People are the most important resource in today’s global economy. And whether companies are willing to admit it, it’s their employees that make the difference to their bottom line. To remain competitive in today's job market, employers need to know what their employees are doing, what skills they have, how they're developing, and how they fit into the business today and in the future. One way to do this is with talent management. Companies need to assess how managing their talent can fit into the overall business strategy—and thus determine whether it’s the right approach for the company at that given time.
What Is Talent Management?
But what is talent management? How is it different from human resources (HR)? And what can it do for your business—both now and in the future?
The term talent management generally refers to the process of attracting highly skilled workers, integrating new workers, and developing and retaining current workers to meet current and future business objectives. But talent management can also mean different things to different organizations. For some it’s about finding and developing top talent, while for others it’s about the overall management of all workers—highly skilled or not—within the organization. But before embarking upon a talent management initiative, it’s important to understand what your organization hopes to gain from integrating talent management within your organization. For this, we need to first take a step back and look at HR.
The Changing Face of HR
From an administrative perspective, the human resource management (HRM) function includes a variety of activities—but the main element is a responsibility for the human resources or “people” making up the organization. This includes deciding what staffing needs you have, recruiting and training the highest skilled employees, addressing performance issues, and ensuring your personnel and management practices conform to various compliance regulations.
However, the HRM function has undergone tremendous changes over the past 20–30 years. In the 1970s and 1980s, it was the personnel department that was charged with managing the paperwork around the hiring and paying of people. In the 1990s, however, organizations began to see the HR department as playing a major role in staffing, training, and helping manage employees—so that they and the organization could perform at their maximum potential. Through this process, the concepts of strategic HR and talent management emerged. Today, talent management is now an established HR function across many large and medium sized companies.
From a technology perspective, talent management differs greatly from traditional HR. While the HR role itself has changed over the years, so too have the systems used to manage people. Just because you have an HR department and you’ve purchased an HR system, that doesn’t mean you’re managing your talent. While some of the HR systems today have added different “talent capabilities,” there are a plethora of options available—making the process of deciding on which one best fits your company’s needs rather difficult. Knowing which one is right for your business has as much to do with your talent strategy as it does the type of features and functions you will need from a software system to manage your people processes.
It All Starts with a Talent Management Strategy
Recruiting and retaining top talent should be the number one priority for your talent management strategy; however, a recent survey shows that properly managing human capital still is a big challenge for many organizations today.
In a poll that Technology Evaluation Centers (TEC) conducted last March, we asked readers the question “What has been your biggest roadblock in effectively managing your talent?” The results were as follows:
- 47% said they didn’t have the right people and/or technology in place to make it work
- 33% said they lacked executive buy-in for the implementation of an effective talent management strategy
- 13% said they were told that their current HR system and processes were enough
- 7% said they didn’t have any roadblocks and were managing their people just fine
While most respondents cited having the right people and/or technology in place, it appears that HR professionals are faced with the pressing challenge of developing an innovative strategy that will meet their current business demands and that their executives will buy into.
It’s important to focus on innovative and creative strategies that will attract and retain the talent needed to meet the needs of the organization—today and for the future.
Below are some elements for creating a solid talent management strategy:
- Adopting a culture of talent within your company—having the willingness to invest in your people from the beginning and throughout the employee lifecycle; and having a sustainable approach toward talent management—even in an economic downturn
- Understanding the business—having a clear understanding of your organization’s current and future business strategies and where people fit into that strategy
- Investment in people—having the necessary people in place (including those that will be involved in the implementation of the software) to establish your strategy
- Continued process improvements—providing training and conducting performance assessments as part of an ongoing process toward strategy improvement
If any of the above points don’t resonate with your company’s philosophy, then you’re probably not ready for talent management—or talent management software for that matter.
But, just to be certain, here’s a quick quiz you can take to get an idea of where you’re at with your talent management readiness.
Readiness Quiz: What’s Your Talent Management IQ?
How do organizations measure their readiness to manage their human capital? This measure represents the availability of employee skills, talent, and expertise to perform the internal processes critical to the success of a talent management strategy. Take this quiz to see how ready your organization is to properly manage its human capital.
- Do you currently have a talent management strategy in place within your organization?
- Is your talent management strategy aligned with your organization’s mission and goals?
- Do you know which measures can make your talent management strategy more effective?
- Are your employees engaged within the organization through the use of surveys?
- Do you know your organization’s workforce demographics?
- Can you easily determine which employees may pose a flight risk?
- Do you have a succession plan in place?
- Can you readily determine the training needs of your employees?
If you answered “NO” to any of the above questions, you may want to take a closer look at your talent management initiative. You may have a deficiency in the information systems you’re using to monitor and analyze employee data. If you are a medium-to-large organization doing business globally, your “people” initiatives may be in serious trouble.
If you answered “YES” to some of the above questions, your organization has somewhat of a grasp on managing human capital, but should look to further strengthen your processes. You may have adequate people management systems in place, but are probably not using them to their full potential.
If you answered “YES” to all of the above questions, chances are your talent strategy is properly aligned with your overall business goals, your talent management or related HR management system is being utilized to its full capabilities, and your organization is successfully managing its talent.
Technology: Too Much, Too Soon
Whether you’re a small company with fewer than 50 employees, or a medium-to-large firm, there’s a place for talent management in your organization. But the decision to buy a talent management solution—as when making any large software purchase—should be based on your talent management readiness, company size, and considerations of the current software systems.
The nice thing about talent management software is that it is usually offered in modules (which make up a suite). In fact, many talent management and human capital management (HCM) software providers offer their solutions this way—allowing their clients to pick and choose the modules they would like to start with. It’s important, however, that the modules you choose are in line with your talent management strategy.
Other vendors offer software packages targeted at specific company size (e.g., business editions for companies with fewer than 100 employees or enterprise editions for larger companies with at least 5,000 employees). If you’re a small to medium business (SMB) looking to get started with your talent management initiative, then you might want to start small—opting for one or two key modules (e.g., employee self-service, and applicant tracking) or purchasing a business edition talent management solution.
In my experience as an HCM research analyst and working on end-user software selection projects for the past 5 years, I’ve often seen companies seek a system that will help them manage their people data, but oftentimes many such companies already have several disparate systems in place with no real strategy for consolidating their critical people information—and making it effective. So what do they do? Unfortunately, they buy more software, thereby exacerbating the situation!
On the other hand, some studies have shown that many companies are not maximizing their current talent management investments to best suit their organizations’ needs. This inadequacy has played a critical role in impeding the success of many businesses today.
As a research analyst, I get plenty of opportunity to speak with vendors and see their products. Here is a list of modules that I often see in talent management software systems. It’s important to note that not all vendors offer this entire set of capabilities. For a list of vendors and their offerings, see the solution matrix at the end of the article.
- Employee/Manager Self-Service (ESS/MSS)—provides access to managers and employees through a company portal for the purposes of imputing, tracking, or managing employee data
- Recruitment—potentially includes applicant tracking, assessments, background screening, reference checking, interviewing, and on-boarding
- Assessments & Surveys—provides testing, behavioral analysis, cognitive ad attitude assessments, and employee engagement surveys
- Communication & Collaboration—facilitates communication via social media, mobile, portals, and chat
- Performance Management—tracks employee competencies and performance (using skill gap analysis, and assessment and evaluation tools such as performance appraisals), and analyzes and reports on trends
- Compensation Management—provides compensation planning, payment calculations, rewards,
- Succession Planning/Management—identifies and develops internal personnel that have the potential to fill key or critical positions within the organization
- Learning Management—enables training, courses, content development, and mobile learning
- Career & Goal Development—provides skill measurements, development activities, and training requirements to associate development activities with employee objectives and competency goals
- Workforce Management/Planning—offers workforce forecast, planning, and analytics
- Analytics & Reporting—offers dashboards, workforce metrics, analysis, and reports
The bottom line with respect to technology is that while it’s important to plan for the future, don’t buy software that you don’t need today.
What Talent Management Software Solutions Are Out There?
The following matrix shows the high-level capabilities of some of the industries top talent management solution providers and includes solutions that fall into one or more of the following categories:
- talent management suites
- enterprise resource planning (ERP) solutions with HCM functionality
- traditional human resource information systems (HRIS) with talent management functionality
- hosted solutions
- on-premise solutions
- software-as-a-service (SaaS) delivery options
Skilled and talented employees are hard to recruit and retain within any organization. Retaining such people is particularly challenging for small businesses competing on unequal footing with larger firms offering better compensation packages.
But talent management is not just about finding the right candidate for the job. That individual must be nurtured and given ample opportunity to develop and grow with the company. Conversely, companies that neglect to manage their talent effectively end up losing key talent.
Before jumping on the talent management bandwagon, you need to assess whether your organization is ready to embark upon such an initiative. If your organization does not have a well-defined talent management strategy in place or still manages its businesses processes with several, disparate software systems, then a talent management system will probably end up hampering your business activities—more than anything else.
But if your organization has a well-defined and structured initiative for managing their talent—now and for the future—then it is ready to take advantage of technology to streamline its talent management processes. The software systems available on the market today can provide the necessary functionality for the recruiting, managing, and developing key employees—and when this is aligned with the overall business strategy, it ensures the growth and success of the organization.