Who’s Making Your Talent Decisions?

“Do we have the right people in place to execute our strategic plans?” That perennial question for organizational leaders has spurred the adoption of practices and systems designed to identify and develop valuable individuals within workforces. But amid the proliferation of digital solutions to this problem, a new question has emerged: Who’s making decisions about your people — your most promising employees and future leaders? For many large companies, the answer may not be internal stakeholders who are keenly attuned to the organization’s strategic needs but rather an industry-standard one-size-fits-all piece of commercial software.

Cloud-based software services have wrought a profound transformation in the HR technology landscape, reshaping how larger organizations approach talent management. Gone are the days when internal executives were responsible for working with IT on bespoke systems, crafting and overseeing talent frameworks, and managing talent data, given that vendors now offer those services for a subscription fee.

HR leaders’ inclination to rent predesigned talent solutions appears to be unwavering, despite concerns about the value derived from such technology: In a 2024 Gartner survey, only 35% of HR leaders said they are confident that their current approach to technology is helping to achieve business objectives. Nonetheless, in a different survey, Gartner found that technology was the top spending priority for HR leaders in 2024.1

Much of the enthusiasm for HR technologies is driven by the desire to achieve cost efficiencies associated with routine administrative tasks. Vendor-designed software may also promise to help organizations transition to and enact evidence-based decision-making. Cloud-based software suites capture data, manage information, and generate the reports upon which many decisions — including promotions, rewards, and resource allocations — are based. Dashboards allow executives to compare employees and, with just a click or two, identify the best and worst performers across various criteria. These criteria, however, are preselected. Vendors tout their products’ so-called best practices and imply that the criteria and processes for talent identification are based on scientific principles and support business goals. The reality, however, is more nuanced.

Fit for Sale or Fit for Purpose?

The interests of vendors and their customers are rarely perfectly aligned, but the misalignments in digital talent management (DTM) systems are particularly concerning.