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Spending Increases for Talent-Management Systems

For the third year, HR organizations are increasing their spending for HR technology systems, but their focus is changing from siloed, transactional processes to more integrated systems that facilitate workforce planning and analytics.

Tuesday, June 28, 2011
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HR technology spending is continuing its upward trend, according to a recent survey, but experts agree that HR's plans will never revert back to pre-recession activities.

About one-third (34 percent) of HR and HRIT executives from 444 U.S.-based organizations have increased their HR technology spending in 2011, according to New York-based Towers Watson's 14th annual HR Service Delivery Survey.

In 2010, that number was 29 percent and in 2009, it was at 21 percent.

"So that's 13 percentage points [on the upswing] in the last two years," says Tom Keebler, Philadelphia-based global leader of the professional-services company's HR service delivery and technology practices. "That's significant."

The survey also found 41 percent of those polled cited talent- and performance-management systems as one of their top three HR-service-delivery issues for this year -- followed by streamlining HR processes and systems (27 percent) and increasing involvement in strategic business-driven issues (25 percent).

"As the economy continues to improve, the need for robust talent- and performance-management programs and enabling technologies has never been greater," Keebler says.

But the focus is no longer on "those siloed, transactional functions that were so prominent before the recession. Now," he says, "it's on tying those fragmented transactions into a more holistic and integrated talent-management system."

Similar findings come from Oakland, Calif.-based Bersin & Associates.

In the talent advisory firm's Talent Management Factbook 2010, "our research shows that simply having one or more talent systems does not necessarily make an organization more effective," says CEO Josh Bersin. "In fact, installing a system that is complicated to use and administer can be less productive and less effective than using simple paper-and-pencil processes."

What makes a difference to effectiveness, "is having well-integrated talent systems," Bersin says.

"Companies with [these types of systems] have higher ratings on nearly every aspect of talent management," Bersin says. "[They] are better able to hire, develop and engage employees. They are also more effective at talent and career planning, and have higher employee productivity."

Having learned the importance of integration and of running leaner and meaner in the 2008-2009 recession, Keebler adds, "HR is not going to slip back and recreate itself the way it was in 2005, 2006 and 2007 -- before [HR functions] transformed themselves to survive.

"We're seeing a lot of HR organizations recognizing that technology can and will allow them to become more efficient," says Keebler.

"You're going to see increased focus on workforce analytics and workforce planning, and career and performance management, and projecting forward" to tomorrow's pivotal jobs and the skills that will be needed to carry them out, as well as the people on staff or outside the organization who have those skills.

"You have all-new technology capabilities that no one was even thinking about in 2003, 2004, 2005," he adds. "The focus back then was about, 'Can my employee access this from home?' "

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Although Keebler does see HR hiring activity growing, it's "not for the traditional roles that you used to see."

The HR roles now and going forward, he says, "are much more around people who can partner with the business and people who have strategic leadership potential." And today's technology can help find, recruit and manage the right people for those roles, he says.

Jason Averbook, co-founder and CEO of Minneapolis-based Knowledge Infusion, won't go as far as to say hiring is growing by any substantial degree. Yes, hiring activity may be going up in HR organizations, he says, but only in terms of "figuring out a better way to utilize the workforce they already have in place."

"The activity may be going up in internal movements -- when boomers leave or others leave [as the recovery moves forward], or through changes in staff and positions to optimize the workforce -- but not the actual jobs," he says. "I don't see any situation where there will be massive job growth in the next five to 10 years."

As far as jobs are concerned, Averbook says, his HR consultancy works with more than 300 organizations "and none of them are increasing hiring," though many are beginning to look outside their organizations for critical talent, something that wasn't happening in the throes of the recession.

What organizations are being asked to do now, he says, "are to plan their workforces three to five years into the future, determine their needs going forward and establish a talent strategy to fill those needs."

This, in turn, "drives the need for talent technology that will determine what those gaps will be and how to fill them," which is precisely what companies and their HR organizations are now looking to buy.

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