Using technology to support talent management

By Alex Bartfield
www.mercer.com/humancapitalconnect

Ensuring that the business has the right talent, motivates and rewards it correctly, and ensures that it delivers the right results – all without overstretching budgets or overloading individuals – is a key business (and therefore HR) imperative. Not surprisingly, in order to support this tough challenge, the talent and reward technology industry has enjoyed explosive growth over the past decade.

According to research firm Bersin and Associates, the industry has grown from zero to approximately $US 3 billion since 1998, and rose by 20 per cent in 2010 alone – despite tough economic conditions. This upward trajectory is set to continue, particularly as market penetration is still less than 7 per cent in Europe and the US. Indeed, Mercer expects that every organisation with more than 500 employees will invest in talent and reward software over the coming five years.

However, most of the talent and reward technology solutions that organisations have put into place over the past few years have failed to deliver the expected benefits. While smaller customers are more satisfied than are larger customers, Bersin and Associates found that satisfaction overall is "moderate and widely varying" – a finding corroborated by Mercer's own findings. Over 75 per cent of participants in Mercer's 2010 EMEA HR Transformation Survey said that HR technology implementations in their organisations didn't entirely meet expectations. While some of the fault for the gap between expectation and performance lies with the technology vendors, organisations themselves must take much of the blame.

It is instructive to look at the vendors' mission statements, many of which are so generic as to be meaningless. For example, vendors claim to be able to "more effectively drive business strategy and growth," "increase the execution of every company [they] work with by 50 per cent" and "enable organisations to meet the challenges they face in empowering their people and maximising the productivity of their human capital."

It's hard to disagree with any of these objectives, but they offer little in the way of practical guidance when it comes to purchasing and implementing new technology. And HR is as guilty as are vendors in terms of their overweening focus on broad themes. Indeed, the root of clients' dissatisfaction seems to be the fact that their talent and reward strategy (and supporting technology) is not aligned to the overall business strategy. So it's perhaps not surprising that HR feels so disillusioned when it realises that the technology solution it has implemented is not a panacea for all its problems.

Aligning talent and reward strategies and technology with business strategy is the most important factor in successful technology implementations. But there are other risk factors too that firms need to pay attention to.

Factors in successful technology implementations

Align talent and reward strategy and technology with business strategy.
Don't try to automate ineffective processes.
Communicate to everyone exactly how the new technology will help them in their jobs and careers, and explain the nature of the change.
Ensure HR has sufficient resources to manage the project.
Ensure the new technology has high-quality content.
Have governance structures to measure the effectiveness of the system and the overall programme.
Secure senior sponsorship.

Delivering value to stakeholders through the next generation of reward and talent technology

Step 1: Linking the human capital strategy to the business context

An organisation's business context will vary, depending on its sector and the nature of the challenges it is facing. Banks' business strategy, for example, might centre around building a more ethical culture and brand and attracting and retaining talent in a stricter reward environment. The energy sector, on the other hand, might be concerned with building a culture of safety and having programmes in place to support the redeployment of staff from politically troubled Middle Eastern countries. And the public sector will be preoccupied with continuing to deliver high-quality services despite new budget constraints. So while productivity and general business growth are important for all these sectors, their business and talent strategies should be more focused. General macro issues may not be particularly helpful; nor are broad themes. But if there is a broad theme to organisations' current concerns, it is likely to be risk rather than productivity.

Nevertheless, while HR has to take into account the current issues facing the organisation and translating those into a people strategy, it must also be proactively informing fellow executives about the talent-related opportunities and threats that could influence the business strategy. Current examples might include the raft of social and professional networking tools, where HR could usefully provide a view as to whether they are disruptive and risky or an aid to productivity and knowledge management. Another issue might be how to attract and retain talent in an environment of growing transparency characterised by blogs and feedback sites where individuals can quickly get real-time information on organisations, including what people are paid.

Step 2: Designing talent management and reward solutions and programmes that fit the human capital strategy

This involves determining the level and type of reward you need to remain competitive in the marketplace, and using performance and succession management to accelerate workforce performance and productivity.

Step 3: Executing the strategy Successful execution of strategy requires more than being on time and on budget. It also means communicating to everyone the solutions you've designed and determining exactly how you will implement them.

Sourcing. That involves deciding which activities you will do yourself and which you will either outsource or co-source.

Infrastructure. It involves:

Determining the capabilities you need to ensure that your processes are efficient and effective
Ensuring you enhance your profile with employees and managers on key activities such as pay and performance by implementing the right technology
Ensuring you have the talent, skills and capabilities to deliver your programmes
Organising the department in such a way as to optimise service delivery, supported by the right technology, processes and people

Governance. You also need to decide how to lead the function and manage related investments.

Successful execution also means measuring the impact of your talent and reward processes – but just 15 per cent of respondents to a Mercer survey of its clients said they had the tools and capabilities to do that effectively. It's no surprise then that, according to Mercer's Future of Talent Management Survey 2010, 41 per cent of respondents said they were 'not effective' at measuring the success of their talent initiatives, with only 54 per cent saying they were 'somewhat effective'.

Reward and talent management technology offers many benefits that help companies remain competitive and thrive in an unpredictable business climate. For example, it can help:

Improve operational efficiency
Promote optimum use of rewards
Support effective leadership
Cultivate an engaged workforce
Maintain a strong talent pipeline
Ensure the best use of talent
Link human capital strategy to business strategy

These days, the benefits offered by the technology help business leaders and people managers as well as current and prospective employees, and while earlier systems tended to be fragmented and stand-alone, reward and talent management technology solutions are increasingly integrated. What's more, as the distinction between personal and professional lives blurs, helped by mobile devices and internet access that allow individuals to work at any time from anywhere, tools originally devised for consumer use are being embraced in 'work technology' solutions. Indeed, reward and talent management technology will increasingly combine talent management and workforce analytics with social collaboration tools.

However, next generation HR is not about features and functions, and the HR department that is seduced by that idea is bound to be disappointed. Rather, it is about delivering measurable value by designing solutions and programmes that are aligned with specific business goals and priorities, using technology to enable that strategy, and measuring success with analytics. Only the talent and reward technology solutions that support this approach will meet HR clients' expectations, but blaming the vendors for shortcomings amounts to denial.

The responsibility for buying and implementing successful technology solutions lies firmly with HR – who should also remember that how they implement is as important as what they implement. The change management aspects of technology implementations can't be over-emphasised – and could, in an ideal world, amount to 25 per cent of total deployment costs. HR functions often overlook this critical element – and they do so at their cost. Talent management and reward is the face of HR to the rest of the business, so it is essential that technology enhances those key practices, not undermines them.