The Return on Talent Management Systems
Companies are switching up their talent management software in droves. Industry leaders don’t try to keep up; they set the standard, and the new standard is better TMS. The talent management software industry is booming because it has proven to be a sound investment. What makes a sound investment? You guessed it –a return.
According to a recent Forbes article on the ROI of talent management systems, “Our research shows that the talent management software market has grown to well over $4 billion and will grow at more than 15% this coming year.” These numbers speak volumes for the effectiveness and need for this new technology.
These new tech solutions make strategic talent management a possibility for everyone. HR professionals can no longer keep up in the industry working in a silo type fashion. Successful companies are driven by fully integrated processes and systems. According to the same Forbes article, the following are attributes of companies with strategic talent management systems in place:
- 26 percent saw greater revenue per employee than their peers
- 40 percent benefited from lower voluntary turnover among high-performers than their peers
- 28 percent were less likely to downsize during the 2008 recession
How’s that for ROI on talent management software? Simply having the software isn’t enough though. It seems that only through the correct implementation and use of the software that these companies saw a marked return on investment. The software ends up being responsible for promoting cohesion and consistency in each talent management process. In essence, setting goals for driving the success of the company. Leaders in the TMS industry offer goal management as part of their software.
This goal management software is in large part responsible for the reported ROI of this technology. Research has found that when companies are able to clearly define and track goals on a quarterly basis, they enjoy 3X the return than those companies who only assess goals annually. This relates back to goal management software due to the ease at which companies can revisit and track their goals.
Investing in talent management has some obvious benefits. After the University of Wisconsin Credit Union invested in talent management best practices in 2008 it saw a 63 percent reduction in time spent by managers on administration. There are also some ripple effect benefits that many companies don’t realize come along with the implementation of strategic talent management systems. The same credit union saw an 8 percent increase in its employee engagement scores.
Most of the new talent management software will also include development planning. This type of planning helps leaders to see what skills are needed and where. This strategic part of the software takes into account what skills the company already has and what skills it needs or will need. This enables a more strategic method of career planning to keep the organization in tune with the industry.
The theories and equations to calculate the ROI of talent management software are abundant, each with a different outcome. At the end of the day, software will do nothing if good management and the right leadership aren’t in place. Tools only help companies implement those practices established by management. If management doesn’t already encourage relevant practices, software will do little in the way of advancing the organization financially.