Research indicates that 70 percent of a company’s budget is typically dedicated to human capital expenses. With so much financially at stake, it’s no wonder that organizations are looking for ways to efficiently and effectively maximize their investment in employee engagement and retention. In fact, the founders of two new companies cite this statistic as evidence that their platforms are important entries into the growing edtech market.
Creating an Employee-Centric Business
Last month, 2016 E&Y Entrepreneur of the Year Tanya Bakalov announced the launch of her new company, BetterSkills, Inc. Backed by $1 million from Bain Capital Ventures, Osage Venture Partners, VT Technology Ventures and angel investors, the company’s Software-as-a-Service (SaaS) platform analyzes workforce data to identify employees’ current skills as well as development opportunities such as training, mentoring and job rotation.
“Companies are shifting their focus to a more employee centric business model and treating the employee experience as a customer experience,” Bakalov said in an email. An employee-centric workplace “provides a nurturing and positive work culture where personal and professional growth and learning are valued and encouraged.” BetterSkills provides these learning opportunities, as well as data to support them, to encourage employee engagement and retention.
Customers can use the BetterSkills platform to create dynamic organizational charts and individual development plans. These plans incorporate training opportunities, job rotations and mentorships that are specific to employees’ current skill levels and career goals as well as organizational needs. “All of these things,” says Bakalov, “come together to create an employee-centric work culture, where the employee is in a dynamic state of stimulation and growth.”
Executive Coaching for Digital Natives
Just two days after BetterSkills’ announcement, BetterUp, another SaaS company, announced its official launch and $12.9 million Series A funding led by DFJ, with SVAngel, Freestyle and other investors participating. Co-founded by self-described “proverbial busy millennial in Silicon Valley” Alexi Robichaux and his partner Eddie Medina, BetterUp pairs emerging leaders with coaches using an online platform.
BetterUp is based on the belief that “everyone deserves executive-level development,” according to its website. Robichaux says that technology makes executive coaching more scalable for companies that want to use it at lower levels of the org chart. He created the app based on his own experiences; he believes that coaching is a powerful development tool, but the traditional approach of weekly meetings wasn’t meeting his needs. By providing live coaching conversations on demand, Robichaux says, BetterUp is more accessible – a coach who is “literally in your pocket.”
For millennials, who seem to be BetterUp’s target audience (or at least one of them), early executive-style coaching is crucial. They tend to view themselves as leaders and seek opportunities to mentor and be mentored. Preparing them for management positions using coaching – perhaps especially if it uses technology – is a great way to help them develop and to prepare their organizations for success.
The Importance of Data
Both BetterSkills and BetterUp emphasize the importance of data to both individuals and organizations. For employees, the ability to measure skills and areas of growth, or the specific benefits coaching has provided, can increase performance and job satisfaction. For organizations, the ability to conduct gap analyses through a platform like BetterSkills informs L&D planning and hiring decisions; the ability to measure ROI, as BetterUp claims to do, supports funding requests.
The training buyers who are BetterSkills’ and BetterUp’s customers must make a strong case to their CFOs about why these tools are worth the investment, notes Robert Adelson of Osage Venture Partners. In this economic climate, HR is one of the most vulnerable departments. Therefore, one of the reasons he decided to invest in BetterSkills is because the platform provides data that training managers can use to justify their investment in it. Brian Goldsmith of Bain Capital echoes this idea, saying that while its people are a company’s largest cost, executives “lack visibility in that investment.” He believes BetterSkills will “help with this pain point.”
Traditionally, Robichaux says, training managers have been unable to identify the causes of employee behavior change. He says that the BetterUp’s longitudinal data enables it to identify actual causation – not just correlation – providing managers with the support they need to justify their coaching expenditures. This data uses several key performance indicators, including leadership skills and traits (resilience, hope and optimism, positive relationships, collaboration, communication and confidence), which BetterUp measures pre- and post-coaching.
As 2017 draws near, both BetterSkills and BetterUp believe that we will see more and more companies looking for ways to maximize their investment in what Bakalov calls “their greatest asset, their human capital.” As technology becomes more advanced, Robichaux says, we’re becoming better at identifying what technology can help us do, the parts of our business for which we still need people, and how we can combine technology and people by “reinserting humans into edtech.”
Training Industry’s 2017 trends report identified continued investment in educational technologies and a culture of coaching as key “changes to the market that will have a lasting impact for years to come.” If BetterSkills’ and BetterUp’s platforms are an indication of the direction of the market, these predictions should definitely prove true.