Bersin & Associates Analyst Updates

What This Economic Recovery Looks Like for HR

info@bersin.com (Josh Bersin) — Wed, 12 Jun 2013 15:11:00 PDT

Last week's unemployment report showed a slow but steady economic recovery taking place. Let's look briefly about how the recovery affects HR.

While the number of people "discouraged from work" did not change, the economy did create 175,000 jobs, which is a step in the right direction. The unemployment rate remains high (7.8%) and there are still 11.8 million people unemployed, but the economy is clearly improving.

Let's take a look at how and where these jobs are being created.

Since January 2011 the US economy has created around 3.1 million jobs out of a total labor force of 155.6 million.

The current distribution of jobs in the US is shown below.

Fig 1: Distribution of US Jobs, May 2013, US Bureau of Labor Statistics, http://www.bls.gov/web/empsit/ceseeb1a.htm

One can see that government, education, and healthcare currently make up around 31% of all the jobs in the US (and most government jobs are at the state and local level, by the way). The healthcare sector has remained a steady growth area during the recession and jobs in this sector remain robust.

Government positions have slowed in the last few quarters, driven largely by the sequestration. Most government jobs are at the state and local level (19.1 million jobs in State and Government vs. 2.74 million in Federal agencies).

Retail, leisure, and hospitality make up a large number of jobs (21.5%), and this sector has been growing steadily. Interestingly, manufacturing jobs have risen to almost 9% of the economy (nearly 500,000 manufacturing jobs have been created since January of 2011). At the beginning of the recession we saw manufacturing drop to less than 7% of the economy.

If we look at trends over the last few years one can see how this recovery is taking hold. Some of the significant changes which have taken place in the last 2 1/2 years include:

Administrative positions have risen by 11% and temporary services have increased by 9.7%. These trends point out two trends: businesses are staffing back up, and we are moving further into a "contingent work economy." (Read "The End of a Job as we Know It" for more thoughts on the contingent nature of work).
Construction jobs are coming back (4.2% increase in jobs) and real estate is hot again. In my neighborhood (San Francisco East Bay) there are now dozens of homes open and people are bidding them up once again. A recent article in the Wall Street Journal shows that household wealth has returned to re-recession levels.
Jobs in leisure and hospitality are up 4.5% over the period, showing that people are starting to have time and money to enjoy our lives again. Consumer spending is one of the growth drivers of the entire economy. Of course for those in the 7.8% unemployment life is still tough, but overall this is a sign of economic confidence.
Information services and financial service jobs have increased around 2.5% over the period. While these are growing similarly to the rest of the economy, the nature of these jobs has changed dramatically. We have data which shows that the new software, IT, and financial jobs are much more analytic in nature. And positions in software development are growing rapidly.
The economy has created 2 million jobs classified as "managers of business." Most companies have hollowed out many of their middle management positions and this data shows that companies have confidence to rebuild their leadership teams.
The US economy has created 1.7 million jobs in "professional and business services," a 4.6% increase in the last 2 1/2 years (twice the rate of job growth in general). This is clearly a sign of the increasing "service nature" of work.

What does this Mean to HR

I talk with hiring managers and HR executives almost every week, and this data reinforces many of the conversations I've been having:

1. Businesses are "talent constrained" again, so hiring in professional and technical positions has heated up. Nearly 2/3 of all HR executives tell us their businesses are talent constrained.

2. Businesses need mid-level leadership. While the workforce continues to age, we need more managers. Most companies have flattened their organizations dramatically, creating a need for more mid-level management. Middle managers (first line supervisors, second line managers) are among the most important roles in business - and we see companies shifting their development resources towards hiring and developing this part of the team.

3. Technical skills are in short supply. As manufacturing, technology, and financial service jobs open up, we see an increase in demand for "data analysts." Recent research by BurningGlass shows that the most popular new jobs for MBAs are "analyst" positions.

4. Leisure, hospitality, retail, and healthcare continue to be growing segments of the economy. These jobs are critically important to our service economy, and they continue to grow. In my neighborhood there are more restaurants than ever. These are not high paying jobs, but they're there... and these can be enriching positions for people who like to serve others or are newly entering the workforce.

5. The "contingent workforce" is growing in importance. Studies show that 40% or more of all positions are now contingent (part-time, contract, or project-based). We call this The Open Talent Economy. Today workers today look at jobs as a way to grow, enrich their lives, and learn. Younger workers will leave and move on when and if your company does not offer them a way to grow. From now into the future we have to look at all jobs as contingent, making it more important than ever to create an enriching and purposeful work environment.

6. Employee engagement continues to be waning. Employees have been battered over the last five years and as the job market recovers people will move. Gallup believes that only 30% of the US workforce is actively engaged at work (actually very slightly up from last year), implying that as the market recovers you are going to have to step up your focus on building a highly engaging work environment. Watch for more from us on this topic soon.

The US unemployment rate is still high and there are too many people looking for work. But the data shows a healthy recovery with most segments making great progress.

You can follow me to stay up to date on trends, research, and news in all areas of HR, leadership, and talent management on twitter at @josh_bersin. For more information on Bersin by Deloitte, please visit http://www.bersin.com .

-----

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

About Deloitte

As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

The Latest Data on Millennials

info@bersin.com (Josh Bersin) — Fri, 07 Jun 2013 10:40:00 PDT

The Millennial generation is hitting the workforce, and the media and organizational leaders have...well, let's just say, concerns. To understand the situation better, Telefónica just released new data on our youngest employees, the Millennials, in preparation for their summit held on June 4th in London (reply available here http://event.ft-live.com/ehome/index.php?eventid=57248&). In partnership with the Financial Times, Telefónica conducted 12,171 online quantitative interviews among Millennials aged 18-30 across 27 countries in six regions including North America, Latin America, Western Europe, Central and Eastern Europe, Asia, and Middle East & Africa . The 190 question survey was administered from mid-January to early February. (See more at: http://survey.telefonica.com/survey-findings/#sthash.SEfLbXMG.dpuf)

I took a peek at the findings and distilled the work-related results. Below are a bunch of statistics, all reporting data from the full international sample unless otherwise noted. Keep in mind these are broad generalizations made from a sample of Millennials. Of course, any one individual’s values and beliefs can vary wildly from these survey results.

Here’s a piece of good news: Millennials will engage in work as their parents and grandparents have before them. Seventy-five percent link who they are as a person to what they do for a living, and 43 percent say making it to the top of their career is very important to them (although only a third of Millennials in the U.S. similarly value their career). Ten percent say their career is their single most important priority, and 14 percent prioritize making money – beating out other family and friends for the top slot. To wit, over 40 percent rated personal finances and personal trajectory (i.e., what am I doing with my life?) in their top three biggest worries. That being said, only half of this survey's 18-30 year old sample is working outside the home – many are still in school. The youngest is, after all, only 10.

So many are planning on engaging in the workforce. Great. In fact, 75 percent "know exactly where they want to be in 10 years". A little vague, I feel. What do they want to do? Technology and economics beat out other fields of study as "most important to ensuring [their] personal future success" at 36 and 20 percent, respectively. In the U.S., technology came in lower at 28 percent with the difference mainly compensated for in Science at 18 percent. Seventy percent of this young generation is willing to work abroad, although that number drops to 62 percent in the U.S.

Will this engagement in work support our economy? We might say “obviously”, but much of our economic strength is rooted in entrepreneurialism. For our youngest workers, 55 percent say being an entrepreneur is important, but only 45 percent say the same in the U.S. The highest scores are in Latin American countries (78-96 percent), and the lowest come from Japan (14 percent). Only 41 percent want to work for a start-up. It seems as though this group is, at least for now, a bit risk-averse. You’ll see below that financial security is a concern, and a start-up, perhaps, doesn’t offer the assurances they are looking for.

Organizations are concerned with Millennials' turnover, and with good reason: consultancies' research reports that a half to two-thirds of this group intend to leave their organization. Despite past research I and colleagues have published which isolated generational differences (Kowske, Rasch, & Wiley, Journal of Business and Psychology) and showed this group as more satisfied at work as a generation, their age - their youth and career infancy - trumps. On job-hopping, Millennials are spilt with 53 percent preferring a steady job, and 47 percent feeling that it’s better to change jobs as opportunities arise. However, in the US, two-thirds believe in the benefits of steady employment. Interestingly (but to no surprise for those of us who watch the Chinese labor market), the numbers flip in China – 55 percent have more faith in switching jobs. The threat of Millennial turnover is real.

What types of organizations are more likely to engage them? We seem to think that contributing to the community is a key issue, and there is evidence to support this idea, but at their core they are like everyone else that works for pay: 95 percent want to work for a company that generously compensates its employees, and 86 percent want it to be focused on financial stability and the bottom line. In fact, over half of Millennials believe that a decent paying job is a right, versus a privilege.

But that’s not the whole picture. Seventy-six percent would rather love their job but make just a little money, and only 24 percent that wouldn’t mind hating their job if they made a lot of money. Eighty-nine percent want to work for an organization that allows for flexibility regarding when and where to work. In terms of the draw of corporate responsibility, over 80 percent want the organization to be socially and environmentally responsible. And they have ideas as to how: their top three most important ways to contribute to society are 1. improving access and quality of education (42 percent chose as one of their top three), 2. protecting the environment (41 percent), and 3. eliminating poverty (41 percent).

In other words, they want to work for top dollar, love their job, and have a flexible schedule, all while working for an organization that contributes to the community and protects the environment. Utopia, or the reality each organization faces?

So what did we learn? The eldest of Millennials are facing facts. They are concerned about their future and are worried about their personal finances. They are geared up to joined the workforce and contribute to the economy. But they are also looking for a balanced approach from organizations – they realize that you have to make money to survive as a firm first, and they hope the organization they join can do that in a responsible way. As HR professionals, we will continue to battle turnover in the Millennial workforce, but creating engaging jobs and upping the socially responsible-factor might help us mitigate this risk.

But let's remember: only half of this young workforce is currently working. And many of this eldest half are just starting families. Without a doubt, like generations before them, their perspectives and opinions will change. As they age, we will watch shifts and adjust our practices.

For more information on generational research, members can download the Bersin report Just the Facts About Millennials (And How Organizations Are Supporting Them).

Explosive Growth in the Corporate Training Market

info@bersin.com (Josh Bersin) — Sat, 25 May 2013 15:35:00 PDT

Earlier this year we launched the 2013 Corporate Learning Factbook, and the numbers are striking.

US training organizations grew their spending by 12% in 2012 with similar growth rates expected in 2013.

This is the highest growth rate in the last 8 years.

Why the high growth? Companies realize that despite the high levels of unemployment in some locations, skills are hard to find. Jobs have become more specialized and even highly skilled professionals must continuously reinvent themselves. Plus, as recent research from McKinsey points out, educational institutions are not developing graduates who are immediately ready for work.

We have been studying the corporate training industry for over a decade, and it continues to change and evolve. Businesses spend more than $62 billion on training in the US alone, and more than 50% of all dollars go into technology, tools, coaching, and other "non-instructor led" solutions. (Globally we estimate the market at around $135 billion.)

The e-learning industry is over $2 billion and growing, but has changed dramatically. Today employees want their training to include video, games, and a whole next generation experience. Much of our research shows that modern best-practice research focuses heavily on the "learner experience," and is highly tailored to the working environment of the employee. Training for sales people, for example, is integrated with the CRM system. Training for new hires is often delivered on mobile devices or integrated into social networks.

The explosion of Massive Open Online Courses (MOOCs) is further expanding the market. Organizations like EdX, Coursera, Udemy, and Academic Partnerships are delivering free training and education materials (charging for academic credit), further expanding opportunities for corporate training.

High-Impact Organizations spend More

Most companies struggle to understand where and how to spend training dollars. Are you spending enough money on training? And is it being spent in the right way?

Our research shows that while underfunding training is a problem, the use of "average spending" benchmarks can be misleading. While the US "average" spending on corporate training is around $706 per year, actual spending levels vary from $200 to over $3,000 per year depending on industry. You, as a training leader, should benchmark yourself against similar organizations in your industry.

Retailers, which have high levels of turnover and employ lower wage workers, for example, spend less per employee but actually deliver more hours. Training is typically delivered by store managers and local programs, supplemented with many online programs. Professional services organizations (consulting firms, for example), spend as much as ten times retailers, and programs must include many hands-on exercises and activities to develop strong client management skills.

Our research also shows that organizations with highly mature L&D functions (we call them High-Impact Learning Organizations) spend 34% more than others. This shows that spending more money on training pays off when it's done well.

Most organizations find it easy to cut the training budget. But over time these decisions reduce workforce productivity, and there's nothing more expensive than employees who do not have the skills to do their jobs well. And remember that training is also an engagement and retention tool: it brings people together into a common culture.

This is why we spend so much time advising companies on best-practices in organization, governance, technology, standards, and processes within L&D. A world-class training organization is truly a sight to behold. It adds huge amounts of value and creates sustainable competitive advantage.

It's exciting to see businesses invest in capability development again. This is a predictor of business confidence and future economic growth. And of course if you're in the workforce looking for a job, it means employers want to invest more in you.

To learn more, read the Corporate Learning Factbook or download the WhatWorks brief.

HCM Partners Bring Human Capital Management to NetSuite ERP

info@bersin.com (Josh Bersin) — Tue, 21 May 2013 20:31:00 PDT

While many of today’s talent management suite providers are extending their talent management capabilities to become full HR providers and HR providers hasten to add talent management support, NetSuite, a cloud-based ERP solution that includes e-commerce, professional services, and financials, has partnered to provide its customers with increased HCM functionality.

With a focus on the mid-and upper-mid markets, NetSuite has HR capabilities from companies such as SilkRoad, that increase its competitiveness with players such as WorkDay, which focus on HCM in their ERP platforms. Integration between the ERP and the HR systems is a critical component in maintaining data integrity and in supporting analytics which cross various modules.

SilkRoad provides NetSuite users with talent acquisition, onboarding, and performance management applications, with an attractive tile-based user interface that offers both appeal and ease of use to end users and HR professionals alike. While the products have different architectures and different underlying databases, single sign-on eases access by users.

This solution, as well as other HCM partners recently announced at SuiteWorld in San Jose last week, will address customer needs for employee management that NetSuite does not itself provide. Other HCM partnerships announced in addition to SilkRoad were Ascentis, CloudPay, Insperity, Meta4, NOVAtime, SilkRoad, TransCard and TribeHR. Dell Boomi was announced as an integration partner.

The goal of this partner initiative spans many areas of HR and talent management, and addresses global support of NetSuite abroad. Beyond the intent to create one single employee system of record, support for talent management functions such as employee and manager self-service, global payroll, benefits administration, compensation and incentive management, learning management, succession planning, workforce management, social collaboration and social media integration is intended. NetSuite markets a payroll product developed from its acquisition of Perquest assets; that has yet to be integrated with SilkRoad, for example. Payroll product CloudPay and HR provider Meta4 provide global capabilities for NetSuite’s growing international markets. Ascentis, NOVAtime, and Insperity, as well as SilkRoad, provide with HR capabilities; TribeHR provides social-networking based HR; TransCard supports unbanked employees.

Are Applicant Tracking Systems Now a Commodity?

info@bersin.com (Josh Bersin) — Sun, 19 May 2013 13:51:00 PDT

The HR software industry is one of the most dynamic and innovative markets in technology. The market for talent management systems (software to manage recruiting, performance and succession management, learning management, compensation, and related areas) is over $4 billion, and we expect it to grow by over 20% next year. The market for core HRMS software is much larger — over $12 billion — and growing as well.

Within this market there are many "sub-markets" for various tools. These include applicant tracking systems (ATS), candidate relationship management systems, social rewards systems, compensation management tools, workforce planning tools, learning and collaboration systems, and more. The HR software market is among the most innovative industries I have seen: The market is huge (more than a million enterprises around the world) and the needs of HR are vast and constantly-changing.

And in the area of recruiting, there is an arms race going on. Companies are spending more than $3,500 per year on average per hire (varies widely by role of course) and the cost of hiring the wrong person is higher than ever.

The ATS Market

The grand-daddy of this marketplace is the Applicant Tracking Systems (ATS) market.

The roots of applicant tracking started with "resume scanning" tools which let candidates scan their resumes to a single number. These systems collected resume's in a database, tried to scan and index them, and gave recruiters an online view of job candidates. As the technology evolved these tools added better parsing (identifying name, job history, education, etc.), searching, and workflow.

In the early 1990s companies like Taleo, Vurv, VirtualEdge (now owned by ADP), and many others started to develop a thriving industry for these tools. In fact, this market was the first robust "talent management software" market and these companies rapidly grew and sold their systems to companies of all sizes. Today we estimate that more than 60% of all companies have some type of ATS, and as the market has shifted (Oracle, SAP, SuccessFactors, ADP, and most other major HR software providers sell them) the market grows continuously. There are now "free" ATS systems available (SmartRecruiters) and even companies like LinkedIn offer a small slimmed down level of applicant tracking functionality.

Even small companies need these systems to store and archive resumes, so while many vendors are being acquired by large providers, there continue to be new providers and new ATS systems available in the market. Some ATSs are well designed for high-volume recruiting, some are designed for small companies, others are designed for highly complex global enterprises.

Do Core ATS Systems Drive Competitive Advantage?

While most HR organizations need these systems, our research now shows that this market is no longer the "strategic" market it once was.

We are completing a major research program in High-Impact Talent Acquisition and just finished looking at many factors which contribute to world-class recruiting. What the data shows is that high-impact recruitment organizations (and we will define that as the research is launched) are not differentiated by their applicant tracking systems. In other words, while you do need an ATS to run your recruiting process well, the selection and implementation of an ATS is unlikely alone to bring you to world-class.

Why is this? The market has shifted, and today the "value-add" parts of recruiting are in the areas of employment branding, campaign management, candidate relationship management, assessment, referral marketing, and interview automation. These new areas of technology are "add-ons" to the ATS, and the ATS itself has now become a core part of HR infrastructure.

What are the new areas of differentiation and high value in talent acquisition? Candidate relationship systems, advertising management systems, assessment tools and technologies, workforce planning, video interviewing, social sourcing and reference checking (look at Gild, SkillsSurvey, Gooodjob, Jobvite, Hirevue) , and of course data analytics systems (look at the data provided by companies like BurningGlass or Evolve, for example.)

Nevertheless, the ATS Market Remains Core to HR

Oracle's acquisition of SelectMinds and SuccessFactors' acquisition of Jobs2Web was part of this shift. While vendors are innovating rapidly, the ATS has now become a core platform and it is available in almost every core HR system. Most major talent software vendors (Oracle, SAP, ADP, PeopleFluent, CornerstoneOnDemand, and soon Workday) will have some form or applicant tracking, making it a standard part of the HR infrastructure. And there are dozens of mid-market ATS providers (iCims, Healthcaresource, and many others) which offer these platforms.

My advice to HR buyers today is to look further. As you build your next-generation HR technology infrastructure, look beyond the applicant tracking system to build a world-class recruiting platform.

______________________________

Josh Bersin is Principal of Bersin by Deloitte and a leading analyst and researcher in human resources, leadership development, talent management, and HR technology. You can follow Josh at @josh_bersin or visit the Bersin by Deloitte website.

To Understand Leadership, Study Followership

info@bersin.com (Josh Bersin) — Fri, 10 May 2013 05:44:00 PDT

I was at a conference with 50 or so chief learning officers last week and we had a number of discussions about leadership.

Despite the fact that there are thousands of models, consultants, books, and assessments for leadership, this group hardly agreed on anything.

We did agree that leadership development is a critically important challenge, and we also agreed that most leadership development programs are too fragmented and not focused enough on the company's specific, current business strategy.

That is, most leadership development and coaching focuses on "rounding out edges," helping leaders identify their "towering strengths" and both leveraging them while identifying our derailers or blind spots.

I walked away with some interesting take-aways I wanted to share.

In order to study great leadership you have to study great "followership." Great leaders naturally attract great followers. Who do we follow and why?

This particular company cited research which points to three things.

1. We follow people with character. Great leaders are simply "good" - they think and act on behalf of the entire organization, they set a good example, and they inspire others to follow them through their behavior and tenacity. They do not "bend the rules," rather they give us all a better understanding of how to be more ethical and fair. ( They have a moral compass.)

2. We follow people who help us grow. Great leaders help us do great things. They respect and bring out the best in each of us. They have an uncanny ability to make us feel good about ourselves and help us find ways to improve and develop pride in our own strengths. And they help us understand how to overcome our own weaknesses. ( They have what is often called emotional intelligence.)

3. We follow people who are "spiky." Great leaders are not necessarily "well rounded," they have unique strengths and weaknesses which make them real. We understand them and we relate to them, and we actually enjoy their "spiky" personality. (They are unique and different in some powerful and endearing way.)

And one final point which came out in the discussion. Great leaders have relevant experience. They seem to understand what to do because somehow they seem to have been there before.

This final trait, that of "experience" - is often called "learning agility" or "judgement." The group seemed to disagree on whether leaders should be moved around into new, uncomfortable roles or if they should continue to grow through similar positions they've had in the past. The team disagreed on this point, but did agree that "relevant experience" was critical to future success.

My personal experience around hundreds of top leaders has shown that most leaders function exceptionally well in certain types of situations, and when they are thrust into new roles (ie. moving from large companies to startups, or from fast-growing businesses to turnarounds), the failure rate is high.

But among all these top learning executives, we all agreed on one simple thing. Great leaders attract followers - so if you study "followership" then you understand modern leadership.

The World is Local: A New Model for Human Resources

info@bersin.com (Josh Bersin) — Tue, 23 Apr 2013 03:02:00 PDT

The World is Local: A New Model for Human Resources

Despite continued focus on globalization, new research by DHL shows that the world is not as "flat" as once believed. While low cost networking has made it easier than ever to communicate around the world, economic and cultural conditions from country to country are more different than ever. The DHL Global Connectedness study, authored by Professor Pankaj Gemawhat, states:

"The world is far less globally connected today than it was in 2007, and global connectedness falls far short of the levels commonly assumed by business executives and the general public."

The study's point is not that the world is not flat, but rather that "flatness" has given way to a new type of business environment: one where all markets are local, and we as business people have to localize our products and services for the countries we do business.

Think about China. Within two years China is expected to have a larger middle class than the United States. The labor market in China is far more competitive, younger, and more dynamic than in the US. Leadership styles are different and tools like LinkedIn are not the dominant players in recruiting and social networking. It is a fast-growing unique business climate. Companies that thrive in China create new business practices, different talent strategies, and different leadership styles.

Our research shows that today's business leaders don't just want to "globalize," they want to "localize" - optimizing their product, channel, sales, and talent strategies in the markets they serve.

How Do Our Talent and HR Programs Keep Up?

How well are you able to localize your talent, recruiting, learning, and leadership programs in the markets you serve? Are you able to provide flexible, rapid response to local business needs? Are your performance and succession programs relevant and localized? Are your HR systems up to date, accurate, and easy to use in local geographies? Do you have local HR staff which can optimize talent and learning programs in each business entity?

While talent is now a top priority on the minds of CEOs (Conference Board Research), our research shows that HR teams have a tough time staying relevant to business leader needs (only 3% rate themselves world-class).

In our recent High-Impact HR research, only 8% of companies believe their HR strategy can adjust rapidly enough to meet business needs, only 6% believe they are most efficiently using their HR resources, and only 9% believe they have clearly defined HR goals, purpose, and objectives. And when we ask our research members to describe the state of their HR organization, nearly half tell us they are going through some form of "transformation."

The Challenge of HR Alignment

The issue facing the HR function is trying to stay aligned with changing business needs while optimizing, designing, and integrating various people processes. Organizations have three conflicting challenges: effectiveness, efficiency and alignment.

Fig 1: Bersin Impact Model

What the model shows is that HR, like other business practices, struggle with three issues: effectiveness (quality of hire, employee capability, depth of leadership pipeline, etc.), efficiency (cost to hire, cost to train, time to complete, etc.), and alignment (business relevance). Too many HR executives focus on effectiveness and efficiency without thinking about the need to "constantly realign" people practices.

For example, if your company goes through an acquisition or expansion to a new market, how relevant are your talent programs? How quickly can they adapt? It turns out that agility is one of the biggest drivers of business impact.

Human Resources must deliver a tapestry of programs for recruiting, onboarding, training, performance management, compensation, employee relations, succession, engagement, and leadership development. While doing this, HR must manage payroll and benefits, avoid legal problems, and keep employees happy. Lots to do.

How HR Drives Business Value

When managed well, HR provides tremendous strategic value.

When asked to try to estimate what drives business success in their organizations, executives tell us that the operations of HR itself contributes around 7% to the company's bottom line performance. When we include the role of HR in driving leadership, management, and employee productivity this increases to 37%. More than 1/3 of total revenue and profitability comes from programs HR directly manages.

Putting this another way, HR's ability to help staff, train, enable, and coach people generates four times the return of HR's compliance and operations functions.

So while companies spend a lot of time focused on reducing HR costs and improving service delivery efficiency, the big value occurs when HR team directly engages with managers and leaders to help the business run better.

Example: Most companies struggle with two conflicting challenges: high levels of execution (which requires rigor, focus, training, and performance excellence) coupled with high levels of innovation (listening to customers, coming up with new ideas, changing and improving work, and taking time to learn). Managers tend to be good at one or the other, but usually not both.

One client is a global technology company which has recently shifted its strategy into high margin services.

This particular company has varying degrees of success in its transformation around the world. The CHRO, in his effort to drive business value, took the time to interview business leaders in the highest-performing business units and asked them to explain their talent strategies. How do they decide who to hire? How do they plan work? How do they set goals and measure performance? How do they assess and select leaders?

He found out that the highest performing team (they were located in Eastern Europe) had a unique and rigorous approach to these talent-related practices. They were not using the "standard" HR approach at all. His reaction was simple: he told the local HR business partners to get deeply involved and tell others and try to fold these practices into the standard operating models. His goal was to "collect this intelligence" and feed it back into the global people strategy.

This example, coupled with two years of quantitative and qualitative research, is what led us to develop a new model for HR.

The Bersin by Deloitte High-Impact HR Research

The research we are introducing this week will be detailed in a series of reports, recommendations, tools, and models over the coming months. You can download the preliminary findings here.

The research shows that a more distributed approach to HR drives tremendous value. In our research we found that 7% of companies we studied adopt certain practices which statistically improve business outcomes. These "high-impact" companies rated themselves 40% better at delivering products ahead of their competition, 33% better at maintaining low delivery costs, 29% better at continuously improving productivity, 9% better at responding to customer issues, and 27% better at winning over their competition. In short, these companies are operating in a more competitive way, incurring lower costs, and staying closer to their customers.

We found five keys to success (click her to read more).

1. HR business partners must be highly trained and specialized.

We must distribute expertise to the front lines. These people engage in recruiting, staffing, management, coaching, and planning. They must be true partners to the CEOs and leaders of their respective business units. They are not "generalists" they are "specialists." And this means they need training, support, and coaching themselves.

Our research also shows that HR business partners need new skills. They should have business backgrounds, understand data and technology, and take on a performance consulting role. High-Impact HR organizations recruit from business schools for these roles, and they train and certify senior HR professionals. We will be publishing details on these roles in the coming months.

2. HR business partners need the authority to design and deliver.

This research shows that high-impact organizations empower HR professionals to design, innovate, and deliver programs locally. They do this within frameworks, standard technology platforms, and standard tools.

Local design is critical to success. While we certainly don't want chaos in people processes, high-impact companies adjust their performance, compensation, and leadership programs as needed to deal with critical workforce and business unit segments.

One HR executive put it like this: we want the local teams to "innovate" and we want corporate to "integrate" and "standardize" where it makes sense.

(It's like distribute computing today - all computers are "smart." Likewise all HR staff must be "smart.")

3. Centers of Excellence should become "Networks of Expertise" or "Communities of Expertise"

HR has a concept of a "Center of Excellence" - a team of people who design and roll out critical programs and systems. While this model makes logical sense, these people cannot possibly keep up with all the various needs of local businesses. The high-impact organizations in our research adopted a different approach: they build a "network of expertise" or "community of expertise" rather than a "center of expertise."

These companies create frameworks, standard platforms, and standard tools. But they expect HR business partners to innovate at the business unit level, operating within corporate frameworks.

This of course changes the skills and capabilities needed in the business units, and most companies will deploy this model in stages. One major client, for example, distributed sales compensation design to its three largest business units - enabling the local VP's of HR to design the structure appropriate to their teams. The global VP of compensation enforces standards and makes sure incentives and compensation levels are consistent.

4. External intelligence gathering plays a critical role.

High-Impact HR organizations are intelligence gathering machines. They benchmark themselves, purchase external data, read research, study vendors and new tools, and focus on continuous development of their own teams. They often have a person or team focused on "HR for HR," developing curriculum, training, and ongoing information services for HR professionals around the world.

This focus on external intelligence gives them the ability to innovate and adapt to new practices more quickly. Because their local HR teams are highly trained and empowered, they can adapt and change their HR practices rapidly as needed.

One of our large technology clients in Silicon Valley, for example, noticed a steady drop in employee engagement and increase in turnover over the last three years. They started losing people to fast-growing companies like Facebook, Google, and Twitter. This particular company is a well known legacy company in the valley, and their talent practices had not been revamped in several years.

Working as a "network of expertise," a team of both corporate HR and local business partners threw away the company's performance management system and started over. While the new approach is not perfect, it is a big step forward - and was driven through the needs of local engineering teams. While it will provide data and consistency needed at a corporate level, it was specifically designed to be "agile," just like the software teams themselves.

One of the key strengths of these high-impact HR teams is agility. They see how the world is changing and they have the culture and expertise to adapt their talent programs.

5. It's Time for a Bold, Business-Integrated CHRO.

High-Impact HR demands leadership. Roles will change. HR staff will be more business oriented (one CHRO told us that he believes 50% of his HR team should come from the business). HR people will be held accountable. And the company must innovate in its HR programs themselves. The CHRO must lead this change, align closely with business leaders, and drive innovation into the HR team.

This is an exciting time for HR, learning, and talent professionals. As the world becomes more "globally local" we have to adapt.

Watch for more from us on this vitally important topic. You can follow me to stay up to date on trends, research, and news in all areas of HR, leadership, and talent management on twitter at @josh_bersin. For more information on Bersin by Deloitte, please visit http://www.bersin.com .

-----

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. About Deloitte As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Looking Forward to the Best Week of the Year

info@bersin.com (Josh Bersin) — Fri, 19 Apr 2013 14:35:00 PDT

It is hard to believe that our IMPACT conference is already upon us. Even though I have been a part of two-thirds of Bersin’s IMPACT conferences, I find myself more excited than ever. Here is why:

Fantastic Keynote Sessions: We had a chance to preview Josh’s keynote session last week, which focuses on “How the New Human Resources Organization Delivers.” I am certain that it will, as always, be a thought-provoking and energizing session for conference attendees. In addition to this session, Josh will also be hosting a CHRO roundtable – the first time we have done something like this – with CHROs from Extra Space Storage, UnitedHealth Group, The Walt Disney Company and Juniper Networks. In addition, we have Cathy Benko speaking to us about “The Shifting Ethos and What It Means For Talent Leadership,” which will focus on the role of corporate citizenship in enhancing organizations’ ability to attract and retain talent. Finally, Dr. Paula Caligiuri will speak about “Building a Pipeline of Culturally Agile Professionals.” I picked up her book a few months ago and have learned a lot from her frameworks and stories, so I’m excited to hear her speak in person.
Analytics, Analytics, Analytics: Everywhere we turn, we hear more about the need to measure and interpret data to derive actionable insights. We have a significant number of sessions dedicated to this topic this year. I was personally involved in supporting two sessions and am especially excited about the insights offered through both of them:
--“Big Data in HR: Driving Improvements From Insights” with Jonathan Ferrar of IBM
-- "Using Data and Analytics to Align Strategy, Process, Roles, and Talent at Lowe's" with Carmen M. Neudorff and Todd Christian of Lowe’s
A Focus on Agility: In 2012, our conference theme was “Building Business Agility Through People.” As it turns out, that conference was just the beginning of a lot of work on understanding what that really means. This year, we have an entire track called “Predict and Plan for Agility.” I will be co-presenting (with Gloria Stinson of Adobe) on “Creating the Agile Organization,” on Wednesday and am also hosting an Executive Roundtable on the subject of Performance Management and agility on Monday (it’s sold out, but I’m happy to talk to folks about the topic during the conference and afterward).

Truth told, though, as excited as I am about the agenda that we’ve put together, I am even more thrilled about the chance to catch up with conference attendees. Throughout the year, I have the opportunity to interact with amazing HR professionals, and this is when we get to reconnect and to meet new people as well. For that reason, it is reliably one of the best weeks of my professional life every year, and I cannot wait for folks to start showing up on Monday. I hope to see you there!

~Stacia

Join Us for a Panel Session on Emerging Learning Technologies

info@bersin.com (Josh Bersin) — Thu, 18 Apr 2013 12:29:00 PDT

If you’re interested in learning about the use of augmented reality, wearable computing, 3D printing, alternatives to virtual ILT, gamification and other emerging technologies to support learning, you’ll want to join us for a thought provoking panel session with Marc Ramos, Global Lead, PeopleDev Global Learning Design at Google, Mary Woolf, Director of Learning Technologies at Yum! University, Yum! Brands, and Emi Kilburg, Emerging Learning Solutions Lead at Deloitte Consulting LLP.

The panel session takes place at our IMPACT conference on Tuesday, April 23 from 9:30-10:45 AM ET at the Marriott Harbor Beach Resort in Ft. Lauderdale, Florida.

The session is structured to encourage audience participation. In addition to the onsite live event, we will work to share your questions posted on Twitter. Use the hashtag #IMPACTHR.

Pre-Hire Assessment Science Revealed: Value for Employers, Value for Candidates

info@bersin.com (Josh Bersin) — Tue, 02 Apr 2013 13:51:00 PDT

These days there is a lot of talk about BigData in HR. And it's a good thing: there is a science to people management, and the more data we have about people the easier it becomes to make critical people decisions. Data helps us understand why some people perform better than others, why some people become strong leaders and others do not, and why some people are highly engaged and others are not.

What is your hit-rate for hiring great candidates? When I talk with peers and leaders in HR around the world, I find that most companies feel lucky if 75% of their candidates work out and 10% become high performers. It's extremely hard to find a "great candidate" and it's not just because there are a shortage of top people, it's often because we often don't truly know what we're looking for.

The Science of Fit

If you have studied I/O Psychology (Industrial and Organizational Psychology) then you know there is a vast research community which studies the traits, personality styles, and characteristics of high performing people at work. And there are hundreds of models (Myers Briggs®, a personality assessment, is often used as one such tool), most of which are based on years of research studying what skills are needed in different jobs.

Many years ago I started talking with assessment firms, and what I learned is that many of the “skills” or “competencies” needed are common from job to job. Attention to detail, time management, cognitive thinking, problem solving, and learning agility are skills that help us in nearly any job in business. But you can get far more specific.

I/O Psychologists look at jobs in great detail. They examine tasks at work and try to diagnose the skills, personality traits, experiences, and knowledge someone needs to succeed at this job (often called “KSA’s” or knowledge, skills, and abilities). This can be accomplished in a two main ways:

We study the job itself, and ask workers and managers what they perceive to be the characteristics of high performers, or
We study high-performers and compare them against the average, creating what we call a “high-performer analysis.”

In our Science of Fit research we looked at a variety of job roles (sales positions, leadership positions) and took advantage of this “high-performer” analysis approach. By selecting the top 10% in performance, you can compare this group’s skills, personality traits, experiences, and knowledge against the average. And if the data is statistically valid, you can create a "model" for success in that job

In this study (using data and analysis provided by Kenexa , now a division of IBM) we looked at cosmetic sales representatives, customer service reps, pharmaceutical researchers, and movie theater staff. In each of these four cases the research predicted future performance and gave the company a unique perspective on who to hire.

In addition to this approach, by the way, some tools also look at the traits of low performers, which one would consider the "derailer traits." It turns out that many high-performers also possess traits of low performers, so when you also identify these "low-performer" characteristics you get an even more accurate prediction of success. (Thanks to Lee Klepinger of Impact Achievement Group for this insight.)

Creating a Pre-Hire Assessment

Once this work is done (and you can buy off-the-shelf tools for this also), you now have the core of a "pre-hire assessment," or test and interview script which can help you identify the top people for a position.

Believe it or not, fewer than 40% of organizations use pre-hire assessment for new hires, and even fewer for internal transfers and promotions (Bersin Talent Analytics Research, 2011).

This month we published a major new library of tools and research on this market designed to help you take advantage of this process. What our research shows is that you may be able to more than double your success rate for hiring with just a few carefully designed assessments.

Fig 1: Process for Pre-Hire Assessment

As this funnel shows, you as a manager or employer should apply these assessments or tests early in the process, long before you start interviewing and spending time on background and reference tests. Why do you think companies use computer and math problems to screen candidates? These tests help quickly understand whether a candidate has the basic skills for the job. (Read about Google's process here. )

Today the assessment market is well over $800 million in size (Bersin by Deloitte research), and includes companies like Korn Ferry, SHL, DDI, CPP (Myers Briggs) and literally thousands of smaller companies that offer specialized assessments by role and job.

Think about how you select, promote, and assess candidates in your organization. There is probably a lot more "judgment" and "experience" than science in the process.

Are pre-hire assessments unfair to candidates? Our research says no. Employers can save time and money in the screening, ultimately finding people with a strong fit for the job. And job seekers get the benefit of rapid screening, helping them figure out where their "perfect job" may be.

We are in an era of “new science of HR.” Prehire assessments are among the easiest way to apply this science to your organization.

PS. Come to IMPACT 2013 and see our brand new research on best-practices in the science of Pre-Hire Assessments. We expect a sell-out crowd!

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright © 2013 Deloitte Development LLC. All rights reserved.

The Ever Changing State of the Learning Technology Industry

info@bersin.com (Josh Bersin) — Mon, 18 Mar 2013 12:15:00 PDT

Over the last ten years the learning technology industry has undergone radical change. With a flurry of acquisitions and many new technologies now available for learning, it is increasingly difficult for a corporate training manager to develop an integrated learning platform. In this article I review the history of this space and point out some important trends.

Evolution of the Learning Management System (LMS) Market

LMS systems were originally developed as back office applications used to schedule and manage formal training. Many companies had them, and they often ran on mainframes.

In the late 1980s a few pioneering companies (Saba, Docent, and Pathlore) set out to build a new generation of systems to manage not only formal training, but also e-learning and other forms of digital content. These companies set in place an explosion of innovation to build e-learning platforms. My former employer, DigitalThink, built its own “cloud-based LMS” back in the early 2000s which let customers brand their own portal, and we found ourselves competing with dozens of vendors selling different shapes and sizes of online learning management systems.

These original e-learning platforms managed digital content, competency models, and offered customized portals to let companies brand and customize their learning experience. Initially developed as content delivery platforms, these early players (Learn.com and GeoLearning, for example) offered their platforms "on-demand," a phrase which is now called "in the cloud."

In the mid 2000's a shakeout started and vendors segmented themselves into two categories: those that focused on global enterprises – (Saba, SumTotal, Plateau, PeopleSoft, Oracle, and SAP) - and vendors which focused on the mid-market (Learn.com, GeoLearning, Blackboard, Certpoint, CornerstoneOnDemand, SilkRoad, NetDimensions, and others). Our LMS market report in 2005 tracked more than 30 major vendors and each was growing. Many were underfunded, but still built great products focused on addressing this rapidly growing market.

Then came talent management. around 2006 the talent management software market exploded and a few innovative LMS companies took the risk of adding performance management and development planning tools to their products. Now the system became useful for HR managers, not just training organizations. Providers like CornerstoneOnDemand, Authoria (now part of PeopleClickAuthoria), SumTotal, and Saba started to promote the idea of a “talent management suite” and set off a race to build broad talent management platforms. The original LMS market was forever changed.

For nearly seven years vendors have added talent features to their learning management systems. Cornerstone extended its product to an enterprise class talent management platform, growing to a publicly traded company now worth more than $1.3 billion. Saba extended its technology into social and collaboration systems and continued to grow in the high end of the market. Plateau, which built a complete talent management suite, was acquired by SuccessFactors and then SAP. Learn.com was acquired by Taleo and then Oracle. SumTotal Systems acquired GeoLearning and a variety of other talent management companies and built an entire suite, including products for payroll and workforce management.

This reset the bar. Now buyers expected their LMS to be integrated into a talent management suite, forcing other talent software providers to build or buy an LMS. SilkRoad acquired an LMS. PeopleFluent (the combination of Authoria and PeopleClick) acquired an LMS. Kenexa acquired Outstart (a content management and LMS vendor). ADP (which acquired Workscape) launched an LMS. During the last five years many LMS companies spent more energy looking for buyers than they did building new features. Recently one of the last vendors of this vintage, Certpoint, was acquired by Infor.

While all this was going on, the virtual classroom and collaboration software market was growing rapidly, and these vendors found out that many of their customers were using their tools for training. So Adobe, Citrix, and WebEx all added learning management features to their collaboration tools, giving buyers even more options for learning administration. Skillsoft, the largest provider of e-learning content, extended its platform with LMS features and now positions Skillport as a learning management system.

Where Are we Now: Innovation Starts Anew

Well today the world has changed. The $1.8 billion market for core learning technologies (Read LMS 2013 for more details www.bersin.com/lms ) has continued to grow, driven largely by replacements, expansion of the market to mid-sized businesses, and growth outside of North America.

Organizations now widely use social tools, video platforms, and knowledge sharing as a major part of their training infrastructure, and they use an array of new technology to run their operations. Since many of the early vendors have consolidated and are now focused on talent management strategies, the market has created the opportunity for a new set of innovators. We call these new providers “emerging players” or “new social LMS systems.” They offer products in the cloud, so you as a training manager can sign up to use them with little more than a credit card.

And new forces are driving innovation. Moodle, an open source LMS which was developed for university education, is now widely available from many vendors. And massive online open courses (MOOC’s) available from organizations like Cousera and EdX are building their own form of learning platform as well. MOOC learning platforms are really very similar to corporate LMS systems, just more focused on consumer usability, e-commerce, and features to proctor exams and enable tutors to interact with students.

The Learning Technology Market Maintains its Importance

Through this last ten years of change, our research shows that the corporate learning management system continues to be a business-critical technology platform. Most organizations offer training and today nearly 2/3 of it is driven through digital content, mobile devices, video, and other new media sources (Source: Corporate Learning Factbook 2013).

This means that today’s modern learning technology platform should manage formal courses, all forms of digital content, e-commerce, social features, employee profiles, competency-based learning, assessment, and often integrate with talent management. So it’s not a simple piece of software.

While the market has matured in many ways (Oracle, SAP, ADP, IBM, and many other major payroll providers have jumped into this market) it continues to evolve. Problems like knowledge management, internal social networking tools, user-developed content sharing, mobile learning and knowledge tools, and expertise management continue to be new areas for innovation.

Many clients tell us that their current learning technology infrastructure is still messy. Organizations typically have an LMS somewhere in the back office hidden behind a corporate portal. But many still have multiple independent systems (one for sales, one for corporate, and a series of local training platforms for different business groups). One of our large clients has seven different learning platforms and is finding it very difficult to figure out much money they are even spending on training. Without a strong corporate training group (or well established rules to govern corporate training), it's very common for local groups to develop and launch their own training programs.

BigData and Analytics Drives Consolidation

Today companies want to apply BigData analytics techniques to their training. Why is our leadership pipeline weak? What causes the big variations we have in sales performance? How can we improve new hire onboarding and productivity? Training plays a part in answering these questions, and the data about training and knowledge management should be consolidated so we can analyze it effectively.

Increasingly, companies do need an integrated and modern learning technology architecture. It is nice to have a single global LMS, but frankly it’s a somewhat elusive problem. As soon as you standardize on the LMS you find a lot of “edge cases” where people want to do some form of training which seems “non-standard” and can’t be tracked completely. So these LMS systems should be highly configurable and many are customized in some way.

Where the Market is Going

The following chart shows our four-stage maturity model for corporate training. As you can see, the evolution of the learning technology market parallels the evolution of L&D itself. Training departments start at a tactical level and evolve over time to end-to-end capability development. So the learning technology market has both supported and evolved along with the L&D function itself.

Fig 1: Bersin by Deloitte High-Impact Learning Organization Maturity Model®

This fascinating market simply will not sit still. Now that the ERP and payroll providers largely provide learning systems, emerging providers and niche players are emerging. In our latest LMS market research (www.bersin.com/lms) we actually found more than 200 companies. These emerging players serve specialized needs (i.e. retail, small business, call centers, healthcare, etc), may focus on social features, and are very easy to use and configure.

More and more of the standard learning platforms support mobile learning as well. SAP, which acquired Plateau and Jambok as part of its SuccessFactors acquisition, now claims that its mobile solutions are the first new versions they ship. SumTotal is moving in the same direction.

The value of an integrated learning platform is increasingly high. Young employees expect their corporate systems to be as easy to use as Facebook or LinkedIn. And we, as HR and L&D leaders, want them to use these systems. The war for skills is growing and we want employees to share their knowledge and participate easily in the social learning experience.

If you haven’t looked at your corporate learning technology for a few years now might be the time. While no company likes to spend money on these tools, they actually represent a very important platform to capture, manage, and improve your own intellectual property. And as training leaders know well, the ability to train, support, and engage employees in continuous development is a true competitive advantage.

Should we Distribute HR Into the Business?

info@bersin.com (Josh Bersin) — Mon, 25 Feb 2013 12:48:00 PST

Today we see continued change in the world of work: people work remotely with high degrees of connectivity, companies are globalized and organizations are flatter, employee engagement is low, and talent markets are rapidly changing .

Is it time for a new operating model for HR? We think the answer may be yes.

We are completing several years of research into the modern High-Impact HR Organization and we have uncovered some significant findings.

(Come to IMPACT 2013: The Business of Talent, on April 22-24 to hear the details.)

The State of HR Organizations Today

Human resources organizations today deal with many operational, compliance, as well as strategic issues. Our research shows that approximately 2/3 of all HR spending focuses on technology, infrastructure, and operational programs (payroll, compliance, record-keeping) and around 1/3 focuses on strategic talent management.

The 2/3 of back office work are things that must be globally integrated, highly scalable, accurate, and efficient. So when we design an HR organization we typically create shared services groups (and use outside providers) to manage these tasks. And our research shows (cataloged in the Bersin by Deloitte HR Factbook, with details available to members) that you can benchmark this back office spending and it will typically cost between $1,000 and $3,000 per employee to deliver per year.

But once you have these programs running well (and this is no easy task), the remaining 1/3 of the HR budget must optimize its efforts on the strategic value HR and L&D provides: supporting what we now call "talent management" - sourcing, hiring, staffing, training, managing, developing, and supporting the team... and planning talent needs into the future.

In most companies these talent-related functions are being moved into the "Talent Management" function, and our research shows that high performing organizations are integrating talent functions in new and different ways. Today a world-class talent management team includes staffing and recruiting, talent development and mobility, leadership and succession management, corporate training, as well as the disciplines of diversity, engagement, and compensation. A lot of "stuff."

Each of these talent functions in and of themselves are complex. Just managing corporate training, where companies spend 1-4% of payroll, is hugely daunting. We have built an entire research practice around the practices of managing the structure, organization, and best-practices of employee development, and we estimate that businesses spend over $130 billion around the world on training alone.

Most companies today have a variety of teams performing these functions (sometimes located in "centers of excellence," a term we are going to recommend you change) and they are at various levels of integration, centralization, or distribution into the business.

A Newly Defined Role for HR Business Partners

In the traditional HR organization model (designed more than 20 years ago), the role that pulls all this stuff together is called the HR Business Partner, of often named "HR Generalist." The idea for these people was that they would "serve" and "support" business leaders and staff, using the expertise of the COE for support.

Well, our research and many conversations with clients tells us that this model is not working.

Why? Several reasons:

1. Skills and Expertise : First of all, the HR business partners need to be very business oriented and they do not often have the skills or expertise to customize and apply all these complex practices locally. Our clients tell us that their own teams lack the necessary skills it all the talent practices, analytics, coaching, and general business acumen needed for such a complex role.

2. Local Authority: In many companies the HR generalist or business partner has no authority. Their jobs have been "hollowed out" by the concept of the COE. As one senior HR leader put it, "I couldnt think of a worse idea than to tell my HR community that we want them to be 'generalists' and let someone else be 'experts.'"

While they have time to learn from their own stakeholders and often see many local needs to help, they are often not given the authority to customize or change programs which come from the COE. This leads to low adoption and often a lower opinion of HR than is justified. If they are not empowered, they often cannot do their jobs.

3. External Intelligence. The HR business partners are often buried in detail and spend a lot of their time simply supporting or aiding local managers and employees. Sometimes they are the dumping grounds for administrative work people don't want to do themselves. So they have very little time to reach out into the outside world, learn new things, and collectively improve their own skills.

4. Widely varying roles. And finally, we find that this critical role must span many potential needs. One day they are coaching top executives, the next day they are dealing with employee relations issues, and a third day they may be revising compensation plans. Our research shows that the HR business partner role typically falls into different "flavors," (OD-related, recruiting and staffing, employee relations and compensation, and executive planning).

The Ultimate Goal

Ultimately what we are trying to accomplish in the design of HR is not only to "optimize HR" but rather to "optimize leadership, management and employees." That is, HR's job is not to "manage the business" but rather to "help managers manage the business." So our ultimate goal in HR organization and governance is to put in place a set of structures, roles, and programs that empower leaders to make faster, better decisions and engage employees in new and exciting ways.

What our Research Finds...

What our research shows (this research will be launched in April at our IMPACT conference) is that High-Impact HR Organizations need to do things differently:

1. Distribute a greater degree of authority and intelligence into HR teams within the business. This means a different structure and more "authority" and "expertise" within each business unit. It breaks down the traditional "center of expertise" structure.

2. Create "networks of expertise," not only "centers of expertise," and let senior talent professionals relocate into the business where needed. This creates an external intelligence function that helps HR continuously improve and evolve as new talent solutions are discovered.

3. Spend more time and money building the skills of the HR team. Every HR professional needs a cevelopment plan (some organizations are now building HR certification programs) to deepen their expertise in the disciplines of HR as well as the business itself. High performing companies tell us that the new HR professional needs 50% MBA skills and 50% HR skills.

4. Define your HR strategy clearly and consider whether you are a "pioneer," a "fast follower," or focused on "efficiency." Our research shows that your choice of strategy helps define the best operating model.

5. Focus very heavily on integrating the talent management teams, bringing together the various talent practices discussed above. Today's integrated talent maangement function includes talent acquisition, development, mobility, retention, engagement, compensation, and analytics.

6. Look at HR technology as "systems of engagement" not "systems of record," so the HR infrastructure supports employees and managers directly. Nearly a third of the organizations we talk with are considering replacing their traditional HRMS with a cloud-based solution, and the biggest driver for change is the need to improve the user interface.

7. Make sure you have a plan to build an integrated talent analytics function. This involves bringing together analytics teams from throughout HR, and moving down a talent analytics maturity model.

8. Put in place a senior executive-driven governance process which lets senior business leaders directly see and impact HR, L&D, and talent investments throughout the company.

A New Model for HR

It's time to rethink the operating model for HR. Stay tuned for more to come on this topic, and please join us at IMPACT 2013: The Business of Talent (April 22-25 in Ft. Lauderdale) to get the details.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

Learning and Talent Systems Market Growing Even Faster than Expected

info@bersin.com (Josh Bersin) — Fri, 15 Feb 2013 11:28:00 PST

The $4.2+ billion market for corporate learning and talent management systems continues to grow rapidly. Even more rapidly than we expected. Late last year we published our Talent Management Systems 2013 research, which forecasts an overall 22% growth rate in talent management systems with even higher growth rates in talent acquisition and performance management software. It may be growing even faster.

The interesting thing about this market is that nearly every vendor is growing, with some growing at dramatic rates and others only growing at moderate rates. CornerstoneOnDemand just announced 58% YTY annual revenue growth, for example, and the company is still only around $117M in revenue. The other major solution providers in the space (Oracle / Taleo, SAP / SuccessFactors, Lumesse, SilkRoad, Saba, PeopleFluent, Halogen Software, ADP, SumTotal Systems, iCims, Ultimate Software, Technomedia, JobVite, and others) are also all growing, and major new entrants like IBM (Kenexa), ADP, LinkedIn, and Salesforce.com are all growing as well.

The reason for this continued growth is the accelerating demand for corporate talent solutions. Our research shows that 32% of all human resources dollars are now spent on talent-related programs (recruiting, training, leadership, succession, etc.). Integrated talent management, which is still a new and complex initiative for many companies, is now the equivalent of "supply chain management" in procurement: it's something any well run company must do.

We will be launching a whole series of new research findings at our upcoming IMPACT Research Conference in April (please join us, it will be the largest IMPACT ever- April 22-24 in Ft. Lauderdale), and what you will see is that global talent strategies have taken on a whole new look. Today's high-performing organizations are globalizing their programs, focusing on new models for performance management, integrating diversity and inclusion into their strategies, and using technology in exciting new ways.

As the chart below indicates, the three big new areas of talent management are analytics, mobile, and social. But these are not just technology features, these are whole new business solutions that drive better decision-making, planning, and employee engagement. And speaking of engagement, the topic of "systems of engagement" is now paramount in this market.

Fig 1: Key Elements of a Talent Management System

Accelerators to Market Growth

The HR systems marketplace is very active right now. Our research shows that the average mid to large sized company has HR systems that are over 6 years old. This means that most big companies are ready to replace, integrate, or significantly upgrade their entire HR infrastructure.

While most companies don't particularly like spending more money on HR systems, the new generation of cloud-based solutions is so significantly different that a "systems replacement" can significantly change the way you do business.

While the market is still evolving rapidly, many of the vendor solutions have converged and have similar end-to-end functionality. So with the right long-term architecture (and we can help you with this), you can now expect all your HR and talent systems to work very well together.

What this gives you is a candidate, employee, and manager experience that truly changes the way people work. And using these tools, coupled with good analytics strategy (Deloitte provides world-class analytics solutions), can now deliver a working "BigData" solution that lets you understand and predict retention, leadership gaps, and many of the difficult challenges we face in HR.

I'm not here to say these systems are all perfect, easy to implement, or 100% complete. But today, for the first time in our history as an analyst firm, the talent management systems market is filled with excellent solutions (albeit each is different), all focused on high value capabilities, and ready for companies that don't want to take big risks.

Please contact us if you would like more help with your talent management or systems strategy.

Come to IMPACT 2013: The Business of Talent, and Learn More - April 22-24, Ft. Lauderdale, Florida

Please come join us at IMPACT, our annual research conference, this year. We have many special events planned, including a formal introduction to our new Deloitte colleagues.

This year we will launch brand new research on High-Impact HR, new research on global leadership in China, and some exciting new products for our research members. You will also meet 600 of the world's most successful companies implementing world-class solutions today. I look forward to seeing you there.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

Is there value in defining mobile learning and classifying mobile devices?

info@bersin.com (Josh Bersin) — Thu, 14 Feb 2013 11:12:00 PST

While writing our Mobile Learning Cookbook, I tweeted that...

This simple statement served as a catalyst for debate of sorts that extended to Facebook and then back to Twitter.

Andy Black jabbed at me a bit saying mobile learning has been around for a long time and that wearable integrated tech is the next wave. (There’s almost always a snark.)

Yup, mobile learning has been around a long time but in reality, mobile learning hasn't been implemented at the majority of organizations hence my discussion. (I don’t disagree that wearable integrated tech is here now and probably in the future for many organizations.)

Geordie Guy suggested that mobile means ‘able to be moved’ and what I was talking about is more portable.

Geordie suggested I get in touch with John Traxler about definitions and classifications. I was already connected to John so I sat down at my ball and chain (laptop), and I reached out to him. He preferred to have a conversation on my Facebook wall. I’ve summarized it here in an interview-like format which included Dave Ferguson and Aape Pohjavirta.

Me: Do you classify devices as portable or mobile? What are your definitions?

Dave: I think the usage is shifting a bit. "Device" used to be a slightly techno word for "thing." A pacemaker, for instance, is a medical device.

I wish that here in the US the term "mobile" had caught on, instead of "cell," for phones, but it didn't, and I'm not going to try and change people's minds.

I'd say define your terms at the outset and people will follow. If I were pontificating (which I'm not; can't find my special hat), I'd say that a mobile device fits into a pocket (cell phone, smartphone) while a portable device fits into your hand or your carry-on (tablet). But that'd be only if I were making a distinction between the two. I haven't seen an actual iPad mini, or whatever it's called, so I don't know how that works out sizewise.

Let's face it; some of this is the 5.25 - 3.5 inch floppy debate (remember them?), which was won by the CD, yet another storage device now in its sunset years. Or months.

John: Devices and technology as the core of definitions is a blind alley. What used to matter was the mobility of learners and learning. Now what matters is whether learning is credible, authentic and aligned to societies, communities and cultures for whom mobility and connectedness are taken-for-granted, not-worth-mentioning.

Dave: I get John's blind-alley point, though I think it's very situational. People in different kinds of jobs may not be able to access particular types of information (whether formal training, take-on-your-own-time stuff, job aids).

If you're on the road a lot, fewer employers are going to condone using a device while driving. If you're in a public-facing job, interactions with peers and customers as well as limits on how much crap you can have in the workspace may hinder your ability to access what some AVP dreamed up after spending too much time with vendors.

Not that you need to be reminded of this, Janet, but your READERS may: none of this stuff makes learning happen. For fifty years we've struggled against the myth that instruction means learning, that courses mean learning, that testing means learning, that digitized content means learning. So the real question for devices, or anything else that's intended to help support improved performance in the workplace (the main reason employers tolerate anything called "learning" or "training" in the first place) is "How is this going to help that happen?"

Even then, it's a never-ending battle against the "they-had-to-look-it-up" crowd.

Me: I found a 2005 definition of mobile learning from you John. At that time you said mobile learning was “…any education provision where the sole or dominant technologies are handheld or palmtop devices.”

John: 2005 was quite a while ago.

Me: It’s helpful to look back at some early definition just to see how far the conversation has progressed.

John: The phrase 'mobile learning' portrays it as a version of learning, the mobile version. It ignores the transformative effect of mobility on the nature of learning and of learners and on the wider society; it might be easier to see not as the mobile bit of learning but the learning bit of mobile and mobile is the defining characteristic of our societies. 'Mobile learning' seems too often preoccupied with enhancing the existing curriculum for the existing institutions and their professionals and maybe extending the reach of the existing education system.

Me: I like that…mobile as a defining characteristic of our societies. Spot on too with the preoccupation.

John: I think in some ways Dave is saying that cultures is not coherent or consistent and fragmented by attitude, ownership, experience of digital technology and individuals are quite happy to hold mutually exclusive and irreconcilable points of view; once we mention jobs we mention differentials in socio-economic power. My friend Aape Pohjavirta always has thoughts about these issues!

John: Maybe obliquely I'm saying education and/ or technology are not ethically or politically benign or even neutral thus mobile learning won't be either.

Aape: This discussion is interesting and should probably happen face-2-face but here a couple of comments:

- I am thinking of starting to use the term connected learning = you log in to any content on any connected device and voilà - you have accessed your personal curriculum, the system giving you access to everything you need to continue learning here and now, recognizing the device, network etc. and giving you an optimized user experience for your specific environment.

- As John rightly says, the advancements in mobile technologies have made "everything technically possible" thus moving the focus to the question of how to deliver actual learning to users of those connected devices. But there are not just one type of users - if you use your connected device as an "interactive textbook" in a classroom setting that usage is completely different from the usage patterns of the "lonely, mobile learners" who access the courses alone with no teacher / trainer present.

When we started creating the mobile media in 2003 we noticed that mobile is used "when you happen have the time" and only for a short period of time. This would mean that the mobile curriculum needs to consist of small pieces (5-8 minutes) of learning material including theory, examples & exercises. In addition to this the social aspects & a possibility for mentor-access would also be good to have - and some sort of a gamification too.

I think that this should be an easy thing to formulate to corporations, one big challenge though is that there is a very very very limited number of service & technology providers who can produce stuff that actually works across the majority of devices at reasonable costs.

John: I think implicitly I was also saying that the affordances of mobile technologies change our epistemology... what we know, how we know it, how we come to know, what we help others know, how we assess the worth and credibility of the known, what it is valuable to know for aesthetic, economic, cultural and any other reasons and who decides the worth of knowing...

Aape: John, very much so and also moving from for "Just In Case" to "Just In Time" learning - very complex, very complex.

John: Thanks Aape. Very coincidentally I just read an editorial saying, Epistemology deals with questions of what knowledge is, what counts as knowledge, the sources of knowledge, the different kinds of knowledge, and what we can know, or the boundaries of knowledge (Wiersma and Jurs 2009). And I should have added the impact of mobile technologies on existing epistemologies, which are a central and defining characteristic of each and every culture, sub-culture and counter-culture.

John: BTW I guess in the sense I’m meaning it, each corporation & company as well as every community, caste and culture have their own ever-evolving epistemology.

My conclusion:

Classifying what is and what is not a mobile device is not very useful.
The ultimate goal of mobile learning may be to deliver on the promise to ‘make learning happen’ through credible, authentic and aligned content.
Mobile learning is transformative because it impacts existing epistemologies.
Mobile learning is a characteristic not a version.

What say you?

Andy Black has been writing about technology futures since (at least) 2005. At one time he was technology research manager at Becta.

Australia’s Geordie Guy has been writing for years about privacy, censorship, copyright and technology.

John Traxler is Professor of Mobile Learning, Director of the International Association for Mobile Learning and author of Mobile Learning: A Handbook for Educators and Trainers

Dave Ferguson is an experienced, straight-talking and well-round learning professional specializing in solving on-the-job performance problems.

Aape Pohjavirta has worked 25 years in digital media, 15 in mobile and invented the mobile magazine (=app) in 2003. He’s a technology visionary & evangelist with a strong-ish belief in science & research with a conviction that anything good now is preferred to waiting for perfect forever.

Moving to Merit-Based Incentives

info@bersin.com (Josh Bersin) — Thu, 14 Feb 2013 06:55:00 PST

The challenge: Moving from a tenure or level-based incentive structure is tricky. Emotions run high when it comes to compensation – as it should, given that we are talking about people’s livelihoods. Those who have succeeded in the previous system have come to depend on incentive program, and may feel as though they worked hard to reach their job level, only to have the game change. Those underserved by the current system feel as though incentives are unfairly distributed, but yet are still skeptical of change. Ultimately, employees want to know, “Will I get more money or have money taken away?” It’s a fair question.

The solution: Merit-based incentives afford the opportunity to reward behaviors, attitudes, and values critical to the success of the business. The following steps outline key considerations when moving to a merit-based incentive system.

Define “merit”. Through a “start, stop, continue” exercise, determine what behaviors matter most to organizational success. Consider mining existing data, such as job descriptions, performance appraisals, competency models, multi-rater, or engagement survey data to hone in on the employee attitudes and actions that impact success. After a laundry list has been established, prioritize actions and identify which actions serve as a counter-motivation for others. (For example, while reasonable work-life balance may retain employees, it may also negatively impact billable hours.) The incentive project team needs to debate the importance of each, and methods (including, but not limited to incentives) of motivating both, if appropriate. Consider including metrics more oriented to employee welfare, such as “development” and “well-being”. As an aside, while these steps discuss merit-based incentives, also consider balancing this effort with an incentive program focused on retention, such as stock options that vest over time. It is good practice to offer incentives on varying schedules to help employees stick with a particularly rough project or organizational transition.
Evaluate metrics. Organizations measure employees in a variety of ways. However, while the primary purpose of the metric is often served, it may not be statistically or empirically appropriate to use in establishing “merit”. Hire a measurement expert, such as an I/O psychologist who specializes in this area to evaluate your data. Have this expert create a “data dictionary”, cataloguing and defining each metric. (As an added bonus, if you complete this step you are well on your way to establishing a Talent Analytics function that can answer a variety of HR questions for the organization.) Metrics should be both objective (e.g., billable hours, attendance) and subjective (e.g., customer ratings, manager/direct report ratings). They may directly measure the behavior, or they may be “proxies”, or metrics that indicate the behavior is taking place (e.g., attendance in development programs to measure learning). You might also include other variables which indicate job difficulty or tough labor markets.
Re-tool metrics. Throw out those that are not effectively measuring their target. Create and test new metrics for behaviors and attitudes currently not measured. Remember, employees will change their behavior simply because they are measured, so take care in deciding which employee actions and attitudes will be measured.
Consider face validity. The goal of this data-based approach is to establish the same credibility and clarity a level- or tenure-based affords. Employees know when they’ve worked at an organization for five years or been promoted to manager; these boundaries for incentive eligibility are clear. Merit-based boundaries need to be similarly clear. Therefore, employees need to buy-in to these metrics and agree that the ultimate formula, discussed below, accurately represents high performance in their jobs. You might conduct employee focus groups to get their input early on – an effective tool in securing approval and acceptance of the new system. You may also need to explain to employees that some behaviors are new, supporting a new direction of, or cultural aspect to the organization.
Establish a formula. With metrics in hand, work with the measurement expert to weigh behaviors and combine them in a merit formula. This formula will need to be communicated, so consider grouping metrics into “buckets” that employees will understand and recognize as relevant and important.
Bring the data together. Either in a warehouse or in a cloud-based data reporting tool, pull the data into one portal so it can be used for this purpose, and for a variety of other analytical tasks.
Test and refine the formula. Run the formula and put it through the sniff test. Discuss results with managers. Are these people high-fliers? Why or why not? Did the formula miss an important aspect of their performance? Adjust the formula as needed.
Consider the role of the formula. What is the boss’ role in this process? Although more legally defensible, will management accept an empirical approach? What communication needs to happen to secure their buy-in, or how will the process account for their input? Is there a metric which can gather their opinion in an efficient way?
Consider timing. How often do you want people to get feedback and incentives, and have the opportunity to adjust their behavior? Balance the ideal with administrative work of frequent data collection. (Consider the use of small pulse surveys or data collection to help you in your efforts.)
Improve the path to development. When employees get low ratings, their natural instinct drive them to improve. A lack of development opportunities stymies employees’ motivation to improve their performance. Without development opportunities, this can be very frustrating and de-motivating. Map critical actions and behaviors to ways these same behaviors can be developed. Consider informal, just-in-time access to development content; formal training, either virtually or in-person; on-the-job coaching; and challenging job assignments.
Implement in phases. Employees need to trust that they are measured accurately and fairly, and that they have opportunities to improve or “show their stuff”. Once trust is established, migrate, perhaps in steps, to the merit-based incentive program.
Communicate! First about the performance efforts, then about the migration to merit-based incentives, communicate to employees throughout the process. Above all, demonstrate why this system is fair and affords them opportunities. Remember, external benchmarks are available to your employees on the internet. You might as well manage the message and be transparent.