What do the greatest companies all have in common?  You got it — the ability to focus their organization on strategy execution by ensuring that each individual is working (i.e., executing) on goals that matter to the organization.  What type of goals “matter?”  Put simply, only the ones that have a direct line back to the Strategy sitting in a binder on the CEO’s bookshelf.

We’re just researching what impact we have on our customer’s ability to communicate strategy and execute new directions faster. The early results are very intriguing and positive – and we promise to share them when we finalize our research.   The timing is also significant as the economy has forced companies to be agile and demands that companies be able to shift their strategy (and subsequent execution) at a much more rapid pace than in a bull market.

The thing that struck me when doing some desktop research was that even though we know that 85% of performance is due to execution, the amount of content available is unbelievably skewed towards strategy — a simple web search on “Business Strategy” returns 3X more hits than “Business Execution”  (80M hits vs. 24M hits).   The term strategy execution returns only 3.5M hits.

The good news is that the “worm is turning.”   Execution is the topic du jour – maybe it’s the economy, maybe it’s just the natural evolution of business.   Regardless, you can put us squarely on the “Business Execution” team, and we’re looking forward to sharing our results soon.

After all, Execution is the name of the game to drive financial results

Technorati Tags: business, execution, goal, money, performance, strategy, win

I have a job that most people would find either very interesting or very boring.  I’ll let you decide which, but essentially my job is to help people quantify the financial benefits of Optimizing their Investment in their people.   Which people?  Their employees, human capital, talent, etc…   It’s a hot topic at the moment, and certainly the economy has increased the importance of making “smart” people decisions.

For the most part, your average company invests the vast majority of their dollars in people, process, and technology.    Out of those three, People are (typically) by far the average company’s biggest expense.  Research has actually shown that 70% of most company’s operating cost is People related.     So I’m here to talk about optimizing your people investment right?  Not exactly.   Today, I’m writing about the “other P” – Process.  Or to be more exact, your “People Processes.”  Confused yet?  Keep reading…

First of all, people and process are linked.  The definition of Process in a business context is “a method or system for achieving a commercial result.”   Put simply, it’s a method or system that your people execute on to drive commerce  - i.e., goods, services, cash, revenues, margin, etc…   If you have inefficient processes, then you’re hindering your company’s (People) ability to execute and drive commerce.    When I’m speaking with executives about the business impact of “Workforce Optimization” many of their eyes start to glaze over when I discuss the value to the organization of creating more efficient people processes for their Front-Line Managers and HR staff to execute on.     The CFO or COO will tell me that those are “soft” benefits and they aren’t interested.    Technically, they’re right – if a process improvement doesn’t allow you to reduce or re-allocate resources, then it is indeed a “soft” benefit.  However, the line between “soft” and “hard” benefits is blurry at best and I would argue that you can’t optimize the commercial result (hard benefit) without first optimizing the method or system (soft benefit).

The fact of the matter is that if we were talking about this in a manufacturing environment then the same COO and CFO would likely have less of a problem with the line between hard and soft.  If I was telling them that if they improve these inputs (process), then they would increase production by 100 widgets per hour (Output or Commercial Result), then they’d likely get our their checkbook and want to know how soon it can be implemented.    Unfortunately, many times people aren’t as willing to make the direct connection with their “People Processes.”    People are variable – some work harder than others, some are smarter, they have bad days, their favorite teams lose the Super Bowl,  their Mother-In-Law just moved in, and the kid gets sick – it’s certainly not as cut and dry as “Input In” and “Widgets Out.”     The problem is that they make up the most significant portion of your Operating Cost so not fully optimizing that investment is just simply Bad Business.    If you’re an executive reading this here are a few ways to determine how optimized your people investment really is:

· What % of your company can tell you the Organizations Strategic Goals?   Go to the Water Cooler and ask a few people.   Just for fun, also ask them when is the next company holiday – they’ll probably all know the answer to that question.

· Are you measuring top to bottom performance based on those Strategic Goals?   By the way, that may be hard to do if the people in your organization don’t know the goals (see question #1).

· Do you know who your top performers are across the entire organization?    Do you reward them differently for their contribution?

I could go on and on, but the answers to those three questions are a good litmus test for understanding whether your company’s largest investment is being managed wisely.    If it’s not, then you might want to consider investing in a better method to drive commercial result.

In parting, I like to point your attention to the “mother of all processes” – the US Tax Code.   Based on our earlier discussion, the Tax Code in and of itself is merely a process, so improving it would only yield “soft” benefits right?   Forbes Magazine has a blurb discussing the complexity of the process.    In 2008, 500 changes were made to the US Tax code.  The “process” changes to the tune of nearly 1000 words/day being added.    Nowhere is the blurry line between hard and soft benefits more apparent.  The process now consumes 7.6 Billion hours of American’s time per year – the equivalent to 3.6 million jobs.     What’s the result, output, or commercial result?    Well, three of the President’s cabinet appointees have had “tax compliance” issues due to the complexity of the method/system/process.   (By the way, it’s not a political blog, so I’m just giving the benefit of the doubt).  If you’re a business, then you employ teams of people just to navigate through the complexity.   If you’re a regular Joe Q. Public, then you spends hours of your own time and money in order to achieve the optimal commercial result.  Sound familiar?

Maybe process does matter after all…

Technorati Tags: HR

I don’t know if we should talk about a new world order but the current situation is unprecedented and our new President Obama is focused on changing how America is run to avoid a longer and deeper recession than necessary. Targeted spending in strategic areas married with a new modus operandi for how the business is run is his recipe. That is not a small task. What I think is most interesting about this whole new deal is not just the magnitude of spending that is being proposed but the measures on how to change how America is run.

Obama being quoted in USA today, “Our problem is not just a deficit of dollars. It’s a deficit of accountability, a deficit of trust,” Obama said at a brief news conference. “We can no longer afford to sustain the old ways when we know there are new and more efficient ways of getting the job done . . . Even in good times, Washington can’t afford to continue these bad practices. In bad times, it’s absolutely imperative that Washington stop them,” Obama said.

“So change and reform can’t just be election-year slogans. They must become fundamental principles of government . . . The appointment I am making today is one of my most important.”

Obama appointed the United States’ first Chief Performance Officer. That’s right a CPO. Nancy Killefer will work with the different cabinet departments to drive alignment and execution from all the people serving there. Yes government is people business. People not organizations perform.

Hiding is no recipe for changing and driving America no more. We can’t afford to be comfortably numb in this situation. We need leadership, accountability and action.

Is this appointment the start of a trend for other organizations? Will more organizations increase the focus on driving performance to thrive in these times? Will more organizations appoint CPO’s?

It is just great to see the American government start acting like a business focusing on driving performance. The worlds’ greatest companies all have a tremendous focus on aligned execution. The greatest companies have transparent systems where they can measure and thus manage the most strategic assets they have – the performance of their people. Full visibility requires real trustworthy data that these companies get from their talent management tools. Imagine the President having full visibility into how people are aligned on Americas goal with full transparency into what works and not all the way down to individuals performing or not…

Good luck Nancy Killefer!

Technorati Tags: alignment, CPO, execution, HR, nancy killefer, people, performance

SuccessFactors Research recently surveyed 227 companies in the UK and Ireland and found that 60% of the respondents listed staff morale as the number one effect of the crashing economy, followed closely by goal alignment and achievement, which was selected by 31% of the respondents. What does this mean for business? I am sure you have noticed the title of this blog, Carrying Rocks or Building a Castle. People who are not aligned with their organization are merely carrying rocks, doing work without building the castle. Companies simply cannot afford to let their people do unproductive work, whether in a good or bad economy. Workers with low morale who are not engaged may never pick up the rock at all.

The cost of an unmotivated workforce is quite substantial. SuccessFactors Research has always maintained that a company’s ability to execute is based on three factors: motivation, talent, and organizational ability (tools, etc.) In fact, we consider these three factors to be multiplicative, so low motivation, or low engagement, directly and negatively impacts the other two factors across the company. Companies can tackle both challenges highlighted in our survey, low morale and goal alignment, with an effective goal management strategy.

Having a direct line of sight between one’s individual contribution and the company’s goals is one major driver of engagement. Goal management can help provide that line of sight, linking and cascading goals so that the worker always has a context for his or her actions.

When optimizing the workforce, potentially laying off staff, and adjusting to the changing business environment, you can’t afford to let low morale effect your organisation’s ability to execute. Ensure that goals are clearly set and managed effectively, and build strong teams committed to building the castle.

Technorati Tags: Engagement, Goal Alignment, HR, Ireland, morale, Strategy Execution, UK, uncertain times

1. Simplicity
   This is a core value of the company, to make it as easy as possible for our users to do their jobs - reduce clutter and complexity wherever possible.
2. Efficiency
   Provide users with the most efficient means possible for them to accomplish their goals - in general, the fewer delays, page views, and mouse-clicks, the better.
3. Quality and robustness
   Because of the importance and sensitivity of our customer’s data, as well as the uptime (availability) of our product, our product must be precise, solid, well functioning, secure, and unbreakable.
4. Clear, direct, and honest communication
   We follow guidelines for communications that also happen to be good for user interfaces! Instructions and messages should never confuse the user.
5. Add value at every step
   We demand of ourselves to add “value” at every step. Every feature of our product should have some strategic reasoning behind it. If it doesn’t add value for our users, we must question why it’s there. To add strategic value, we strive for:      
   1. Relevance
      Our design must be appropriate and usable by the intended audience, and reflect the user’s world. We should avoid jargon and metaphors that don’t fit how users think of our product.
   2. Visibility
      We believe organizations work best when there is direct line of sight - people can see what they should be doing. The same holds true for user experience. If users can see and understand the capabilities of the system, they will be more successful in accomplishing their tasks.
   3. Accountability and results
      At the end of the day, our customers must justify the cost of using our product, and we have to be able to provide measurable results that show our product being beneficial, if not invaluable - everything we do should be mapped to a promise to make our customers’ companies better.
6. Improve cross-module integration
   One of the core benefits of the SuccessFactors platform is the ability for different modules to work together to deliver more value to the user. This is an inherent advantage that SuccessFactors has over products in silos or standalone products that may have been sewn together as a result of an acquisition.
7. Showcase user-centric innovations
   Ideas, needs, and solutions from user research are brought to the forefront in the SuccessFactors UI, while applying our deep design experience and knowledge of usability principles.
8. Kaizen!
   To keep delivering value to our customers, stay ahead of their needs, and maintain our edge on our competitors, we must constantly improve our product. We must evaluate it from every angle, identify and address its weaknesses, and constantly work to improve the product by working towards these design goals.

From the three pillars to these eight design guidelines, our GUI has one purpose - to unlock the potential gold mine of actionable, people-related data that resides within our fully integrated talent and performance management suite. As we have stated, the more people use our software, the more value is added to the transaction system, but there is another layer of value to be extracted from the richness of the data, not just the quantity. When businesses invest in multiple modules, Goal Management, Career Planning, Recruiting, Compensation, Performance Management, incredibly rich data is gathered that can help businesses make very strategic people decisions quickly and objectively. Our GUI is designed to help our users easily tap into that rich data to help them make the right decisions to drive people performance.

Technorati Tags: Design, GUI, HR, performance management, Strategic HR, Usability, Usage

No one can afford to be blind sighted when it comes to their people. Now more than ever, with so much need for restructuring and resizing, this is critical. Our approach to designing the SuccessFactors Suite simply has to be different from “design for super users,” those who use the same tools day in and day out. It doesn’t matter much though if it’s hard to use, if users spend all their time figuring it out.

I decided to ask one of our User Interface leaders how we actually make it so easy and rewarding for people to use SuccessFactors. User Experience Manager Andrew Wong was pleased to share this with us. There are three pillars to the SuccessFactors approach to design:

1. User Involvement - Over the years, SuccessFactors has conducted volumes of research, including usability testing, focus groups, site visits, customer interviews, surveys, and usage data analysis. We talk to companies of all sizes, customers and non-customers alike. We also talk with end users — the managers and employees who use our product — not only HR professionals, whose challenges are often different than the everyday challenges that our end users face. You can often find us performing usability testing at trade shows and at our annual SuccessConnect user conference.
2. Innovation - We value the creative process and innovation, and we believe that innovation is what significantly differentiates SuccessFactors from products that stick to a more conventional approach. We constantly challenge ourselves to solve problems better than how they’ve been solved before, and we do not settle for “me-too.” Our NEXTlabs™ is a testament to our commitment to innovation. “New” and “exciting” are never words we avoid in our thinking. We lead with ideas, and we embrace change.
3. Corporate values - Another way we differentiate ourselves is by designing in a manner consistent with our founding principles: measurable customer success and delight, superior excellence, and constant improvement (Kaizen!). We also align our goals throughout the company and enforce our Rules of Engagement (including our “no jerks” rule) to ensure that we are all working well together, with nothing but our customers’ best interests at heart.

Our latest product, Stack Ranker, features many user-friendly design elements - it is visually appealing, easy to use, provides all the relevant information a manager requires at a glance, and strives for simplicity (see the screenshot). The Stack Rank appears clearly and cleanly on the right-hand side of screen. Easy-to-understand results will drive usage.

Our design pillars form the foundation of our truly User-Centered Design approach to building fun and easy to use software. Next week Andrew will share with us the 8 principles that drive our success in user interface design. We want our customers to get the most value out of their investment - creating a great user experience helps us to ensure that the system is used so customers will have a rich source of data from which to make their most important people-related decisions.

Technorati Tags: Design, GUI, HR, Strategic HR, Usability, Usage

One question we often get is exactly how much improvement can I expect from talent and performance management systems. SuccessFactors Research engaged with Gen-Probe over a year ago to develop a case to show them how they could drive improvement in their organization through people. After successfully implementing SuccessFactors, the results have been very impressive.

• 10% Increase in the retention of high performers
• 37% Decrease in the retention of low performers
• 20% Increase in the employees who felt they had a good understanding of how their pay is determined
• 19% Increase in employees who understand the measure used to evaluate performance

Furthermore, Gen-Probe was able to reform their compensation process. High performers could now earn 150% of their bonus awards, while low performers were limited to less than 100%. In fact the visibility and transparency built into the system allowed Gen-Probe to look at the total distribution of merit and bonus pay, as well provide immediate insight into performance appraisals.

How did Gen-Probe drive change in their organization? Then recently answered this question in an article about the success of their performance management system:

“The new performance management system focused on four critical elements. The first was to provide support for defining and aligning individual goals with Gen-Probe corporate goals. The second was to provide frequent opportunities for feedback to maintain focus on achieving the already-established goals. The action plan also focused on a rewards system that tied achievement of individual and corporate goals to the allocation of merit and bonus awards. Lastly, the plan focused on strengthening the foundational skills for all employees and managers to effectively communicate goals, performance expectations and address issues before they become hurdles to achieving results.”

Can you afford to let your competitors gain that kind of advantage? Particularly now, with the economy slowing and companies renewing a focus on cost and performance, talent and performance management is critical to driving success. Companies who cede this advantage will emerge from the slow economy weaker and less competitive. Gen-Probe has proved that when companies take human capital management seriously, they win.

Technorati Tags: Gen-Probe, HR, performance management, Success Story

Professor of management at Drake University in Iowa, Steve Scullen, found that forced ranking, including the firing of the bottom 5% or 10%, results in an impressive 16% productivity improvement.

Companies that are able to quickly compare the performance of their people to find high and low performers have an advantage over those who cannot. Low performers actually cost the company money, so when a business manages them out, they see an immediate benefit. The opportunity cost is even higher. If high performers contribute about 5 times as much as low performers, as our friend and thought leader Dr. Peter Cappelli has found in his research, the opportunity costs is huge. Imagine how much more value the company could generate if they could replace low performers with high performers.

These kinds of optimizations are on everyone’s mind in todays slowing economic environment. SuccessFactors decided to tailor a solution for optimizing the workforce by building a tool that allows managers to stack rank their employees.

Of course stack ranking isn’t just about managing out low performers, but it is also about ensuring that you are able to find and cultivate your best talent. Those top performers who contribute 5 times as much as the low performers should be rewarded, leaders should be identified and trained. Competencies should be compared and managed across teams to ensure that the right capabilities are in place. Stack ranking is a great tool not only for optimizing your workforce, but also for building it. 

Already rich with performance management data, the SuccessFactors Stank Ranker helps managers to:

• Visually Rank Talent – Instantly identify your top-ranked players so that you can optimize your team by motivating and cultivating your best people. Give limited rewards to top employees that deserve extra recognition, or quickly identify low performers to let go when faced with tough layoff decisions.
• Go Beyond Performance Reviews –Stack Ranker expands the formal review process by letting you capture new characteristics for a more holistic assessment. For example, you can incorporate factors like criticality of the role into ranking or other criteria to serve as tie breakers.
• Assess Everyone at Once – Quickly assess your entire team across critical competencies and criteria in real time — all in one place. Side-by-side rating promotes more accurate relative assessments.

Stack Ranker was designed to help companies act now. Organizations simply cannot afford to carry the dead weight of low performers in these uncertain times. Furthermore, they need to move quickly or they will be outflanked by their competitors. Tools like Stack Ranker are critical to succeeding in today’s environment.

Technorati Tags: HR, performance management, stack ranker, uncertain times, Workforce Optimization

Everyone puts on a little weight during good times – vacations and holidays are notorious times for over eating, relaxed behavior and good feelings. Well for businesses, the vacation has come to an abrupt end. After years of easy credit and a booming housing market, the bottom has fallen out from under companies more quickly than anyone had expected, and the economic uncertainty looks as if it will continue for some time.

What will businesses do with all of the excess weight they put on during the good times, when they were content and growing with the rest of the economy? Well for those of us who have had to lose holiday pounds before, we know there are a lot of ways to get back in shape. The obvious solution is calorie restriction, cutting back on the excess – but this technique alone will leave you weaker than before you put on the weight. When the economy recovers, companies who depend on cutting calories alone will emerge weak and unable to take full advantage of the changing and improving business environment. Cutting calories alone leads to smaller muscles and a weaker body.

The best approach to losing weight is an approach that optimizes your body. Sure calories will have to be cut, but if you plan and execute carefully, you can ensure that you don’t lose any muscle. You might even emerge leaner and stronger than before. This should be the goal of every company planning layoffs and workforce adjustments for the economic downturn. To optimize the workforce in a downturn you should:

• Lay off people based on data from the performance management system, so your strongest “muscles” aren’t lost
• Find the positions within the company that are critical to your success, and ensure that successors are named for those positions
• Identify the key competencies that drive your success, and ensure that they are cultivated during the downturn, so you can emerge with strength

Companies often focus too much on cutting, or building one part of their organization. Strong arms won’t help you win a footrace. Optimizing the whole body is the best way to lose holiday weight – for companies it is the difference between remaining competitive and falling behind. Use the data in your talent and performance management system to optimize your workforce. Now more than ever companies need to be smart about managing their resources, including their talent.

Technorati Tags: downturn, holidays, layoff, optimize, performance management, uncertain times

Actually if you think about it, when is the best opportunity to actually go on the offense and make a change? When the going gets tough or when everything is gently pointing upwards? Companies will either be acquired, stripped of assets, or go on the offense to acquire underpriced assets when markets and demand soften up. The real deal then is obviously to make sure you quickly can get your organization aligned and executing on the new company’s direction, and that you drive the calculated synergies of a merger or acquisition home. With people being by far the biggest expense for any given business (on average 70% of operational cost) how you deal with your joined workforce must logically be the most important factor in any M&A situation.

“In any merger or acquisition, investment banks and equity analysts will provide you with a plethora of figures quantifying the synergistic strategic benefits of the union. Yet what determines whether a merger succeeds or fails is really its people.” - Jean-Pierre Garnier, ex-CEO of GlaxoSmithKline

Logically then, companies with better people processes and a serious focus on people performance should do better in a merger. To test this hypothesis, SuccessFactors research examined the performance of ten of our customers that specifically cited challenges resulting from a merger or acquisition as their business drivers for investing in SuccessFactors. The results were clear - the ten companies that leveraged SuccessFactors to drive the merger home completely outperformed their competition in 12 month revenue growth, 12 month income growth, return on equity and price to book ratio. These mergers were not just successful on paper, they worked in the real world.

Download the SuccessFactors Research Data Sheet: Mergers & Acquisitions to see just how successful our customers are and how they are winning in these uncertain economic times.

Technorati Tags: acquisition, Analysts, economic downswing, HR, iron maiden, merger, uncertain times