, and vendor satisfaction. I combined it with a solution provider briefing to provide some highlights.
Adoption trends
Of all systems involved in human resource management, the recruitment rate was the highest. The overwhelming majority of organizations (88%) used some sort of recruitment or talent acquisition solution. High recruitment rates are directly related to the organization's ongoing needs to find individuals with specialized skills or to promote the recruitment and employment process.
Recruitment systems typically include a variety of features, including management and tracking, candidate evaluation, background checks, and sometimes onboarding processes. In 56% of the organizations surveyed, recruitment solutions were highly integrated into the company's ERP or HR management system. In that case, replacing an existing recruitment system can be painful. This explains why only 6% of the organizations surveyed decided to switch current solutions, with an additional 6% having active RFPs (compared to 21% of organizations planning to switch payroll solutions).
Vendor's Score
Each year, the Customer Voice section of HR Systems Survey identifies vendors who receive top scores from customers in two areas: vendor satisfaction and user experience.
The following companies scored the highest scores in three customer size categories for user experience. (Italics specify vendors with the highest score. The remaining four vendors are displayed in alphabetical order.)
- Companies (Over 5,000 employees): ICIMSIn fact, Microsoft LinkedIn Recruiting, SAP SuccessFactors, Workday.
- Mid Market (500-4,999 employees): surelyADP, Greenhouse, Microsoft LinkedIn Recruiting, Workday.
- Small, medium size (Less than 500 employees): Bamboo HRADP, Isolved, Paycor Newton, feasible.
The following providers had the highest vendor satisfaction score:
- Companies (Over 5,000 employees): ICIMSIn fact, Microsoft LinkedIn Recruiting, SAP SuccessFactors, Workday
- Mid Market (500-4,999 employees): ADP, Greenhouse, ICIMS, actually, work day
- Small, medium size (Less than 500 employees): Can be doneADP, Bamboo HR, Isolved, Paycor Newton
High-score characteristics of solution providers include innovation and updates, easy integration, flexible configuration, and vendor responsiveness. Respondents also cited the ease of personalized messaging with non-HR staff.
The reasons for the low score included data inaccuracy, security issues, integration issues, and cost concerns.
Enter your AI
A survey by HR Systems revealed that 24% of respondents use some form of AI to adopt. In comparison, 9% predicted whether they were budgeting for AI use for adoption. The most common use case for AI in hiring is the generation of job descriptions. However, AI agents are being developed rapidly.
- Candidate Procurement and Screening. AI can analyze large datasets to identify possible job seekers and screen resumes more efficiently, even those with unconventional career paths.
- Automatic communication. Chatbots and AI assistants can also engage with job seekers in real time, respond to popular queries, provide updates, and conduct initial interviews.
- Scheduling interviews. AI-powered tools can automate schedule coordination between candidates and employment managers and streamline the process.
- Document generation. In addition to creating job descriptions, AI can also draft candidate summary, take interview notes, and write offers and rejection letters.
A well-designed AI agent will improve the candidate's experience by quickly answering regular questions, improving scheduling efficiency, and providing rapid updates to the recruitment process.
AI can also analyze large amounts of internal and externally available data to identify passive candidates and build a robust talent pipeline based on specific skills and experiences. This is a major advantage for companies with skills gaps in a particular field.
The real risk
Advanced AI capabilities often carry risks depending on (1) the amount of training that has been involved in developing the product's algorithm, and (2) the way the customer implements the product.
For example, experts often reduce the reduction in recruitment bias as an advantage of AI-enabled recruitment tools. However, algorithms based on data points such as home zip codes, specific schools, and even past work experience can introduce careless bias. Algorithms based on historical employment outcomes can incorrectly reinforce past discrimination.
These risks are genuine and can be expensive. The claim to hire discrimination based on built-in algorithm bias has led to several well-known dispute lawsuits against employers and vendors.
When implementing AI-driven recruitment tools, encourage decision makers to pay attention and carefully consider potential benefits and risks. At the very least, businesses need the resources to develop strong governance guidelines with ongoing AI monitoring and training, as well as human monitoring of designated accountability and processes. The decision to choose a tool must take into account the transparency of proven vendors and the maturity of the system. Being first on the market in this category is not necessarily a vendor's selling point.
Sapient is currently analysing data from the latest HR system survey, representing feedback from around 5,000 organizations around the world. We look forward to discussing the results with attendees at the Financial and Accounting Technology Expo in November.
