Yearly Archives: 2008

Attack at the top of the hill

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Go on the offense in the war for talent when your competition is hurt. Yes you hurt too but winning in business or in bike racing is a relative game – very relative. Of course you are stronger and feel more confident in your ability to sprint and attack when you are warmed up and ready, but the problem there is that so is your competition. In tougher times when every company is hurt from a slowing economy there is no better time to go on the offense and focus on strategic talent management issues. You can recruit the best from your competition and develop your key talent – if you get some slack you should use it wisely.

Of course when the economy is putting the knife on your throat it is easier said than done, but most organizations get very inactive in a slow economy. They simply resist taking any action, hoping things will correct themselves. Well the economic climate will eventually recover – it always fluctuates – but your company will come out weaker than your competition if you don’t act. But can you marry cost cutting with going on the offense? Yes, but laying off people can’t be done by simply applying stupid rules such as last in first out (very common in Europe, sometimes forced by laws) or broad 10% cuts in everything. Doing it like that is just lame.

Make sure you surgically get rid of the people that do not perform, nor have the potential to grow into the future needs of the organization. Think not only in terms of cost savings, but also in terms of talent optimization, although this is probably something that most organizations should do all the time in any economic climate. You just don’t see nor face this problem in booming times. So attack on top of the hill when your competition is hurt and you have a great chance of coming out winning. Pain is temporary, victory is forever.

HCM is good for the Green

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Recently Saugatuck Technologies released a study showing that SaaS (Software-as-a-Service) Human Capital Management software contributes at least 2-3% to top line growth – definitely good news for companies seeking more green. An article in this week’s San Francisco Chronicle made me start to think about another kind of green – the environment. Human capital management is key to driving a number of environmental initiatives. Paperless reviews save paper. Working from home reduces gas-guzzling commutes and slows the need to build new office space, and as the San Francisco Chronicle points out, employees love working from home. As an important part of the individual value proposition to the employee, working from home helps keep your employees engaged.

But, successfully promoting a paperless office and shifting people from the office to the home, requires systems that support these activities. Goal alignment, ensuring that people are working on the right things for the right reasons, is very important. People need to feel like part of the team, even if they aren’t physically present. Traction, not action is the mantra for successful execution. Goal alignment ensures that people are moving in the right direction downfield to score, and not just gaining yardage. In fact, if your players are moving in the wrong direction, they are moving farther away from the goal. Goal alignment helps ensure that this doesn’t happen. It is not a substitute for supervision from a manager, but keeps the team working toward the overall company strategy.

Human Capital Management is a critical to earning green, and going green, enabling people to work from home, in global teams, anywhere, anytime. How green is your organization?

Employees Want More Work? (Not Less?)

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I’m happy to post this guest blog by Doug Klein President of Sirota Survey Intelligence and one of SF Research’s Thought Leader partners. Doug will present findings from resent research on this topic with us in a webinar next week. Join us then to learn more.
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Well, not really. What employees truly want is the amount of work they have to do to match the expectations they had when they took the job. During the on-boarding process and throughout the early years, every employee continuously re-evaluates the “deal” between themselves and the company. When the “deal” is still fair, employees are satisfied (even enthusiastic), when the “deal” sours, they become highly attuned to dissatisfiers.

Part of most employees’ “deal” is to feel valued. This has a personal and performance component. They want to certainly be treated fairly and with all the common courtesies (like management not ignoring them, not being treated as a second class citizen, etc.) as well as having their current and future development needs met (so they can achieve their own personal work-related goals – whatever they may be).

Employees who are bored (reporting “too little work”) are often doing work for which they are ill-suited, or have jobs that are poorly designed. As a result, they have by far lower job satisfaction, sense of accomplishment, and pride in their employers compared to all other workers. All in all, they feel less valued.

Feeling overworked – a condition that could lead to job burnout – is far more prevalent than feeling bored and spikes during 2-5 years with the company. Employees who complain about being overworked often feel they are not receiving adequate support from co-workers. In addition, they contend that the quality of their work suffers (because of this inefficiency), resulting in greater stress and tension, and their feeling that they have sacrificed their personal lives for their jobs.

The complaints of both overworked and bored employees should be taken seriously, yet being bored has far more serious consequences for an organization than being overworked. Complaints about being overworked can be an indication of poor quality or work processes, and it can be difficult in certain circumstances to retain employees who feel they are overworked and out-of-balance with their work-life. But bored employees have an even greater negative impact on an entire organization, lowering morale and productivity, and draining resources.

One mechanism of action at play, as previously indicated, is employee perceptions of the “deal-delivered.” Work-life balance is almost an afterthought to people who feel their employers are meeting their end of the “deal” by being fair, providing interesting and meaningful work, and recognition or rewards for a job well-done. Work-life balance becomes a real issue when employees feel that their employers aren’t holding up to their part of the partnership.

However, when employee don’t feel valued (like when they feel bored) or feel overworked (because the company is being inefficient or cheap vs. dealing with an unexpected – or expected – rise in demand) issues like work-life balance, commuting, etc. become highlighted in their minds and become true dissatifiers.

What’s the time? – It doesn’t matter it’s always now…

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I was preparing for a presentation about change management and how HCM technology drives results that I plan to deliver at an HCM conference when I saw this video. I must say that Sam Zell really nails it when addressing the staff at Chicago Tribune. This 6 minute video clip is so telling, inspiring and indeed entertaining.

Sense of urgency, attention, and understanding the reason for change are of course the ingredients required to help change something. It doesn’t hurt if you know where you’re going either to funnel the change in the wanted direction. I think Sam nailed it. Win or lose – that’s the game.

Do you look forward to coming to work?

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While the world is experiencing a war for talent, each region has its own, unique talent related challenges. Indeed there are local talent management phenomena, as Jason Averbook from Knowledge Infusion and I discussed in his recent blog.

In some European countries a lot of businesses carry a huge cost for people on sick leave. This cost in most European countries is a shared responsibility between each company and some kind of government funded insurance system (most employers must pay this insurance anyway – in many places it is mandatory).

How much of a burden is this for organizations? There are many consequences when employees overuse sick leave:

  • Need to carry extra staff to cover for the absence levels
  • Cover the absences with temporary staff that is both costly and not always fully productive in wider-scoped roles
  • Lose business – which might be the worst of all alternatives since it will hit both the top and bottom line

Let’s look at this example from a financial service company in Holland:

The employer is legally responsible for paying 70% of the normal salary, after 2 sick days for a full 2 years. In a majority of industry sectors, this is legally raised to 100% through deals with unions. Our research indicates that the sick leave in Holland is about 6% (Sweden, Norway and the UK between 4-6%, France 3%, Italy, Ireland & Germany about 1.5%)

For a global financial service company with about 2 Billion Euros of labor cost and 35K employees there is an average cost per employee of 57K Euros. With 6% absent for sick leave that would mean that 2100 employees are absent at a cost of 120M Euro per year. If that sick leave could be reduced to 5% this company would have 350 more people working while directly saving 20M Euro. This example though showing significant cost savings is only looking at the direct cost of this absence, and not at the more strategic impact of lost business opportunities, or the individual human costs. Though there are arguments for fixing systematic problems caused by over generous sick pay, there is really nothing organizations can do about it in the short term… or is there?

To find the answer I turned to one of SuccessFactors Research Thought Leaders Ken Scarlett who has been researching this, and the conversation left us with some very real solutions.

Aggregately speaking, the higher the Engagement level (as measured by an engagement index) the lower the sick leave rates, and there is no better way to predict the likelihood of abusing sick leave than by the responses to the questions “Do you look forward to coming to work?” and/or “Do you feel you work is important to others?” Ken’s research shows that the group who answered negatively to those questions has the highest propensity to max out/abuse sick leave. With the specific questions above, you can actually create a highly accurate forecast within 10% margin of error.

In any country and any industry your job as a leader is to increase the likelihood that your people answer the question “Do you look forward to coming to work?” positively.

The war for talent goes global

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Few industries are so intensely engaged in the war for skilled people as is the high tech industry. Talent is everything.

Microsoft and other powerhouses have been lobbying for more immigrant visas for skilled workers from abroad, which is illustrative of one way companies are dealing with the issue at hand – finding net new talent.

When it comes to attracting talent and venture capital, Silicon Valley is by far the leader compared to other US regions (though Wall Street is challenging Sand Hill road), but the race is on from other areas around the world. This study from the Bay Area Council Economic Institute and McKinsey reveals that some other areas are emerging as real threats to the current king of the war for talent, Silicon Valley.

As we see from the graph below the cost of doing business is highest in London, followed by the Bay Area, Stockholm, and Shanghai, respectively.

cost of living effects talent shortage
In addition to high cost of doing business, the cost of living in several of these high tech areas is becoming a steep hurdle for new people when they consider relocating. For instance, in the San Francisco Bay Area the portion of income spent on housing is more than double that of the US average.

Taking all of this into account – the need to take on this war for talent on a global scale is very real right now. High tech is struggling with it more than others today, but many industries will follow.

“Think globally but act locally” is a common saying, but I’d suggest that “think globally and act globally” could be a better recipe for winning the war for talent. Get the best people to work with you (that’s right not for but with) fully aligned with your strategy irrespective of where they are located. Build your business based on talent, collaboration, and focus on real customer value creation. Collaboration and value creation have nothing to do with real estate, immigration laws, peak hour commutes, and localized flexible work arrangements. It is all about integrating the right people to produce results. The smartest companies that embrace and execute on this philosophy will win the war for talent and hence the customers’ money, based on real value creation. The best people can work with you wherever they are. Embracing this will keep you competitive. Failure to do so will be costly and troublesome. The world is spinning let’s spin along with it…

Retention is up, that’s great! Wait, maybe not…

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Though engagement levels are correlated with retention it is important that we don’t mix them up. We know that when the economy slows down people will have fewer opportunities to find great jobs elsewhere and out of necessity will decide to stay with their current employer. We see this in various pockets right now. This is not the same as having an increased engagement level, but rather the contrary. When the economy slows, turnover rates improve, but not really for the better – more people with less motivation end up staying on board. This is very costly for organizations. No one can afford to carry dead weight. True visibility into people performance can of course mitigate this by ensuring that action is taken to increase the right retention, while in parallel also increasing the right turnover – turnover of low performers.

If there is a need to scale down on the number of employees, real visibility into who is to be let go and who to keep becomes even more important. Failure to deal with this the right way will cause a negative impact on engagement levels and ultimately performance and results. What is the cost of decreased turnover of your low performers? More than you think. Not only are they not working to their full potential, and therefore costing the company money, but they also bring down the morale of high performers. Have you ever worked on a team with free rider? Motivation levels fall quickly for the entire team.

Gen-Probe is an admirable organization and a great example of someone that really deals with retention in a textbook way of focusing on the “right” retention and not just retention in general. They hold HR executives accountable for driving the right behavior in their organization – increasing retention for high performers while addressing issues of low performance through active performance management and increased attrition. They even tie part of their executives’ bonuses to these retention and turnover rates reinforcing the importance of this. As we all know, it is very costly to lose great employees but, also consider how costly it is to keep disengaged, low-performers with direct losses of contribution, and potential toxic effects on colleagues across the organization.

So be cautious in this rocky, economic period. If you see that your voluntary turnover rates go down don’t automatically assume that it means improved engagement – in some cases it could actually mean the opposite…

Building bench strength is a myth

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Why is that? Per definition that would imply that the person on the bench has more potential and capacity than what is currently being used right now. Well how many star players are happy sitting on the bench waiting for their turn to play? Building it only works if done right and that is to look deeply and widely at your workforce potential and employee preferences, and then act on that information. Act means putting people to use and managing to their potential. The worst thing you can do is to ignore untapped potential, thus de-motivating and potentially losing your strongest people. Such a loss will be seen on the profit and loss statement, in addition to being a human loss for individuals. Studying the financials of our customers we see that those customers that are using our Succession Management module operate with 7.9%pt (absolute) higher net profit margin than those that don’t…

In his upcoming book, Talent on Demand, our research partner Peter Cappelli discusses the need for looking at talent as an input parameter for production, and uniquely applies the same model that is used for the supply chain. You don’t want to build costly excess inventory anywhere in the physical supply chain but, is it acceptable on the most costly asset – people?

Peter will join us at our upcoming customer conference in June to discuss this approach of managing talent along with other SF Research thought leader partners as well as our customers.

Is work a place or something you do?

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Sometime during the movement from an agricultural economy to an industrial economy I think we have collectively mixed this concept up, and so it merits the question today. Work used to be about what you could produce. When we moved into offices and cubicles, and started shuffling information back and forth that concept was lost. We started to refer to work as somewhere you go, and this changed how work was measured; workers were paid and rewarded for time and not always results.

Work is what you do – not just a place where you go. In a recent article published in the Harvard Business review, Tamara J. Erickson discusses this very issue in terms of what Gen Y’ers expect from work. In essence the task and not time is what matters to them.

I hope that this concept is not only for Gen Y but for everyone in the workforce, irrespective of age. According to recent research from our thought leader partners Jim Ware and Charlie Grantham at the Future of Work, people today divide their working time almost equally between the office, home or somewhere in between. I am, for instance, writing this blog on a plane to Europe to speak at a strategic talent management conference in Stockholm – well I guess that is work though I’m not technically in the office.

This is of course pretty straightforward as a concept but nonetheless difficult to change in some organizations. The solution, may I suggest, comes from a managerial change in attitude and behavior. If we get away from the face time and office hour concept and instead focus on the expected results and goals that need to be achieved, productivity will improve. People naturally want to do great work and be rewarded for the results. It also allows people to focus on managing their energy, in addition to managing their time. Maybe you are more productive, alert and energized at 8pm after a long run on the treadmill at the gym than you are at 10am in the morning. Why not get some work done then? If your employer measures your contribution, not your time on the clock, go for it! It maximizes your productivity, benefiting you and your employer.

Maybe we could learn from the US Marine Corps and their usage of mission based orders. An order is given with the goal that needs to be accomplished, along with an explanation as to why that goal is important. It is then up to the officer in charge and closest to the action to deal with how to get it done and to do it. That is goal orientation instead of time orientation. So focus on output and results instead of time. Semper Fi!

Give me what I need not just what I want!

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I was just checking my Yahoo! mail where I saw an email highlighting a really cool piece of research recently done in the UK, studying how the Google generation (people born after 1993) go about getting information. The study, information behaviour of the researcher of the future, was commissioned by the British Library. Guess what – people are not going to spend time pouring through libraries and books to get the information they need, but rather simply search from the web or better just have it intelligently pushed to them – is this really a surprise? No but it does raise the question: why have we put up with enterprise software that is so dumb in how it delivers information? Generally, enterprise software is great for handling transactions but no real guidance on how to make better decisions faster.

SuccessFactors has just released the 83d release of our product, called ULTRA, which has received enormously positive feedback from customers, prospects and analysts. But what is so special with this new release? Yes, it is completely integrated and easy to use with very intuitive navigation and delightful appearance. So what does that have to do with finding the information you need when you need it? Information alone is not terribly useful. This is why ULTRA strives to deliver contextualized content. That simply means delivering answers to questions that you might have, or ought to have to effectively execute the task at hand. Today, no one has any time for anything including time to find the information they need, which would be lost time for productive work. If you need relevant information, but fail to go out and get it you will be forced to make a less informed decision. This could have a huge impact on your overall productivity. In ULTRA this concept was widely considered during its design, which is why in ULTRA information is delivered with the relevant context and tools so that you can make informed decisions. Even if you actually don’t know that you need it.

For example, there is a Coaching advisor that gives the individual practical advice on how to address specific needs or shortcomings, as defined in a competency assessment? If you have a need for better communication skills (and who does not btw…) real, practical advice on how to improve those skills is just there. Need to get a quick look at how people in your department are performing vs. their potential, check out the nine-box summary and drill down to the individual level to troubleshoot performance problems – content in context. These tools have not only helped me, but have also benefited the members of my team for whom I complete performance reviews. That is what truly smart software provides for its users. The writing assistant is another powerful tool that I just used to assist in writing a performance review for an analyst on my team. I think that alone saved me the evening, freeing up some valuable time and getting me home in time to have dinner with my wife and kids. Thanks to the ULTRA team for making it easy for the Google generation and for the rest of us…