Talent Management in a Recessionary Economy - My Final Analysis Before Moving On!
Today, I picked up Workforce Management to read an article titled, “Sales of Talent Management Tools Forecast to Slow in ‘08“. Seems the folks at IHRIM think we are in for a slowdown in HR technology spend.
Talent management in a recessionary economy is the topic de jour from enterprises, vendors, financial analysts, hedge funds and pretty much anyone observing the talent management space. Back in December, I wrote a post called “What Happens to HCM and Talent Management Investments in a Recession?” with great comments from some industry thought leaders on the impact of the current economic environment. Two weeks ago, Knowledge Infusion hosted a webcast titled, “Talent Management in an Uncertain Economy” with great attendance and reception from the market.
My view….I think IHRIM got it all wrong. Based on my qualitative and quantitative analysis of the market, and lots of conversations over the past few weeks, here are some reference points:
- A leading talent management vendor showed me last week that their “pipeline”, defined as a company having a ready business case and budget secured, was the largest in the history of the company.
- SuccessFactors in their first earnings call two weeks ago shared extremely healthy growth (70% YoY) in Q4 and strong bookings and guidance for 2008
- Knowledge Infusion ourselves is witnessing the largest pipeline and conversion in our history. The good news for the technology vendors is that we often shape strategic decisions that often results in software purchases.
- Taleo, in their earnings call earlier this month, announced record revenues with backlog increasing over 40%
- One of our large enterprise clients just secured multi-million dollar funding for their 3-year talent management strategy
Net…net…the talent management market is strong. In a recessionary economy, projects can get pulled, budgets can get frozen, and initiatives can get stalled. Yes, the market could change quickly, but all signs from my seat point to continued strength.
With all of the talk about “are we or aren’t we in a recession”, what shareholders and observers should be really talking about is a companies ability to adapt to uncertain economic times. SuccessFactors CEO, Lars Dalgaard did a great job in their earnings call articulating how they, as a company, are managing their business to change and adapt to market conditions.
The questions companies should be asking themselves, irregardless of recession or not, are:
1) Do we know when and how to spot material impacts to the business and immediately make critical talent decisions?
2) Do we have processes in place to adapt the business and make decisions quickly to “right-size” the organization?
3) Do we know our pivotal roles, top performers, and current bench strength throughout the organization?
These are the conversations companies must be having today!
Technorati Tags: SuccessFactors, recession, talent management, Taleo Performance, Lars Dalgaard, Knowledge Infusion, IHRIM
13 Comments Add your own
1. Naomi Bloom | February 27th, 2008 at 12:21 pm
To the questions companies should be asking themselves, I would add:
1) Can we ramp up our off-boarding processes to handle the high volume/tight timeframes of major layoffs?
2) Do we have an alumni and/or high caliber position seeker program in place to keep tabs on people of value that we would like to reel in if/when we are growing?
3) Are we tracking our entire pipeline of obligations, to include offers made, so that we know our exposure if a hiring freeze or other dramatic action is needed?
4) Do we know who should be the first and second to go in case we need to layoff some % of our work force?
There are many more, equally challenging questions we should be considering in the face of a possible dramatic downturn in our industry or company — and this has already been felt in housing, mortgage services, etc. — so that, just like with succession planning, we are prepared to survive because we’ve thought through how to handle the opposite of growth.
2. Arshad Merali | February 27th, 2008 at 5:29 pm
As a consulting company that provides organizations with solutions to manage their people, we’re seeing tremendous demand for our services alongside the software acquisition.
Smart companies realize that they need to be better prepared to compete on attracting and retaining talent. Recession or no recession, the winners will be the ones that can deliver quality service to their customers, and that can only be accomplished with quality people.
Besides, having an automated system not only helps a company focus on what matters, it helps to reduce administration and costs.
Sounds like a win-win to me!
3. Jo | February 28th, 2008 at 1:56 pm
The CIPD, the professional association for HR managers in the UK met on Tuesday in London at a really well attended meeting to hear of large talent management initiatives.
There are really big companies operating out of the UK. 15K employees is modest. The largest represented on Tuesday was 525K. I sat next to HR managers of more modest shows of 200 employees or so.
Talent management is alive and well over here!
4. Phil Fersht | February 28th, 2008 at 5:49 pm
Some interesting views here. I am seeing companies taking a different approach when bracing themselves for this forthcoming downturn than many past recessionary experiences:
1) Firms remember the dotcom bust and 9/11 nightmare well and are preparing themselves for this one well in advance. Many firms are stalling external hires and prioritizing filling vacancies with internal staff. They are hoping to minimize layoffs at all costs;
2) The aftermath of 9/11 instilled a cost-containment mentality into many companies and there is less fat to trim these days in a lot of companies (especially in HR, with that massive wave of HRO deals in 2001-2005);
3) IT and Business Process Outsourcing are becoming the logical cost-cutting measures now - i.e. focusing on farming out tactical / routine processes and placing increased emphasis on designing retained organizations.
Hence, the focus inside firms is more directed at developing and retaining talent than ever before. I don’t profess to be an expert in all these talent suites - and software is only as good as the business processes to which it applies - but talent management is more critical than ever in these recessionary times, and if these vendors can deliver solutions to facilitate that, then there is every reason for optimism for further growth in this market. I do believe that these software vendors need to focus on partnering with the HR consulting shops, so will watch with interest as this space plays out over the next 18-24 months.
PF
5. Lisa | February 29th, 2008 at 12:40 pm
Jumping on the bandwagon here, as I frequently say in the addresses I give on the subject, the numbers don’t lie. There is a very real shortage of talent at the doorstep that will necessitate continued focus on talent management.
Here’s just one data point, this year in 2008, the number of young adult workers, from 25 to 40 year olds, will DECLINE by 1.7 million. That’s 1.7 million less workers to replace the nearly 77 million baby boomers who will be eligible for retirement.
6. Phil Fersht | February 29th, 2008 at 5:31 pm
what do we do with all these old people then? “retirement-boarding solutions”?
7. Colin Kingsbury | March 3rd, 2008 at 7:56 am
“What do we do with all these old people then?”
Raise the age to start collecting Social Security.
As Sean Connery said in The Untouchables, “Now yous can’t leave!”
8. Ready to Lead? Next Gener&hellip | March 4th, 2008 at 1:07 am
[…] are not only conducive to retention, but also realizes their best leaders. This is particularly true in a recession environment where choices must be […]
9. Martin Snyder | March 4th, 2008 at 8:42 pm
Our 4thQ 2007 was a record and Feb 08 was a record Feb for us- that extra day really helps !
OTH, I dont think the economic situation has yet hit non-financial, non-consumer firms, and talent shortages are real and ongoing. I read once upon a time that the best place to deploy funds in a deep stall would be human capital in North America- I hope that turns out to be true.
10. Technology Commons Blog R&hellip | March 25th, 2008 at 11:17 am
[…] Corsello at the Human Capitalist is thinking about the economy. So are other folks - including Gartner and Workforce Management. Unlike the authors of those […]
11. HR Technology: Recession-&hellip | July 17th, 2008 at 6:06 pm
[…] HR Technology: Recession-Proof (So Far) The commentary continues on the extent to which the economy is impacting our core Talent Management technology marketplace. At one end of the continuum, it’s about the importance of talent management as a longer-term initiative — if you defer talent investments, you could be at a material disadvantage when the (inevitable) recovery arrives. SystematicHR highlights that nicely here. Jason Corsello weighed in recently as well (here). […]
12. Is talent ever a luxury? &hellip | August 8th, 2008 at 7:22 am
[…] Talent Management in a Recessionary Economy […]
13. XLREC | January 6th, 2010 at 8:11 am
Working as a recruitment company in the UK financial services arena, we at XL-Recruitment saw talent aquisition took a battering last year, however we are hopeful that 2010 will be a better year for everyone involved with the hunting, retaining and aquisition of new talent. All companies and particularly in financial services, will this year be heavily reliant on securing the best talent in their respective fields in order to ensure the growth of their organisation, however small.
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