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Managing investments in people and their performance is critical to every organization. It also is complicated. To support the various aspects of human capital management (HCM), organizations often use a variety of technology including systems for human resource management, talent management, workforce management and payroll management. Often these separate systems use their own information and are not well connected to each other. Today they are deployed both on-premises and in cloud computing environments, which further complicates integration. This situation disrupts processes and challenges HR departments and leaders to invest time and resources to correct it.
Unifying applications across HCM is a critical concern that organizations are addressing. One intersection point is between core HR systems and payroll management; as well, payroll management must connect to talent management for salaried employees and workforce management for hourly earners. Our benchmark research finds that time and attendance (51%) and compensation (45%) as the two areas that most organizations need to integrate with payroll management. Application and data integration can support a range of key activities such as recruiting, onboarding, performance management, learning management and compensation management, all of which are crucial to motivate, develop and engage employees. It is essential to integration to have a single, consistent source of employee data that all these systems can draw upon; an employee master can provide a reliable source of information and simplify interactions of managers and employees and facilitate collaboration among workers. Many organizations are examining ways to create a consistent platform on which human capital management applications can interoperate.
Integration of systems will be a major focus of our research agenda for human capital management in 2015. We will closely examine the current state of core HR management, talent management and workforce management systems with an eye on possibilities for them to work together smoothly. Managers in HR departments and the lines of business realize the importance of providing the best possible employee experience in attracting and retaining all types of talent; to achieve this they must effectively use technology for all the people aspects of their organization. Developing a strategy and a plan to unify HCM systems should be the first step. To succeed this will require buy-in from executives and management across finance and operations. Our research this year will strive to identify best practices in making technology a more valuable asset for managing the most important component of any business – its people.
Our 2015 agenda will leverage two recent benchmark research projects, payroll management and next-generation learning management. In addition, soon we will have new insights from benchmark research onnext-generation human resources management systems, and we will explore the expansion of talent management platforms and applications. As usual we will continue the in-depth product and vendor evaluations of ourValue Index; in 2014 we released Value Indexes on compensation management and payroll management systems, and this year we will expand to assess learning management and HR management systems.
Examining new methods to recruit and retain employees will become critical as competing for available talent becomes more difficult, and our research in 2015 will explore this area. Being efficient at recruiting has become a top priority for organizations. To achieve that goal will require a more comprehensive approach than most take. It starts with marketing positions and moves on to how candidates are assessed and interviewed; both increasingly rely on technologies, now including video. Later on organizations seeking to enhance their employees’ skills and potential should consider using learning management as a platform not just for training but also to improve their onboarding, performance and employee development processes, and we will continue to focus on this area. In addition we’ll examine new ways to address the work/life balance, a major concern for today’s workers, including using wearable computing devices for wellness and fitness tracking as part of creating a more flexible work environment. As I have pointed out wearable computing has a larger potential for organizations. This innovation along with mobile technology could help transform management of hourly and salary workers over the next couple of years.
Technologies like these are part of the new landscape in human capital management as businesses work to support the needs of all employees, from management to front-line workers. As well as mobile and wearable technologies these include analytics, big data, collaboration, cloud computing, and social media. Combined they have opportunity to simplify workforce processes and increase understanding of performance and engagement. As many organizations have both cloud-based and on-premises environments it is more challenging to get timely data that can be used for a range of analytics and reports. And they more data than ever before, which big data tools can help them manage and which analytics can enable them to gain insights from. In this data-driven world HR can’t continue using spreadsheets and reports and should transition to dedicated analytics tools, including predictive analytics to determine future hires or risks involving current employees. Analytics also is essential for helping maintain regulatory compliance, particularly the new Affordable Care Act (ACA). Our research confirms that the foremost issue driving investment into human capital analytics (in almost two-thirds of organizations) is improving efficiency and productivity. Analytics will remain a major focus of our HCM research.
The rapidly expanding use of mobile technology won’t slow down, we predict, especially as smartphones grow into mini-tablets, and tablets become like ultra-lightweight notebook computers. This pace of innovation is challenging for HR, many of whose applications do not run well on them. Apple is the preferred platform for business mobility, followed by Android and a small but growing presence from Microsoft, and organizations must figure out to accommodate the workforce in using the variety of mobile technology. HR should take a leading roleto determine the best strategy for the workforce and mobile use of human capital management applications. For example, our recent research on learning management systems finds mobile devices being used in more than one-third (35%) of organizations and almost half (43%) planning to use them.
The final item on our 2015 research agenda is the advancing use of systems that help individuals and teams collaborate. We observed embedded collaboration capabilities becoming a common component of talent management applications in 2014 and expect the trend to spread to workforce management in 2015. Organizations are rapidly turning to social collaboration methods, and while conventional discussion forums are most often used (by 39%), social recognition, wall posting or activity streams and earning badges and awards are being planned or evaluated for use in more than 40 percent of organizations, according to our next-generation learning management benchmark research. Organizations should be looking more closely at how to use collaboration to improve employee engagement, and we will provide recommendations on doing that.
Our HCM research agenda for 2015 continues to focus on the major issues in which technology plays a key role in addressing business issues. Please follow my analyst perspectives and our research and education in our community this year as we continue to evaluate the use of information technology to improve the effectiveness of HR professionals and lines-of-business managers.
CEO and Chief Research Officer
As organizations look to improve the competency and skills of their workers, learning management system (LMS) technology can help improve their efforts. Our latest benchmark research innext-generation learning management systems finds a range of progress in this regard. Our Performance Index analysis places organizations almost evenly between the two lowest (51%) and the two highest (49%) of four levels of performance. The results differ by size of company as measured by number of employees. For example, only 8 percent of small companies reach the highest Innovative level of performance, compared to 26 percent of very large companies, the largest percentage of any size. Analyzed by industry, the Finance, Insurance and Real Estate sector performs best: Two out of three (65%) are at the top two levels. We attribute this in part to the finance industry’s focus on processes and its need to comply with regulations and teach employees how to do so.
We also analyze performance by four dimensions: People, Process, Information and Technology. In this research, participants perform best in the People (74% at the two highest levels) and Technology (53%) dimensions. Conversely, more than half rank at the two lowest levels for Process (55%) and Information (62%). We attribute this difference to the existence of people-centered learning programs and the core technology components for learning management.
Learning management systems have existed in various forms for many years, yet the research finds that a significant number of organizations participating in this research have not adopted this technology. Although nearly two in three (63%) have a training department responsible for learning management, only about half (53%) have a learning management system. Moreover, a formal approach to learning management correlates with size of company: The numbers of those that have a training department rise at each size level, from 25 percent of small organizations to 100 percent of very large ones. There is a corresponding increase in the number that have learning management systems (small 28%, very large 92%). Because larger organizations have more employees, they likely wish to train them uniformly and more often have resources to devote to this function. Most organizations of all sizes said the primary purpose of the learning management system is employee development training (46%) or compliance-related learning (29%). The use of an LMS automate learning processes and be more efficient in their operations.
Also, learning management systems can contribute to the effectiveness of other employee-related systems including human resources management (HRMS) and talent management. Organizations can gain a more complete view of employees, their performance and what they learn by applying their learning management systems to worker activities. The research shows that most have not done such integration, but some have connected learning management to closely related HR business processes like employee development (35%), which the research shows is the primary purpose of their learning management programs for nearly half of organizations. Performance management (33%) and employee onboarding (27%) are the processes to which they have connected learning management next most often.
Integrating the learning management and performance review processes also makes sense in that the benefit of learning management most often cited (by 72%) is to create more effective workers. Three out of four (77%) of those connecting the two processes are satisfied or somewhat satisfied with how they link learning management and performance reviews. Looking ahead, the research finds double-digit percentages of organizations planning to connect learning management with other HR business processes in the next 12 months and similar percentages planning to do so within 24 months.
Effective learning management requires content to educate those who engage with the system. Yet one of the costliest aspects of a learning program is the acquisition and management of content. For years this has been handled by specialists using purpose-built tools. A new technology capable of alleviating some of this cost is the massive open online course (MOOC) model. The research shows that employees in 40 percent of organizations use MOOC technology as a source of content and courses; however, only 10 percent have MOOC linked to their learning management system, while the rest access it independently. Another emerging option is socially sourced content, which has the potential to reduce dramatically the cost of content development. Two in five (42%) organizations said that using this source is important or very important to their learning content management strategy; just one-fourth said it is not important. Currently most (46%) get no more than one-fourth of their content from social collaborative sources, but in the next 12 to 24 months 30 percent of organizations expect up to half of all learning content to come from such sources.
Learning management and employee training is a widespread corporate function, and the research finds that 70 percent of organizations have an annual budget for it. In nearly half (47%) of those the budget has increased in the past 12 months; in only 13 percent has it decreased. Thus the opportunity for further investment in learning management exists, as having a budget is the top-ranked consideration (placed first by 15%) for building a business case; among job functions, executives (23%) ranked budget as most important more often than others. Among those ranked first or second in importance, having a budget and ensuring executive sponsorship tied for the top consideration (28% each). These two factors should be considered in tandem.
Organizations building a business case can find key benefits in learning management systems; the most-often found in the research are creating more effective workers (by 72%), improving worker training (65%) and improving the efficiency and productivity of the workforce (54%). Engaging and retaining more of the workforce was cited by 44 percent overall, but more executives (60%) and management (vice presidents, 75%) chose this, reflecting their positions in the organization and value of this benefit.
Learning management systems have the potential to transform training organizations by increasing employees’ effectiveness in their jobs and preparing them to act according to their company’s policies and rules. Linking a learning management system to other human capital management processes and tools can bring a tighter connection between people and performance that can result in positive outcomes. Organizations seeking to prepare their workforces better for their roles should examine how the next generation of LMS can help them achieve this goal.
CEO and Chief Research Officer