Talent management is a large and growing challenge at many organizations and talent management providers are racing to provide new offerings that can help business leaders and managers improve how they recruit, retain, develop, and oversee their workforce. Many HR organizations and those alike initially specialized in a single aspect of the talent management value chain are now focused on more comprehensive offerings to meet the pain points of businesses and understand their unmet needs in human capital management.
According to a study done by BCG, workforce management technology needs to offer real insights into what businesses want and deeply understand the needs of the market to design smarter solutions. In the past few years, we have seen explosive growth and a growing challenge of managing talent in the new work norms after Covid and the rise of the gig economy. But this challenge brings opportunity. In 2021, more than $12 billion in venture capital poured into HR technology, with the rate of investment continuing to grow, as investors back companies whose digital models are promising. Workforce management providers have a critical window of opportunity here for the next 18 to 24 months to innovate their offerings and establish their roles in the talent ecosystem.
To survive and thrive in the digital economy, talent management providers will need to become a technology business that provides an exceptional experience to their customers, partners, and employees based on real-time analytics and a connected experience. But simply taking the initial step towards a transformation without a digital core will not equip organizations to lead in today's marketplace. A digital core empowers workforce management providers with live visibility into all talent mission-critical processes and integrates systems that allow business leaders to predict, manage, analyze, operate, simulate, plan and even anticipate future talent outcomes. A leading workforce solution provider, Headway, reported that its digital core has powered a connected staffing value-chain and continues to provide personalized hiring experiences to new employees, including offer management and onboarding. Since the implementation of a connected metric-driven value-chain, they were able to accelerate recruitment and hiring by 20%, increase client satisfaction by 40%, and increase total revenue by 30%. Not only are they reaping the benefits of integrated solutions, but they are also able to provide HR departments with streamlined rapid time and expense reports to accelerate hiring performance and reduce employment costs based on real-time contextual information.
94% of HR decision makers struggle to keep up with the latest technology trends and developments. (BCG)
Customers Want Integrated Solutions
Our conversations with HR leaders suggest that the most important coordination needs to happen across the value chain, as companies look for solutions that integrate disparate data sources, talent sources, and functionality to manage talent more seamlessly.
Roughly less than 1% of data that exists in organizations is analyzed and turned into business benefits.
Well-connected, value-centric HR departments and workforce solution providers that can meaningfully contribute to enhancing organizational effectiveness need to:
- Anticipate future talent needs
- Assess skill levels
- Source talent and match internal candidates to opportunities
- Develop the skills and capabilities for the current workforce
- Embed workers in the organization
- Manage employee performance and engagement
To adapt to the changing landscape of work, companies need to pursue essential priorities aimed at improving employee journeys, retaining top talent, and updating their processes and technology systems. BCG research has found that the real value of digital technology comes from realigning business processes with technology and ways of working. In fact, many companies report that an intuitive user interface and a strong client success team are key considerations in their choice of solution partners.
But implementation needs to go beyond the technical domain. Companies need partners that can guide them to adapt their skill taxonomies for industry and company specifications, help them learn from other companies' journeys, and partner with them to envision the future of their workforce. More than any digital transformation implementation, this journey is about changing an organization's culture through proper insights and integrated solutions.
3 Strategies for Workforce Management Providers to Create an Edge
1. Develop differentiated data to power predictive analytics and insights
Data is king. We’ve all heard it. The scale, richness, differentiation, timeliness, and quality of data all matter. Accurately identifying skill requirements and assessing capabilities requires effective data integration. For example - staffing companies have propriety data that is derived from their processes like information about who needed what kind of staff, how that staff performed, how that staff was paid, learning on what and how well individuals are mastering new skills, how applications that workers use contribute to job efficiency, etc. that they can use to predict, analyze, manage and operate future talent needs and improve candidate matching, creating a positive feedback loop and innovating solutions faster.
2. Create strong skill taxonomy, with the capability to adapt it for industry and company context
In our work with clients, we have found that almost every talent platform and external data provider has its own skill taxonomy or ontology, but not all are fit for purpose. Developing usable taxonomies requires aligning and integrating with multiple external taxonomies, simplifying them using ML, and then refining them further to unearth the common skills at the right level of granularity. And as anything else, taxonomies evolve over time and skillsets change rapidly, so staying up to date and having a good core to support you when they do is important.
3. Establish a position that connects or orchestrates multiple parts of the talent management value chain
Customers want integrated solutions. They provide seamless experiences and help companies anticipate workforce needs and identify potential matches from across internal and external talent sources while connecting them with a set of reskilling and upskilling solutions quickly. BCG research shows that companies overwhelmingly want to be able to access a suite of upskilling providers rather than operating in a closed ecosystem. A digital core enables talent management providers with the ability to establish this position quickly and even become a storefront for a variety of value-chain activities.
Providers that treat talent management technology as a plug-and-play solution are setting themselves up for failure. Creating a connected, value-centered system for talent management will allow them to face market disruption, focus on strong partner collaboration, business optimization, and customized workforce solutions. As the market continues to evolve at a much faster pace, being able to identify customer needs and provide solutions when they are most needed is becoming increasingly critical, and a digital core can help.