A Bersin and Associates study of the corporate talent management market identifies 22 talent management processes that have the strongest correlation with business impact. HR software did not make the list. The study finds the highest-impact processes include highly refined sourcing and recruiting, performance-based coaching, and identification of key competencies.

The researchers say the list, available for free, can help organizations prioritize their focus when creating or revamping talent management strategies. The study also includes best practices and case studies which illustrate how these processes are executed in leading organizations today.

"Business and economic growth, changing workforce demographics, and constrained corporate spending have collided to create daunting talent-related business challenges," said Josh Bersin, president of Bersin & Associates. "We found that carefully crafted talent management strategies can address these challenges and significantly improve business outcomes. Organizations without such talent management strategies are at a tremendous disadvantage. Unfortunately, our research shows that many companies fall into this category."

Talent Challenges Loom in Most Industries

The Bersin & Associates research highlights the depth and breadth of corporate talent challenges. More than half of respondents (53%) reported critical shortages among line manager positions, 48% identified critical shortages in engineering and other technical professionals such as nurses, and 39% reported critical shortages in sales professionals. The research shows talent shortages across all industries, with particularly urgent problems in healthcare, government, utilities, oil and gas, and telecommunications.

The top talent challenge cited by organizations is a lack of qualified managers. This leadership gap, cited as critical by 51% of respondents, illustrates the difficulties involved in identifying, hiring, and developing mid-level managers.

Integrated Talent Management Strategies Still New to Most Organizations

Bersin cited an example of a leading defense contractor that has developed a comprehensive, multi-prong talent management strategy to recruit and develop technical professionals and managers in response to a workforce analysis that revealed a shortage of 45,000 technical professionals by 2010. Such mature solutions are rare. Bersin & Associates research showed that only 21% of responding organizations currently have some talent management strategy in place and fewer than 5% have implemented a clear strategy with operational plans and executive ownership.

Performance Management, Competency Management, and Recruiting Deliver Highest Business Impact

Upon analysis of 62 talent-related processes in eight functional areas, the study identified 22 processes that drive the highest levels of business impact. The three functional areas driving highest impact are performance management (34% improvement), competency management (31% improvement), and sourcing and recruiting (27% improvement). Other key initiatives important to talent management include leadership development, succession planning, workforce planning, and HR systems.

“Our research identified highly refined sourcing and recruiting, performance-based coaching, and identification of key competencies as the processes which drove greatest business results. Organizations which integrate and optimize these processes can create a high-performance culture, a deep understanding of critical talent needs and future shortages, and a clear view of the best sources for new talent,” said Bersin. “It is no longer enough to simply work harder to recruit and manage people. Organizations must now work smarter and take a holistic and integrated approach to identify, source, recruit, and develop talent."

The study also found that while the market for HR talent management software is rapidly growing, these systems alone do not create significant business impact. “On average, organizations with talent management software solutions are only 8% more effective at solving the business problems we identified than those without, and in some cases, the introduction of technology creates negative returns,” said Bersin. “Talent management is a business problem which must be solved through senior executive commitment and a focus on integrated talent management processes. Software can assist with these improvements, but it doesn’t create improvement.”

Other findings include:

• Business executive ownership is a key driver of successful talent management solutions. Organizations with a top executive owner are more than 35% more effective than those with programs owned by HR executives.
• Corporations clearly recognize the need to improve their talent management strategies. Only 4% of respondents believe they have world-class processes for talent acquisition, management, development, or compensation in place today.
• Leadership development and succession planning are the top areas of focus for HR executives. When asked what area is most in need of overhaul or revamping, 36% of respondents cited leadership development and 30% cited succession planning.
• Learning and development investments are in need of realignment. Only 34% of surveyed organizations currently have learning and development programs that are fully aligned with the organization’s talent management needs.
• Sourcing and recruiting, one of the top opportunities to drive business impact, is becoming a science based on workforce analysis, demographic and competitive analysis, targeted marketing, and centralized control. Organizations with centralized sourcing and recruiting functions (only 40% of the market) are 14% more effective than those with distributed recruiting teams.
• While only approximately 10% of respondents have adopted integrated talent management systems, those with such suites have a 60% higher return, when compared to those organizations with unintegrated HR software applications.

Effective Talent Management Solutions Are Tailored to Unique Business Needs

“Talent management problems and solutions are very business specific,” said Bersin. “Each best practice we studied was uniquely crafted to meet the needs of that company’s market, products and services, culture, and competitive issues. Forward-thinking organizations are rethinking the way HR is organized to improve its integration and alignment with specific business challenges.”

About the study

The Bersin & Associates 400-page report, "High-Impact Talent Management: Trends, Best Practices, and Industry Solutions", is based on input from more than 750 organizations and 15 vendors, as well as interviews with 55 senior HR executives and encompasses more than one million data elements. This study examines all aspects of corporate talent management, including global business drivers by industry, top talent gaps, talent trends, and adoption rates of 62 talent-related processes in eight functional areas. The research also provides data which can be used to help companies benchmark their strategies against organizations of similar size and in similar industry segments. An executive summary is available at no cost.

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