There is a clear relationship between individual productivity and an organization’s ability to cultivate a high-quality workforce. When learning is connected to critical elements of talent management, the result is greater than the sum of its parts.
Much has been said about the global war for talent and the growing shortage of skilled labor, and most experts agree that a “perfect storm” of events — including mass baby boomer retirements and a growing skills gap, especially in technical areas — are making talent increasingly scarce.
According to an April study conducted by a team from The Boston Consulting Group (BCG), the World Federation of Personnel Management Associations (WFPMA) and the Society for Human Resource Management (SHRM) involving 4,741 executives from 83 countries and markets, the most critical people challenges include managing talent and improving leadership development. The BCG study bluntly assesses the implications of the talent crisis:
“Talent and leadership are becoming even scarcer resources than ever before,” the report said. “This scarcity results from dramatic changes in the complexities of business and the expectations of employees. Increasingly, people are the most important asset at many companies, and the fortunes of these so-called people businesses are closely tied to their leadership and the talent they employ.”
As the market for top talent heats up, the ability to build an environment that not only attracts, develops and retains great employees, but maximizes employee impact at all levels of the organization becomes paramount. Senior executives are beginning to understand the explicit links between improved business performance, increased workforce productivity and the development of individual employee competencies — leading organizations to change the way they have traditionally viewed learning management.
No longer a siloed function of the corporate training department, learning management is fast becoming a top priority for human resources and business executives looking to drive business operations and employee performance. These executives recognize that well-trained and knowledgeable employees operate more efficiently and are more agile, enabling their organizations to seize market opportunities and successfully navigate economic downturns.
As a result, organizations serious about improving workforce performance to realize bottom-line results are integrating learning management strategies with strategic, supply-side HR functions, including performance, compensation, career development and succession planning.
Behind the Scenes
To meet the challenges associated with the growing talent crisis discussed earlier, today’s CLOs must work with business and HR executives alike to develop a learning strategy that integrates with HR strategies and focuses on filling critical talent gaps and developing the organizational talent pool. Where companies were once reported to spend an average of 12 times more on recruitment than on training existing employees, experts argue that approach is no longer viable:
“As a result, by focusing on the end points of managing talent (acquisition and retention) rather than on the middle ones (deployment and development), organizations ignore the things that matter most to employees. When this happens, companies set themselves up for inevitable churn, which becomes especially hazardous in a tight labor market.”
According to research and advisory firm Bersin & Associates, corporate training constitutes a $60 billion industry in North America, worldwide spending is greater than $150 billion and an average of 2.4 percent of payroll is spent on training. Bersin & Associates’ research also revealed that, “Today’s corporate training organization is trying to redefine itself in the world of reduced spending, the multigenerational workforce, social networking, increased globalization and a tremendous focus on integrated talent management.”
To drive workforce productivity and business performance, forward-thinking organizations are undergoing a fundamental shift in how they build and manage their people, moving toward a business operations-centric approach. Learning management is, of course, critical to developing organizational capabilities. To move to a business operations-centric approach to managing people, employee learning must be tightly integrated with HR processes, such as performance and career development.
Why? By leveraging data across the enterprise, organizations can drive workforce performance to new levels, which can have a dramatic impact on the bottom line. Organizations can proactively develop learning plans based on performance results and the specific needs of business units. According to a study of more than 165 organizations by Aberdeen Group and the Human Capital Institute (HCI), companies with integrated learning and HR strategies through talent management achieve about 45 percent higher workforce productivity and almost 40 percent higher revenue than their peers.
As Easy as It Sounds?
Historically, most HR departments have operated using a decentralized model, in which each functional area operates independently, with its own goals, measures and budgets. For example, little to no integration typically exists among core HR functions such as development, performance management, compensation, succession planning and retention.
Because most companies have not integrated learning and HR functions, the migration to a cohesive learning organization in which learning and development activities are not only tied to HR activities, but also to business objectives, can seem daunting and complex.
Most organizations have tools for learning management. Many also have disparate tools for performance management and compensation planning. However, these projects often are managed in isolation and with separate resources, limiting the role learning and HR play in corporate strategic-planning processes.
The organizations best positioned to win the war for talent are those taking an integrated approach to learning and HR by implementing unified talent management systems. Talent management solutions have emerged as an option to meet the needs of executives, managers and employees through one system and unify the information across applications such as learning, performance, compensation, career development and succession planning.
The combination of learning with HR through talent management not only offers a holistic view for all of a company’s stakeholders, it enables the learning and HR organizations to seamlessly share information and organize cross functionally.
Learning Management’s Role in Holistic Talent Management
While some mistakenly identify learning management as a “nice to have” in the spectrum of integrated talent management processes, today’s leading organizations carefully are coordinating or merging their learning and HR processes to develop employees to their fullest potential. They recognize the need to position learning as the cornerstone of their talent management implementations, drive the advancement of their employees’ skills and increase workforce productivity.
For example, organizations that fuse the two can not only administer an employee’s annual performance review, they also can use the performance appraisal to establish actionable learning plans that will result in greater employee performance and goal achievement. Employees can then be compensated and rewarded for their performance.
Bersin & Associates addressed this type of marriage in its “Performance Management 2006” report:
“We believe that LMS integration will be the most common integration in the next few years, driven by both the development-planning processes as well as the growing need for succession-planning applications. Automating development plans and implementing any type of competency-based talent management requires organizations to synchronize competency, course catalog and course-completion data between LMS and performance management systems.
“Only by integrating the two systems can one get a ‘complete’ view of any employee’s performance, competencies, training history, certified skills and certifications. This is one of the reasons we believe that many customers will choose to purchase a performance management system that integrates ‘out of the box’ with their LMS.”
Through integrated talent management solutions, employers can tie learning not only to employee performance, but also to other business processes such as career and development planning. As employees and their managers map performance and career goals, they can identify learning activities that will help them achieve their goals and measure completion of those activities.
In addition to linking with performance and career-planning functions, learning can and should be integrated with succession planning, which has emerged as one of today’s greatest organizational imperatives. In an October 2007 survey of 526 C-suite executives by SHRM, 75 percent of respondents identified succession planning as a significant challenge. Succession planning provides a systematic approach for executives and managers to identify, assess and develop their staff to ensure they are prepared to assume critical roles in the company.
To be most effective, succession planning should operate as a part of an end-to-end process that includes training, development and performance appraisals. Not only must executives or managers be able to identify the individuals with the skills, experience and performance ratings to qualify for specific positions, but they also must be able to develop learning plans that build the skills and competencies over a projected period of time.
Not All Integration Is Created Equal
Beyond the essential business process described above, a true talent management solution also must support data and user-interface integration. Not only should the solution share basic HR data (e.g., name, address, position, etc.) to reduce administration and link learning management with other HR functions, but integrated solutions also should eliminate data silos and duplication through a unified data model.
True data integration does not occur when disparate learning and HR applications are cobbled together. True integration between learning and HR functions means redundant data entry and data silos are eliminated and that all components of the integrated solution operate from one data model. Integration, however, does not stop with business processes and the elimination of data silos.
In a 2007 Gartner report, analyst James Holincheck wrote, “The lack of integration between talent management applications can cause many issues for companies in gaining strategic value from their investments. From a line manager’s point of view, there are multiple applications with multiple user interfaces that do not work the same way. The user experience for creating a requisition or providing interview feedback in recruiting is different from the experience for writing or approving a performance review and possibly different from the experience for merit increase planning. This can be confusing to managers.”
With a consistent user interface, organizations can drive a higher user adoption. The benefits of integrated learning and HR functions are lost if users do not adopt and embrace the solution. As learning executives work with HR to embrace enterprise-wide talent management strategies, they must consider the ability for solutions to seamlessly fit into a unified architecture and deliver a consistent user experience.
Driving True Business Value
To stay competitive into the next decade and mitigate the talent crisis, today’s leading learning organizations are adopting new strategies that enable them to develop their existing talent. There is a strong correlation between improving individual productivity and an organization’s ability to develop and retain a solid workforce. Only when learning is considered a strategic part of HR can organizations truly align their people strategies with business strategy to deliver further value and drive increased business performance.