By Peter Weddle, Founder & CEO TAtech
The numbers are straight-forward and telling.
A Manpower Group survey found that "4 in 5 employers globally report difficulty finding the skilled talent they need." That was in 2023. The situation has only gotten worse since then. It’s a reality that threatens both the operations and the financial performance of enterprises everywhere.
And yet, WorkTech has now reported that in the first half of 2024, “talent acquisition attracted $239 million [in VC investment], HCM around $656 million, and talent management around $246 million.” In other words, investors poured almost 4 times more money into HR-related activities than they did into talent acquisition.
Why is that?
Investors are smart enough to know that you can’t manage the human resources you don’t have. And, talent acquisition is the way you get those resources. So, treating it as a secondary investment option simply doesn’t make any sense.
Part of the problem may be the lack of visibility. Go to any HR or HR tech conference, and the big HR platforms suck all of the oxygen out of the room. They consume the attention of almost every investor, analyst and influencer at those shows. Talent technology startups and innovators are too small to stand out and simply get overlooked.
That’s an issue to be sure, but I think there’s another factor at play. Many, maybe even most VCs see talent acquisition as a subset of human resources. In their view, if you address HR, you cover TA too.
It’s an understandable point of view. After all, it’s the way much of corporate America views the relationship. In a whole lot of c-suites, the Vice President of Talent Acquisition reports to the VP of Human Resources or Chief Human Resources Officer.
The TAtech Leadership Summit on Recruitment Marketing is designed for HR/TA leaders and senior professionals at enterprise employers and their counterparts among TA solution providers. To be held at the newly renovated Le Méridien Tampa, The Courthouse, the conference opens with a welcome reception on the evening of February 26 and then runs all day February 27. The agenda is still in development, but the focus will be on showcasing the latest technology and most innovative practices for moving to full-funnel recruitment marketing. Seating is limited at the conference venue, so register today to make sure you have a spot.
A Subservient Role No Longer Makes Sense
Here’s the problem with seeing TA as a subset of HR. That relationship is the functional equivalent of having the Vice President of Marketing report to the Vice President of Sales. Though obviously related, they are clearly two entirely different activities requiring entirely different skills and knowledge. It just doesn’t make operational sense for one to be subservient to another, and the vast majority of companies don’t make that mistake.
Moreover, that capabilities mismatch isn’t the only problem. In the real world of organizational politics, having one equally important unit report to another – which is exactly the case when TA reports to HR – almost guarantees that the subservient unit will get stiffed in the assignment of priority and the allocation of budgets and staffing.
If you have any doubt about that, take a look at the talent acquisition function in the vast majority of companies today. It’s perennially underfunded and understaffed. Individual recruiters are responsible for filling 15, 20 even 30 or more reqs. And, when the economy turns down, as it has in some sectors right now, it’s recruiters who get shown the door first.
So, it’s no wonder that VCs overlook talent technology. They’re simply following the lead of their traditional customers. And, that’s a mistake. A high-performing HR department is obviously critical to an organization’s success. But, so too is a high-performing talent acquisition capability and that’s simply not achievable without the state-of-the-art tools venture investments (as well as those by angel and private equity firms) can promote.
Food for Thought,
Peter
Peter Weddle has authored or edited over two dozen books and been a columnist for The Wall Street Journal. He is the founder and CEO of TAtech: The Association for Talent Acquisition Solutions.