The market for people analytics (PA) technology is growing quickly. In fact, RedThread Research reports that there were 121 PA technology vendors in 2020, with a 35% growth rate from 2019 and a 55% compound annual growth rate (CAGR) over the last 4 years. Forward-thinking companies are helping drive this growth as they increasingly realize that understanding and supporting their employee base is good for the business at all levels. Furthermore, the events of 2020 also led HR departments to focus more heavily on employee engagement; employee experience; and diversity, equity, inclusion, and belonging (DEIB) programs, fueling even more growth in the market.
But rapid growth can make it difficult to understand each vendor’s capabilities and filter the real differentiators from the hype. One way to categorize the various PA solutions is to look at them based on two major attributes: 1) whether the solution is active or passive and 2) whether its goal is empowerment vs. listening or monitoring. This is a useful way to understand the capabilities of various solutions, so let’s dig into what each of those attributes means.
Active vs. Passive
Active vs. passive refers to how a user interacts with the technology. Active tools are ones the user has to take an action to engage with (for example, fill out a survey, access a dashboard, read a report, etc.). This can include data-gathering—for example, a pulse survey tool is active because the user must spend time answering the survey questions. On the other hand, passive tools don’t require any input from the user—they gather data in the background. Technology that analyzes e-mails and chat messages, by either looking at metadata or going deeper to analyze message content, is passive.
This attribute is separate from what the solution does. For example, a coaching product could be active if it requires users to fill out surveys and have meetings or consult an app on a regular basis. Or, it could be passive if it analyzes message metadata and sends feedback to the users in their flow of work. A pay equity analysis tool could rely on active input or passive input, as well.
Empowerment vs. Listening/Monitoring
Empowerment vs. listening and monitoring refers to whom the technology benefits. Empowerment tools benefit their users directly and are built for individual employees. These tend to give feedback directly to users or teams to help make them aware of their behaviors and improve in real time (or close to it). Leadership development tools fall into this category. Listening/monitoring tools gather information on users for the benefit of the organization’s leadership or the organization as a whole. These are typically used by HR, PA teams, and business leaders to help make strategic decisions. Workforce planning tools are one example.
I call this category “listening/monitoring” because there’s a fine line between listening to employees (which is good) and monitoring them (which is probably not good). Gathering input from employees is vital for organizations to make good decisions, but tools that do this are still built for organizations and leaders first and individual employees second. That’s very different from a tool designed to empower employees.
Empowerment tools also benefit the organization (In the long run, I believe empowerment is much more beneficial to a business than monitoring.), but that’s not what their primary design objective is. The organizational benefits are a secondary effect of improving individual employees.
Why Passive Empowerment Tools Are Coming into Their Own
Over the next several years, I think we’ll really see tools in the passive and empowerment categories gain significant traction. Surveys and active feedback methods are nothing new to HR or PA teams, and solutions that provide data to leadership (like Microsoft® Productivity Score) are familiar, as well. But the technology that lets passive tools process data in the background and surface useful findings has only recently advanced enough to be useful to the enterprise. (See examples like the Computational Culture Lab at Stanford and UC Berkeley that use computational methods and data science to measure and model culture dynamics.) There’s also been a shift over the last several years in support of employee empowerment and privacy in the workplace, which accelerated in 2020 as many teams moved to remote work. As these trends continue, I believe interest in passive and empowerment-focused tools will continue to increase.
Passive tools offer unique benefits. They require little to no interaction from the user and can be used more widely and generate more useful data than active tools. Advances in natural language processing have led to models that can analyze the actual content of digital messages, not just metadata, looking at what a message says rather than just who sent it to whom and how often. This lets these tools examine a wider range of behaviors, like how often a user gives feedback to his or her teams, expresses doubt, or asks for input from his or her direct reports. As this technology continues to develop, these tools will become even more valuable.
Empowerment tools are also becoming popular thanks to the backlash against employee monitoring from the COVID-19 pandemic. Empowerment demonstrates trust in employees, while monitoring demonstrates a lack of trust. Research from my company has found that managers who do things that demonstrate trust and create psychological safety, like requesting feedback and expressing doubt, tend to score better on performance reviews. In the long term, trusting employees leads to better performance from those employees (especially for remote and hybrid teams), which, in turn, improves things like productivity and the bottom line. As more businesses realize this, I think we’ll see increased interest in empowerment technologies.
It’s an exciting time for PA technology. As you look at the growing market, think about whether a given solution is active or passive or whether it focuses on empowerment vs. listening and monitoring. It just might help shed new light when evaluating these technologies.
Lizzie Jaeger is Lead Product Manager at Cultivate. She’s worked in the HR technology space for 6 years at Zenefits and Reflektive after starting her career as an HR manager in the hospitality sector. She holds a Professional in Human Resources certification and a BS from San Diego State University.