Sunday, October 16, 2011

Trajectories and Root Causes in HCM

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

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

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

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

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

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

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

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

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

Monday, July 18, 2011

The “Next Hill” in Talent Management Software?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

I am excited to now serve as one of Scout OnDemand's Board Advisors; and they can be contacted at

Steve Goldberg
HR Technology Industry Advisor
July 2011

Wednesday, July 13, 2011

A Dozen Things (Still) Needed in HR Technology

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Steve Goldberg
HR Technology Industry Advisor

Friday, April 8, 2011

The Future of Employee Self-Service

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

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

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

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

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

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

Steve Goldberg

Monday, March 28, 2011

Unprecedented vendor/solution churn expected in Talent Management Systems market

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

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

We previously highlighted the generally mediocre customer satisfaction scores garnered by most Talent Management Solution purveyors in our recent TMS Customer Satisfaction research and Report

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

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

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

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

Steve Goldberg

Thursday, February 17, 2011

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Steve Goldberg