What does it take to truly build something? Plans? Yes, plans are important. Materials and People? People are the most important factor when building anything. Before you can start to look at plans and gather materials, your people must be motivated to do the job. Today the downturn in the economy is deeply impacting the morale of employees, potentially crippling workforce performance when companies need it the most.

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.

Last week we discussed the three pillars on which we build our user experience. In addition to those three pillars, there are eight guidelines that we follow to ensure that our user interface is fun, simple, easy to use, and relevant to the enduser. The last of those qualities, relevant to the enduser, is the cornerstone of a successful experience. Fun and easy to use are irrelevant if the Talent and Performance Management system does not provide actionable, strategic data on your people. Our eight core guidelines are:

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.

Often when meeting with customers and prospects I get the question: how do we make SuccessFactors so easy to use for managers and employees across the world? The question always arises from HR pros when I explain that we don’t build SuccessFactors for them, but rather for busy managers and individual contributors around the world. Fail to make it easy to use and no one will use it. Simple. No usage means no transactions, which means no strategic data. This leaves managers and executives in the dark when it comes to making decisions around the biggest cost to businesses today – people.

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.

We often talk about the advantages of using talent and performance management systems to drive results and gain a competitive edge over other organizations. Our research and the research of our thought leader partners shows how human capital management really works, but sometimes nothing speaks better to the impact of people and performance management than a success story.

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.

Now more than ever, organizations need to optimize their workforce in today’s economic climate of falling revenues and shrinking profits. Companies have long used stack-ranking to manage their people and identify employees to manage out or up, GE for example categorizes their workers as being top, middle and low performers with 20% high, 70% middle, and 10% low performer distribution. They regularly manage out the bottom 10%. Stack ranking is a powerful tool, but does it work? 

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.

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.

Aside from being the title of a great song from one of the greatest rock bands ever -Iron Maiden- Be Quick or Be dead is a great metaphor for today’s business environment. No matter how you look at it speed is picking up and someone will take advantage of it at someone else’s expense. Now more than ever with falling valuation of assets, lack of liquidity, and reduced consumer confidence the notion of “survival of the quickest” is the real deal. Darwin famously stated that it is not the strongest but the most adaptable to change that survives, and this is true as true in the business world as it is in nature.

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.

Making mistakes can be a good thing if you learn from them. Making the same mistakes again and again is stupid and costly.

The economy goes in cycles. I know it feels like a long time ago, but do you remember that we had a pretty quick and tough downswing that started in March 2000? 2001 and 2002 felt like a nuclear winter to a lot of people and businesses. I’m not saying that the current situation has the same underlying factors and patterns as the last time that we had this tough economic climate, but businesses and people are to a large extent equally as affected by it as before. Smart companies learned from the mistakes we made the last time the economic cycle entered a downswing and avoid repeating them.

So what did we learn from the last downswing? Some companies really lost and others came out of the economic turmoil even stronger, making real gains relative to the competition. Business, like sports, is very competitive and relative. Making a relative gain is easier when everybody is hurt rather than when all are performing well and happily taking orders serving demand. Furthermore, it was clear that those companies that avoided facing the new situation lost. Inaction is never the solution for advancing down the field. So companies that tried to take advantage of the economic downswing with clear actions won.

Here are some mistakes that losers make to learn from:

• Losing companies that get caught up in internal reconfiguring and take on an inward focus also tend to forget about their customers need and the value provided to them
• Losing companies fall for the pressure to cut people across the board when called on to downsize and reduce costs
• Losing companies alienate talent with poor decisions made through an extreme focus on short-term results; alienation which can last years thereafter.

SuccessFactors Research has recently written the paper Winning Through Talent in Uncertain Times, addressing how companies can get ahead when times are tough. Learn from your competitors’ mistakes, smartly align your resources, and turn an economic downswing into an economic opportunity for your company.

At SuccessFactors, it is easy to take virtual teams for granted. We began with a global vision, and from the start worked across geographies in virtual teams. Simply put, we got things done – the actual mechanisms, e-mail, PRDs, webcasts, were not nearly as important as the attitudes of the team members. Not long ago SuccessFactors Research, along with Jim Ware and Charles Grantham from the Future of Work, took a look at how the workforce is changing. One clear result – more people will be working remotely. The days of knocking on the office door, or ducking into a coworker’s cube to ask a question are coming to an end. 

The question arises, as companies expand opportunities to work remotely, how can they ensure that their virtual teams stand up and deliver? How can companies recreate the seamless virtual teams that I have taken for granted at my time with SuccessFactors? The folks over at OnPoint Consulting have done some research on virtual teams and found that successful teams have members that:

• Show Initiative
• Are willing to assume Leadership/Responsibility
• Share Processes
• Have a clear understanding of their contribution to the company
• Provide timely feedback
• Are willing to  expend extra effort
• Work together well
• Help each other

Well, it has been said that man cannot move mountains. Technically, this is true – fortunately  people are more flexible than their geography. In fact, with great human capital management, you most definitely can move mountains, and should. Let’s talk about the mountain facing managers in most companies, the performance Bell curve.

Looking at low, medium, and high performers, it’s obvious that the lion’s share of people in a company will be middle-performers (particularly a company with many employees). They are the mountain.

A lot of companies unintentionally focus on their top and bottom performers – the very worst are let go or disciplined and retrained, while the best performers are recognized and rewarded – but what about everyone in between? More often than not, they are ignored because they are doing “okay” and because fixing performance problems in the middle of the curve requires more effort and greater understanding of the individuals.

Managing the high and low performers is important, but rarely matches the impact of moving the mountain in the middle of the curve. If the bulk of your workforce is in the middle performing, logically the most of your people costs are there, and therein lay your greatest potential for improvement. Think about it numerically, if your company has 35 slackers, 200 middle performers, and 35 rock stars, increasing the performance of those 200 middle performers would have a far greater impact than say, firing or retraining the 35 slackers!

Moving that mountain, shifting that bell curve to the right, increases the performance of everyone, including the heart of most workforces – the middle performers.

Companies should focus on moving the entire curve to the right, elevating the performance of everyone. Pulling that curve to the right takes some effort, but the potential payoff is tremendous. To start, you can lure some of your middle performers to the right with a transparent, and strong pay for performance system. If it is clear that higher performers are getting a lot more than the middle performers, real impetus to perform can be created – in fact an article highlighting our research on the spread of pay was recently published in Talent Management magazine, which clearly shows companies with a larger spread of pay between performance levels do better!

Of course pay for performance is just a start. Giving your middle performers clear career paths, opportunities to advance their skills, and managing their competencies can help you to pull the performance curve at your company to the right. Maybe a person needs training, would fit better in another department, or has an issue with his or her manager, etc. With great HCM, you can get to the heart of the problem and move mountains in your organization.