No need to lean closer to the screen, you read that title right: you should pay more for your talent management system.
Of course there are exceptions — if you’re paying something like $3,000 per user per month, your TMS is probably working wonders for you (or at least it should be). But if, like most businesses, your talent management budget doesn’t exactly fill a Brinks truck, you’ll want to increase it.
Here’s why you need to start opening that wallet a little wider: today’s businesses aren’t getting what they need. They’re feeling boxed in, settling for a solution that doesn’t fit their needs. Sure, they’re getting a decently-priced talent management system, but that’s about it. As we’ve discussed numerous times on this blog, the wrong software creates more problems than it solves. So let’s dive a little deeper into why your talent management program should climb a little higher on the budget food chain:
A Top Priority
First and foremost, let’s look at how a good talent management solution can benefit you. It makes recruiting easier; continuously evaluates employee performance and engagement; helps you retain your best talent; and develops that talent into potential leaders. In other words, there are a lot of valuable benefits to a talent management system. All of the above helps you keep capable, productive employees that keep your company innovating and succeeding.
Plus, on top of that, retaining these employees for a long time helps your bottom line. There isn’t an exact metric on how much employee turnover costs companies, but none of them are pretty. As Zane Benefits reports, some studies show that replacing an employee can cost half to two-thirds of their annual salary. Other estimates show that replacing highly educated executives can cost up to 213% of their annual salary. That’s an absurd amount of wasted money.
Because of this, 66% of CEOs rank improving their talent management strategy as a top priority for their business.
A Lack of Talent Management Budget is Hindering Human Resources
We conducted a study of talent management software buyers to find, among other things, what challenges they faced and what their old vendors failed to do. The most common vendor failures included a lack of features, too much manual work, the system was outdated and the system was too complicated.
Now, what does this all have to do with your budget? The overwhelming majority of respondents said that their budget was a challenge in finding a new talent management system. Specifically, 90% of the buyers we surveyed said that their TMS budget was a hindrance. Despite most human resource departments experiencing problems with their old systems — problems that make them less productive — they don’t have the budget to find a better vendor.
This doesn’t correlate at all with how high a priority most CEOs place on talent management. In order to truly prioritize your talent management, you need a budget that matches its importance. You need to be able to invest in the most robust, or one of the most robust, vendors that offers all of the features you need. And that vendor also needs to be easy to use, so that the learning curve is small and your HR pros can be as productive as possible, as quickly as possible.
Recruiting and Hiring is More Difficult Than Ever
The many benefits of good talent management systems aren’t the only reason why CEOs think talent management is a priority. In today’s business world, recruiting and hiring is tougher than it’s ever been. According to Bloomberg, 2016 saw a record high for job openings in the US.
This is a great sign for job seekers; they have a plethora of options available. For companies, on the other hand, this is more of a curse. They have plenty of jobs, but nobody to fill them with.
This has created a stiff competition for not only the top talent, but talent in general. Job posting software Betterteam found that 2016 saw a huge increase in hiring troubles among HR professionals, as compared to only three years prior.
And just to compound the HR issues, Betterteam also reported that employee retention is “at a low point, with employees holding onto jobs for an average of just 4.4 years, and hiring… is taking longer than ever [29.3 days].”
With so much stacked against your HR department, you need every advantage you can get. You can’t risk letting them wallow in hiring purgatory while your competition snaps up the best of the talent pool. You need the best talent management system possible. And with the best, comes an increased price tag. It’s certainly a tradeoff, but as we’ve said, talent management is more important than ever.
It’s Time for an Increase
The best talent management suites come with everything you need for hiring and retaining, from applicant tracking systems and succession planning strategies to performance management, talent acquisition and talent development modules. Although we’re certainly not advocating that you redirect an insane amount of money towards talent management, you should increase its budget so that your HR department can recruit and hire better. If your current talent management system isn’t working as well as it could, it’s time to find a new one.
Make sure you read plenty of reviews and buyer guides during the selection process; you need to make sure you choose the right software for your company. But even before you do that: make sure you have the budget for the best system possible. You won’t see the results right away, but over time, you’ll thank yourself for it.