Chapter 10

Talent Management
Software and Systems

Adam Miller, Chief Executive,
Cornerstone OnDemand

What’s in this chapter?

• A brief history of talent management software, including the rise of niche talent management solutions
• How software can help, and its limitations
• The current state of software development
• A look into the future
• Opportunities for building an integrated, software-based talent management system

 

Clearly, talent management has become top of mind for most corporate executives and organizational leaders. Talent management—or components thereof—has been one of the most popular cover stories for trade and business publications, recently from theHarvard Business Review to the eponymousTalent Management magazine. It appears that these new concepts are all the rage.

But the reality is that most of what seems “new” about talent management has been around for quite some time. Many of the theories and processes that drive most corporate talent management discussions today were well documented long ago. Just pick up a copy of the classic business bookExecution by Larry Bossidy and Ram Charan (2002), and you’ll notice that much of what they describe as best practices in management during the 1980s and 1990s is really the stuff of what we today call talent management fundamentals.

So what is all the hype about?

I believe it is about the technology. The systems that exist today don’t make enterprise talent management better; they make it possible. Talent management systemsenable the management of people in accordance with best practices. In other words, it is today’s systems that make talent management concepts a reality.

To truly understand the interplay between talent management theory and technology, it is helpful to walk through a brief history of talent management technology and what has been enabled by each step.

 

 

A Brief History of Talent Management Systems

Technology to support human resources (HR) has been around for years. In some cases, one might even argue that it performed some early talent management functions, though they may not have been described as such. But technology evolves, and the depth and breadth of features and functions that support modern talent management practices and processes have dramatically increased. In this section, I trace the evolution of the software systems in use today.

 

 

The Early Years: Human Resource Information Systems

With the advent of enterprise software applications in the 1970s, it became possible to track all things corporate. Soon financials, inventories, supply chains, and customer relationships were trackable. So, too, were people. The rise of human resource information systems—known as “HRIS systems” (yes, the “S” is redundant)—created a revolution in corporations around the world. Corporate HR departments spent millions to deploy a “system of record” for all employees.

Theoretically, all employee information would be available at the click of a button. The reality was, however, that most of these HRIS systems simply became a repository for administrative information for employees, including

• hiring information: hire date, referral source, compensation
• personal data: name, birth date, contact information
• organizational data: the employee’s location, division, position, pay grade, cost center, and manager.

The HRIS systems would be used to manage the acquisition of new employees—including provisioning benefits, making access available to the information network and building, and recording organizational data—as well as the disbursement of employee-related information to payroll providers, pension administrators, and the like.

HRIS systems became central to the orderly administration of people. As a result, over time, these systems came to be considered a required cost of doing business.

However, the dream of cost reduction and operational efficiency was challenged by the complexity of managing these HRIS systems. With each installation customized to the needs of the specific organization, changes in processes and organizational structures became increasingly expensive. And because the systems needed to be maintained, rather than the technology creating efficiency and streamlining processes, HR departments actually needed to expand their staffs to support the technology. Many HR departments even created their own IT groups to manage the customizations required as organizational changes occurred. And soon, HR/IT organizations became their own fiefdoms, often in conflict with corporate IT functions, whose managers believed that they were accountable for the acquisition and management of all the firm’s technology.

 

 

Global Company Complexity

The process became even more complex with consolidation and growth. Global conglomerates would find themselves with multiple, incompatible HRIS systems that would not communicate, further limiting the value of the systems for managing people. The “trough of disillusionment” became a reality.

Nonetheless, HRIS systems had become essential components of enterprise resource planning (ERP) systems. Once HRIS systems became “must-have” items, demand for them grew rapidly. As a result, competition in the human capital management software marketplace became intense, leading to commodification, consolidation, and, ultimately, the crowning of SAP and Oracle (following Oracle’s acquisition of Peoplesoft) as the leaders in the field.

Because the focus of competitive ERP vendors was a broad range of enterprise applications and much time was spent integrating applications from acquired, smaller ERP vendors, a consequence of the ERP wars was the inability of HRIS systems to fully meet their potential and extend from HR-facing administrative systems to employee-facing talent management systems (the exception was the creation of employee selfservice portals that allowed employees to update personal information). Although the ERP vendors built extensions to their HRIS modules to support other functions in the talent management continuum, they were unable to develop the depth of functionality required to fully meet the ever-evolving needs of their client base.

 

 

The Rise of Niche Talent Management Solutions

While the market penetration of HRIS systems dominated HR budgets and HR/IT mind share, the lack of end-to-end solutions for managing the entire employee life cycle opened the door for niche talent management solutions to meet the needs of executives and HR managers who wanted to more effectively develop and manage the workforce. From 1991 to 2006, five separate talent management “subindustries” emerged, each dealing with a component of the talent management process that HRIS systems were not able to adequately address:

• learning
• performance
• succession planning
• recruitment
• enterprise social networking.

 

Learning Management

 

In the late 1970s, the advent of relational database systems enabled the creation of basic systems to track the learning that took place in the corporate environment. This basic record-keeping capability was deemed superior to paper-based records, especially as it related to regulatory training. The result was the invention of training administration systems that helped to automate the processes associated with managing classroom learning.

When e-learning first became popular in the 1990s, the concept of using learning management systems to catalog and track the training really took hold and became a requirement for all large enterprises—at least in the eyes of the companies that were selling them. By leveraging the Internet rather than the classroom or CD-ROMs to provide self-paced training to more people at lower costs, e-learning was seen as a great way to cut expenses. Learning management systems (LMSs) provided the means to deliver the e-learning.

Early learning management systems would allow companies to perform basic record-keeping tasks, in addition to providing the ability to browse, search, register for, and (for e-learning) launch training. Many vendors got into the game, including both entrepreneurial HRIS staff members, who would commercialize the basic systems they had built for their own training departments, and the broad range of e-learning vendors, who would package an LMS as part of their content sales, providing end users with access to their content.

Over the years, competition and consolidation in the learning management system space, which forced the remaining vendors to evolve their platforms, became a boon to chief learning officers and corporate training administrators alike. Today an enterprise-class learning management system offers a wide range of functionality related to onboarding, corporate training, and leadership and development programs.

In addition, learning management systems were no longer the sole domain of the training department. As corporations came under increasing levels of regulation, compliance departments formed, often with executive-level titles, such as chief compliance officers who reported directly to the CEO or the board. The use of e-learning for compliancetraining—combined with the capabilities of learning management systems for making training assignments, distributing notifications, and reporting—provided great efficienciesand improved compliance for these groups. And because of its place in the corporate hierarchy, compliance departments, in many cases, have taken precedence over HR or training departments in procuring and controlling assets like learning management systems.

 

 

Performance Management

 

Learning management was the first, but not the only, extension to HRIS systems. Performance management, particularly more automated means of conducting performance reviews, was another key component. As you might expect, employee performance management systems started simply enough. They were nothing more than automated versions of the standard performance review process, leveraging computer and Internet technology to simplify the distribution of paper-based forms. Many of these tools were created by IT and HR/IT departments, which required customization each time the review form was changed.

Today’s performance management systems go far beyond the basic performance reviews, with some providing tools for managing

• goals
• reviews
• competencies
• development plans
• compensation.

Goal management is intended to improve overall organizational productivity by specifically aligning each employee’s goals with those of his or her manager and business unit and those of corporate executives along the chain of command. This cascading ensures that even the objectives of lower-level individual contributors are tied to the stated objectives of the chairman or CEO. Theoretically, this means that all oars are rowing in the same direction, maximizing the speed and effectiveness with which the organization can accomplish its goals.

Because the goals can be tracked in real time, they transform performance management from its traditional reactive approach at the end of each year to a proactive process that enables managers to rectify problems as they are occurring, rather than when it is far too late. Further, by automatically tying each employee’s individual goals directly into the performance review process, the employee performance management system makes management by objectives easy to implement for any manager, with complete transparency for the employee.

Enterprise performance management (EPM) systems also can track key performance indicators (KPIs). Each goal can contain specific targets that relate to the organization’s KPIs. Because the goals are aligned from manager to subordinate, the KPIs can be consolidated. Viewed graphically as a dashboard, these tools allow executives to determine where in the company people are off track and thus enable executives to reallocate resources. In addition, some goal management systems support balanced scorecard methodologies, tracking organizational and individual objectives from a number of perspectives and automating data collection that could otherwise take weeks.

There are alsoreviews. The basic automated performance review has gotten a significant boost from today’s EPM systems. Review forms now can be configured at will, allowing customization for different segments of the employee population. Also, because automation simplifies the process and raises the participation rate, it becomes much easier to do periodic, proactive reviews instead of being limited to annual, reactive reviews. Most important, some performance management systems can link reviews to goals, competency assessments, and compensation and development plans—providing a unique performance review for every employee.

Some organizations find performance reviews too subjective and or too quantitative. Many organizational psychologists argue that the real way to make an employee more successful is to evaluate the person on the more qualitative aspects of a job. For example, an organization might believe executives should have strong leadership skills, business acumen, and decision-making ability to be successful and effective. To the extent that an executive has gaps in those competencies, development might be a worthwhile investment.

Because competency models typically are based on “softer” attributes, which are less easily measured than targets or key performance indicators, the ratings of the employee’s manager usually don’t tell the whole story.Competency management tools enable organizations to easily administer personalized 360-degree feedback processes, which choose the appropriate competency assessment for a particular employee and sends that assessment to the employee, his or her managers, and other qualified raters. By aggregating and weighting these multiple assessments, the ratings become considerably more objective.

Automation also enables a fair amount of sophistication in the administration of competency assessments. For example, results can be hidden from the employee to protect the anonymity of raters. And assessments can be sent to people outside the organization, enabling customers, suppliers, and partners to participate.

Most organizations do competency assessments to better develop their employees. Just as the competency assessments are personalized for the employee, EPM systems can automate the creation of an individualizeddevelopment plan for each employee, based on his or her assessment results. These development plans serve as road maps for employees to develop the skills they need to be successful in their current roles or prepare for future roles.

Development actions, which can include traditional training, on-the-job activities, and stretch assignments, can be linked directly to employee objectives. When tied to a learning management system, development plans can be tracked, allowing organizations to measure the impact of development actions on employees’ competence and performance.

With current and historical performance data now available to every manager, paying for performance across the enterprise becomes a possibility. Using a combination of organizational data, performance data, and corporate compensation models, EPMcompensation planning sys-tems provide managers with clear guidelines for making compensation decisions, including merit increases, bonuses, and equity awards.

The automation provided by EPM systems dramatically simplifies the compensation planning process:

• All the relevant information for a manager’s direct reports is usually organized on a single screen, providing timely information and eliminating the need for data entry.
• Budgetary guidelines, eligibility rules, and approval workflows can be automatically enforced.
• Cascading budgets can be managed systematically, with executives allocating their budgets to senior managers, who then allocate their budgets to line managers.
• Prorations for employees who moved into a position midcycle can be automatically calculated.

In addition, enterprise-wide reporting helps ensure consistency and equity in compensation adjustments, as well as compliance with corporate standards.

 

 

Managing Succession Planning

Succession planning has long been the domain of public company boards and family businesses, dominated by a desire to smooth the transition to the next CEO. More progressive firms address the same challenge for all executive positions, identifying, as well, the next potential CFO, CTO, and COO. This process typically involves closed-door meetings at which detailed presentations on other senior managers are reviewed to determine the best candidates to fill potentially available executive slots.

Although the organizations following such processes have been better equipped to deal with unexpected changes at the top, the overall value of this type of succession planning for the entire organization is limited. Enter succession planning systems.

Succession planning systems automate many parts of the process, reducing the time managers spend on succession planning activities from weeks to days or hours. More important, these systems enable executives to quickly compare candidates at any time during the year, recall prior ratings, and provide reports for the enterprise.

As succession planning systems have made the process easier to implement, it has been taken to a whole new level. Rather than limiting the process to the organization’s most senior executives, today’s cuttingedge organizations are doing succession planning forall managers. This depth of succession planning—which for large organizations could include thousands of people rather than a handful of executives—can provide solid transition plans for staff at all levels. But it has a much more important effect: It helps identify high-potential employees throughout the entire organization.

Talent readiness has become the mantra of talent management professionals the world over. It is defined by an organization’s ability to truly understand its “bench strength.” Consider these questions for your organization:

• Do you have the right people in the right positions for today and tomorrow?
• Who are your young superstars who can be developed now to lead new business units in the future?
• Who has tremendous potential but is in the wrong job or is likely to walk out the door (that is, where is retention risk high)?
• What parts of the organization are vulnerable because there are no identified successors who could fill open positions (that is, where is readiness low)?

Because the succession management process typically includes evaluating employees across a broad array of metrics and because these systems can sort, filter, and report on results by any criteria, these questions can be quickly answered. And the graphical interfaces of enterprise-class systems allow the data to be displayed in four-box or nine-box grids, enable the computation of custom metrics, and may even allow interactive organizational charts.

Many companies now extend the process to include input of all types of employee attributes. As a result, managers and executives gain access to real-time talent profiles of their employees, which allows for even more effective succession planning decisions. The information that can be tracked might include

• education
• experience
• certifications
• skills
• career preferences (career goals, geographic preferences, and so on)
• competencies
• performance ratings
• potential
• readiness
• retention risk.

In combination, this information can be used for two purposes in addition to traditional succession planning: talent pooling and internal recruiting.

Talent pooling, which is now more popular with talent management circles in Europe than North America, focuses succession planning on critical positions rather than the management hierarchy. The organization identifies specific roles that are mission-critical to success and for which a prolonged vacancy could prove extremely detrimental. Then operational or HR managers identify employees who can fill those positions, resulting in a pool of available resources.

Similarly, talent pools can be created for certain attributes, most commonly for employees with high potential. By organizing these employees into a talent pool, management can more closely monitor their careers, track their leadership development, and keep an eye on their retention risk. Such a talent pool can then be a preferred candidate source for any open senior positions.

Perhaps the biggest value of automated succession management comes in the form of more effective internal recruiting. Because the systems track the attributes of all employees (or at least all those who have been reviewed during a succession planning or talent pooling process), tools are available to internal recruiters and/or hiring managers to immediately identify people who are the best fit for open positions. Some systems even allow managers to rank and compare candidates on a single page, showing, for example, that the candidate who may be the best match is not willing to relocate or is persuasive but not persistent.

An outgrowth of automated succession management gives power to the people through succession planning in reverse: career pathing. In much the same way that the more advanced systems can tell which employees would be the best fit for a given position, they can also tell which positions are the best fit for a given person. Essentially, the systems are calculating the compatibility of two sets of attributes—of the person and of the position—and can present them in any order. Thus career pathing, combined with development planning tools, allows employees to manage their own career paths—often resulting in higher employee engagement and retention.

 

 

Managing Recruitment

One of the most successful early uses of the web was for recruiting. Online job boards quickly proved superior to newspaper classified ads for job seekers and hiring managers alike.

The success of online recruiting produced the need for corporate recruiting departments to manage the influx of candidates from myriad sources. The result was the emergence of application tracking systems (ATSs), which provided powerful tools for recruiters everywhere.

Essentially, the ATSs supported the basic hiring process:

• opening a job requisition, including automating the approval workflow
• automatic posting of the job, initially on an internal corporate job board, but with some ATS platforms today, autoposting on multiple external job boards simultaneously
• automatic categorization and/or delivery of résumés from job applicants to recruiters and hiring managers
• tools to search, filter, and score applicants
• profile-based screening of applicants
• automated workflow management of the interview process
• tools to communicate with candidates throughout the process
• tools to process new hires.

Enterprise-class applicant tracking systems go beyond the basic recruiting workflow, offering an array of functionality related to the recruiting process. Some of the more interesting features include oneclick background checks (typically done through an automated integration with a third-party background screener); automated résumé parsing, which enables résumé searching and comparison; campus recruiting tools; compliance reporting; and candidate relationship management tools.

These tools not only reduce costs and streamline the recruiting process, they can actually improve it. Different processes can be enforced for the hiring of hourly and salaried employees. Sourcing reports can be leveraged to provide enterprise-wide analytics on the most successful sources of candidates. And pre-hire assessments can be used to screen and select the most qualified candidates for open positions.

In addition, through the ATS, applicants can be routed directly to onboarding programs, which can be housed either in the ATS or in an integrated learning management system. Because the ATS has the pertinent new hire information, onboarding can begin evenbefore the employee’s first day on the job.

 

 

Managing Enterprise Social Networking

The most recent addition to the talent management continuum has been enterprise social networking systems. Originally described as collaboration tools, these systems are used to connect employees with one another, customers, partners, vendors, and, ultimately, timely information.

Enterprise social networking tools do not invent new processes; rather, they harness technology to account for the col aboration, communication, and informal knowledge networks present in every organization. This ongoing col aboration and the resulting user-generated content are typical y organized through both a browsable taxonomy of topics and through the concept of virtual communities. Online communities might be established to bring together remote salespeople or partners, or as a way to connect corporate alumni with the company. These communities or affinity groups could be open to the public, or they may be invitation-only private communities sharing information, best practices, and case studies.

In many ways, enterprise social networking represents the next generation of knowledge management. Whereas knowledge management platforms were developed in an attempt to capture the tacit knowledge of employees in the organization, primarily through a document repository, social networking systems seek to share information in a more interactive way through the use of various online mechanisms, including

• Discussion forums: These have not changed much since the advent of the Internet, providing an online bulletin board for community members to share information. People can post their thoughts on a topic, and others can respond to that posting with a posting of their own, or start a new “thread.”
• Blogs: These are now all the rage both in and out of the corporate environment. Blogs are similar to forums, except that the postings are typically from a single author on one or more subjects. Readers can comment on the blogger’s postings or on another’s comments. Readers also can subscribe to a blog so that they are notified every time the author posts a new entry.
• Wikis: These are community-contributed “articles” that allow all members of the community to update and edit over time. Wikipedia is the best-known example of a wiki.
• Podcasts and webcasts: These are recorded audio (podcasts) and web-based (webcasts) sessions that can be played back at any time. Often these are grouped into a series, such as a series of lectures or speeches from a specific person, to which you can subscribe.
• Documents and online resources: The social networking platform serves as a repository for documents and online links, including presentations, white papers, and other materials.

Any of the postings can usually be rated and commented upon by members of the community, with the enterprise social networking platformstypically providing access to the top-rated, most-commented-on, and most-recent postings.

But social networking is not just about documents and postings. Social networking also involves the concept of “friends” or connections, allowing members to connect directly with others. Because each member of the community typically has his or her own user-generated profile, often including photos, personal information, and his or her own postings, friends can keep tabs on that person. Some systems provide periodic updates on changes to profiles of your connections, including any postings they have authored or any connections they have made. In addition, friends can comment or “scrap” (as in scrapbooking) their connection’s profiles, enabling constant communication through the system.

A number of free consumer-based social networking platforms are available with similar features and are heavily used by the under-30 crowd. However, enterprise social networking platforms provide the ability for organizations to manage the user-generated chaos in ways that popular, free services do not. Governance has become both a key differentiator and a key challenge for corporations adopting enterprise social networking systems.

In its short history, many use cases have emerged for enterprise social networking, ranging from customer self-service to partner enablement to community-based product innovation. Some uses directly relate to talent management, including onboarding, succession planning, informal learning, and employee engagement.

For geographically dispersed organizations, social networking provides an important benefit to the onboarding process by virtually connecting new employees with others in comparable positions to account for the socialization element often missing in routine orientations. For example, a new remote salesperson can immediately connect with other members of his or her sales team, sharing market intelligence, sales tools, and marketing materials and generally feeling like part of the team.

For succession planning and internal recruiting processes, social networking analytics and “social mapping” can provide important insights. HR managers and executives can gain a clear understanding of the informal organization chart (versus the static organization chart based on the formal management hierarchy) by showing the critical “connectors” on the team with the most connections. For example, there may be someone on the sales team who is the go-to person for advice on deals but who is not formally in the chain of command for any of those salespeople. That connector is a vital resource for sales success, but it may have gone unnoticed if attention had not been given to user-generated connections or the most popular authors in the social networking system.

It is often argued that the vast majority of training budgets is spent on formal training programs, despite the fact that the majority of what we learn in an organization is informal or social (for example, from a mentor, in a project team, around the water cooler). Enterprise social networking platforms also provide tools for managing informal training, or at least organizing resources for on-the-job training. Questions can be asked of experts for real-time answers, without knowing the appropriate experts in the company (which beats out emailing the whole organization and not getting any answer), and the answers become publicly available for future reference; bloggers can share their knowledge on specific topics that can be accessed for on-the-job performance support; and wikis, forums, documents, and online resources can be structured for easy search and retrieval. When tied to a learning management system, this creates a powerful tool for administering all forms of training within the organization.

Perhaps most important, enterprise social networking is becoming a corporate requirement for engaging younger employees in the workforce. For Generation Y and Millennials, who have grown up on the Internet using instant messaging more than the telephone and scrapping more than email, social networking is a way of life. They expect that the tools they have at work to beat least as good as the tools they have at home. Enterprise social networking platforms, especially those populated with vibrant online communities enabling dispersed employees to collaborate, provide a start.

 

 

Talent Management Today

The evolution of niche talent management tools has given way to the rise of talent management suites. These systems combine some or all of the functionality of niche talent management systems in a single application, often marketed as a suite of integrated modules.

Although the early niche vendors would argue that “best in class” was favorable to a human capital suite, some of those vendors have now become suite vendors and now argue for suites’ superiority. Of course, “niche” and “suite” are matters of perspective, and today’s talent management suites are still relatively specialized compared with the end-toend ERP suites of the remaining HRIS providers.

The allure of the talent management suite is simple: All the tools used to manage someone are available in a single location. And because many of the functions are strengthened by one another, an integrated solution provides greater value—performance-driven development, onboarding supplemented by virtual communities, succession plans triggering leadership development programs, pay for performance, and recruiting tied to the competencies demonstrated by high-performing employees.

 

 

Deploying to the Extended Enterprise

The application of talent management systems is no longer limited to employees. Organizations increasingly see their corporate “ecosystem” as a key part of their business. For many corporations, indirect distribution channels are as important as direct sales teams. For many nonprofits, volunteers do more of the work than their internal employees. And with social networking tools transforming the way companies and customers interact, the lines among customers, partners, and employees continue to blur. In many cases, the talent management tools used for employees have equal applicability to customers, resellers, distributors, independent contractors, and other nonemployees.

Perhaps the most common way that organizations—from corporations to academic institutions to nonprofits—leverage extended enterprise functionality is through training-for-profit initiatives. Through the combined use of e-learning, e-commerce, and learning management technology, training previously reserved for employees or delivered on a limited basis in the classroom becomes broadly available to clients, partners, and even consumers at large. The training could even be restricted to certain populations or priced differently by client or category (for example, customer training could be discounted for top accounts). The result is that training becomes a new, or more meaningful, profit center.

 

 

Software as a Service

Deployments to the extended enterprise have recently benefited tremendously from the rise of software as a service, which makes deployments outside the corporate firewall relatively painless. One explanation for the recent dramatic rise in the use of talent management systems is the enterprise adoption of software as a service. As broadband connections became universal and use of the Internet became commonplace for all workers, it became feasible to deliver entire systems over the web. At its core, software as a service, or on-demand software, is software delivered over the Internet. Compared with the traditional model of on-premise, client-server-based enterprise software, software as a service marks the next evolution of software delivery.

The easiest way to understand the concept of on-demand software is to consider the difference between Microsoft’s desktop products (like the Office suite) and Google’s online applications (Google Docs). For example, with Microsoft, you need to install a specific version of the software to run on your computer, whereas with Google you are always using the current version and nothing needs to be installed locally. Also, your Microsoft Office configurations are limited to the computer on which it was installed, but Google Docs configurations are accessible from any computer, anywhere in the world.

At the enterprise level, legacy on-premise applications are like Microsoft and on-demand services are like Google. For example, traditional enterprise software installations can be complex and time consuming. By contrast, on-demand implementations tend to be less complicated and take less time. More important, whereas traditional software required each version to be maintained, configured, customized, and upgraded by the internal IT department or consulting firms, on-demand software is delivered as a service, which means that the service provider hosts and manages the software, making it essentially “version-less” for the enterprise.

Because the software is hosted by the service provider, equipment and maintenance costs are eliminated. So are the costs of upgrades. The on-demand software is typically purchased on a subscription model, paid for over time, which more closely aligns the service provider with the client’s ongoing success. In addition, on-demand software can typically be configured rather than customized, further freeing IT departments for more strategic work and lowering the total cost of ownership. For example, administrators can configure their own email notifications and reminders using mail-merge-like functionality without the need to call the IT department or the vendor.

Nonetheless, software as a service had its early opponents, concerned about security, scalability, and control. As these concerns have been alleviated by successful, large-scale, on-demand software deployments by some of the world’s leading companies, software as a service has become the fastest-growing segment of enterprise software.

Some argue that talent management is well suited for software as a service for two reasons: Configurability makes the systems easier to use, and, because it is not installed behind the firewall, it can be accessed by contractors, partners, and customers as needed.

I would argue that software as a serviceenables talent management. Despite the clear value offered to organizations in a service-oriented economy, where people are both the single biggest asset and expense, talent management tools were initially difficult to justify. Specifically, unlike inventory or financial data, people are constantly moving and evolving, so in the case where every organizational change required customizing the software, it was difficult to make the business case for systems. But today’s on-demand talent management systems allow for configuration by business unit, real-time changes in workflow and organizational structure, personalization for employees as their roles and competencies change, and the ability to adopt increasing levels of functionality over time, as the organization’s talent management needs evolve.

 

 

The Future of Talent Management

So what does the emergence of all these new systems and technologies mean for the future of talent management? Let’s look at their main implications.

 

 

Niche Solutions Will Disappear

Niche talent management systems will become a thing of the past, as the interrelation between talent management “components” becomes a fundamental part of all talent management programs. In other words, looking holistically at organizational talent will become commonplace for managers and executives, in much the same way that they have come to expect summarized financials across disparate business units and real-time access to inventory and sales data. New managers won’t just want things this way; they will expect it. As a result, vendors will need to move to meet the needs of the market. There will be product extensions and mergers and acquisitions as companies quickly shift from adding commodity-reinforcing nice-to-have incremental features to differentiating must-have feature sets.

 

 

Talent Management 2.0 Will Arrive

Just as the Internet has evolved from a one-way street to a multilane highway, so, too, wil talent management. With “Internet 2.0” came the ability for the reader and publisher to simultaneously interact and the advent of user-generated content. No longer are websites simply static displays of content and pictures created by webmasters; rather, the web has become fil ed with user-created content, in the form of articles, blog postings, wiki contributions, comments, ratings, reviews, and podcasts (audio and video).

The result is a major change in the expectations of the end user. Rather than accept updates a few times a year, the new norm is sites that change continuously. Daily news updates are eclipsed by perpetual updates. Live sporting events, political debates, and financial conferences are blogged aboutduring the event. Everything has become interactive; the raters even rate the raters.

Does this mean that talent management changes? Of course! Younger employees expect feedback constantly, not once a year. Geographical boundaries become irrelevant when team members communicate by instant messaging with the people next to them in the same way they interact with those 5,000 miles away. Trainers have to compete with (or leverage) subject matter experts in the field, who can weigh in on any issue for any co-worker at almost any time.

Managers will no longer be willing to wait for monthly reports on their teams. Managers will expect to see any information about their employees in real time, just as they can tap Google for the world’s collective knowledge on almost any subject. And obviously, they will want it to be easy and intuitive to get that information.

At the same time, the capabilities of the tech-savvy “Internet elite” are expanding to the masses. As broadband connections have become ubiquitous and web browsing has become commonplace for young and old alike, standards have changed. Not only must there be tools to get this information and provide these services, but the tools must be accessible from anywhere in the style to which users have become accustomed. The DOS-based, administrator-only computer interfaces of the past have gone the way of the typewriter. It’s got to be fast, easy, and look good—plus it needs to be available to the self-empowered managers of today when they want it, where they want it, and how they want it.

 

 

Corporate Walls Will Fall

Corporate walls become porous when people start viewing networks personally rather than institutionally. Contributions from customers, distributors, and vendors become as important as those from employees—and just as available when a person starts combining social networks from all phases of his or her life.

The rise in extended enterprise deployments of talent management solutions is one outcome of this trend. Employees and nonemployees alike are now often “managed” in comparable ways. Similarly, the use of enterprise social networks to manage relationships with customers, partners, and former employees blurs the line between what’s “inside” and “outside” the company.

 

 

Productivity per Employee Is Becoming a Key Performance Indicator

A combination of economic pressures and improved employee performance management tools has made employee productivity a key measure of success. In much the same way that supply chain management systems allowed companies to optimize their inventory levels and relationship management systems helped companies optimize their service delivery, talent management systems enable organizations to optimize their most important asset: their people.

Arguably, the best metric for tracking success in this area is productivity per employee. Can you do more with the same number of people? If you can, and people represent your largest single expense—as they do in most organizations today—then you are more profitable. Increased productivity is enabled by more effective talent management in many ways.

 

 

True Talent Planning Is Becoming Possible

One dream common to talent management professionals and business management is the ability to accurately predict the need for talent, raising and lowering the head count in an optimal fashion, while simultaneously being able to maximize the productivity of all of those in place.

Succession management systems don’t just track attributes for individual employees. Many already allow for analysis of talent readiness, including the identification of competency gaps, skill deficiencies, and leadership risks (especially where you can identify high retention risk and low readiness), byorganizational unit.

In their next phase of evolution, these tools will provide the ability to conduct scenario planning for the workforce by automatically assessing the full impact of organizational changes throughout the organization. For example, if you plan to move a senior manager to an executive position, the system will be able to evaluate who will take his or her role from middle management and then who will take the middle manager’s position.

As another example, if you make an acquisition and move people to manage the integration of the new business, the system could identify who can fill the gaps left in the existing organization and recommend development actions to help them to succeed. Organization charting, succession management, development planning, and analytical tools used in combination will provide the answers.

 

 

Workforce Analytics Is Becoming a Reality

The holy grail of talent management is workforce analytics. Imagine if you could quickly and accurately answer these questions:

• Who are the top employees in the organization? Why are they top employees?
• What is the correlation between competencies and performance? How can we accurately predict who will become a top performer when recruiting internally or externally? How can we develop someone into a top performer?
• Where are the weak links in the organization? Where do we need to reallocate resources? Should we build (develop) or buy (recruit)?

Truly integrated talent management systems are almost there. The more the systems are used, the more data that are capable of being mined become available.

 

 

Opportunities

So what does all this mean for you? When you consider implementing a talent management strategy, think big. The opportunity now exists to build an end-to-end talent management solution, from sourcing through promotion and retirement. Through the use of an integrated software solution, a company can now

1. Identify the talent required for an open position and then source candidates, internally and externally.

2. Assess potential candidates against the attributes necessary for success in the position, including competencies, skills, experience, and education. Or managers can compare candidates against the attributes of a top performer currently in that role.

3. Orient the employee to the position, irrespective of whether it is a new employee joining the organization or a current employee who is changing roles.

4. Connect the employee to others in similar positions, whether they are in the same office or geographically distributed.

5. Develop the employee against competency gaps for the particular position.

6. Set goals for the employee and ensure that his or her goals are aligned with the goals of his or her manager and business unit and the organization as a whole.

7. Periodically assess the employee against these goals and other measures of success for the organization. Rather than do reviews retrospectively, conduct periodic performance reviews that proactively identify and correct performance and/or competency gaps in relation to specific objectives.

8. Pay an employee based on his or her achievement of these objectives and calibrate against others in similar roles.

9. Develop employees throughout the year to ensure that they are best equipped to achieve their objectives. Provide tools for employees to get needed training, coaching, and/or performance support.

10. Empower employees to manage their own careers by clearly understanding traditional and nontraditional career paths, finding mentors for these paths, and understanding the development needed to become qualified for new positions.

 

Then, on an organizational level, you can:

 

1. Annually benchmark the potential and performance of team members to measure talent readiness and to ensure an appropriate level of bench strength is available, based on corporate growth plans and other considerations, such as historical employee retention rates and expected turnover.

2. Use succession planning to identify high-potential employees and put them into leadership development programs, tracking not only their progress but also their retention risk. Ensure that those ready for promotion are given ample opportunities for career mobility inside the organization before they seek employment elsewhere.

3. Ensure that compliance requirements are met and other types of regulatory training are completed in a timely manner, including ongoing certification and continuing education requirements.

4. Plan effectively for the future—understanding organizational strengths and weaknesses, comprehending the impact of development programs and training expenditures, and learning when, how, and who to hire or promote.

 

These capabilities also extend beyond the enterprise. Resellers can be trained to perform as effectively as direct salespeople. Partners can be taken through self-paced certification programs. Volunteers can be identified and developed to fill the needs of nonprofits as they arise. Customers can be engaged to drive product innovation.

This is not a far-fetched dream. It is the state of the art for talent management today. When used effectively, it enables the creation of highly competitive, efficient, and productive organizations. It is not only how companies achieve unparalleled “execution.” It is how they are “built to last.”