To date, few companies have succeeded in implementing a comprehensive talent management strategy on a single human capital management (HCM) platform. Yet for other assets of the business, this is almost unthinkable. After all, businesses cannot optimize their liquidity without consolidated insight into all financial assets and liabilities. Optimizing a supply chain is likewise impossible if supplier data remains isolated in separate systems that don't connect. So what's been happening in HR?
The skills that employees provide every day constitute a key corporate asset. Yet today, most companies don't have a single view of the talent available to them. Many combine offline processes with third-party point solutions, creating islands of talent-related data that are not integrated within the overall system landscape. They may even struggle to identify which skills are most critical to the company's growth and which positions are the most strategically important, making it hard to identify and grow future leaders. This gap represents a major opportunity for businesses to boost bottom-line performance.
By implementing consistent, company-wide processes for determining talent needs, and then taking the right actions to meet those needs in the short, medium, and long term, companies can generate significant value by getting more creativity, innovation, and productivity out of their workforce. Organizations must analyze their talent management processes and look to new enhancements in HCM applications from SAP to realize an optimized talent and leadership supply.
Pinpoint Your Organization's Talent Management Processes
All talent management processes are based on the fundamental elements of HCM: skills and competencies. It is an enormous challenge, however, to organize the demand for skills across an entire organization — particularly one with multiple lines of business, locations, or subsidiaries. Therefore the first step to implementing a comprehensive talent management approach is identifying skills demand — what skills are needed in what areas of the company, when, and for what purpose?
Most companies running SAP are familiar with the Organizational Management (OM) structure, the set of organizational units, positions, jobs, people, and cost centers that define the structure of a company, driving many operations within ERP applications such as HR and Financials. But many companies don't fully exploit this structure and its ability to map skills demand into organizations. You can use the HCM system to describe positions in the organizational structure qualitatively, including what skills and proficiency levels they require.
SAP has also released a new object, Job Family, which allows positions with similar skills profiles to be grouped together for planning and reporting purposes. The Job Family object is available with Enhancement Package I for mySAP ERP 2005 and integrates seamlessly with other OM objects. This new object allows companies to define their organizations with a natural aggregation of skills demand — the first step in determining what talent management programs an organization needs.
Once skills demand can be aggregated in a system, monitoring skills supply and comparing it to organizational demand becomes easier — leading to additional processes such as upskilling, attracting and acquiring new talent, and planning for ongoing talent development and the succession of key positions. To optimize the level of talent in an organization, HR professionals need tools that show them where gaps may exist and what options are available for filling those gaps.
Companies often measure employee skill levels with active methods, such as surveying, or passive methods, such as relying on employees to update their own skills profiles. Automated HCM applications can help keep this information current. But the problem for many companies is that their patchwork niche applications are not aligned when it comes to skills and competencies — making it impossible for HR to get an accurate overview of skills supply.
The Competencies catalog in mySAP ERP HCM, however, contains all the qualifications that a company may wish to track (see Figure 1). All SAP Talent Management applications read and write to this catalog. For example, the SAP Learning Solution application within mySAP ERP HCM uses the catalog to determine which training courses are mandatory for each employee. By basing talent processes on a single set of competencies that are tracked centrally and reused across all talent-relevant processes, efficient enterprise-wide talent management becomes possible.
The Competencies catalog in mySAP ERP HCM
Once an organization has created a single version of its most critical competencies, a good aggregation of its skills supply, and working processes to enable timely updates and monitoring of this data (e.g., automated learning management, or employee and manager services for development planning and skills updates), it is primely positioned for the next step: investing in talent development. Attracting and Acquiring, Educating and Developing, Motivating and Aligning, and Rewarding and Retaining employees are all processes that currently reside in organizational and data silos in many companies. Companies create and perpetuate these silos by implementing nonintegrated point solutions in areas such as learning, compensation, and performance management. In contrast, integrated solutions make for better investment decisions and better ROI, as initiatives are based on accurate data about talent supply and demand.
Establishing accurate supply and demand for talent is possible using any mySAP ERP HCM release — all offer a common competency base that supports your organization's talent management processes.
mySAP ERP 2005 contains SAP's first talent pool-based Succession Planning module. This release also contains significant upgrades to the functionality in Learning, Recruiting, and Performance Management.
Enhancement Package I for mySAP ERP 2005, which shipped in July 2006 with Support Pack 05, contains the new Talent Development Specialist role, the Job Family object, integration to Job Families from Performance Management, and many enhancements to E-Recruiting.
Enhancement Package II, scheduled for December 2006, will deliver enhancements to the Talent Development Specialist role, including advanced analytics.
The data monitors in the Talent Development Specialist work center require a Basis Support Pack, available as of September 2006; make sure that all Support Packs are current before implementing Talent Management in mySAP ERP 2005.
How SAP Supports Talent Management Processes
Comprehensive talent management processes with a recognizable ROI depend on consistent talent demand and supply data. mySAP ERP HCM has always been architected to supply a single source of competency information to all talent-related applications and processes. New enhancements, however, particularly in mySAP ERP 2005, enable an even more comprehensive talent management strategy.
Prior to mySAP ERP 2005, customers wanting to use an OM object to aggregate positions with similar skills profiles often created their own custom objects, since the standard Job category object was usually needed for other purposes, such as tracking industry codes. The new SAP standard Job Family object is an OM object of great value from a reporting and monitoring perspective. Of even greater value is the integration of the SAP Performance Management engine with the Job Family object. As of Enhancement Package I for mySAP ERP 2005, the first of two enhancement packages for the latest mySAP ERP release, SAP Performance Management users, such as managers, will be able to rank employees based on their potential for specific job families and hierarchies within a job family (see Figure 2). This will enable users monitoring the talent supply, as well as conducting other activities like succession planning, to cast a very wide net when searching for internal replacements or future successors to key positions. It also ensures that succession planning is not strictly based on managers designating successors from their own area, but opens the possibility of bringing in higher quality candidates from elsewhere in the organization.
Preview of Job Family maintenance in mySAP ERP 2005
Traditionally, HR professionals have not had a single, comprehensive software solution for evaluating and managing skills and talent throughout the enterprise. To streamline the user experience, the central monitoring activities in Talent Management have been brought into a single role in Enhancement Package I for mySAP ERP 2005: the Talent Development Specialist. This role can define job families and hierarchies, define and assign competencies, search the talent pool, and manage succession plans. The role is defined as a portal-based work center with data overviews and linked transactions and reports (see Figure 3).
Preview of the Talent Development Specialist role
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The data overviews allow the Talent Development Specialist to control how skills demand and supply within a firm is aggregated, evaluated, and acted upon. It makes all the follow-on processes in Talent Management, many of which are enhanced in mySAP ERP 2005, even more focused and valuable to the company. This role is critical for the succession management process. It facilitates the talent pool search, integrates succession plans, evaluates and compares candidates, and provides needed context for making optimal succession decisions. Using one work center, an HR professional can determine a skill gap and close it by using a performance management initiative, creating a development plan, or finding new talent in the talent pool. In the future, this role will also be used to trigger automatic upskilling of employees based on their needs and the organization's plans for their future development.
With the latest release of mySAP ERP HCM, customers will enjoy new capabilities in managing workforce talent. When matched with integrated processes and consolidated data on employees, prospects, and other talent sources, these capabilities provide a powerful ROI for strategic HR. SAP customers should look into mySAP ERP 2005 and its Enhancement Package shipments to plan and implement a comprehensive, integrated talent management strategy.
For more information about mySAP ERP HCM, please visit www.sap.com/hcm. mySAP ERP 2005 enhancements are available from the SAP Software Distribution Center at www.service.sap.com/swdc.