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February 11, 2010

Q&A with Colin Tenwick, CEO at talent management company StepStone

StepStone’s Colin Tenwick explains why the boardroom is starting to pay more attention to talent management

By CBR Staff Writer

Q A large part of your business is online recruitment, so what was the effect of the recession on the job market and your business?
A We have two parts to our business: online recruitment and talent management. The online recruitment business is highly cyclical and we saw the tail-off start in Q4 2009 and by mid last year the business had dropped off 45% across Europe. The drop-off was predominantly from large recruiters, which moved to lower volumes and commitments, and from big staffing companies. But the SME side of the business actually grew.  In the SME market, if you only have half a dozen employees and someone leaves, then that has a disproportionate affect on the company and they need to be replaced.

Since July, we’ve seen business coming back and Q4 was the best quarter of the whole year and Q1 2010 will be up 10% on last year. So last year, we saw a very rapid decline, stabilisation and now things are starting to improve. Confidence is starting to come back but it is considered.

On the talent management side of our business, we’ve seen consistent demand throughout the recession.  The push for growth obviously came to a grinding halt, but there’s been a refocus on talent and we’re seeing more of considered, structured approach to talent management.

Q What is happening in the talent management market?
A Redeployment is one of the clear developments. If you move people in your company, the ROI is two or threefold more than recruiting externally. But we still have cases of companies where they are announcing thousands of job cuts but recruit thousands at the same time.

We have a report coming out with the Economist Intelligence Unit in a few weeks and what we’re seeing from that is that talent management is coming to the fore of C-level executives’ priorities. In the area of talent acquisition, we’re seeing companies using social media and the web to attract and recruit more effectively. The ROI is compelling.

In the last 18 months, the public sector has really picked up on talent management as people realise it can bring huge efficiencies. Also multi-branded customers, such as Louis Vuitton, where there are multiple brands under one group, are also investing in talent management.

So the whole area of talent management and how companies recognise how to build and get more out of their resources is scaling up. All this fits in with the view that finding talent is increasingly important. And talent isn’t just about professional people but blue-collar workers too.

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Q What about your plans for the US and other geographies?
A We’re seen as the leading European player in this space. My background is in running tech companies and the US is a graveyard for European software companies. Our view is let’s dominate the European market – we’re five times bigger than any other player in talent management. For the last two years, customers have been deploying in the US, so we support European players who have US businesses. Currently, we have 70 customers in the US. In the last six months we’ve also started to handle US businesses looking to deploy internationally, such as Sara Lee.

We are also in Asia. We started in Singapore and Hong Kong with a support centre, but the Asian market for talent management is wide open so we’ve increased our investment over the last 12 months considerably and we’ve opened up a Chinese data centre and we’re winning local business.

Our strategy is to continue to focus on our strength in Europe and increase our business in Asia and also in the US, which will ultimately require some kind of acquisition. In terms of online recruitment, we will focus on expanding in Central Europe.

Q What lies ahead in the talent management market?
A There’s a big debate about what talent management actually is. Some definitions include payroll and learning management. We think at its core it’s about performance management, succession planning, competencies and compensation management. We need to be best of breed in each of these.

Analysts talk about the fact that talent management will become a suite of products, but we’re not seeing that yet in the market. We see companies looking individually at competencies or recruitment, but very few will buy an overall suite. Only 10% of our customers are using multiple modules currently, mostly in recruitment and then performance.  There’s a genuine discussion in the industry as to whether this will occur or not.

Q How important is the UK market to your business?
A We’re quite evenly split between Germany, the UK and France, Italy, Belgium and the Nordics grouped together. The UK is more advanced on e-recruitment, but behind in terms of performance management and succession planning. If you go to Germany, you find they are ahead in talent management, but behind on the recruitment side.  Our focus as a company will be to see more growth in talent management in the UK and in Germany more e-recruitment. Our business currently is 50:50 e-recruitment and talent management.

Q You mentioned social media, how is that changing the recruitment and talent management business?
A I think it is changing the way in which recruiters can get hold of data and manage it. Social networking will not replace the need for professional skills and recruiters, but it is a rich data source. Some companies are deciding whether to accept social media data or not. And then there’s LinkedIn, which recruiters are using for data sourcing. We’re starting to hear of some companies barring LinkedIn because it’s being used by headhunters to find out about companies.

I don’t think we’re talking about some huge radical change, but it will change the way people can articulate views about companies. And it can be used for candidates to rank companies on how good they are to work for.  We get two million people a week coming looking for jobs, to be able to harness that would provide invaluable information. Our job is to work out how we can apply social media to talent management.

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