SearchFinancialApplications caught up with Analyst Josh Bersin, principal and founder of Bersin by Deloitte Development...
LLC, about his upcoming talk at the 2014 HR Technology Conference, to be held from Oct. 7 to Oct. 10 in Las Vegas. Bersin's topic: "The New Talent Agenda: How Integrated Talent Management Has Fundamentally Changed."
How has integrated talent management changed fundamentally?
Josh Bersin: The concept of talent management started in the mid-2000s when software companies at the time, like Authoria, basically said, 'We don’t think it makes sense to build a recruiting system, a learning system, a cost [HR] system, a performance management system. We'll just build a piece of software that does all of this.'
HR departments woke up to the fact that it would be better to have most of these typically standalone HR functions under one roof. So, for the last seven or eight years, HR departments have been creating [titles such as] VP of talent, and they've been moving these previously standalone functions under this one person.
What I'm going to talk about at the presentation is that the next big wave is not just taking what used to be standalone business processes and integrating them, but rethinking the impact of all the decisions you make in each one of these [on] the others. [For example,] if you're in recruiting, you're impacted by the employment brand, and the employment brand is impacted by employee engagement, and employee engagement is impacted by the performance-management and leadership-development process.
Research we did in the last year shows that one of the biggest problems companies have today is retention of people. They're very worried about their engagement and their employee expense, and the fact that people are overwhelmed at work. Sixty-five [to] 70% of the people in the companies we surveyed said that the overwhelmed employee is one of their top three problems.
One of the things we're going to be talking about at the conference is that HR technology has to be developed like consumer technology. It has to be so easy to use that it requires no training. It has to actually be useful -- not something you have to do, but something you use to make your job better. It has to have a mobile design that's like an app, not just a mobile-enabled version of some Web thing. And the user interface designers in these HR software companies have to be every bit as vigilant to user engagement as gaming companies.
You point out that talent management software has evolved significantly, with vendor consolidation, new features and an increased role for ERP and learning management systems. How has that evolution played into the new talent agenda?
Bersin: There were a lot of acquisitions of standalone vendors. Learning management systems companies were being bought by performance management systems companies, and vice versa.
The big bang was when SAP bought SuccessFactors. They basically laid down the gauntlet and said, "We are going to build an end-to-end talent system that includes everything: core HR, payroll and all the elements of talent management."
That essentially incented Oracle to buy Taleo. Then IBM bought Kenexa. Very recently, Skillsoft bought SumTotal, and then a lot of little acquisitions took place.
Within about two years, we went from a market of a lot of best-of-breed solutions to a lot of [systems that] look integrated and end-to-end but actually aren't. Every of one of these acquisitions has a few little rough edges, where one of the pieces they bought isn’t as good as it should have been, or it was a bit of an immature company and their product was behind.
Most of the buyers of talent management software are aware of this and saying [they] don't want to buy a standalone solution anymore. If [they're] interested in replacing their core HR system, which is a massive decision -- and by the way, a lot of people are making that decision because Workday has done a really good job of convincing people that a whole new architecture for core HR is a good idea – they're basically looking at replacing everything. There's a wholesale HR upgrade-replacement going on at most major corporations of all the major components. It's not easy, because none of these vendors are perfect and none of them seem to have everything exactly the way you want it.
Because the HR market is so big and there's so much money to be made, dozens and dozens of startups have built new standalone solutions. I wouldn't be surprised if over the next three or four years, all these big software companies buy up more of the social-recruiting tools. They will probably buy up the new employee-engagement vendors and maybe even social recognition.
There are still some standalone vendors left … but they are mostly moving into mid-market now, where they sell to medium-size companies [that] don't necessarily have the money for an end-to-end solution.
How is this latest incarnation of the technology -- the more integrated suites -- causing companies to rethink how they manage talent?
Bersin: The promise of this software is to provide data about people that allows managers to make better decisions. The big, big potential is to be able to answer questions like, 'Why do we have a high turnover rate in the IT department? Who's leaving, and why are they leaving? When are we going to have a shortage of engineers in the production group, what cities are they in, what ages are they, and where should we source and look for those candidates? Who are the potential people in the organization that are ready for leadership roles?'
The more tactical outcome is that the HR processes they have, whether they be training, performance management or coaching, are done in a more useful way. If HR says, 'Here's a system that will give you a tool to help you set goals with your employees, that’ll help you make your employees' goals transparent to other people, that will give you coaching tips, that will give you online collaboration, that will allow you to more easily talk to your employees and maybe keep track of what they’re working on,' now you're talking about something that's actually making it easier to do your job, not just easier for you to do HR.
The direction of talent management software is towards work management. The days of automating HR are kind of done.
Which of these technologies could have the biggest impact?
Bersin: The stuff that used to be exciting is no longer driving impact. Performance management software -- most people are not getting much out of it. They're trying to reengineer that process [and saying], let's simplify it.
In the learning area, the market has been very dull for quite a long time, but some new things are happening. Most of the learning management systems companies are building analytics software that goes through your entire catalog of courses and what everyone has taken [and making] recommendations for learning. The second thing that's big in learning is embedded learning.
Analytics is high value. Lots of tools now have built-in analytics where they will immediately tell you, 'We think, based on our analysis, these are the flight risks, these are the people that are likely to be overpaid or underpaid based on their performance.'
The most valuable software today is actually [on] the recruiting side. There are now tools -- mostly from small companies -- that will go out onto the Internet, tap into major social networks and collect attributes about people that may not be on their [resumes]. [For example,] there are tools that will score software engineers based on the submissions of software they’ve made to public software-sharing sites. The recruiters can now find people in the tight labor markets that they couldn’t find before.
Another category that's really hot is called social referral marketing. [When] you open a new job req, you would like your employees to refer their best friends, because those are usually the best candidates. If they're too lazy or they don't have time, you turn on this tool and they authorize you to access their social network. Now you have 1,000 employees and 1,000 employees' networks, and you can mine that information to allow people to promote jobs to their friends. It dramatically improves what’s called referral recruiting, which is a very, very powerful part of recruiting.
Read a guide to talent management systems
See coverage of last year's HR Technology Conference