How Behavioral Economics Is Helping ADP Develop New HR Apps

July 11, 2016, 12:30 PM UTC
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What better place for a human resources software company to test and refine ideas for new applications than its own employees? Payroll and HR services giant ADP (ADP), ranked No. 7 among the top 10 cloud HR software companies, is doing just that with a “startup” nestled within its four-year-old Innovation Lab.

The ADP team is using behavioral economics concepts—the study of how psychological, social, cognitive, and emotional factors affect organizational decisions—to develop new applications for talent management processes and training. They don’t have to be associated with existing software. In fact, these apps often address narrow processes that sit outside the realm of what’s handled by traditional HR systems focused on recruiting or performance appraisals, said Stuart Sackman, who is ADP’s CIO and its corporate vice president for product and technology strategy. “Many of today’s systems are too heavy,” he said.

So far, the modest team has come up with 10 ideas that live outside the responsibility of its traditional product groups. Four are being used by subsets of ADP’s 55,000-person workforce. They include LeaderCompass, a tool used to collect feedback about managers outside traditional performance review cycles; ADPcoach, software for helping leaders identify and address their skill gaps; NetworkCompass, an app for surveying employee groups about initiatives or projects; and MeetBetter, a system for keeping meetings on point and on time. The last one is already used by close to a dozen ADP customers.

Sackman told me that the side effects of these apps are sometimes quite unexpected. For example, the team discovered LeaderCompass is useful for keeping org charts updated on the fly, since workers using the system are asked to confirm the identity of their manager before answering a survey. And even though the goal of ADPcoach is to provide highly personalized training programs for employees, it is pointing to common skills gaps and training needs that might benefit from additional investment.

The biggest problem facing HR teams?

Apps that pass muster will find their way into the ADP Marketplace (the company’s online directory for HR software) starting in July 2016. Over time, the group may work on behalf of specific customers but that agenda is still evolving. “The goal is to study how people work, how they interact with systems, and come up with apps that are more frictionless and useable,” Sackman said. “You can think of this as consumer-oriented design.”


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