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Talent management system essential guide

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Talent analytics gaining a foothold in the industry

Companies are looking to talent analytics for improving decision making around recruitment, retention and succession planning.

Talent analytics is rapidly becoming the next big thing in the analytics world as companies step up their efforts to cultivate and align human capital resources with core business objectives in hopes of achieving a competitive edge. And talent analytics is helping companies get a better understanding of their talent intelligence.

“The workforce has become much more high-level within the mind-set of the C-level executives than it ever was before,” said Claire Schooley, senior industry analyst at Forrester Research Inc. in Cambridge, Mass. “They realize it takes a lot of time and money to ramp up someone who’s brand new, to get them to be part of the culture and understand how the job is done.”

Given the new mind-set, analysts are projecting significant growth in the talent management software space. For example, in the Global Talent Management Software Market 2011-2015 TechNavio report forecasts that the global talent management software market will grow 12.5% between 2011 and 2015.

Talent analytics getting attention

While talent management software has been around for some time, it recently has received more enterprise-level attention as major ERP vendors, including SAP, orchestrated sizeable acquisitions to beef up their capabilities in this emerging area. SAP’s acquisition of SuccessFactors in December 2011, coupled with rival Oracle’s purchase of Taleo in February this year, underscored companies’ increasing desire to foster an employee-centric culture and capitalize on their biggest asset -- their employees. It also revealed the software giants’ ambition to flesh out their HR portfolios with talent analytics and Web-based delivery models, as both acquired companies are leaders in the Software as a Service-based HR field.

SAP sees big potential for talent management software among its customer base. “In terms of operations, companies have made human resource operations as efficient as possible, and talent analytics and management software helps provide an edge over competitors,” noted Kouros Behzad, SAP’s director solution management for line-of-business HR. “Best-of-breed organizations are using talent management more than the laggards. It helps them move forward quicker and better.”

Talent analytics offers a qualitative view

There is some confusion about what constitutes workforce analytics and talent management analytics. Some experts say the line between the two is artificial, while others suggest that workforce planning is more quantitative, focused on deploying the right people to the right jobs in the right quantity. Talent analytics, on the other hand, is more qualitative, experts say, keyed to personnel development, including recruitment, retention and engagement.

Experts say that applying talent analytics can help companies better analyze turnover, conduct more effective succession planning, stay on top of certifications and training, and identify top performers and ensure they are effectively deployed and engaged. For example, using talent analytics, HR can drill down into the number of employees that have specific certifications. It can then compare those figures with what is required based on different regulations, identify the gaps and develop the appropriate training.

Consider the example of an oil and gas company looking to become a leading provider of renewable energy in 10 years but lacks a renewable business unit. Talent analytics would give the company the insight into what specific skills sets it needs. These analytics could also show what existing talent could be cultivated into renewable energy resource experts or if they needed to acquire expertise.

“What you’re measuring is the strength of your talent bench as far as certifications, how deep the bench goes in terms of succession so you know you can fill certain roles, and where you need to be investing in training,” explained Lois Melbourne, CEO of the Irving, Texas, company Aquire, which provides workforce planning software.

Another example of applying talent analytics is to foster employee engagement. With the proper visibility into key data sources, HR specialists could determine that 80% of high-value employees attend a particular leadership training program, but of the directors that left the company, 20% didn’t participate in that training. The finding might suggest that lack of training or personnel development prompted the turnover, helping company leaders to be better positioned to take action to correct the problem.

“Having the data-derived insight to know confidently what happened is where analytics play a hugely important role in taking leaders from thinking they know the answer to knowing they know the answer,” said Al Adamsen, CEO of People-Centered Strategies LLC, an advisory firm based in San Francisco that specializes in leadership development and talent strategies. “It increases the confidence in decision making -- in this case, an investment in people and training.”

Next Steps

Review an FAQ on SAP talent management

Find out about using talent management for team building

Get advice about cultivating employees with talent management

This was first published in June 2012

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