4th Aug 2009
Josh Bersin outlines how HR professionals can keep up with the rapid growth of talent management software and ensure you find the best fit for your organisation.
One of the fastest-growing segments of HR is talent management systems. These new integrated platforms automate and improve processes for applicant tracking, goal setting and performance management, career and succession management, employee development, and various elements of compensation.
The market for integrated talent management systems grew out of the long-established markets for applicant tracking systems, learning management systems, and performance management tools. Bersin & Associates estimates that the market for such integrated systems will exceed $2.5 billion by the end of 2010 and continue to grow at more than 15%, despite today’s recession.
What should you as an HR manager do about these systems? Is it time to jump in and replace your existing, somewhat dated HR software with one of these solutions? Which ones are the best fit, and what modules should you purchase first? Our research into this market shows the following keys to success:
Start first with a talent management strategy
Since this market is so new and rapidly changing, suppliers have different strengths, focus areas, and levels of expertise. Some vendors have very well integrated solutions which address performance management for mid-sized companies. Others focus more broadly on learning, performance, succession, and career management and can handle larger global businesses. Some have roots in recruiting and applicant tracking, while others are now focusing heavily on compensation.
We’ve seen that it typically takes a year for a company to implement just one module. So before you select what appears to be the best platform, it is vitally important to prioritise your own internal roadmap and the specific processes you want to automate first. Our Talent Management Factbook will help you understand what other companies are doing and help you build this roadmap.
Remember, it is far easier to automate a process which is well developed and broadly accepted. Selecting software before defining the process and gaining acceptance from the business will only slow your implementation.
Look for a provider which focuses on your particular organisation size and type
When you do decide you’re ready for talent management software, make sure you select a vendor which has many customers (20 or more) of your size in your industry. Your needs will vary depending on your size. Small organisations need simpler processes and more integrated systems; large companies need high degrees of flexibility, customisation, and security administration.
Talent management approaches also vary widely by industry. Professional services companies, for example, manage people through a combination of project and direct line management. A succession and performance management program will need to accommodate the input from many different managers to an employee’s development. Other industries, like software and financial services, have very significant pay-for-performance incentives, and different types of succession programs. Find a vendor that has extensive experience in your industry so they have the features, experience, and implementation templates you need.
Consider your ERP or HRMS supplier
If you are satisfied with your HR management system (HRMS) or payroll provider, make sure you consider offerings from your current vendor. All major HRMS software companies now have talent management modules and some have reached parity with the niche talent management vendors. Our research shows that integration is more important than functionality in the talent management world. These systems will be heavily used for very important reporting and analysis; they will help you plan and characterise your workforce more easily; and they must rapidly adapt as you restructure or reorganise.
The talent management system will become a system of record – so if you can find one that integrates with your HRMS you will be saving time and money. And in today’s world of web services, integration with your HRMS is easier than ever before.
Unfortunately the HRMS providers are still new to the market, their products are less mature, and they often come with dependencies on system upgrades. We estimate that more than 8,000 companies have already implemented talent management software from non-HRMS providers, so if you do decide not to use your HRMS vendor you’re not alone.
Imagine the system as becoming the social network for talent
Initially you will see these systems as an effective way to design, automate, manage, and measure the various talent processes in your company. But think about what is coming next: once your talent management system is implemented -- storing your employees’ job history, development plans, performance reviews, and various other talent data -- this system becomes the 'Facebook' for your company.
New applications become available:
- Employees can now shop for positions in other parts of the organisation - implementing a dynamic career management solution which builds greater talent mobility;
- Managers and executives can rapidly search for specific talent pools and look for specialists or find gaps in the workforce in critical roles
- Individuals and managers can implement social learning by identifying experts and contacting directly for assistance and mentoring
- Managers can quickly build internal networks and gain input and feedback on their many managerial needs
- Executives can do scenario planning and succession management by viewing active, live information about employees’ jobs and experiences, giving themselves a more real-time view of the health of the organisation.
And there are many more applications to come. We believe this next wave of talent management solutions will go even further to manage people throughout the HR lifecycle.
In today’s slow economy, it is more difficult than ever to find capital for new investments in HR. Talent management technology, however, continues to be one of the bright lights in the market and we believe it will continue to grow even more rapidly as the economy recovers.
Josh Bersin is CEO and president of Bersin & Associates.
Look out for our technology editor's article later this week, in which he asks, 'Is talent management software in a slump?'