Hiring, managing and retaining employees is a significant cost for most companies. According to Glassdoor, it takes 24 days to hire a new employee and costs the average U.S. employer about $4,000 per hire. The right technology can make a difference. An effective talent management system streamlines management of employees and has a dramatic impact on the bottom line. 

Why Do Businesses Need a Talent Management System?

Talent management systems are cross-functional human capital management solutions that help companies address the key components of successful employment, including recruiting, employee learning and development, performance management and retention, said David Pridgen, national account manager at Chetu, a Florida-based firm that specializes in business software development.

“These systems are highly beneficial for any company, large or small, as talent-related operations can be quite complex, costly and demand strict compliance measures,” he said.

A well designed talent management system also creates better connection between human resources functions, like compensation and succession planning, and broader business outcomes. “Talent management systems engage employees, leadership and HR to better meet their business objectives through performance and goal management,” said Michael Todd, product manager at SumTotal Systems, a provider of talent management software.

Key Features of a Talent Management System

As with many technologies, talent management systems are not one size fits all. Consider several factors when selecting a system to fit the specific needs of the business, including:

Integration Capabilities

First and foremost, a talent management system should be compatible with the software suite commonly used in the business, Pridgen said. A talent management system is only effective if it connects with accounting software, HR tools and other key systems related to HR operations. “Companies should confirm that their systems are compatible with all their current software needs before purchasing, or work with custom software developers to either modify the software or build their own solution to meet their specific needs,” Pridgen said.

Compliance Safeguards

Industries like healthcare and financial services have stringent laws requiring compliance with strict data management and privacy protocols. “Every country, state and municipality may have their own regulations when it comes to hiring, interacting with, paying, or terminating employees, so it is important for the new solution to help the company adhere to the necessary protocols or else they risk legal troubles,” Pridgen said.

Learning Opportunities

Accessibility and Usability

Ease of use for all stakeholders is another key feature of a good talent management system, said TJ Hoffman, chief operating officer at Sibme, an online video coaching and collaboration platform. “If the functionality is geared towards management or HR personnel to do all of the work, your team won't benefit from its use,” he said. For example, employees need to get feedback on their work and be able to take an active role in setting and tracking their own goals. Management needs a dashboard to quickly see the actions and outcomes of that effort, Hoffman said. An accessible talent management system enables everyone to get actively involved and become more accountable. 

Analytics and Data Management

The ability to leverage employee data to make key decisions is critical in today’s fast-paced business environment. “Since we live in the age of big data, it should come as no surprise that analytics and data management capabilities are crucial factors for modern talent management systems,” Pridgen said. Talent management systems that provide in-depth employee analytics and automated reports help a company better understand its employees, he added.


A talent management system is a substantial investment so companies need to ensure they choose a solution that will grow with the business over time. That may mean investing more to customize a system to fit changing needs rather than switching to a new system entirely. “This is another reason why businesses may choose to enlist the services of custom developers who can rework both custom-made and off-the-shelf solutions to meet the needs of a growing company,” Pridgen said.

“Given the fast-pace of today’s business environment and the thinning margins companies are working with,” Pridgen said, “talent management systems are essential for businesses to succeed.”