HRTechTruth

Succession Planning (or Succession Management) – Missing the opportunity SO FAR

2012-01-17T15:57:00.010-05:00

Being very effective at Succession Planning seems to be more elusive than excelling at any other Talent Management function or process. This is somewhat counter-intuitive given that the other major Talent Management activities – Workforce Planning, Recruiting, Performance Management, Learning and Development, and Total Rewards Management – (a) tend to be the focus of many organizations’ continual process improvement efforts; and (b) all have major elements in common with Succession Planning.

Citing just two examples to illustrate the latter point -- Recruiting, like Succession Planning, should ideally involve external talent pipeline-building and talent relationship management being practiced ahead of specific resourcing demands. Even Total Rewards Management as a process has similarities with Succession Planning in that both might require a re-evaluation of current practices (against market / industry practices) when there are talent retention issues or attraction challenges in critical roles.

The fact that effective Succession Planning has been shown to materially drive business results and competitive advantage -- coupled with how few organizations claim they practice SP broadly and effectively -- highlights what appears to be a huge missed opportunity to-date for many organizations. Here’s the data …

Missing the opportunity (so far):

- A 2010 study by ASTD and i4cp showed that only 14% of respondents to their survey described their succession planning efforts as effective to a “high” or “very high” extent.

- An analysis of the FTSE 100 (largest co’s on London stock exchange) conducted by global Leadership Risk Management firm Talent Intelligence (November, 2010) found that:

> only 2% of the FTSE 100 stated that key leadership roles were being actively identified and benchmarked against the external market
> only 10% had identified the roles critical to the success of their organization or that had a major impact should a key individual leave
> while 49% of organizations developed individuals internally for succession purposes, this was typically driven by employee-centered training and development purposes as opposed to leadership risk management reasons
> up to 79% of the FTSE 100 rely on internal succession planning alone to replace the most critical roles in the business

- More than half of companies cannot immediately name a successor to their CEO should the need arise, according to a 2010 survey of 140 CEO’s conducted by Heidrick & Struggles and Rock Center for Corporate Governance at Stanford University. Other very telling findings from this study included:

> a full 39% of respondents cited that they have "zero" viable internal candidates
> the majority of firms or 65% have not asked internal candidates whether they would even want the CEO job if offered to them
> on average, boards spend only 2 hours a year on CEO succession planning

- And finally, according to executives participating in a July 2011 Canadian Financial Executives Research Foundation study, only 40% of Canadian private companies surveyed had a clear business ownership succession plan in place.

The opportunity being missed:

In the words of John J. Barry, leader of PwC's Center for Board Governance which advises audit committees and boards of directors: “Proactively approaching management succession can generate real benefits, as effective succession planning typically helps to reduce recruiting costs (e.g., exec search fees), establish stability, promote top talent, and enable quick response to unplanned leadership vacancies.”

It is almost universally believed that a well developed succession planning process promotes higher retention rates across-the-board, likely due to employees and leaders recognizing that time, attention and skill development investments are being made in them.

As for two real-life examples from hugely successful enterprises:

Apple has basically been able to seamlessly transition to new leadership and continued success after Steve Jobs’ passing as their succession plans were put in-place well before his health declined. Jobs in-fact wrote in his resignation letter …“As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.”

Additionally, McDonald's is credited with having a succession plan that served them well when two of their CEOs died in the course of a single year. “And yet, the company proceeded without a hitch" stated Charles M. Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

And very interestingly noted, with respect to Succession Planning technology … Bersin & Associates’ “High Impact HR Study” in 2010 of over 1,200 HR practitioners revealed that – as an “HR System application area” … Succession Planning drives a higher degree of “HR Department impact” than Compensation, Learning, Performance or Recruiting based on rankings by the respondents.

So what are the underlying reasons or impediments to effective Succession Planning?

Well, let’s start with a terminology / labeling nuance …Succession Planning is much more aptly referred to as Succession Management. The reason -- while Succession Planning has historically looked within internal talent pools to find successor candidates, Succession Management looks at both internal and external talent pools – and ideally in an integrated fashion. Moreover, you likely have a flawed process if you think of succession in terms of just planning.

Other characteristics of a flawed process in this arena include having the same “high potential” individuals in a number of different succession pools; or not reflecting changes in business strategy, context or culture by appropriately re-confirming the most viable successor candidates; or just doing Succession Management at periodic intervals.

And not to leave out what is perhaps the most prevalent and success-limiting mistake found in Succession Management frameworks across the globe ... using a lens of “successor candidates have to be ready now.”

Steve Goldberg
January 2012

Trajectories and Root Causes in HCM

2011-10-16T11:36:00.003-04:00

As most HR professionals know, HR was among the last corporate functions to rely heavily on metrics and KPI’s. So now that we have a plethora of metrics to leverage in HR / HCM, including both leading and lagging indicators, we are now ready to take the next step – or next few steps. These next steps include: looking at the direction or trajectory of metrics data, and when the trajectory turns negative or unsatisfactory, evaluating and addressing potential root causes.

For many decades, Finance departments and CFO’s have paid close attention to key business indicators such as major changes in DSO (Days Sales Outstanding), or changes in Cost of Sales, or fluctuations in Cost of Capital, or G&A expenses on the rise as a percentage of total expenses, etc.

Foundational HR-related metrics such as revenue per employee, engagement and/or turnover rates, ratio of HR staff to total workforce, time-to-productivity – and even more creative metrics like % of first choice candidates hired, or average time to be promotion-ready -- can also be very instructive or telling when they reverse course or trend-line. When that occurs, organizations should thoroughly examine potential causal factors until suitable actions are determined.

Sometimes “causal factor analysis” will reveal that the changing trajectory of a metric might be acceptable, or no real cause for action; e.g., when employee engagement turns ‘South’ right after a staff reduction; or when the ratio of HR staff to total workforce temporarily turns ‘North’ when new Benefit plans are introduced -- or when a company increases HR staff after outsourcing HR services to a firm which perhaps over-commoditized HR service delivery with too much emphasis on automation / technology-enablement.

Other times, “causal factor analysis” will highlight instances when corporate / HR action is necessary to avoid business problems becoming more pronounced. When revenue per employee or employee engagement starts turning for the worse, and no intervening variables can readily explain the change (e.g., nothing was taken away from employees and the organization is fairly stable) … there are some likely explanations which should be investigated.

We will probably start seeing more HR technology offerings which include very practical “decision-support guidance”… highlighting likely explanations for the types of trajectory changes mentioned here, and essentially teeing-up alternative courses of action. Customers that avail themselves of these capabilities might experience these hypothetical scenarios – and business benefits:

- Time-to-productivity trending down … Determined to be largely due to encouraging / incenting early retirements, which resulted in losing mentors who likely kept time-to-productivity within acceptable ranges

- Employee engagement trending down … Determined to be largely due to hiring less experienced, less costly people-managers

- Average performance ratings of key talent trending down … Determined to be largely due to shifting away from relying heavily on executive search firms for key roles -- to increasing employee referral incentives when referred employees are ‘A’ players

The “Next Hill” in Talent Management Software?

2011-07-18T12:46:00.003-04:00

Let’s begin with a few data points as a backdrop:

• In the US, 93% of US-based Global 100 companies use executive coaches (Bono, Purvanova, Towler, & Peterson, 2009).

• Between 40 and 60% of Fortune 500 companies use executive coaches, according to research by consulting firms such as the Hay Group and Manchester.

• As of 2008, there were approximately 12,300 business/executive coaches in North America (Frank Bresser Consulting Report, 2009).

• On January 1st, 2011 the very first Baby Boomers turned 65. As many of the occupants of this group are perhaps no longer fitting into the plans of their employers -- or no longer desire conventional, very demanding job situations -- a portion of this group will be parlaying their experience (along with appropriate certifications) into becoming independent executive coaches. This will further swell the number of independent executive coaches as referenced above.

While the supply of business / executive coaches keeps climbing, demand is also significantly increasing – principally due to two factors:

• The inexorable exodus of baby boomers is resulting in unprecedented numbers of key employees having gaps in their professional and/or management development … particularly within organizations that have not institutionalized mentoring and experience-transfer programs.

• More organizations are now promoting a culture of transparency, self-awareness and personal growth, particularly with people-managers … as their strengths and developmental issues likely affect the productivity, retention and engagement of everyone around them.

The proliferation of organizations using coaches is no surprise, since industry studies continue to report that the average ROI for companies investing in executive coaching can be seven or more times the investment made in these services. Although once used as an intervention with troubled staff, indeed coaching is now part of the standard leadership training for executives in such companies as IBM, Motorola, J.P. Morgan Chase, Hewlett-Packard, Google and many others.

So is the effective procurement and management of independent coaching engagements truly the next frontier (or next hill) to be conquered in the HR software market? That remains to be seen, but I personally believe that technology-enabling this highly strategic Talent Management ‘niche domain’ will - at the very least - start getting more attention than it ever has to-date.

After all, few if any HR/Talent Management software applications focus on capturing major cost savings/efficiency gains while simultaneously focusing on improving the quality and productivity of key talent throughout the enterprise. Most HR leaders today cannot tell you how much coaching is happening in their company, how much they are spending, what the coaching engagement is about, or whether it is working.

A relatively new company called Scout OnDemand is aiming to change all that.

Scout’s technology allows the streamlining of coaching fee structures, intelligent matching of coaches with individual coaching needs -- and perhaps most important given how many employees are typically affected by the recipients of external coaching – provides customers with solid assurances that coaching engagements are properly measured and managed for desired results.

In addition to providing best-in-class SaaS-based solutions for addressing the aforementioned business problems, Scout OnDemand’s mission is to also educate organizations utilizing external coaches that current models for providing key talent coaches are exploitive in terms of cost. This is basically due to the fact that numerous (“middleman”) companies today provide access to a network of independent coaches for a fee comparable to executive search firms, but most don’t do an effective job of matching, managing and measuring these pricey engagements – often exceeding $500 per hour.

Scout also believes their solution will have the impact of expanding the use of coaching in organizations way beyond senior executives. By making coaching more manageable, transparent and affordable, it will become feasible for companies to employ coaching more widely – for managers and supervisors, high potentials, and also to complement key training programs.

Just as organizations are now extending the use of enterprise software to facilitate social collaboration / social learning / socially-rooted innovation, it certainly seems that rapidly changing corporate cultures, management styles and demographic shifts might usher in yet another new Talent Management technology domain.

I am excited to now serve as one of Scout OnDemand's Board Advisors; and they can be contacted at https://www.scoutondemand.com

Steve Goldberg
HR Technology Industry Advisor
July 2011

A Dozen Things (Still) Needed in HR Technology

2011-07-13T08:30:00.003-04:00

Here’s the same list I published 6 months ago, all of which I believe are still very much needed in HR Technology circles ...

1. More end-customers embracing the fact that underlying HR data models are as important as any other, perhaps more “wow-evoking" component of an HR technology infrastructure.

To illustrate this point --- As astute purveyors of simple headcount reports know, the report is not highly valuable without being accompanied by clear definitions and even training around which people are counted – and how. This data model issue gets much more interesting when you consider the notion of a “highly valued or excellent employee.” If someone is an excellent performer who consistently gets the highest performance ratings based on assigned objectives, than what should someone be labeled who achieves those same ratings – plus consistently refers candidates who become great employees, generates innovative ideas that translate into revenue streams, and has great potential to contribute in other roles that may have increasing importance to the organization over time?

One more important point on HR data models – perhaps a related phrase or concept that should be used going forward is “integrated people data architecture” – thereby forcing “people data” to be integrated and viewed in conjunction with other types of business and organizational data such as Finance, Sales, Product and Customer data.

2. Configurability toolsets that are not necessarily the exclusive domain of vendors’ consulting services organizations or end-customer power users.

3. More standardized and demarcated definitions of what the following terms mean in the context of HR technology: usability, inter-operability, scalability, adaptability and configurability.

4. Also related to the evolving lexicon of HR technology terms is the fact that more clarity is needed around these half marketing / half capability descriptions: “embedded analytics” and “embedded social collaboration.” It seems to this observer that excessive license is still being taken regarding the word “embedded.” Are these capabilities embedded at the transaction level, the business event / scenario level or the decision-making level? Do I need to know these capabilities exist to use them or will the system let me know they exist? How easy and accessible are they to use?

5. Better technology integration and a unified user experience between HCM modeling tools (e.g., for workforce planning, compensation modeling, succession modeling) and the TMS or HRMS platforms used to data-populate and record the results of those modeling scenarios.

6. More technology-enabled “business intelligence linkages” between on-the-job performance, or better yet, broad-based data on employee value ( see #1 above) … and the sourcing / screening / selection practices, learning and development practices, and total rewards and recognition practices that led to those levels of employee performance.

7. The recognition that only when end-customers focus sufficiently on change management, and solution providers deliver less complex/more intuitive/more engaging / “what’s in it for me?” user experiences -- will broad user adoption occur; and moreover, that the absence of these elements will almost always result in lower ROI, sub-optimal business value and unrealized business cases.

8. Solution capabilities that highlight HR business process bottlenecks and/or defects … along with their causes, associated data patterns and potential remediation steps.

9. Less focus -- by both solution providers and end-customers -- on HR technology features (‘what it does’) and functions (‘how it does it’) … and more emphasis on capabilities (a significant category or core theme of a set of features) … as it is capabilities that paint a much clearer picture of the strategic (= R&D funding) direction of an HR technology solution provider and their suite of products; e.g., social collaboration and mobile computing capabilities are feature category sets that typically represent an on-going R&D commitment to these areas.

10. Moving past the notion of “role-based” architecture and system design to “human factors-based” architecture / system design … as an individual’s role is only partially indicative of how they think about and approach the people management and people collaboration aspects of their job. Many people in the same type of role think about and approach the people management / people collaboration aspects of their role quite differently.

11. The recognition that successful HR technology implementations should never be principally measured or defined by “going live at (or close to) on-time and on-budget” … but by the incremental and measurable business value and impact it delivered to the organization.

12. More solution capabilities that are focused on human capital-related problem-solving and risk and opportunity identification / management --- and perhaps a little less emphasis on all the features and functions involved in HR process automation and enablement.

Steve Goldberg
HR Technology Industry Advisor

The Future of Employee Self-Service

2011-04-08T22:47:00.001-04:00

HR Systems purveyors long ago realized that, like “point of sale data capture”, the best and most logical way to have accurate data in a system was to have data maintenance occur at the point of the event, and owned by the person who was most knowledgeable of the event. The result was the introduction of Employee Self Service or ESS. In the 1990’s, when leading HRMS vendors were a bit slow in offering extensive ESS, niche providers like Edify (later acquired by Workscape) stepped in with ESS Toolkits which extended the core HR system’s capabilities in this area.

Then, with PSFT release 8.0 in 2000, the HRMS market leader in the U.S. (at that time) significantly expanded its set of ESS transactions from roughly 20 to over 100, and made that enhancement one of the cornerstones of marketing that release.

Over the last 10 years, the concept and capability set of ESS has largely remained the same; i.e., fairly tactical self-updating capabilities around personal information such as changing an address or emergency contact, adding a dependent or beneficiary, changing payroll exemptions, adding new education or training information, etc. One interesting advance on the ESS front during this time was the embedding of role-based and personalized content, aimed at offering decision-support and coaching for managers, and content support for employees; e.g., informing them of their benefits enrollment options while enrolling. This was in fact the core offering of Enwisen, now part of Lawson.

More recently, core HR / HRMS solution providers have added the ability for employees to update their career interests, hobbies and other involvements outside work. This latter type of information obviously gives people-managers and organizations overall a much better opportunity to really connect with (needed to truly leverage) their human assets.

The continuing evolution and even future vision of ESS came up in my conversations yesterday with two prominent Talent Management suite vendors: SuccessFactors – in relation to their Employee Central offering for core HR functionality, and PeopleclickAuthoria. In fact, when Charles Jones -- the Chairman and CEO of Peopleclick Authoria -- uses phrases like “the system of record is fast-becoming the individual”, and “productivity is now all about total awareness and collaboration”, you know there’s a sea change going on relative to what core HR means, who owns it and the new way of defining ESS. Note: Silkroad Technology is also very much in the mix here with their HeartBeat offering.

With respect to redefining ESS, and whatever suitable replacement term someone comes up with, just think about the phrase above -- “total awareness and collaboration” – and think of all of the events, knowledge and forums for collaboration that relate to employees that are part of the value they bring to the organization and their fellow employees. Those events, pieces of knowledge and collaborations are the future of ESS.

Steve Goldberg

Unprecedented vendor/solution churn expected in Talent Management Systems market

2011-03-28T09:00:00.003-04:00

Based on Bersin & Associates’ comprehensive research on the Talent Management Systems market, the unprecedented level of change in the landscape related to vendor M&A activity and on-going product suite build-outs might now be contributing to a never-before-seen amount of churn with respect to vendor/solution replacement activity.

This interesting market dynamic, with obviously major implications for both solution providers and end-customers, will be covered from several angles and in different forums at Bersin & Associates’ annual IMPACT conference -- April 26th to 28th, St Petersburg, FL.

We previously highlighted the generally mediocre customer satisfaction scores garnered by most Talent Management Solution purveyors in our recent TMS Customer Satisfaction research and Report http://www.bersin.com/Lib/Rs/Details.aspx?docid=103313482&id=.

More specifically, the majority of solution providers received an overall customer satisfaction score of 3.5 or less on a 5.0 scale, the equivalent of getting a grade of 70 or less on a 100 point exam.

Our additional investigation into trends in the market revealed a somewhat startling finding. When respondents were asked how likely their organization was to switch TM System components in the next 12 months, one quarter to almost one third responded with “extremely likely” or “somewhat likely” – responses varying modestly based on specific TM System component, as follows: Learning Management: 31%, Talent Acquisition: 28%, and Performance Management: 23%.

These findings and other likely eye-openers will be discussed and analyzed (e.g., tied to potential market drivers) at IMPACT end of April … which as you can see, has an agenda chock-full of practitioner panel discussions, presentations and roundtables, and of course Bersin & Associates research overviews. http://impact.bersin.com/Agenda26.aspx

Hope to see you there, and benefit from your perspective in our many lively discussions.

Steve Goldberg

Less Talked-About -- but VERY Compelling -- Benefits of SaaS

2011-02-17T08:57:00.001-05:00

In Bersin & Associates’ “Talent Management Systems 2010” study (published in late 2009), we estimated that more than 70 percent of Integrated Talent Management solution implementations were being delivered via SaaS (Software as a Service).

The SaaS model has clearly taken off, and software companies which are committed to this model are seeing great benefits in the financial markets:

• Taleo announced record Q4 revenues of $67.2 Million, up 33% year-over-year
• SuccessFactors announced record Q4 billings of $88.5 Million, up 41% year-over-year
• Cornerstone OnDemand recently filed for an initial public offering after significantly growing revenue in 2010; the IPO is being underwritten by Goldman Sachs, among others
• Ultimate Software -- now delivering mostly using SaaS -- announced recurring revenues (basically from 2 sources: the SaaS subscription model and maintenance from on-premise installs) increased 28% to $170.9 million in 2010, with another $57 million coming from non-recurring revenue
• Both Saba and Plateau tell us that their SaaS business is growing at 4-5X the rate of their licensed software business; and Plateau indicates that SaaS accounts for 90% of new platform bookings.

One of the important things to consider is that SaaS is not necessarily less expensive than installed software, but what SaaS does do is shift costs from a major initial cost outlay plus periodic and potentially significant upgrade costs -- to a more steady (but often higher) annual expense. Over the long-term it is not clear if SaaS is more or less costly, but it is very clear that SaaS provides many other benefits.

As David Mallon pointed out in his “Learning Systems 2011 Report” published just last month, these benefits include:

• Low cost of entry and initial investment (very little capital budget is needed)
• Easy and continuous upgrades with centralized feature updating (your system does not fall behind in features and capabilities)
• Immediate access to latest innovations (can leverage every dollar of vendor R&D spend)
• Reduce overhead with minimal IT infrastructure requirements (you gain the benefits of a modern IT backbone without your own IT team upgrading hardware)
• Limited IT involvement required (you can stop bugging your IT department to help you)
• Predictable spending (you can budget for your HR systems on a continuous basis)
• Freedom of choice if unsatisfied (you can “switch out vendors” much more easily if you do not get the service and/or product investments you need)
• Time to implement (systems implementation time is very fast, even though actual implementation still demands a heavy focus on planning, training, change management, and communications)

Based on my experience talking to many very astute HR/Talent Management Systems customers over the years, I would like to add three “less talked-about but very compelling” benefits of the SaaS delivery model:

1. All end-user interactions with the system, including the all-important ‘frequency of usage’ can be readily monitored. Why is this benefit so compelling? My research shows that the biggest challenge in driving system value is utilization by your employees and managers. SaaS providers can show you precisely who is using the system, what capabilities they are using, and how well the system is being adopted. (More to come in my exploration of the “Total Realized Value” concept -- stay tuned…)

2. Customers can leverage the client community as a true asset, because the vast majority of customers are using the newest release. In a traditional implementation, you can possibly become the “only customer” running a certain release with certain features enabled and perhaps customizations applied. In a SaaS implementation, almost all customers are running exactly the same software, enabling you to share best-practices with potentially every other vendor client.

3. Project sponsors and the project team can get ‘quick wins’ … something critical for maintaining project support and momentum over the duration of all planned HR Technology initiatives. I’d like to point out a perhaps subtle difference between time-to-implement and time-to-value.

While some organizations may view “go-live” as a real win, as we all know that until the system is heavily and appropriately utilized by all your target audiences, the system has not really become a success. In a SaaS implementation, you can roll out a “pilot” of the system very quickly, and from there, build real success in the first year. Licensed software implementations often take many quarters before even a pilot is launched, stretching the patience of many executives.

Consider the implementation time we found for SaaS customers in our September 2010 Talent Management Systems research (200+ respondents). Almost 60% of customers are implementing PM (performance management) systems in less than 9 months; and over 70% are implementing SM (succession management) systems in less than 9 months!

Final thoughts: While both the obvious and more subtle benefits of a SaaS delivery model for HR Systems cannot be over-stated, I would be remiss if I left readers with the conclusion that “SaaS is the answer for everyone.” Let’s not forget that an ‘on-premise’ delivery model for HR Systems should be a serious consideration, and is sometimes the best option, for organizations in highly regulated industries … and/or if talent data is shared with (and influenced by) other core business applications in real time. In at least these 2 situations, control over systems and data is the key driver, and the on-premise model often garners higher marks for that decision criterion.

Steve Goldberg

A Dozen Things the HR Technology Market Needs in 2011

2010-12-31T17:26:00.001-05:00

As another year goes -- by no means, quietly -- in the books, we are reminded of the very significant progress being made across the entire spectrum of HR technology solutions; e.g., the availability of much more configurable, integrated, usable if not engaging enterprise TMS and HRMS solutions; and in general, offerings which go far beyond process automation and extend toward enabling end-to-end, strategic talent management.

So, what’s left to be done ---- PLENTY!

Here’s a list of a dozen things that come to mind that would continue advancing the HR technology market in material ways, many of these ideas will be further explored in subsequent blog posts:

1. More end-customers embracing the fact that underlying HR data models are as important as any other, perhaps more “wow”-evoking component of an HR technology infrastructure. Yes, Naomi Bloom, you had me sold on the importance of HR data models long ago!

To illustrate this point --- As astute purveyors of simple headcount reports know, the report is not highly valuable without being accompanied by clear definitions and even training around which people are counted – and how. This data model issue gets much more interesting when you consider the notion of a “highly valued or excellent employee.” If someone is an excellent performer who consistently gets the highest performance ratings based on assigned objectives, than what should someone be labeled who achieves those same ratings – plus consistently refers candidates who become great employees, generates innovative ideas that translate into revenue streams, and has great potential to contribute in other roles that may have increasing importance to the organization over time?

One more important point on HR data models – perhaps a related phrase or concept that should be used going forward is “holistic information architecture” – thereby forcing “people data” to be integrated and viewed in conjunction with other types of business and organizational data.

2. Configurability toolsets that are not necessarily the exclusive domain of vendors’ consulting services organizations or end-customer power users.

3. More standardized and demarcated definitions of what the following terms mean in the context of HR technology: usability, inter-operability, scalability, adaptability and configurability.

4. Also related to the evolving lexicon of HR technology terms is the fact that more clarity is needed around these half marketing / half capability descriptions: “embedded analytics” and “embedded social collaboration.” It seems to this observer that excessive license is still being taken regarding the word “embedded.” Are these capabilities embedded at the transaction level, the business event / scenario level or the decision-making level? Do I need to know these capabilities exist to use them or will the system let me know they exist? How easy and accessible are they to use?

5. Better technology integration and a unified user experience between HCM modeling tools (e.g., for workforce planning, compensation modeling, succession modeling) and the TMS or HRMS platforms used to data-populate and record the results of those modeling scenarios.

6. More technology-enabled “business intelligence linkages” between on-the-job performance, or better yet, broad-based data on employee value ( see #1 above) … and the sourcing / screening / selection practices, learning and development practices, and total rewards and recognition practices that led to those levels of employee performance.

7. The recognition that only when end-customers focus sufficiently on change management, and solution providers deliver less complex/more intuitive/more engaging / “what’s in it for me?” user experiences -- will broad user adoption occur; and moreover, that the absence of these elements will almost always result in lower ROI, sub-optimal business value and unrealized business cases.

8. Solution capabilities that highlight HR business process bottlenecks and/or defects … along with their causes, associated data patterns and potential remediation steps.

9. Less focus -- by both solution providers and end-customers -- on HR technology features (‘what it does’) and functions (‘how it does it’) … and more emphasis on capabilities (a significant category or core theme of a set of features) … as it is capabilities that paint a much clearer picture of the strategic (= R&D funding) direction of an HR technology solution provider and their suite of products; e.g., social collaboration and mobile computing capabilities are feature category sets that typically represent an on-going R&D commitment to these areas.

10. Moving past the notion of “role-based” architecture and system design to “human factors-based” architecture / system design … as an individual’s role is only partially indicative of how they think about and approach the people management and people collaboration aspects of their job. Many people in the same type of role think about and approach the people management / people collaboration aspects of their role quite differently.

11. The recognition that successful HR technology implementations should never be principally measured or defined by “going live at (or close to) on-time and on-budget” … but by the incremental and measurable business value and impact it delivered to the organization.

12. More solution capabilities that are focused on human capital-related problem-solving and risk and opportunity identification / management --- and perhaps a little less emphasis on all the features and functions involved in HR process automation.

And in the spirit of the holiday season ---- a Baker’s Dozen 13th item I’d like to see in the HR technology domain:

13. More highlighting of the difference between “industry best practices for HR technology” and “company best practices for HR technology” --- the latter category are the ones that work best for YOUR organization!

10 HR technology / HCM systems capabilities many wish they had ...

2010-09-26T17:42:00.005-04:00

HR technology solutions have unquestionably come a long way in “technology attribute areas” like configurability, usability, inter-operability and lower cost of ownership. Fortunately for business users of these solutions, business benefits and impacts now extend beyond the virtues of the tool or platform itself … thanks to advances in facilitating workforce collaboration, leveraging embedded analytics, enabling more robust workforce planning, achieving a more integrated, cross-functional talent management model, etc.

That said, here are 10 capabilities that many end-customers would say they are still waiting for --- particularly as it relates to true Line Manager Enablement. These capabilities are much more about managing Human Capital risks, problems and opportunities -- than about the automation of a standard HR business process.

1. Provide guidance as to when it is best to fill a staffing gap by using a temp or contractor, training an incumbent, transferring or redeploying another employee, or hiring a new employee.

2. Identify “enrolled employees” (good performers who could be excellent if they were more emotionally connected or engaged) and what actions/programs should be considered.

3. Identify “key employee retention risks” and viable options for stabilizing those situations … [Note: A retention risk might be someone in the last year of stock option vesting who is paid under market in a business unit with below-average engagement].

4. Highlight employees or business units experiencing a “trajectory change” in productivity, engagement, retention, etc., and business-related variables that could be causing the change.

5. Highlight instances where the value of certain competencies (e.g., consultative selling) are becoming much more important to the organization; and related to that, identify otherwise good-performing employees who may consequently need to retool, be redeployed or replaced.

6. Highlight key employee situations where “non-financial rewards” would offer a very favorable “perceived value-to-cost ratio” … [Note: Non-financial rewards (such as assigning a coach or mentor, or allowing an employee to work from home) also typically have a cost attached].

7. Provide guidance as to where to look for possible talent management-related reasons for declining sales, declining customer service ratings, longer product development cycles, losing more high-performing employees to competitors, etc.

8. Provide a broad and realistic perspective on “organizational readiness” for such events as a shift in business strategy, change in product / services mix, M&A transactions, etc.

9. Identify situations where changing an employee’s role, manager or business unit might convert that employee from a good to very good or excellent contributor.

10. Highlight where a particular HCM metric or KPI is “actionable now” … or if it’s more appropriate to investigate further (with related metrics) before taking action.

ONE SENTENCE that says a lot about HR Technology implementations

2010-09-04T11:54:00.005-04:00

Since it's Labor Day weekend, this is my shortest blog post to-date ... although I have to admit, this ONE SENTENCE distills much of my 25 years of 'lessons learned' from implementing HR Technology solutions:

Success is more about project governance, people management, change management, vendor management, end-user involvement/ownership, marketing and post-implementation infrastructure optimization than it is about making commercially viable software do what it's supposed to do.

Have a restful holiday weekend all!
Sg

Embracing social networking to drive business results

2010-08-20T22:03:00.003-04:00

With 400 million active Facebook users and 80 million registered LinkedIn users, the need for social networking and interaction has secured and validated its place in Maslow’s hierarchy of needs. Moreover, large-scale economic uncertainties fundamentally change the drivers that attract, motivate and retain employees, including the need to perhaps socialize more during challenging times.

This viral trend, however, has posed an interesting challenge for organizations that want to capitalize on the potential business benefits of social networking and collaboration without making work so ‘social’ that employee performance suffers. Organizations therefore have to optimize the mix of non business-related social networking -- with business and job performance-related social collaboration … as these two clearly bleed into each other and can’t easily be de-coupled. A purely social contact today can become a critical business or job-relevant contact tomorrow, and someone who is not a contact today can become a social or business contact tomorrow.

Most large companies now have ‘social computing’ policy guidelines in an effort to ensure that company-sponsored (through technology platforms) social networking doesn’t cross over to ‘diminishing returns’ in the form of minimal company benefit – or worse, company liability. As an example of appropriate social computing policy, employees should be advised that when they discuss the company or company-related matters, they should write in the first person; and also make it clear that they are speaking for themselves.

In the midst of all the excitement being generated by social networking, and particularly, its potential to drive business benefits when guided appropriately (e.g., social learning, social collaboration-infused innovation, social networking as a driver of productivity, retention and engagement), I will offer-up one tip for organizations looking at the Talent Management Suite market:

You may recall when “embedded analytics” was being claimed by nearly every HCM solutions vendor, even when it might have been more aspirational than a reality. Well, “embedded social collaboration” may be a quasi-universal vendor claim that is at that same stage. Trust but verify!

What to call HR Technology implementations to increase odds of success

2010-08-04T11:39:00.004-04:00

I’ve ended my brief hiatus from blogging in which I was heads-down on white papers and other HR technology projects. I will try to get back to roughly a bi-weekly blogging schedule.

As the title of this blog post implies, I feel a change is in order with respect to how HR technology implementations are labeled, marketed and positioned within organizations. Whether we want to admit it or not, many HR technology implementations do not live up to expectations – either in terms of empirically measured ROI, or anecdotally reported perceptions of the new system or module. While there are many useful articles and blog posts about causal factors, perhaps we haven’t adequately considered the need to simply call these very strategic initiatives something else. Why?

For one thing, there’s a legacy here that cannot be ignored so easily … a few decades of HR systems being owned by the HR function and designed more from an administrative, compliance or transaction-processing perspective. Consequently, line managers (the true stewards of Talent Management) didn’t exactly view the announcement of a new HR system as cause for celebration. Even Integrated Talent Management Suites have not always proven to be so integrated or designed from a “what’s in it for the user?” perspective.

Compounding this challenging legacy is the fact that the terms “next generation HR system” … “new HR system” … and/or “new Talent Management system” have been so broadly used within customer organizations – often before they were ready to materially change business outcomes -- that they’ve lost much of their meaning and ability to change attitudes toward broad adoption.

There’s perhaps yet another reason to call HR technology implementations something else – the words "technology implementation." Most astute observers of large-scale, complex technology implementations would probably agree that for every technology implementation considered widely successful, there is one considered a train-wreck. So, there you have it -- the double whammy syndrome of labeling these initiatives “HR Technology implementations.”

A logical candidate for re-naming these projects might be more reflective of what they really are --- or should be – “Foundational Change Management Initiatives" ... in which technology will be a major component. These endeavors are truly aimed at changing hearts and minds about how people should be managed for competitive advantage, using technology as an enabler. This is an "inside-out" transformation, brought about by such techniques as being open about perceived take-aways (and offsets), identifying and converting those “on-the-fence”, promoting major benefits at the individual stakeholder level, etc. The most successful change management efforts are designed to impact at a very personal level, not at the level of how processes will be better or more efficient for the organization.

Every time I hear about an HR technology implementation to optimize and enable HR/Talent Management processes, I quickly ascribe 3 things to the effort: (1) the change management dimension has been short-changed once again; (2) an overly simplistic, process-centric view of Talent Management / Human Capital Management which will likely prevent holistic thinking about the Talent Agenda; and (3) no more than a 50/50 probability of resounding success due to (1) and (2).

4 “Tricky Nuances” in Talent Management

2010-06-26T16:15:00.010-04:00

On the heels of my last post on the careful use of predictive tools in screening job candidates, I have included some musings below on 4 other “tricky nuances” in talent management.

1. One of the predictors of “employee retention risk" that I’ve used in models is “recency of training.” Just like a prior ‘job-hopping’ pattern can foretell whether a job candidate might be EITHER a good or bad hiring decision (depending on the job), training an employee could have polar opposite effects on employee retention -- based on the broader "work experience" context.

The degree to which training increases/decreases the odds of an employee leaving (voluntarily) is often related to whether the skill(s) they are being trained in are valued more internally vs. externally. Presumably, something valued more internally (e.g., being skilled in a company-proprietary technology) means the employee will likely be compensated, engaged and generally treated better than if they were to leave … so better retention usually ensues. Conversely, if an employee picks-up a new skill or set of skills (e.g., Six Sigma Training) when the market is hungry for those skills –AND the organization is not expending much effort (or money ) to engage and secure that employee, the training offered can certainly result in creating an “employee retention risk.”

2. A tricky scenario that relates to compensation is where an excellent or above-average performer gets a very modest (or even meager) salary increase due to being on-top of the range for their salary grade. In an organization of say 10,000 employees, it’s certainly conceivable that 3-5% (or 300-500 employees) will be in this situation. If the average salary for this group is $70,000 and the average (small) increase given is 3% … that company has doled out $630,000 to over $1 million and will likely derive very little if any benefit from that! [Refer to #3 below for a possible way to mitigate this situation.]

3. A more technical situation where compensation can serve as a dis-incentive … Take the case of a married couple in the U.S. filing a joint tax return with a combined taxable income of $65,000. One of them then gets a nice 10% salary increase for being a great contributor -- cause for a nice dinner out -- or is it? Well, for married couples filing jointly, $68,000 is the cutoff between the 15% and 25% tax brackets. Consequently, this couple’s income (after taxes) is actually decreased by $8,000 after one of them gets a healthy 10% raise! How does an organization avoid rewarding employees well but getting the opposite of the desired effect?

One answer is to have an HR manager and a corporate accountant review a list of all employees potentially in this situation; and perhaps offer a non-monetary reward if the employee so chooses; e.g., flex hours or non job-specific training. At the very least, they should communicate with those employees to advise them of the consequences (e.g., short and longer-term) of this year’s comp adjustment.

4. I’ll end with an example in the realm of competencies … specifically, what might occur when the value an organization attaches to a certain competency changes in a material way? Case in point from investment banking … I suspect a few Wall Street firms (the ones that seriously signed-up for less risk-taking) have been thinking a lot lately about how to re-tool their workforce from a competencies standpoint. With “risk management” and “sound judgment” likely being valued much more in these firms, they must quickly transition to these “newly valued” competencies in a way that is minimally disruptive to the business.

Predictive tools in Talent Management (e.g., Recruiting) – proceed with caution!

2010-06-15T16:16:00.009-04:00

Fact: Pure scientific method actually includes testing the hypothesis -- and the opposite of the hypothesis.

Opinion: I believe this purist approach to science and predictive tools unfortunately evades many modern-day “salaried scientists” … including some I-O (Industrial – Organizational) Psychologists who develop assessment tests to predict job success or flag questionable job candidates … sometimes only looking to confirm what they believe to be true. This is probably a function of the intense pressure to get verifiable "scientific" results more quickly in order to demonstrate business value to internal / external clients.

Many recruiting experts would agree that “false negatives” (rejecting a job candidate that would have been a great contributor) are much more harmful to an organization than “false positives” (hiring a job candidate that turns out to be a bad hire). This is generally the case because – as Bill Gates maintains – losing a potential star developer to a direct competitor can be the equivalent of losing $1 billion over the career of that developer. In contrast, most poor hiring decisions are usually addressed / ameliorated within 3-6 months; so on average, they are rarely costing an organization over $40-50,000 for the average professional. So – potentially, a “false negative” can be 20,000 times more costly than a “false positive” --- ok, maybe worst case.

In this context, perhaps we should be concerned that many assessment tests given to job candidates include this particular item to generally screen them out:

• A previous “job-hopping” pattern is often used to predict which job candidates would likely not be an ideal hire, even though the opposite may well be true for certain positions or job situations. For example, a business development exec that changes jobs every 2-3 years probably has a considerably bigger network of contacts to call on … and likely even a broader selling skills repertoire, than a sales executive who has been with one or two organizations over a long sales career. Moreover, a job-hopping sales exec may have been so good that their Sales Comp plan did not adequately reward them, driving them elsewhere.

• The same job-hopping disqualifier or “yellow flag” as a predictive tool also runs counter to the notion that people who have worked in a variety of organizations are exposed to many different ways of doing things, including a broader range of best industry practices.

Bottom line --- predictive tools can be very powerful and useful in Talent Management (e.g., Recruiting), but caution should be exercised in the form of not applying the same conclusions across all types of roles, candidate / manager behavioral profiles and work situations.

HR technology implementations -- fewer failures on the horizon

2010-06-07T23:03:00.010-04:00

Last week a $30 million lawsuit was filed by Marin County, Calif., against Deloitte Consulting, alleging the consulting firm misrepresented its expertise in SAP's technology. Deloitte is planning to file a counter-suit over the County's failure to pay, and claimed the County failed to provide Deloitte with written reports detailing system deficiencies.

Decade after decade, we've read about consulting firms and enterprise software vendors blaming each other for failed implementations when these unfortunate situations are largely preventable – particularly when you’re dealing with consultancies and software solutions which have come through many hundreds of times before.

The root cause of these failures, or in some cases major delays or re-starts, is typically not defective software as delivered. Companies offering defective enterprise software simply don’t stay around very long.

Two fairly common causes of failed HR technology implementations which are gradually being neutralized in the HCM solutions arena relate to change management and the customization of on-premise, installed software.

For many years, change management was the segment of tasks in an implementation project plan that were often short-changed due to resource constraints, being managed by project directors or accountable managers with limited (change management) experience, or being outsourced to firms/practices often brought in during the later stages of the project … vs. focusing on change management throughout the entire implementation --- a far superior approach.

Change management is partially about changing attitudes and behaviors, and as HCM systems are increasingly being viewed as company-wide assets for everyone’s benefit -- instead of “the system HR insists that we use” – the need to change attitudes and behaviors is perhaps no longer as intense. Now these exercises have a better chance of succeeding as project teams can focus on change management aspects that are more tangible like process changes needed, targeted training, etc.

Another reason for failed HR technology implementations is also becoming less pervasive – namely, instances where on-premise, installed software gets customized to better meet a customer’s “unique” business requirements. As everyone knows by now, the degree to which enterprise software gets customized is directly correlated with the prospects of a failed or at least under-performing implementation. The good news is that instances of customized software are clearly trending downward with much better configuration toolsets being introduced by software providers --- and SaaS delivery models becoming much more prevalent.

20 things you should never short-change when buying/implementing HR Technology

2010-05-21T16:39:00.005-04:00

1. the “what's in it for me” perspective of each class of user; e.g., employees, applicants, line managers, executives
2. considering the downside of “imposing across-the-board standardization” when it unduly compromises other key business objectives
3. the change management effort in planning & executing the implementation
4. the training effort in planning & executing the implementation
5. the process & technology integration effort in planning & executing the implementation
6. subscribing to the “trust but verify” approach with respect to vendor / product claims
7. IT buy-in and having their criteria for support understood and transparent
8. end-user buy-in and having their criteria for support understood and transparent
9. exec buy-in and having their criteria for support understood and transparent
10. leveraging your company’s brand / value as an end-customer in making expectations known to your vendor partner; e.g., expectation to have some input to product direction or priorities if possible/practical
11. your organization’s previous experience with new technology adoption and roll-out
12. critical linkages between the various pillars of the Talent Management value chain, including those that are “focus areas” more than processes; e.g., employee engagement
13. internally marketing the benefits of implementing the new HR/HCM system or module --- before, during and after the system is implemented
14. the importance of “quick wins” to create support and momentum in the early stages
15. the importance of end-users being in control of (and being accountable for) data quality
16. focusing on business drivers, how they might be changing over time, and how the HR/HCM system aligns with those drivers
17. lessons learned from similar companies with similar implementations
18. the contingency plan for transitioning away from each HR/HCM vendor you partner with
19. creating & maintaining a “risk and opportunity” log from before Day 1; i.e., during the planning stage --- thru post-implementation
20. using a meaningful decision-support process and tool for prioritizing system enhancements needed -- or (if there's no other viable options) customizations pursued

Financial impact of data-driven workforce decisions --- MIND THE GAP!

2010-05-03T17:05:00.007-04:00

To illustrate the bottom line business impact of making optimal workforce decisions based on properly analyzing data --- and data relationships, here's one example that most companies face all the time:

For every gap in workforce capacity ... either in terms of numbers, skills, competencies and/or physical location, there are 5 viable options:

(1) train an incumbent to address the gap
(2) re-deploy another employee ...
(3) promote another employee ...
(4) hire a regular employee ...
(5) hire a contractor ...

Taking a recent benchmark from Staffing.org on the average fully-loaded cost of hiring an exempt (non-executive) employee (= approximately $12,000) ...

Consider an organization with 500 exempt-level 'workforce gaps' to address in the course of a year that is not in a position to -- or by force of habit doesn't -- make data-driven workforce decisions.

Let's assume for this example that the 500 workforce gaps are addressed as follows (excluding the cost of labor):

- 80% or 400 gaps were addressed by an external hire (400 x $12k = $4.8 million)
- 20% or 100 gaps were addressed by an internal redeployment, half of which (or 50)created other (cascading) gaps to fill (50 x $12k = $600k)
- None of the gaps were addressed by training as it was not considered an option
- None of the gaps were addressed by hiring more costly contractors

So in this fairly typical example, the total cost of addressing the 500 workforce gaps is $5.4 million -- excluding the cost of labor itself.

Now let's further assume that IF the appropriate data -- and data relationships -- were analyzed so as to optimize each individual workforce decision, the breakdown would have looked like this:

- 40% or 200 gaps were addressed by an external hire (200 x $12k = $2.4 million)
- 40% or 200 gaps were addressed by an internal redeployment, half of which (or 100)created other (cascading) gaps to fill (100 x $12k = $1.2 million)
- 20% or 100 of the gaps were addressed by training an incumbent at an average cost per training instance of $2,000 (100 x $2,000 = $200k)

So in this decision-optimized example, the total cost of addressing the 500 workforce gaps would be $3.8 million -- excluding the cost of labor itself.

The difference -- $1.6 million ---- for EVERY 500 workforce gaps to fill.

A large organization of 10,000 employees would likely have at least 1,500 workforce gaps to fill annually ... so they would enjoy a cost savings of approximately $5 million!!!

Based on many years in and around HR functions, I believe this example is quite plausible and realistic in highlighting the benefits of a data-driven decision process in HR.

As they say in London --- "Mind the Gap!"

4 Burning Questions about the HCM Solutions Market

2010-04-11T09:22:00.003-04:00

I have my own ideas on these important questions, but welcome hearing from others:

(1) Why do Tier 1 or “large brand” HR-ERP solutions continue to dominate market share worldwide when (according to considerable, recent research) their total cost of ownership is 3-4x that of Tier 2 solutions, when less than 2/3 of their core functionality is ever utilized, and when expected business benefits are achieved less often than with their “Tier 2” counterparts?

(2) Why do the most expensive enterprise solutions in the market seem to require the most customization --- when it should perhaps be the opposite?

(3) Given that robust Talent Management Solutions are supposed to enable business strategy, why (again, according to recent research) are so few end-customers satisfied with the underlying HR process that supports that (Talent Management) strategy -- as is the case with the satisfaction of Performance Management processes?

and ...

(4) With a Talent Management Suite market estimated at $3 billion, mostly participated in by enthusiastic customers who have already spent substantial sums implementing an HR-ERP, why do customer satisfaction ratings only hover between low and medium for players in this market segment? Moreover, why are these solutions apparently having such a negligible impact on such a cornerstone of talent management like Employee Engagement?

What GREAT companies, managers and HR departments know --- and do

2010-03-21T18:25:00.005-04:00

As great companies and great managers know, human capital is likely their organization’s primary source of competitive advantage. Moreover, it is generally understood that in order to maximize that competitive advantage, employees have to be fully “CALLED” --- another one of my favorite acronyms invented during a bout of insomnia:

- Cost-optimized … invest more in employees when business-justified
- Aligned … employee goals/priorities/behaviors with company goals/priorities/culture
- Leveraged … with respect to competencies, skills, ideas and creativity
- Listened to … for the next great idea or product, knowledge of key customer issues, etc.
- Engaged … committed and motivated employees stay longer and perform better
- Deployment-optimized … right people with the right skills in the right jobs at right time

While a tad more controversial than the above, many great companies and great managers also know that more time, attention and resources should be devoted to the top 20 percent of your employees, i.e., your top performers. This is because you can usually increase company revenue by millions of dollars by improving retention rates on that top 20 percent. Intuitively, this means utilizing the right -- often personalized -- mix of total rewards, recognition and retention vehicles for those exceptional performers.

That gets back to the first “L” in the “CALLED” acronym, because you can only get that right mix by listening. A related point is that key employees who are retention risks should generally get the most immediate attention.

Important note ---- HR organizations that are able to develop and then validate a practical model for predicting or identifying Key Employee Retention Risks (or “KERR”) demonstrate to their internal clients that they can dial-up more ‘science’ in their ‘art and science’ professional HR repertoire.

Feel free to contact me if you wish to know more about one such model that I developed -- sbgconsultingllc@gmail.com.

Ensuring your HCM solution gets you to the "plateau of productivity"

2010-03-07T20:06:00.009-05:00

Astute observers of the HR Software industry, including thousands of customer organizations that have made material investments, are now experiencing some measure of déjà-vu … as Talent Management Suites are perhaps going through the same “technology hype cycle” (aptly named by Gartner) that characterized HR-ERP’s.

Following the “peak of inflated expectations” and “trough of disillusionment,” companies are still quite focused on learning the best ways to leverage these technology assets as they embark on the “slope of enlightenment” and ultimately the “plateau of productivity.”

In the spirit of reaching the “slope of enlightenment” (and beyond!) more quickly as it relates to Talent Management Suites, I have identified what I believe to be 5 critical considerations for customer organizations that want to avoid wallowing in the “trough of disillusionment” for any appreciable period of time. These 5 key considerations are:

1. Develop and establish a clear and business-sustaining Talent Management Strategy (short and longer-term) as it relates to all “people assets” -- before determining the best way to technology-enable that strategy. The enterprise Talent Management Strategy should ideally incorporate both the "what" and the "how" ... i.e., WHAT your organization needs to do to fully leverage its workforce for competitive advantage; and HOW it will do that -- including the optimal mix of HR service delivery models.

2. Recognize that Employee Engagement, while not viewed as a core HR business process like Recruiting or Performance Management, is as critical as any pillar within the Talent Management functional footprint. It is the horizontal 'results area' that permeates all HR business processes.

3. Do not blend “business processes” with “business problems” … in other words, segment business pains and business opportunities by those related to fixing/optimizing HR or workforce-related business processes, and those which require more non-linear or holistic thinking (e.g., why are we losing many of our best people to our competitors, or why does it take us so long to integrate a new business, or is there an opportunity to expand our services at this time).

4. Leverage a practical Business Intelligence (“BI”) toolset that provides insights into improving the people side of the business -- without muddying the waters further. BI tools and their outputs should be introduced incrementally as new terms and new ways to use workforce information are adopted -- and fully understood. Bottom line: If you forget that effective change management is critical here, you might as well forget the new BI toolset.

5. Look at HR/HCM solutions and potential investments from the employee perspective … e.g., the “what’s in it for the employee?” lens. If the conclusion is “I’m not sure” --- you are probably looking at another investment in an HCM solution platform or tool that manages information about employees, and manages core HR business processes, but likely does not materially improve employee engagement, retention or productivity – my new “ERP” acronym for the new decade.

Back by popular demand --- "5 New HCM Concepts that Could Have Legs in 2010"

2010-02-19T11:46:00.006-05:00

Since a few folks have asked me to re-post this one ----
--------------------
5 HCM concepts I've been noodling on for some time:

1. Employee Value Indicators … various dimensions, numerically scored, that complement a Performance Rating or revenue-generation metric – thereby presenting a broader picture of the employee’s value to the organization. These dimensions might include latent competencies, trajectory of an employee’s engagement level, and trajectory of the value of an employee’s particular competencies (i.e., will become more or less business-critical).

2. Latent Competencies … competencies that employees possess that might be invisible to the organization, and therefore not leveraged, because they are not relevant to their current job function. Various HCM systems only track competencies at the position level.

3. Total Realized Value (or “TRV”) on HCM Solutions … is the degree to which the broad potential value that an HCM Solution can deliver gets marginally (or even significantly) reduced due to such factors as system underutilization, improper utilization, ineffective change management (causing lower system adoption), data model compatibility issues, on-going system integration issues, the need to alter well-conceived business processes to accommodate system idiosyncrasies, or the need to develop and maintain elaborate competency models.

4. Job Milieux … as implied by this French word for environment or setting … Job Milieux factors might include a direct boss’ management style, whether work is team or individual-based, whether the culture at work is formal or informal, whether the organization is in rapid change mode or more steady-state, etc. The importance of Job Milieux is that these factors could all potentially influence job performance, but influence performance or productivity differently for different employees.

5. Total Rewards Optimization … Related to the notion of Personalizing rewards, but also factoring-in both cost as well as value perceived by the individual, employers will likely be putting forth more effort toward maintaining an “optimal rewards and engagement/retention plan” for every key employee. The objective is to generate the biggest bang (perceived value = better retention and engagement impact) for the buck. Inherent in this exercise is the fact that (a) non-financial types of rewards (like an opportunity to be exposed to different parts of the business) can have the biggest impact in some individual situations, and (b) individual situations are not static very long so these plans must be updated as needed.

Two (dare I say "transformational") Opportunities for HCM Solution Vendors

2010-02-16T10:05:00.008-05:00

While HCM solution vendors have made great strides in thinking more holistically and strategically about Talent Management from the customer perspective, there are still some important areas for moving the ball forward -- if not considerably downfield. Many HCM vendors are now trying to figure out if they want to tackle these challenges head-on, or “stick to their knitting” – i.e., do what they do best.

Two such areas garnering more attention from HCM vendors these days, including understanding the ROI proposition and other implications for their business, are (1) productizing “what-if” modeling and analysis capabilities … and (2) demonstrating that their solutions are transformational.

As covered a bit in previous blog posts, an area ripe with both challenge and opportunity for HCM solution vendors is productizing “what-if” modeling and analysis capabilities, given that the HCM processes they are focused on are not defined in a generally standard way. Compensation Planning and Workforce Planning, for example, are not like Recruiting, which perhaps has 70-80% commonality across organizations. Add-in the fact that these capabilities generally lack finite boundaries, and you have a situation where vendors need to figure out how to provide enough capability (vs. specific functionality) to be very valuable / actionable -- without frustrating customers with too much complexity and confusion about when to stop modeling and analyzing!

Another interesting question facing many HCM vendors is how to take the notion of ROI one (or two) steps further and actually seek to demonstrate that their solutions are either directly transforming businesses, or “allowing customers the space” to focus on transforming themselves through other means. In shorthand, we’re talking about changing the nature of a customer’s business --- not just “how” customers do things (e.g., to save money), but “what” they do to enhance the value they deliver to their own customers and the markets they serve --- and in-turn, dramatically grow their business.

When IBM many years ago decided to undergo one of the biggest enterprise transformations in history (going from largest computer hardware provider to even larger professional services provider), one would think they relied to some extent on the HR function (and their tools) to determine the feasibility, optimal timing/pace and tactics, and all likely people costs to achieve that.

Workforce Planning & Modeling Solutions --- approaching “white hot”

2010-02-06T11:15:00.004-05:00

As someone who has waited a long time for HCM solution vendors to collaborate with customers around developing standard workforce planning models and process definitions … since not having those meant solutions couldn’t be somewhat commoditized/sold profitably … I think Workforce Planning & Modeling Solutions as an HCM market category now shows signs of approaching “white hot.”

In just the last 30 days, you have Human Concepts bringing in former PeopleSoft and SAP product strategy exec Hanif Ismail as Chief Strategy and Products Officer; and then this week’s announcement of Success Factors acquiring Inform. In bringing in Hanif, Human Concepts gets a proven leader and innovator in the HCM solutions space, someone who will galvanize a team and company around “winning ideas” – and someone I also worked quite closely with at both PeopleSoft and Swiss Bank Corp … so I think I’m in a good position to offer those comments.

Human Concepts is now clearly poised to break out way beyond their org charting heritage, and indications of that began with their acquisition of Optimize (including Transition Manager) from Taleo, a suite of workforce modeling capabilities originally built by People Business Network.

In acquiring Inform, Success Factors gets a top player in HCM analytics, workforce planning and predictive modeling, with solutions built on a solid foundation of research-driven benchmarks. I don’t know the players at Inform very well at this juncture, but we all know that Lars and his team at SF have an intense, Michael Jordan-like desire to win … a clear sign that Inform brings solid assets and capabilities.

It is also gratifying to see some of the HCM predictive modeling ideas I’ve been playing with over the years starting to get formalized -- and more importantly – productized. Capabilities like predicting key employees who are “retention risks”, or optimizing the pace and magnitude of a workforce reduction without incurring significant business risks, or determining who stays/who goes in a staff redundancy based on a broad set of appropriate data points.

A few suggestions I would offer to solution providers now productizing this exciting but still largely Greenfield area within HCM ..... Don’t stop at a snapshot of employee engagement/retention/ productivity trends (my new “ERP” acronym), show me what factors (singularly or collectively) influence employee “ERP” … in what order … for what job and employee profiles … given what situational or environmental factors or events (i.e., frame scenario-based or event-based analyses).

Moreover, when looking at who stays/who goes in a staff redundancy scenario, consider how the business may be changing (e.g., expanding or contracting certain products or services), and the related implications for which competencies (overt and/or latent) are becoming more or less important over time.

HR Practices that should be Practiced More Often

2010-02-01T14:23:00.019-05:00

Starting off in the world of Compensation … I will defer to Ann Bares and her Compforce blog for this first HR Practice, as I don’t think anyone could have said it any better. Regarding the best way for HR/Comp Managers to handle line manager requests for job upgrades, salary adjustments and/or incentive awards …

“Are there days you feel as though your entire professional legacy is built around saying "no"? Rather than see our role as beginning and ending with the act of guarding the pay dollar coffers as though our lives depend on it, we should commit to understanding the root issues underlying these pay requests in order to help managers see and solve the real attraction, retention and motivation issues."

According to Bares ... "These issues often have little to do with cash compensation, including (but not limited to): poor management, communication problems, lack of growth/development opportunities, trust issues and systemic and/or organizational obstacles to performance. In my experience, managers pursue cash solutions to non-cash problems for a host of different reasons. Sometimes they just don't clearly understand the real nature of the problem. Sometimes they are merely following an unspoken protocol that employee issues are always addressed with compensation. Rather than just putting up a wall and issuing the standard "no" in response to a manager's compensation request, join them in an effort to understand and find an optimal solution (for all parties) to the real problem at hand.” http://compforce.typepad.com/

In the world of HRIS … Based on my (often trial-and-error) experience heading-up Global HRIS functions for 4 investment banks in the 80’s and 90’s … before various best practices were being widely shared -- formally or informally, I determined there were some essential business (vs. technology) practices for HR Systems groups to be successful. In my view, these HRIS business practices include:

- developing business cases that are compelling, data-driven and realistic
- using decision-factor matrices to prioritize potential HRIS initiatives
- proactive HRIS marketing … to build support for and increase adoption / proper usage of the new HR/HCM system
- determining the best way to influence/align with HCM solution vendor product roadmaps
- influencing HCM solution vendors to operate with SLA’s (Service Level Agreements) on aspects of the relationship they control
- addressing the non-technology aspects of business process optimization (in conjunction with the technology aspects)

And within the HR profession overall … I offer the following suggestion: “Don’t over-conceptualize the profession.” In an effort to make HR more about science than art (which is generally a good thing as it increases the predictability of outcomes), we should not wipe out the art component altogether. There are times when standard models get in the way of clear, rational thinking dictated by the situation at hand. An example I’ll cite is a prominent HR consulting firm’s application of a model which distinguished Attraction Drivers from Retention Drivers from Engagement Drivers.

According to their conceptual model, Attraction Drivers included a flexible work schedule and a reasonable workload; Retention Drivers included a good relationship with my supervisor and ability to input to departmental decisions; and Engagement Drivers included the sense that Leadership was interested in my well being and the organization encourages innovative thinking.

The downside of applying this very professional-looking conceptual model, as I see it, is that it reduces human behavior to very simple and universal ‘cause and effect’ principles; and human behavior (in the context of the workplace or anywhere else) is neither simple, nor universal. It also took far too many years for the right amount of HR and Corporate attention to be focused on employee attraction, engagement and retention; so let's not "split hairs" between these 3 very intermingled HCM areas for the sake of adding another interesting paradigm to the annals of HR theory.

Why Performance Management Processes UNDER-Perform

2010-01-21T07:06:00.001-05:00

Let me begin with some key findings and conclusions drawn by Bersin & Associates in their “Essential Guide to Employee Performance Management Practices” (2008). Their research, which captured responses from more than 700 HR, Learning and Development, and IT professionals (representing 30% of Fortune’s top 100 companies), included such findings as …

- 40% do not believe their current employee performance management practices play a critical role in achieving business goals and executing business strategies
- 45% say managers in their organization have difficulty differentiating between high and low performers; and
- 38% of line managers do not believe they have the training or skills needed to effectively support the process

But those interesting, likely discouraging numbers aside, the coup de grâce for me was this simple, bottom-line statement from Bersin’s research efforts in this area: “Employee performance management is one of the least liked management processes in organizations today.”

My own, albeit informal research in this area started in the mid 80’s when I was asked to automate the Performance Management Process at a 100-year old brokerage house on Wall Street. I commenced that “research” by asking some HR colleagues, a few line managers and a few employees why they thought we needed the process. My HR colleagues said “how else can you fire someone without getting sued?” My Line Manager colleagues said “how else can we back-up our compensation decisions without having HR on our backs?” The employees I spoke with generally said “frankly, we’re not sure how we benefit from this process.” True story.

One key take-away for me back then, one which I’m still waiting for evidence of its non-relevance today, is that “there’s a big difference between a Performance Documentation Process (owned by HR) and a Performance Nurturing Process (owned by the entire organization).

The typical Performance Appraisal process purports to improve performance, but the disconnect is that it typically doesn't establish or strengthen employee commitment, engagement and/or satisfaction. In the absence of having those effects, how can the process improve employee performance?

A related research finding was detailed in a Gallup Management Journal (GMJ) survey of U.S. workers conducted in 2006: Only 29% of employees are actively engaged in their jobs and 54% of employees are not engaged at all. One can only imagine how low these engagement figures are since the onset of the global financial crisis.