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Blog: Making the case for your core HCM solution as the system of record for skills

Written by Mercer's Jim Holincheck

Skills have become a crucial element in workforce planning, hiring, career growth and development and retention. The Mercer 2023 State of Talent Acquisition Survey showed that 65% of respondents agree that as leadership priority increases, there is a corresponding increase in the priority of investing in a skills framework to support both talent acquisition and talent management. However, most organizations have multiple applications in their solution portfolio that leverage skills. This makes it challenging for organizations to leverage skills in a holistic manner. Organizations need to decide what solution should be their system of record for skills. In most cases, the core HCM (Human Capital Management) solution should be that system of record.

The importance of skills

Skills are becoming the currency of work. This will become increasingly true as AI (artificial intelligence) takes on tasks that humans used to perform. Organizations will seek to decompose jobs into AI tasks and human tasks based on skills. In some cases, this will mean AI as an assistant (or co-pilot). In other cases, AI may take on all the tasks freeing up humans to do other work that is better suited to their skills. Regardless, skills will be central to designing the future of work.

Skills in multiple systems

Skills are already part of many Work Tech solutions today. Talent acquisition systems can capture candidate skills. Performance management systems can document employee skill usage and improvement. Succession planning systems can use skills as part of understanding readiness for future roles. Learning solutions can provide developmental opportunities for improving and building new skills. HR (human resources) leaders can also use skills information to plan for future workforce needs. That is, should an organization buy (hire), build (develop) or borrow (use the extended workforce) workers in the future?

The challenge is that these could all be different systems from different vendors who use different terminology and taxonomies. Also, integration can be lacking. In many organizations, when someone is hired, skill information captured during the recruiting process is not included in the integration with the core HCM solution. Another example is an employee taking an e-learning course that helps them improve or build a skill. The learning solution will have this new or updated skills information, but the talent acquisition solution is unaware that this employee skills have changed so a hiring manager or recruiter may not know there is an internal candidate who would be a good fit for an opportunity. It is also a poor employee experience if you expect an employee to update their skills in all these disconnected systems because of the lack of integration.

Point to point integrations

Point to point integrations do not make sense typically. Doing a direct (two-way) integration between the talent acquisition system and the learning system in our example could make sense if those were the only places where skills were used and updated. However, for most organizations that is not the case as skills might be used for many different use cases across many different systems.

Why core HCM as the system of record for skills

The reason is relatively simple. If the talent acquisition and learning systems are from different vendors than your core HCM solution (the employee system of record) as in our example, then many organizations already have some integrations already built. They just may need to be enhanced to enable the core HCM system to be a hub for skills data. That is not to say that it is not challenging work to create or update these integrations. There is a need to map skills taxonomies coming from and going to the other application to a common taxonomy maintained in the core HCM solution. That is not simple. The good news is that core HCM vendors are starting to address those challenges through various partner relationships. A good example is Workday. It has partnered with Degreed and SkyHive to start to build what they call a skills ecosystem. We expect to see additional work done by core HCM vendors to build out these ecosystems to make it easier for customers to use skills data.

What if my organization does not have a single core HCM solution as a system of record?

Some organizations do not have a single system of record for employees. They may have grown through acquisition or have operations in certain countries where it made sense to use their payroll service provider as the system of record. In this case, consider some additional approaches:

Use a people analytics solution — If there are multiple employee systems of record, often there is a people analytics or data warehouse solution where all the employee data are consolidated. Again, integrations may already exist that may just need to be enhanced. Some vendors like Visier have already built skills into their foundation and deliver analytics and support planning with skills.

Use the system that has the greatest “center of gravity” — There may be one system in your portfolio that is providing the most value from leveraging skills data and/or makes it easiest to populate and maintain skills. Use that system as the hub.

Core HCM as the system of record for skills

Skills data are continuing to gain importance to organizations. To be of the most value, it needs to be current, up to date, and in a format that is consumable by all applications that want to leverage skills. In most cases, the employee system of record, the core HCM solution, is likely to be the best choice as a skills hub. However, when the core HCM solution is not the right choice, consider a people analytics solution or the specialist application that provides the most value and capabilities to maintain skills data.