HR technology implementations -- fewer failures on the horizon

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

4 Burning Questions about the HCM Solutions Market

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


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

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

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

and ...

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

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

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

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

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

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

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

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