The Institute for Corporate Productivity (i4cp), the company I work for, recently did a study on how companies gauge and retain high-potential employees. These “HiPos” are the bread and butter of organizations, as they are the employees who can really cause a positive impact in one way or another.

The i4cp study found that 69% of the 469 responding organizations have a high-potential assessment process in place, and most of those organizations say a development plan is part of that process. This is all well and good… however, less than half (47%) of the companies with HiPo programs are diligent about measuring the effectiveness of those programs.

Companies need to focus more on measuring the success of their programs and identifying new ways of retaining these employees. Presumably, a fair amount of these high potential candidates know that they are in demand, and thus are more likely to leave a company sooner rather than later. Career changes are common these days, and with the baby boomer generation beginning to retire, companies need to figure out how to retain their most valued and up-and-coming employees.

The good news is that organizations should be able to adjust quickly to improve the measurement of their programs, since a massive 83% choose to keep them in-house. Here are some ways to measure HiPos, based on various studies and articles:

• First seek consensus on what factors constitute high potential, then “use round tables or other collaborative decision-making methods to vet individual manager’s nominations.” (Training magazine)
• High-potential talent should be selected based on current performance “coupled with clear criteria that evaluate and measure future performance,” recommends Jeff Snipes, CEO of a leadership development firm. Identification and development of candidates should begin within the first two to four years of employment.
• Both HR and business line managers should be involved so that assessments are driven both from day-to-day performance and company’s overall criteria and vision.
• PeopleSoft and Executrack have been popular tools to automate identification of HiPos, though only 30% of respondents say they use automation tools.

ROI generally takes an analysis of costs and opportunities for savings based on a set of assumptions.  We’ll have “X” number of transactions on self service, we’ll reduce “Y” pieces of paper, and approvals will take “Z” less time.  However, how often does HR perform sensitivity analysis around X, Y and Z to see if small changes in any or all of those components will radically change the ROI?

Say for example, if the number of transactions on self service are drastically lower than assumed?  It’s possible that the savings are proportionally lower as well, and your ROI assumptions are just bad.  On the other hand, if the amount of paper you process is going to process does not change the ROI figures much, then this metric is less sensitive.  In other words, you know from sensitivity analysis which assumptions are the ones driving changes in ROI, and which ones are more fixed.  Those metrics that drive changes in your ROI are your higher risk items.  Your executives will want to know what happens if your assumptions are wrong, but they will also want to know what you’re doing to make sure your assumptions are indeed right.  In this case, driving processes to the self service site is an adoption and usability issue.  You can drive adoption through good change management.

Often, HR is stunned when walking into a CEO, CFO or COO’s office and getting challenged on their business case.  Understand that it’s their jobs to understand and challenge any numbers you put in front of them.  They simply can’t let you buy something for the business that is not proven.  Your ability to tell them that even if your assumptions are wrong by 30% (or whatever) you’ll still be able to break even in an acceptable timeframe for the investment.

Don’t be stunned by getting challenged, but also expect to be very prepared.  Often, the best course is to partner with some finance guys (build a relationship, and don’t be a dope about it).  These guys can not only do the financial analysis that takes us days (they do it in minutes), but they can also inform us what analysis is really needed.  As I go from company to company, what the CEO looks at is always different.  It’s always good to have the finance guys on your side helping you to prepare.

An outsider is led to believe such cutting-edge tactics in the employment space are the rule. In reality, it’s the exception. The percentage of companies publishing blogs full of embedded YouTube videos, Flickr photos, a roll call of MyBlogLog users and links to Facebook fan sites is probably in the single digits. Fortune 500 companies taking this approach are easier to find than Bigfoot. ¹

Cheeseman gives a good perspective on what’s going on and what’s going wrong.

1. HR is at the bottom of the heap. A disconnect between recruiting and marketing is quite common in corporations. While creative brainpower focuses on selling products and services, getting candidates through the door takes a backseat.
2. The IT department, like marketing, pushes the online needs of HR to the backburner. By relying on excuses like “we’re just too busy right now,” or “here’s why that won’t work,” IT easily pushes aside initiatives from the department that doesn’t understand technology, and doesn’t know how to push back.
3. Legal says no. Just the idea of a lawyer getting involved can kill an initiative before it’s even born. It’s easier to just go on with business as usual instead of try something new and innovative. Additionally, even if blogging, video and social networking efforts are approved, they are viewed as potential legal land mines and headaches if site visitors get out of line.
4. Turnover. HR departments tend to see a lot of turnover. Many employees spend limited time in the recruiting profession, hoping to land a less stressful generalist position or move on to higher-paying jobs in management or other departments. This leads to HR departments that prefer to play it safe and not stray from traditional recruiting tactics. People like to stay in their comfort zones, and recruiting is no different. Playing it safe means staying employed at most organizations. ²

Honestly, I’m struggling with what we’re using Web 2.0 for and wondering why it’s useful.  Do we really need blogs for recruiting, or wiki’s for employer branding?  Is a social network useful?  I’m a huge advocate of 2 things that have to do with Web 2.0.

1. Networks are indeed very useful if we employe them for the enhancement of collaboration or innovation.
2. Web 2.0 is great when it comes to usability.

Those 2 items aside, I’m not sure Web 2.0 is really adding that much value to HR.  Perhaps I’m not a visionary, or perhaps I just haven’t seen it work yet.  But unless we’re using this stuff to really create value, we’re just spinning our wheels and focusing on the wrong things.

I’d love to see organizations with good governance, processes and policies around the use of blogs, wiki’s and networks.  I’d love to see these enhancing productivity and innovation.  I’d also love to see them improving engagement.  But I don’t think we need to implement Web 2.0 because we think it’s the right next thing to do.  Let’s be thoughtful about what we implement, and how we do it.  I’d rather see us behind the curve rather than recklessly moving ahead because we think it’s the right thing to do.

1. Cheeseman, Joel, February 15, 2008.  “HR’s Struggle with Web 2.0.”  The Industry Insider. [back]
2. Ibid [back]

Sometimes, I see people who are not angry over anything, yet they are still not nice.  Here’s my message: some of the people we interact with in HR can have huge impacts on our workforce.  My main example is interactions with consultants and vendors.  I’ve seen way too many organizations not only treating their vendors like non-partners, but treated with great disrespect and insolence with little or no reason.  Vendors have the ability to be either great partners, or are also in the position to greatly disrupt your organization.  While I’ve never seen the latter, certainly an unhappy vendor is not going to go the extra distance, above and beyond the call of duty, to create perfection – and perhaps they should not.

Let’s talk about engagement, but not with your employees, but with your vendors instead.  If we define engagement as the willingness to invest discretionary effort, this means they are working to improve quality of deliverable or product when they are not contracted to do so.  This is the type of service you want from your vendors, and the type of service you are likely to get only when you have a good and positive relationship with them.  It’s the type of relationship that comes not from a vendor relationship, but from a partnership where each organization not only profits, but genuinely wants to get the best result for the other.

Sometimes things go wrong.  When they do, an engaged vendor is going to act quickly and often before you even know something has gone wrong.  Your concern as a customer is rightly so.  Your reaction to issues can be controlled, or highly negative.  Whatever your perspective, I’ve seen many such transactions, and the highly negative reactions never get you as much as controlled and thoughtful exchanges that appreciate that things go wrong (on both sides), and ask for partnership in the appropriate solution.

This is a simple process rule.  In the example, it makes good sense.  You can’t get in a train if people have not left the train yet.  If it’s full, you’re not getting on.  If people have exited the train, there is now room for more people.  It’s really not a hard rule.

In HR and in business generally, we define rules, policies, process flows, and then often we don’t follow them.  The reason for this is that we have exceptions to handle, and sometimes things just have to be handled faster than a defined process allows.  When this happens, we often take short cuts to get to the end state faster.

The problem with exceptions and shortcuts, is somewhere else in the process, we most likely created inefficiencies and possibly created more manual work somewhere else.  What you actually did was speed up one process but slow down 5 others.  While this might be an ok ROI in some circumstances, it’s not in many.  Unthoughtfully circumventing process for short term and single objective gains at the expense of anything else is a tough proposition that we all go through all too often.  All the while, we are scolding managers that fall out of line when they take shortcuts in their HR processes when they have P&L objectives to meet.  Let’s challenge ourselves to be more thoughtful about when we decide to exit a process and understand the real ramifications and benefits when we do.

So topic number 1.  Just because you are done smoking your cigarette, does not mean it’s ok to throw the butt out the window.  I mean really, it’s still littering even though 60% of it is gone.

So what does this have to do with HR?  Well, nothing really, but I’ll force it in.  Here’s where I’m going to go with this.  What might seem right to you, may not seem right to others.  A prime example here is cost savings and efficiencies.  When we outsource and automate processes for HR, often we’re actually just offloading the work to someone else.  We love implementing things like manager self service, and when we do so, often managers actually get more work than they had before.  Their response is:  why did you push your wasted effort onto me?  I’m the one producing direct value for the company.

In fact, they are often right.  When we implement things like on-line job requisitions, hopefully we’ve implemented them so that the work is more intuitive, less time consuming, and more easily accessible than before.  Sure, you’ll have the random manager complaining that their old paper based process was better, but these reactions are easily controlled through a decent change management program.

Often however, we’ll actually implement a process that while automated, might be more cumbersome than before.  Because it’s automated, we’ve used the excuse to plug in 3 approval levels, and asked managers to assist us by telling us where they might want to source candidates from.  We’ve asked them to put interview notes into systems they never had to worry about before.  In all, while we might have a more effective solution for HR, the solution for the manager (a.k.a. the business user, end user, real stakeholder…) might have gotten significantly worse.

It’s all based on your perspective.  While you might think it’s perfectly acceptable to throw the cigarette butt out the window, the guy who that butt is landing on might have a very different perception.  In HR, we must understand that we are not our own customer.  In most cases, executives, managers and employees are, and it is their perception and point of view that matters most.

I was a bit surprised to see this, but given that Taleo is so dominant in the large enterprise recruiting space, their only places to grow their market was really in performance (general release earlier this year) and down market. 

On it’s face, Paychex seems like a decent place to start, but I’m honestly a little surprised that they didn’t go with someone like Ceridian instead.  ADP is an obvious elimination since they own Virtual Edge, another recruiting system. 

Paychex is not an intuitive solution for Taleo to partner with since their own technology is far behind Taleo’s.  First, Paychex HR customers often deal with technology that is well behind competitors such as ADP and Ceridian.  Second, There are comparatively few Paychex HR customers compared to Ceridian and ADP.  Most of Paychex customers are pure payroll, although this has been shifting for quite some time.  Lastly, an organization like Paychex which has severely limited penetration into the medium size employer market.

Even then, Paychex is probably the number 2 provider (behind ADP) for the small employer, so if Taleo is looking to increase penetration into 100 and 200 employee companies, perhaps this does make good sense.  Payroll is a very low priced commodity market, and while I don’t know how Taleo is pricing their services, it certainly can’t be similar to the enterprise market. 

One thing I know for sure, the SMB market is in for some interesting competition now that Taleo is in the mix for their business.  As always, more high quality choices just means better news for the rest of us.

1. Taleo Press Release. [back]

All things holding equal, what are the advantages that go to the ERP?  Well, there is always end to end processes.  Anything else?  Well, not really.  So the list for ERP is indeed much shorter than it is for point solutions.

Here is my argument.  Having great end to end processes will in many if not most cases trump any incremental gain in any other functional area.  Let’s face it.  No process is contained within itself with an originating event and conclusion within the same application module and HR function.  Let’s take a couple simple examples:

1. Job Requisitions, they start not when the manager initiates the requisition, but it all actually starts in core HR.  At some point in the distant past, the compensation group set up all sorts of job codes.  In an ideally integrated world, the job requisition will pull data from the job tables into the job requisition.  That’s integration point number 1.  Number 2 is going to be any type of position control or workforce planning tool that might automate the creation of requisitions for newly created or recently vacated positions.  This is also often with core HR, but may also be housed somewhere else.  Integration point number 3 is for competencies.  These might be sitting in core HR, or your talent system.  Hopefully you are not replicating your competency tables throughout the modules.  Once these initial integration points have been completed and the requisitions have gone out, interviews completed and candidates hired, then you need to integrate into all sorts of other things.  You might have a separate payroll system and timekeeping, you’d have to push data out to HR, there may also be an onboarding system or website.  All of these also disperse data out to numerous other systems as well.  So having said this, is it worth it to go with the point solution over the ERP?  If you go with the point solution and don’t effectively integrate all functions, have you actually created additional manual work?
2. Compensation Merit Reviews, they have very distinct begin and end points.  And all of these are outside of the normal compensation process.  Hopefully the merit process will begin by pulling performance data from the performance module.  Remember that this is not the beginning of the process, but performance is also somewhere in the middle.  They (perf) had actually pulled from competencies, job, learning, etc.. already.  As compensation, you’re just the recipient of a recipient.  Then there is the merit budgeting process.  The budgets might come from core HR, they might come from finance, but they might also come from some consultant’s salary system where surveys are stored and aged.  So you collect all this data and then send it along its merry way for managers to process.  Once that is done, it needs to get back into core HR, and the whole process probably ends in payroll when new salaries are paid.

My point is this:  don’t go out and buy any modular systems without first understanding that your process is part of a much larger organism.  A breakage in your world (or getting into or out of your world) breaks the whole thing.

Integration is important.  And every point solution will tell you that they have standard integration routines to all the major ERP’s.  This might be true, but are those standard routines good enough?  Will all the data you need to get from 5 different originating systems get in? or will you need to customize to add fields?  Will all the data you need to get sent to consumer systems get out?  From what I’ve seen, real, simple and comprehensive integration just isn’t there yet.  We all keep talking about SOA, but the reality is it’s 3-5 years away. 

They are the “best of breed” solutions, have the most advanced functionality, slickest user interface and self service tools, and probably the best per function process and workflows.  And while I won’t go into ROI or TCO, there is usually a significant difference in the cost model between ERP and point solutions. 

I’ll be honest, advanced functionality does not excite me that much.  When it comes to performance, there is a box that everyone has, and anything truly unique will need to be customized.  That’s ok, but the facts are that everyone (comparing apples to apples – you can’t put an SMB solution against Taleo) is going to be within 5% of everyone else.  And any new, interesting functionality hasn’t really meant that much to me.  So vendors are offering Facebook integration.  So what?  They are not helping you define the governance model.  They are not telling you what the legal issues are with privacy.  And they are not helping you understand how this advances your strategy.  So while they are giving you an interesting functional improvement, they are also giving you a strategic and policy nightmare.

Self service and user interface is indeed important however.  This goes right down to change management.  While you should always have a change management program with every implementation, a decent user interface will make your life a bit easier on this front.

So I think workflow for the very specific (not end to end) process will be best in a point solution?  Probably so, as they have much more time to invest thinking and programming the possible permutations.  As mentioned yesterday, processes are end to end and I think that the ERP wins this battle.  What I would say though, is if you’re going to buy a point solution (let’s say talent), think seriously about sourcing all your point solutions from a single vendor.  This way, competencies, performance, compensation and succession will generally be integrated.  Going with the right vendor, either recruiting or learning may be as well.  Make sure that you’re also checking out how integration is really happening on the back end.  Often, vendors have cobbled together a set of applications they have purchased and the back end is a disaster that you’ll never know about until after implementation.  But some good research and questions will allow you really figure out if you’ll have integration or just the appearance if it.  (What are those questions you ask?  Sorry, that’s stuff I get paid for)  At the end of the day, if your integration points are between core HR and a single suite of point solutions, you’re still probably ahead of the game.  You’ll still have areas where process is broken, but hopefully you’ve eliminated most of the integration points and therefore eliminated much of your manual work as well.

What if you started acting like the VP of Talent? Understanding that talent is hard to find and not obvious to manage. The VP of Talent would have to reorganize the department and do things differently all day long (small example: talent shouldn’t have to fill out reams of forms and argue with the insurance company… talent is too busy for that… talent has people to help with that.)

Seth’s point that perhaps we should just rename and market ourselves from HR to Talent seems to be a decent idea.  As he points out, simply renaming is not an option.  We have to throw ourselves into the endeavor with additional focus and understanding.

I however, don’t believe we should rename ourselves to talent.  Talent to me is simply the latest way that HR has derived to provide ourselves with direction.  I’m not saying it’s a bad thing that we are focused on talent, I personally love it and think it’s great.  However, in 5 or 10 years, there will probably be a new way to reinvent ourselves that may be more relevant for the next decade.  “Talent” will be relevant for a very long time, but it may not be what is leading in the minds of business executives.  I think the brand “Human Resources” is as generic as anything else and while it may not be the perfect brand, it may be more timeless.