December 31, 2010
At Forrester, we think of strategic talent management as made up of four pillars: Recruiting, Performance (including succession and career development), Learning, and Compensation, which sit on top of the core HR system that manages employee records and transactions. These four pillars of HRM (human resource management) have taken on critical importance in the past year. Organizations find talent that they must bring up to full productivity as quickly as possible. Leaders want to make sure employees have performance goals and appropriate formal and informal training to help them meet these goals. For those strong performers, variable compensation rewards their work efforts. Technology is available to automate all these processes, but up until this year, few vendors provided functionality in all four strategic HRM pillars.
Now the big push on the part of HRM vendors is to offer a four-pillar solution. The vendors with a learning heritage are adding performance, compensation, and even recruiting — sometimes building solutions, and other times making acquisitions. Recruiting vendors are broadening their offerings by acquiring performance and learning vendors. The driver is the customer who wants a unified solution rather than “best of breed” solutions from multiple vendors. One client told me recently that they had six vendors for various HR processes. Even though the vendors had strong offerings, integration was a nightmare, and dealing with so many individual vendors was another headache. The value of a truly unified strategic HRM from one vendor is a no-brainer for HR departments, but they are not sure the vendors can deliver. The comments I hear often are, “Vendor X has a great performance and compensation solution. They have made acquisitions and offer recruiting and learning, too. We are not convinced that the new acquisitions are ready for prime time. Maybe we should stay with our multiple vendor solutions for a while longer.”
Vendors have to prove to customers that they can really deliver solutions that make recruiting, performance learning, and compensation seamless in the business environment. I believe 2010 has been the beginning of the ramp up, and that 2011 will see even more acquisitions toward the goal of providing a unified strategic talent management offering. We will also see some successes from early adopters and the gradual movement of companies toward one vendor for multiple strategic HRM processes.