From the 1950s to the 1980s, when companies wanted to hire, they simply posted handmade signs on their storefronts, restaurants, or office buildings and waited for people to flock in with their resumes. An interview was often as simple as asking whether interviewees could do a specific task. If the answer was “yes,” they were hired—and sometimes started working right on the spot. And that was just the hiring. Managing the employee was a whole other story.

Today, talent acquisition and management is very different.

Traditional HR versus Talent Management

Traditionally, companies managed their human resources with a few basic tools—including the ever-popular spreadsheet. Small businesses often used a variety of software applications to manage their personnel records—one for managing payroll, another for administrating benefits, and a third just for maintaining employee records (including items such as training documentation and performance appraisals). But working with these disparate systems often led to errors and inconsistencies.

Hiring consisted of posting a position in the local newspaper, calling back any individuals who applied for an interview, hiring them, having them complete a few hiring forms, and sending them off to start their day. After a probationary period, new employees would receive their performance review, and—if they were lucky—receive annual reviews every year thereafter. This, however, was not always a given.

This approach raised a few questions: Were the employees getting the training they needed? What did they think about their experience with the company? How did the company track employee performance?

It was clear that organizations had to change the way they managed their people if they were to be successful—and have them stay. Employee turnover, loyalty, and retention became something to think about! It was no longer enough to bring employees on board and simply let them work. It was now necessary to manage them properly, track performance, compensate them for their performance, help them set career goals, provide them with training, and so on.

Today, as new trends emerge and HR challenges increase, the factors most likely to cause a radical restructuring of the workplace include an aging workforce, the retirement of the baby boomer generation, and a shortage of skilled workers.

These factors have spawned new areas in the management of human capital, including recruitment, workforce management, performance and compensation management, succession management, and of course the over-arching approach known as “talent management.”

What Is Talent Management?

Talent management consists of a range of tools and processes:

• tools for defining and accomplishing their recruitment and retention goals
• the ability to handle large-scale hiring and terminations activities using robust forecast, planning, and analytics
• the integration of comprehensive employee data into a unified system
• the ability to identify which employees are optimal successors for key positions
• the creation and management of a talent pool based on performance appraisals and employee career goals

The term “war for talent” was coined by McKinsey & Company in 1997, as the name for its original research on talent management practices and beliefs. Since then, talent management has been adopted by scores of businesses looking to improve the processes of tracking and managing their employee talent. It has also opened up a whole new opportunity for software vendors and service providers.

People are the most important resource in today’s global economy. To remain competitive in today’s job market, employers need to know about their employees—what they’re doing, what their skills are, how they’re progressing, and how they fit into the future of the business. As such, today’s companies need to integrate talent management into their wider business strategy.

When it comes to managing talent, HR and C-level managers definitely have their work cut out for them. They must take into consideration the needs of the organization—i.e., both current and anticipated strategic and operational changes—and link those needs to the development, performance, and needs of employees. Developing and implementing a talent management strategy is just one of the ways they can achieve this.

Where Does Technology Fit In?

But even the best strategy can’t stand alone. Successful execution requires the help of a system that can automate core HR functionality while making crucial employee data easily accessible to the users who need it—including the employees themselves (as in employee portals).

A key component of the talent management strategy is the ability to analyze different situations or scenarios. Without technology (such as real-time analytics, dashboards, etc.), this would be much more difficult. Handling this kind of data on spreadsheets, for example, is not practical and can lead to misinterpretation and errors.

Access to this information is crucial for making informed business decisions about a company’s talent—e.g., who needs to be where, in which capacity (succession planning)? Which department is low on resources? Where do we need to hire?

In order to control costs and provide the greatest competitive advantage in the context of the organization’s resources, the system must be able to bring together key talent management or human capital management (HCM) processes such as performance management, workforce planning, skills management, succession planning, recruiting, and resource scheduling into a unified solution.

Talent management solutions are comprised of several integrated applications designed to help organizations improve their recruiting and hiring processes. These processes generally include recruitment, performance management, compensation management, succession planning, and workforce planning, and may include several other modules, depending on the solution. Talent management can often be adapted to industry-specific challenges, such as those in the health care, education, or financial services fields.

And if it weren’t enough that HR managers have to figure out what types of activities each of these modules and applications accomplish, they also have to figure out exactly which application to purchase first and which delivery model will best serve their current needs.

Talent management solutions are available as hosted software, on-premise, or as software-as-a-service (SaaS), and are provided by niche vendors (often referred to as best-of-breed), human resource management vendors, and learning management vendors, as well as tier-one and tier-two enterprise resource planning (ERP) vendors that have added talent management into their ERP mix.

Before making any decisions about which application and modules to select, be sure you’re prepared with a list of questions and concerns that you can discuss with prospective vendors. For example, how are these modules sold? Do I have to purchase the entire suite of products or can I purchase each module as needed?

Technology Evaluation Centers Gets On Board with Talent Management

This month, TEC is embarking on a new journey by adding a talent management research space to our Human Capital Management Evaluation Center. This new space complements and is integrated with our existing research spaces for human resources (HR), learning management systems (LMS), and incentive and compensation management (I&CM) software.

By providing the missing piece of the HCM puzzle, TEC can now reach out to a wider range of businesses that are seeking information on talent management solutions, as well as to those vendors that provide those solutions. In this new research space, you will find everything you need to start you on your talent management software selection journey, including articles, white papers from leading vendors, certification reports, case studies, and more. Additionally, TEC Advisor (TEC’s software selection decision support tool) allows you to compare talent management solutions side-by-side.