While the market for talent management suites (TMS) is poised for rapid growth, there appears to be a disconnect between what vendors are offering and what users want.
Talent management (or human capital management) software typically includes tools to manage recruiting, performance, career planning, succession management, learning, and compensation.
Attracting and retaining skilled workers in today’s tight labour market is becoming a top business priority.
That one reason why C-level executives are getting far more interested in talent management tools.
Sales of these products are likely to reach more than $2.3 billion by the end of 2008, and grow at least 20 per cent annually for the next three years, according to a study by Bersin and Associates, a corporate learning and management consultancy firm based in Oakland, Calif.
And vendors of TMS products have also been trying to keep pace with this demand in a variety of ways.
For instance, over the past 24 months, performance management and learning management software vendors have been “building and buying applications to extend their offerings and to gain market share,” the Bersin study says.
In February last year, Bersin and Associates polled 740 human resources (HR), information technology (IT) and learning professionals from a broad range of industries in North America.
These professionals were asked about their talent management practices, challenges and plans – and their use of TMS.
It seems managers and employees in large enterprises as well as small and medium sized businesses (SMB) want “something entirely different” from what’s available today, according to Leighanne Levensaler, principal analyst for Bersin and Associates and the author of the study.
She said while the focus of first generation applications was the HR specialist who needed to collect data about employees from managers, today line managers and workers are demanding TMS that help them make better talent and career management-related decisions.
Levensaler said managers want the tools to help them answer questions such as: Can anyone fill this vacancy? Who is ready for a promotion? Is this high performer underpaid? What skills and competency gaps will I have in my group over the next several months?
And employees want a TMS that helps them answer a very different set of questions: What do I do to receive a merit increase? How can I advance in my career here? Who has had a job similar to the one I want or have and how can I connect with that person? Who is an expert in using this process and how can I connect with that person? What development opportunities are available close to my performance or competency gap?
Effectively answering these questions will help employees align their actions with the business, to build community and communicate their career interests and preferences.
By contrast, the survey found that organizations are still using TMS for tactical transaction management of HR processes.
Organizations buying integrated TMS are still largely focused on consolidating their applications to simplify operations.
While they long for advanced capabilities, most companies are in the early stages of deployment and still trying to understand the potential of TMS, said Levensaler.
Many firms are deploying TMS on a piecemeal basis, according to the survey.
Around 48 per cent of companies polled implemented one module at a time, 27 per cent deployed two to three modules, and only nine per cent are embarking on a large-scale TMS project.
Small or midsized businesses (SMBs) are most likely to undertake large scale TMS rollouts because they have centralized or smaller HR departments, and have no legacy applications to replace.
Levensaler says the next generation of talent management suits will incorporate features and functions being sought today by managers and employees.
“Over the coming months, buyers will see more interactive applications that encourage community and collaboration.”
Combining profile management and user generated content can potentially alleviate competency management challenges, the study found.
The move is towards products that reduce reliance on the HR department as the author, manager and editor of the competency model, according to Linda Galloway, vice-president for marketing and communication at Bersin and Associates.
“Human resources departments are more focused on transactional rather than strategic functions,” she said. “They concentrate on payroll and benefits and performance appraisals as opposed to recruiting and on-boarding.”
In some cases when HR departments are tasked with defining and maintaining a set of skills and competencies for jobs in the organization they set a parameter of standards against which all employees are evaluated.
“Because the authors are not familiar with the job, it is possible for these standards may not to reflect the reality and demands of certain positions,” Galloway said.
In fact, Levensaler found that it is a common complaint among organizations that their current employee profiles “do not represent a complete or comprehensive picture.”
Profile management features in a TMS will enable managers to define, track and search for flexible talent attributes and competencies such as experience, training, certification and licenses with out or with minor HR assistance.
Tools will also allow managers to add or delete new competency requirements as the need arises.
Talent is a hot commodity in any industry and organizations are i becoming aware that managing it effectively is vital for success, says one Canadian analyst.
“Ensuring alignment between talent and company strategy in the long term produces substantial improvement and affects the company’s bottom line,” said Morgan Chmara, research analyst at Info-Tech Research Group Inc. in London, Ont.
Being able to effectively identify the ideal candidate for a position and holding on to core talent is also becoming more important as aging baby boomers approach retirement age, Chmara said.
This can be seen in some companies tied to legacy systems run by COBOL programmers who are nearing the end of their careers. Mainframe installations continue to grow but the people to run them are in short supply.