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According to IDC's Worldwide Integrated Talent Management 2013 Vendor Analysis MarketScape report, written by Lisa Rowan, research vice president of human resources (HR) and talent management services, integration among the modules in talent management software is improving, as is customer satisfaction.
But as the talent management software market has consolidated in recent years and larger vendors have acquired smaller ones to flesh out the four components that make up an integrated "suite," core functional differentiation among vendors is decreasing, Rowan says. So, what should HR buyers base their purchasing decisions on?
In this Q&A, Rowan explains the prep work HR managers should undertake before they choose a suite vendor and consolidate talent management functions on a unified platform. She also weighs in on the rising importance of integrating core HR systems with talent management software, and sheds light on the increasing interest in learning and compensation management technology.
You've recommended in the past that companies in the market for talent management suites determine their 'talent culture' and let that inform their buying process. For instance, a company that constantly needs new employees would be a recruiting culture, and should choose a vendor that is particularly strong in recruiting. But now that basic functionality is more or less evening out, do you have any new buying tips?
Lisa Rowan: There are fewer and fewer buyers coming to the process with nothing already. So, my advice now is take a look at what you have in place [and determine] what's working and what's not.
The biggest struggle remains that there are silos within HR or the organization as a whole. [For example], with learning there could be a separate training organization responsible for not only employee education but also for the extended enterprise, so they don't necessarily report into or work closely with HR. Recruiting is often a separate entity. So, you need to understand your talent culture [and] maturity -- what is most important, and how far along are you in making sure the different components of your organization are working together? It's a lot of self-examination.
And understanding then that your recruiting function is a little removed, but has similar goals around ensuring the success of folks that are hired -- that's a starting point for a conversation around how [performance and recruiting] might benefit from sharing. Likewise with training. Training in a vacuum without understanding its impact on employee performance [or] total productivity of the organization is a critical factor to measure, but a lot of organizations aren't able to do that. Why? Because they're disconnected -- functionally and from a technology perspective -- so they're not getting that feedback loop that they need.
Then you come to the table -- the recruiting group is using [one vendor] and [the] learning group is using [another] and performance is from a third [vendor] -- and talk through what are the strengths and weaknesses of those various solutions. What is the user experience, the service level? Somebody might be much happier. Then talk about inviting in a group of vendors to look at how we bring those [functions] together under a single vendor. I think HR just going out and looking at a vendor without having done that internal pre-work is not the right way to go.
Do you think the priority of integrating core HR systems with talent management software is rising?
Rowan: I do. I think the HR IT organization is probably a little more attuned to that from the perspective more about the reduction of complexity they deal with -- the uploads [and] downloads, etc. -- [and] less about the functional integration and benefits. It might look as though its working OK to the HR functional team, but it's the IT folks who see the ducks' legs swimming under the water.
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I believe the work that SuccessFactors [has done] with SAP is really a good thing for them -- we've got that work [of] integration with core that's being done. Likewise with Oracle, Infor and ADP. So, I would say [they] have a bit of an edge on others in that regard.
But bear in mind that integration with core almost has to take second place to getting the talent pieces together. If you've got something for core, a vendor for payroll, [and] another for benefits administration, [and] then you've acquired a recruiting solution, a learning management system, a performance system and you're doing compensation with spreadsheets, there's a plethora of things that are disconnected. So, you can start by looking at [unifying] the talent components first, I think.
We've talked about social and mobile's impact across the talent management suite, but did you find new trends pertaining specifically to any of the four modules?
Rowan: There's a lot of interest and movement on adoption of new or revised learning, succession and compensation [systems]. Recruiting [is] always the [module] that has the greatest churn. [It] still does, but it's less than it was -- and that's telling me organizations are not able to do a lot of hiring. Especially with unique skills -- technical or other kinds -- they're less able to find those skills on the open market. So, I see that we're moving from a 'buy talent' culture to a 'build talent' culture. It's the [symptom] of a recession [that] training budgets get slashed, [but] we're seeing an increase in training budgets, and intention to acquire developmental elements of talent management.
Compensation is the newest of the talent management areas to see technology applied to it. Recruiting's been around for 20 years, [but] compensation automation and bringing sophisticated tools to compensation is fairly new, [and] it's an area we see a lot of interest in. It's [partly] because the compensation professionals are willing now to get off their highly proprietary customized spreadsheet tools for something that's more sophisticated.
But I also think the compensation conversation is broadening. Typically you [would] see the compensation team work with management to come up with a budget, [and once] a manager would get his budget he would probably just distribute it evenly [and] without much forethought. I think with the introduction of more formalized performance processes and the understanding that it is difficult to replace particular skilled workers, it is incumbent upon them to try to keep these people. [Now] I think compensation is becoming less unilateral in its decision making and more democratic in a broader conversation across a management team. So, it's a combination of those things -- there are tools that are making it so that organizations can democratize the process, and there is a need to hold onto the individuals with high skills.