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Mitchell Langbert
Mitchell Langbert

Talent Management Software

How it is revolutionizing human resource management.

June 2, 2011
by Mitchell Langbert, PhD

The past five years have seen a revolution in human resource management (HRM) technology. While the cause of the revolution is technological — the development of talent management software — the results are managerial. Human resources is being downsized and better organized to achieve its mission of serving a strategic, integrative role. Along the same lines, talent management technology offers opportunities for small accounting firms to gain the advantages of a state-of-the-art human resource management department without budgeting for one.

Josh Bersin, president of Bersin & Associates, a technology and organizational development consultancy that specializes in talent management applications, describes the evolution of HRM software during the past five years. Traditionally, there have been two categories of HR software:

  1. Core HR management systems that include payroll and human resource inventory data and
  2. An array of smaller programs that can generically be put under the talent management umbrella and include recruitment, performance management, onboarding, learning management and compensation management.

Previously, these were small program applications that firms could purchase over the Internet and use on PCs. Their integration has led to something bigger than could have been foreseen, Bersin says.

The problem many HR departments have faced and that talent management software solves is making the transition from human resource administration to human resource strategy. Companies have struggled to integrate hiring, goal setting, appraisal and promotion decisions. The integration of the once disparate programs into talent management suites has generated enormous demand and is causing HR departments to demolish their silos and create a single talent management department. This facilitates interaction and strategic thinking. Bersin observes, "Companies now realize that they have to tie together the HR disciplines to make HR work." He adds that accelerated change, the aging of the boomer generation and competitiveness have caused firms to seek the change. As a result, Bersin's own career has evolved from a focus on software to a focus on organizational development as the software that he helps firms adopt leads to the restructuring of HR departments.

Cloud Computing in HR

Bersin uses one of his clients, a large pharmaceutical company, as an example. This organization is complex because of acquisitions. HR had been designed on a functional basis and was scattered. Moreover, the firm's top management realized that the leadership pipeline was going to be a problem because of the aging of the baby boomers. The firm's senior vice president realized that it would be necessary to reengineer HR, collapsing the HR groups into a more centralized, integrated unit capable of developing common competencies and a single culture. The distributed HR functions were eliminated and underperforming HR personnel were eliminated.

Smaller firms can purchase integrated talent management software that is linked to mainframe servers via the Internet or what IT professionals call the cloud. Smaller firms can purchase systems from Halogen or Success Factors. Bersin points out that smaller accounting firms have the same HR problems as their bigger counterparts and similarly benefit from integrative thinking about HR. Smaller firms lack HR departments, but there is no reason to be deterred. Software vendors often offer HR consulting support and there are numerous HR consultants available to help conceptualize goals, hiring standards, e-learning programs and competency models.

PC Magazine's Samara Lynn notes that integrated core HR management systems are also available: "Now that businesses are cutting down on staff, you have one integrated suite of applications where you introduce employee information that gets entered across business applications: HR, payroll, billing/sales and people's expense accounts; an integrated system cuts down on manpower."

Microsoft is rolling out applications that link to the cloud Lynn noted. Much like timesharing that was popular in the early days of mainframes, today’s small firms can access expensive mainframe technology via the cloud. The one fly in the ointment, Lynn points out, is security. Not all small accounting firms will trust their confidential personnel data even to the most secure systems. Lynn pointed out that Microsoft has been on the forefront of developing security. She mentioned the recent hacking of the Sony PlayStation network. As the LA Times reported, hackers may have obtained credit card information of tens of millions of PlayStation users.

Lynn is optimistic about security, though. She recommends TriNet's cloud-based payroll and all-in-one HR core services package. You log in and see a dashboard; you can see your company's mission statement (in case you had doubts), policies, rules and regulations, benefits and remaining vacation days. You can see your 401k balance by linking to a site for the 401k fund manager. Lynn is enthusiastic about this kind of responsive technology. She also notes that encryption methods are advancing. Bersin is convinced that cloud-based systems are perfectly secure now.

The Financial Times covered talent management software in an April 2011 article. The article points out that newer HR firms have exploited the older core HR systems firms' neglect of the talent management niche. Taleo, one of the talent management firms, reports growth rates of 20 percent and over the past couple of years vendors have seen growth rates of more than 40 percent. On its website, Taleo observes that most organizations know more about their laptops and copiers than about their people. Their clients include the Medical College of Wisconsin and Dante's Restaurants. They explain that the reason for the rapid growth in interest in talent management systems is the increasing importance of human capital management to competitiveness and a renewed recognition that integration of goal setting and measurement into performance management can motivate performance.

One of the important features of talent management systems is onboarding. Onboarding is a process that aligns employees with the organization. Onboarding systems measure socialization and engagement as well as provide orientation. On its website, Aberdeen Group reports research that finds that firms that have standardized their onboarding processes and utilize talent management software have 50 percent higher retention rates for new hires. Employees in the firms that utilize talent management software have more than double the level of engagement of "laggard" firms, that is, firms in the bottom third of their sample. The best-in-class firms saw more than double the increase in customer satisfaction and more than triple the rate of customer retention in comparison with midrange or average firms. Aberdeen Group identifies automation as a critical element of onboarding. Other best practices include involvement of stakeholders and a standardized process.

Conclusion

Bersin, Lynn and the various consultancies in the talent management field offer convincing reasons why HR managers and small accounting firm principals should investigate talent management and other integrated HR software. The promise that HR can play a strategic role in the firm seems to be becoming reality due to the integrative power of this new generation of software.

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Mitchell Langbert, PhD, is an associate professor at Brooklyn College. Widely published on the subject of human resource management, Langbert has consulted and served as an expert witness.