RedThread has released new research showing a major spike in demand for people analytics technology (PAT), up 53% from 2020 to 2021. The current PAT market is estimated at more than $3 billion and continues to expand rapidly, with strong investor participation. PAT capabilities focused on employee engagement and the employee experience dominated growth, as organizations searched for ways to retain talent and improve job satisfaction.
WOODSIDE, Calif., May 17, 2022 /PRNewswire-PRWeb/ -- New research shows massive year-over-year growth in demand for people analytics technology (PAT), with much of the market targeting solutions to improve employee engagement and experience. The size of the people analytics market, its rapid growth, and the prevalence of investment and acquisitions indicate a strong and deepening commitment to PAT across business verticals.
"The market grew at an unprecedented rate, with a 53% growth rate between 2020 and 2021, and an 80% compound annual growth rate (CAGR) for the past five years," according to the new report, "People Analytics Technology 2022: Executive Summary," released today by RedThread Research.
"We're seeing explosive growth in this sector," said Stacia Garr, cofounder of RedThread Research and coauthor of the report. "People analytics capabilities are advancing at a moment when businesses are ravenous for this kind of information as they face an onslaught of new challenges and uncertainty."
RedThread estimates the current size of the dynamic and rapidly growing PAT market at upwards of $3 billion. The crowded, competitive market is attracting significant investment. Nearly half of the vendors polled reported receiving infusions of cash in 2021, and almost a third said they'd acquired another company, been acquired themselves, or changed hands.
While the market grew, customer satisfaction with PAT vendor offerings dipped.
"Customer demand for PAT spiked with the pandemic," explained Garr. "In response, vendors rushed to deliver new capabilities. Less than ideal execution may have collided with elevated expectations."
Indeed, more than half of PAT vendors—57%—said they'd created new products and solutions in 2022 to address customer needs.
Faced with the need to pivot, ask more of employees, and navigate a tight job market, businesses looked for ways to better understand and improve the employee experience. People analytics technologies aimed at improving the employee experience dominated the market in 2021, surging to 42% of PAT vendors, up from 34% the year before.
"Businesses clearly appreciate the impact people analytics can have on employee engagement, employee satisfaction, and employee retention," said Priyanka Mehrotra, Research Lead and coauthor of the report. "Helping employees feel empowered, productive, and happy at work is critical in today's challenging business environment, where retaining key talent can be a limiting factor to growth."
It's not just a matter of retaining scarce talent. Businesses are dealing with pandemic burnout, an ongoing wave of resignations, challenges around hybrid work and extended work from home, and the impact of inflation on wages and job satisfaction. Keeping employees motivated is critical to business success.
"Leading a business is never easy, but this has been a particularly volatile time," said Garr. "Leaders are turning to analytics to help them figure out what employees need, what's working, and what might be driving them away."
While demand for PAT grew, the ways organizations use the information did not.
In its first PAT survey in January 2019, RedThread asked vendors to estimate who would be using their solutions in three years. This year's survey fact checked their projections. Across the board, estimates of usage by role proved overly optimistic.
Today, C-level executives, people managers, and employees are all using people analytics substantially less—more than 20% less—than vendors had hoped. In fact, actual usage went down from 2019 to 2021.
"The future customer base must be broader than traditional PA or HR leaders," said Garr. "Leaders across the organization can use insights from people analytics to strengthen the business."
A complimentary executive summary of key findings from RedThread's 2022 PAT study is available at http://www.redthreadresearch.com. On Wednesday, July 13, RedThread will host a webinar exploring the study's findings and their impact. Members of RedThread will have access to the complete research in the forthcoming People Analytics Technology Report 2022, with individual vendor details to be made available in RedThread's People Analytics Technology Vendor Tool.
About Stacia Garr
Stacia Garr is a researcher and recognized thought leader in talent management, leadership, diversity and inclusion, people analytics, and HR technologies. Her work has been featured in Fortune, Forbes, the New York Times, and the Wall Street Journal, as well as in numerous HR trade publications. Stacia cofounded RedThread Research in 2018 after leading talent and workforce research for eight years at Bersin by Deloitte. Before Bersin, Stacia spent nearly five years conducting research and creating learning content for the Corporate Leadership Council, part of CEB/Gartner. She has an MBA from the University of California, Berkeley, a master's degree from the London School of Economics, and undergraduate degrees from Randolph-Macon Woman's College.
About Priyanka Mehrotra
Priyanka Mehrotra is a research lead at RedThread Research. Before joining the company in 2018, she was part of the research team at Bersin by Deloitte where she worked on talent management, diversity and inclusion, and people analytics, as well as conducted research and contributed content for Bersin's mid-market study. Prior to Bersin by Deloitte, Priyanka worked at several nonprofits, think tanks, and international organizations where she published and coauthored articles and research.
About RedThread Research
In an HR industry rife with jargon and fluff, RedThread Research connects experience, data, and ideas to provide substance and actionable insights. RedThread researchers are experts in performance, people analytics, learning, and diversity and inclusion, as well as the emerging technologies to support them. Their original research is developed through broad collaboration to curate the best ideas, and written in plain language to be as useful as possible. The result is high-quality, unbiased, transformative foresight to help organizations improve people practices and build a stronger business.
To learn more, visit http://www.redthreadresearch.com.
Media Contact
Nitika Gupta, RedThread Research, 647-444-4048, [email protected]
SOURCE RedThread Research
Share this article