Because of their close relationship, more organizations should — and probably will — explore ways to integrate and automate succession planning and learning.
February 27, 2008
Succession planning and learning are part of the same talent family. Because of their close relationship, more organizations should — and probably will — explore ways to integrate and automate these key functions.
Talent management is the process of managing the development and deployment of employees from recruitment to retirement. Talent management activities cover processes that attract, develop and reward employees and include recruiting, competency management, learning and development, performance management, compensation and succession planning.
Companies have been using talent management solutions to address the tightening labor market, which will be exacerbated by the retirement of the baby boomers during the next decade.
Renewed War for Talent
According to the U.S. Department of Labor’s Bureau of Labor Statistics, the unemployment rate has been trending downward for the past 30 years. IDC studies show that more than half of companies experienced a noticeable candidate shortage this year.
In the next three to five years, most companies believe that the impending retirements will cause significant knowledge gaps in at least some areas of their organization. Companies expect most levels to be impacted by the retiring workforce, although middle and senior management will be most affected.
Learning Function Most Automated
By leveraging the core capabilities of the different talent management functions, organizations can optimize the human capital component to maximize the company’s business.
A majority of companies have either a manual or an automated process in place for functions such as learning and development, recruiting, compensation and performance. However, approximately 40 percent do not have a formal process in place for competency management and succession planning functions.
Given the current labor situation, it is particularly important for companies to leverage competency management and succession planning functions to quickly identify and
respond to organizational knowledge gaps and to identify future potential leaders within the organization.
While most companies have processes in place for many talent management functions, the fullest benefit appears to be realized once those functions are automated. Automation helps ensure that consistent processes are used across all business units and automated processes increase the visibility an organization has into its talent pool.
There remains a heavy reliance upon paper-based systems for most of the functions. The one exception seems to be in learning and development, where automated solutions are most common. Learning and development may have been automated more quickly than other talent management functions because of its traditional separation from the recruiting, promotion and succession process.
Evolution of Talent Management Function Automation
The evolution of the automation of the different talent management functions has proceeded differently. Automating payroll began in the 1970s, and the tools to support better management and consistency of the compensation process began to be broadly adopted in the early 1990s. Currently, close to 50 percent of companies have some form of automated compensation management system. While the first automated learning management process appeared in the late 1980s (earlier on mainframe systems), learning management systems (LMS) have been broadly available since early in this decade and coincided with the early pushes toward
e-learning and content management.
Conversely, succession planning remains a largely manual process. Only about 5 percent of all companies have had an automated succession process in place for more than two years.
Thus, not surprisingly, among those companies that do have a technical solution in place, compensation and learning have been implemented the longest. By comparison, more than a third of companies had their succession planning solutions automated just within the past 12 months.
Integration of Talent Management Functions Limited
Integration of the talent functions remains a challenge. If having a talent management process is good and having an automated process is better, having a talent process integrated with other talent functions and with other enterprises systems is the best possible situation.
However, for now, full automation and integration is only happening within a minority of companies. Nearly 40 percent of organizations describe their talent management functions as not being integrated. Only one out of seven companies describe their talent management functions as being mostly or completely integrated.
Companies have not yet adopted an integrated talent management system because the expense is hard to justify. Management benefits of an integrated system, while easy to describe, are typically the responsibility of different functional owners. The compromises and complex data and functional requirements necessary to support an integrated talent management function often are impossible to navigate. However, as the retention, development and deployment of talent becomes more critical, the motivation to cross that ocean will become irresistible.
The value of an integrated talent management process appears to be twofold. There is the direct benefit of increasing an organization’s ability to develop and retain its best employees. Less obvious is the recruiting benefit. In a tight labor market, the ability of a recruiter to describe the organizational commitment to the candidate’s professional development and career success is a powerful motivator. Such a powerful motivator also increases an organization’s ability to attract the top candidates and could even lure experienced candidates to consider changing employers.
Future of Talent Management Solutions
Two-thirds of companies plan to implement parts of a talent management solution within the next 12 to 18 months. Not surprisingly, the two functions selected most frequently are the succession planning and competency management: Lack of process in intensifying war for talent makes succession planning and competency management important areas for investment.
IDC research, confirmed by this Business Intelligence Board study, suggests companies will continue to leverage talent management solutions to address the tightening labor market both to internally develop employees and attract the most appropriate and highest-potential candidates. Those companies that begin the journey early will clearly lead the pack as the labor market tightens.