Originally posted on Bersin by Josh Bersin

The Epic Shift: Away from “Talent” and now focus on “People.” Talent scarcity is still a problem, but engagement, empowerment, and environment are now the real issues companies face.

For the last ten years businesses and human resources departments have been heavily focused on building talent management strategies. Originally conceived as programs to help manage people from “pre-hire to retire,” these strategies have spawned a $10+ billion software industry, helped refocus HR departments, and have educated CEOs and business leaders about the importance of talent.

And the scarcity of talent gets worse. Just this month a New Yorker article details the emergence of “talent agencies” for software engineers, replicating the marketplace for talent agencies in Hollywood. The company discussed in the article, 10X Management, brings together top engineers and product designers and serves as a complete agency to help you find top software teams. As the world of work becomes more contingent and the disparity between highly skilled and others grows (read “The Myth of the Bell Curve” for more on this topic.), the need to attract top people will get harder.

Our latest research shows that your ability to attract talent (the right people, not just anyone) is now one of the biggest differentiating factors in business. We see a fast-growing new marketplace for tools and vendors which help you assess your culture and find people who “fit” – fit with your strategy, your culture, your team, as well as the job. New talent analytics tools and strategies now help you figure out who fits, find people who fit, and make sure you know how to keep people who fit.

With all these changes, and an accelerating need for new young leaders, is “talent management” as we define it working? As I go around and talk with business and HR leaders, I am left with a big question:

Do today’s “talent management” programs, as defined, work? Have all the companies who purchased and implemented talent management software truly transformed themselves? Have we really built the “talent-centric” organizations we talked about over the last decade?

My answer is simple: the world of “talent management” shifted under our feet. “Talent management” strategies we conceived in the last ten years are rapidly becoming out of date. A focus on “pre-hire to retire” is becoming less relevant, stack ranking and performance management is being totally revamped, corporate training is undergoing a total transformation, and the concepts of “staffing and assessment” are being replaced by a focus on corporate culture, engagement, work environment, and empowerment.

As I look back on the talent management research we did in 2005 and 2006 I realize that while most of it was important and fundamental, almost all of it has changed today. In this article I will give readers some perspective and then highlight the important trends and opportunities we have to better attract, engage, and manage people in the next decade.

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History: Corporate “Talent Management” Started Around 2004

Around ten years ago (circa 2004) people in HR started talking about bringing together many of the standalone practices within HR into a new function called “Talent Management.” At that point in time the economy was growing and pundits were talking about “The War for Talent.” (I believe McKinsey started the phrase.) The challenges included aging baby boomers, a tight economy for critical skills, and the need to build leaders around the world. This set of issues refocused HR on building talent programs to recruit, develop, and better manage people.

Here is the issue we talked about over the last ten years – and it has turned out to be true (slide from 2004):

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These set of talent challenges pushed HR to think differently. Rather than define itself as the “service center for employee issues” and a “service center for managers,” HR started to redefine itself as the “talent management function” for business. This was a profound shift and it set off ten years of restructuring, reskilling, and redesigning the HR function.

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The original idea, shown above, was to “bring together” each of these standalone programs into an end-to-end process. Originally people called it “pre-hire to retire” (a dated, now that people change jobs so much), and it set of a big set of strategies and software vendors to try to not only optimize each step, but bring all the steps together.

The term was coined: “Integrated Talent Management” – and a set of software vendors started to build “Integrated Talent Management Suites.” We called them “suites” because they were kind of cute and novel, not really a standard software package yet.

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The goals of integrated talent management were lofty: give companies an integrated view of capabilities, leadership gaps, succession pools, and even talent needs for the future. Even today this is a tough thing to do, but we have built an industry around this whole idea.

Software vendors jumped in quickly, setting off a major chain of acquisitions. I believe Authoria (now PeopleFluent) and Softscape (now owned by SumTotal Systems) started this idea, when they pitched the idea of a single software system that would integrate recruiting, performance management, compensation, and maybe even learning management. Softscape had an integrated HRMS and talent platform in the early 2000s and Authoria won the “shootout” for integrated suites at the HR Technology Conference in 2007, (which we as an analyst firm actually designed).

We aggressively jumped into research in this area, and in 1997 we published one of the reports which helped define the market, called High-Impact Talent Management. I wrote much of this report and I remember thinking very hard about what this all meant to business.

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The process we discovered and wrote about, shown above, was one driven by the business. We found a few leading edge companies doing this – starting with business strategy, moving to talent strategy, and from there to HR and process design. But many started at the bottom, and focused their talent management programs on software implementation or solutions to integrate HR.

Even today this remains a challenge. With so many vendors in the market and the ERP providers offering talent management software, it’s common for companies to buy software first, and then later figure out how to use it. Today more than 40% of the companies buying HR software are focused on “making it easy to use” and integrating heterogeneous systems, not “solving particular talent problems.”

To help companies understand what talent management was all about, we developed the framework shown below (which many of you have seen). It pulled together all the practices and processes to consider in an integrated talent strategy.

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As the framework illustrates, we mapped out how these processes worked together and documented many of the process steps to link each together. Today such an integrated framework is common in most HR departments, and continues to be a point of ongoing discussion.

As our framework shows, we define learning and capability management, competency management, planning, and business alignment as “uber processes” which play everywhere in the organization, and you can also see that performance management, succession, career, and leadership development make up the core. This is still a very valid process diagram, although some organizations may put talent acquisition in the middle (depending on your stage of growth.)

I distinctly remember meeting with a client around that time (2008 or so) and they said to me “what about diversity, doesnt that belong in here?” My reaction was “no, I’ve never heard anyone think of diversity and inclusion as part of their talent strategy.” Well of course I was wrong – today Diversity and Inclusion is very core to this whole set of processes (or should be).

The idea, again, was to provide what vendors sometimes call “pre-hire to retire” HR processes with an integrated set of programs that all work together. And in the early days talent acquisition wasn’t even considered a part of this process.

Today almost every major corporation has a “VP of Talent” or “VP of Talent Management” and this person’s job is to manage some combination of the HR functions shown above. In some cases the company brings performance, succession, and leadership development together. In other cases the L&D team is integrated as well. And in many companies today the recruitment or talent acquisition team is also part of this function.

2006-2012: Software Vendors Jump In With Both Feet

While all this thinking was taking place within HR, software vendors smelled an opportunity and jumped in. Following Authoria’s lead, companies that sold standalone tools for recruitment, performance management and learning management (SuccessFactors in Performance Management, Taleo in Recruiting, SumTotal or Saba in Learning) suddenly realized that they could or should have everything. So there was a very exciting 8 year period of consolidation.

This was quite exciting for all of us. Some of the deals included:

  • Authoria purchased several small companies and was later purchased and became PeopleFluent.
  • Taleo acquired Learn.com and was later acquired by Oracle. Oracle later purchased SelectMinds to expand its recruitment offering.
  • SuccessFactors acquired Plateau and was later acquired by SAP.
  • ADP acquired Workstream and built out its own LMS and talent paltform, and has since launched integrated analytics and benchmarking as part of its talent management solution.
  • CornerstoneOnDemand expanded from LMS to talent management and later acquired Sonar6 and then Evolve (analytics).
  • Stepstone acquired a variety of software companies, extended itself into end-to-end talent management, and renamed itself to Lumesse.
  • Silkroad acquired a variety of companies including an HRMS company and built out a suite, pioneering the idea of the HRMS being part of this “suite.”
  • Saba and SumTotal (LMS companies) acquired smaller companies to build out their end to end talent suites.
  • Halogen Software, Kenexa, and many others went down this path – creating an industry of “integrated talent management software” companies.
  • IBM acquired Kenexa and is going down this path now, and Salesforce has made some efforts through their acquisition of Rypple and launch of work.com (which has been repositioned for sales forces today).

This entire industry has become huge, with more than $9 billion of total product revenues in the market each year. Today the whole concept of a “suite” is going away and the ERP vendors have jumped in. Almost all the ERP vendors have built or bought similar products to integrate with core HR systems (HRMS).

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As those of you who work in the software industry know, this is the food chain of software companies. As a market evolves, bigger vendors with larger sales forces and lots of existing customers buy up smaller companies because they can quickly put these new products into their sales channel, rapidly growing that market.


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