What is a talent management system (TMS)?

A talent management system, or TMS, is an integrated software platform that supports core talent management processes, including recruitment, employee onboarding, performance management, learning and professional development, compensation management, and succession planning. These processes, and the technical capabilities that support them, are typically delivered via software modules. So, businesses can start with what they need and add additional functionality as they grow.

Most importantly, with a TMS, an organization can link human resource planning to its business strategy. This ensures proactive measures are in place to provide the necessary talent that will support the current and future goals of the business.

Talent management definition: the practice of supporting the entire employee lifecycle, from initial candidate acquisition right through to succession planning.

How does a talent management system work?

A TMS integrates all of the HR modules needed to attract, hire, and develop employees. Although it is common for individual modules – such as recruitment or performance management – to be referred to as talent management systems, standalone modules lack the multi-faceted capabilities of a truly integrated system, which supports the entire talent lifecycle and its processes, from initial candidate acquisition right through to succession planning.

Talent management systems typically run in the cloud. A cloud platform provides a range of benefits, including larger data storage capacities, more robust security, and easier integration with complementary applications such as payroll, training programs, career planning, and other systems, as well as the secure storage of employee data (such as personal information, demographics, and compensation).

Here are the key talent management processes supported:

The key elements of a talent management system.

Plan. Ensure talent strategies align with the needs of the business. Work with leadership teams to understand business objectives, then ensure the talent strategy supports these outcomes.
Recruit candidates. Source talent globally, nurture candidates throughout the recruitment process, and leverage the efficiencies of a comprehensive applicant management and tracking system.
Onboard employees. Optimize new hire engagement with a dedicated onboarding portal. Ramp employees quickly with paperless new hire processes. Automate workflows for on-, off-, and cross-boarding.
Manage employee performance. Help employees manage their goals. Use guided action planning for continuous performance management.
Plan and design compensation models. Reward and recognize strong performers.
Develop and retain employees. Provide modern and engaging learner experiences. Schedule and carry out compliance training. Develop proactive succession plans and actively develop leaders.

The evolution of talent management systems

In the 1980s and early 1990s, talent management focused predominantly on developing internal talent, leading to an excess of middle-management roles. Through the economic downturn, businesses restructured, and more emphasis was placed on attracting external talent. However, by the late 1990s, organizations found they were hiring and losing experienced people at about the same rate. This led to a new focus on retaining and nurturing existing personnel.

HR processes were incorporated, but without a centralized model, each track was siloed and information was often out-of-date. HR and recruiters had to deal with paper-based and time-consuming workflows with little time to focus on strategic initiatives.

Comprehensive talent management systems were created to integrate all HR talent modules within a single platform. Workflows became automated and digital, creating efficiencies across the organization.

Today, talent management systems are used by companies around the world and across all industries. A TMS helps organizations with unique and modern challenges relative to talent management in the 21^st century. For example:

Skilling, upskilling, and reskilling: Identify skills gaps. Establish training and reskilling pathways to transition people to new or evolved roles.
Diversity and inclusion: Implement diversity sourcing and candidate development plans. Provide proactive and continued development to regain and grow a diverse workforce.
Remote workforces: Shift employee support mechanisms to accommodate remote workers. Provide new interaction models to ensure manager and employee engagement is optimized.

Benefits of talent management solutions

From a business perspective, a talent management system provides a range of benefits that include:

An integrated and centralized data model for all talent management activities
Recruitment strategies that align with the objectives of the business
Improved employee onboarding, retention, and development
Better engagement between managers and employees, including processes for compensation, reviews, and rewards

Specific user-based benefits include:

Recruiters: Better manage end-to-end, using career websites, job postings, applications, candidate screening, and employment offers. Applicants can access and explore career Web sites, apply for roles of interest, and engage within a dedicated candidate portal for interviews and employment offers.

Watch how the recruiting or hiring manager can hire the best talent faster.

Applicants: Easily find postings through career Web sites, apply for roles of interest, and engage within a dedicated candidate portal for interviews and employment offers.

Watch how the recruiting or hiring manager can deliver the best candidate experience.

Human resources: Seamlessly coordinate all talent management tasks. Use powerful data analytics to inform business decisions. Generate detailed reports to share statuses and results. Create compensation plans and easily prove compliance with government and industry regulations.

Watch how HR can enable insight-driven planning.

Managers: Work collaboratively with recruiters for greater efficiency. Welcome new hires and help them ramp quickly. Manage compensation across entire teams. Use streamlined processes to help track activities, performance, and ongoing feedback for all assigned employees. Align individual performance goals with business objectives. Use reward and recognition tools to optimize employee engagement.

Watch how managers can give employees the guidance they need to succeed.

Employees: Easily access information and tasks, including goals, rewards, performance reviews, compensation and benefits information, and learning paths tied to individual career goals. Recognize peers and redeem rewards and other benefits related to exceptional performance and results.

Learn how to deliver an engaging experience that enables employees to realize their full potential.

Capabilities of a talent management system

A TMS allows an organization to implement an end-to-end talent strategy that aligns with the objectives and goals of the business. For example:

Recruitment: Attract and hire the best candidates who, in turn, become high-performing employees, boosting productivity and improving organizational strength.
Development: Build skills and adaptable teams to help drive business performance. Identify and cultivate strong leaders for continuous growth.
Retention: Help employees grow in their careers, increasing engagement and retention.

A talent management solution also provides operational efficiencies, using a centralized model for planning, data sharing, and other interactions. Digital workflows replace manual and offline processes for greater efficiencies in the backend, allowing HR personnel to focus on higher-value work.

The activities associated with a TMS generate personal and confidential data, which the system stores in a secure database. Powerful analytics and reporting capabilities help inform strategic planning to ensure that the business achieves its immediate and longer-term talent goals.

With a talent management system, the company can easily plan, measure, and communicate talent results and overall value to the business.

SAP SuccessFactors Talent Management

Learn how you can build a talent strategy that your company needs to succeed.

Learn more

Talent management systems FAQs

Almost everyone within an organization will use a talent management system, including recruiters, candidates, human resources personnel, managers, and employees.

A talent management system resolves persistent business problems, such as:

Manual, time-consuming workflows for recruiting, onboarding, performance, learning, compensation, and succession activities
Lack of continuity across systems with siloed data stores
Sub-optimal manager engagement
High employee turnover rates
Few qualified candidates for open positions
Consistent oversight for compliance with corporate and regulatory employment laws

A talent management system must be agile to adapt to rapid shifts in the overall business strategy. Determine in advance how the system will integrate with other applications and within the broader human resources infrastructure. Finally, consider the experience for every stakeholder and ensure the TMS meets the needs of these users.

Today, most talent management systems are deployed in the cloud. This deployment model is more scalable and provides enhanced security, storage, and other capabilities. It also supports a software-as-a-service (SaaS)-based business model, opening up accessibility for small and medium-sized businesses with more moderate operations.

SAP Insights Newsletter

Subscribe today

Gain key insights by subscribing to our newsletter.