Category Archives: SuccessFactors Research

HR Executives Do It Better

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The “it” I’m referring to here is recruiting. Last week, an HR Collaboration track made its debut at the Enterprise 2.0 conference in Santa Clara, California.  This was the first time Human Resources was singled out at the conference, born out of the need for better alignment between Enterprise 2.0 and specific business objectives.

The conference chose to go much deeper into the topic of “people and culture” because HR leaders are so well positioned to initiate sweeping change across a business. The keynote panel on the morning of day one kicked off the new track and covered multiple issues that keep HR professionals awake at night.  Three senior level HR executives from customer organizations were on the panel as well as Oliver Marks and moderator Bill McNee.

Each of the panelists is making Enterprise 2.0 real in their companies by using collaborative technologies to recruit and retain employees.  Houghton Mifflin Harcourt (HMH) was one such customer on the panel.  They are a 180 year-old publishing and education company with a globally dispersed workforce.  The challenge they’re facing is one where they have to bring social to business in order to appeal to the way their customers, and employees, expect to communicate and get work done.

Two recommendations to keynote attendees looking to bring social collaboration into their business from Ciara Smyth, EVP and Chief Human Resources Officer for HMH were:

1) Start viral.

2) Trust your employees.

For companies looking to survive in a 2.0 world, business is now dependent on how quickly they can innovate new products and speak to a younger, tech-savvy audience. Being able to keep up with an iPad wielding, platform agnostic customer base is critical as business leaders seek to remain competitive in industries that have traditionally been slow to adapt to change. Are there any industries older than Facebook and Twitter NOT facing the same pressure?

The video from the Human Resources Meets Enterprise 2.0 and the Cloud panel can be found on the Enterprise 2.0 Conference website at http://tv.e2conf.com/ (you’ll need to register to view the videos).

HR 2.0 or 1.0 – how’s your version of HR paying off?

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Perhaps my search was not “optimized” but what I found under “Strategic HR”, “HR 2.0”, and “HR Blog” was disappointing. Why aren’t more HR professionals and experts talking about how HR can make the difference between average company performance and stellar performance? Studies prove that when companies treat the HR function as strategic (and don’t just pay lip service) and put systems in place to efficiently capture, measure and present information for analysis about the workforce, they outperform.

A study of 157 companies utilizing SuccessFactors for strategy execution (not just to optimize a process) found users of the solutions experienced average revenue growth of 15.4% over a 12 month period (compared to an average industry growth of 10.6%).

Sure, some of this was due to efficiency gains around a process (short-term). But the key was the ability to get better execution from the workforce through strategy alignment and clear identification of top performers. Top performers in a company are shown to be 3x more productive so why aren’t we focused on attracting, developing and retaining top performers instead of “streamlining transaction times” and “reducing manual transaction” – isn’t that HR 1.0?

Small and medium sized businesses stand to benefit the most by focusing on their workforce because they are growing and expanding at a higher rate than large businesses and have greater demand for skilled workers. Milan P. Yager, NAPEO executive vice president says that if small business loses even one seasoned knowledge worker it affects them competitively. He says that “these business owners want to ensure that seasoned workers convey their knowledge, or even continue working longer if possible.”

Yet, 90% of the companies I speak with claim their reason for evaluating a system is “the current process is cumbersome, people don’t like doing it, too much time is being spent, it is one of the last processes left to automate”.  Really?  Is that strategic?  Do you want a seat at the executive table? Then how about putting a system in place to help you analyze how well your hires perform, the characteristics of a top performer and who is the best person for a project or new role? On average the cost of a bad hire is equal to the annual salary of that employee. The cost of losing a top performer is at least 1.5x that employee’s salary.

Close to 24 months ago when the economy was in free fall, a top 3 management consulting company surveyed over 500 companies to find out if the SuccessFactors Business Execution software had made an actual business impact or whether the software was purely delivering a cost savings from bringing HR processes online. The business impact turned out to be very real because the right information was captured and visible for making strategic workforce decisions. A 40% increase in time spent on strategic priorities doesn’t come from completing reviews on time. A 67% increase in project completion is the result of understanding your talent and putting the right talent on the right projects. Check out the study for your self – http://www.successfactors.com/docs/sf_guide_MovingMountains_r5.pdf .

Those of you in human resources who are taking a strategic approach to your human capital are more than likely awarded more funding from your executives. Those focused on performing reviews annually online and trying to reduce costs by automating a process are most likely watching your budgets dwindle faster than the cost savings you are trying to produce. Come on – think strategically. Enough said!

Business Execution

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We’ve been talking about how companies can drive better results from better execution throughout the lifetime of this blog. With this launch of a new software category Business Execution Software we decided to explicitly rename this blog. Welcome to our new born or reincarnated Business Execution blog.

Lars, our founder and CEO, and I are working on our book Return on Execution©. You will find posts from the research and findings that we’ll share in the forthcoming book right here on the Business Execution blog. After all driving execution is what explains the financial performance of your company. Execution creates sustained competitive advantage. With an average of 70% of your operating expenditure comprised of labor (for not taking contractors into account) there is no bigger expense post to optimize if you want to drive better execution. It’s not a matter of what but rather who drives the execution of your strategy. To learn more about this exciting book visit this Return on Execution(c) link to read the short version of it.

You’ll see posts from the SF Research team as well as guest posts from our select thought leaders on the topic of driving execution. Keith will share insights from working with our customers around the world in how they increase their ability to execute both here and through Twitter so sign up for that too. We welcome your active input and feedback. Let’s go drive some better execution.

Strategy Definition or Strategy Execution…

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Which is more important?   It’s a bit of a chicken vs. egg argument, but it’s fair to say that both are critical to driving positive financial results.   Put it this way, if defining strategy explains 15% of a company’s financial performance then 85% must be explained by the execution of the strategy.  You can’t separate the two, but given those percentages it’s also fair to say that execution is  a much harder task. The more you study this the clearer the evidence becomes.

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

Be Quick or Be Dead

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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.

Go Team – Get Real Performance from Virtual Teams

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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
From our perspective, looking at what makes a successful team is only half of the equation. To get great performance, companies should think about why the aformentioned attributes are so important. When people are working remotely it is much easier to:

  • Pass responsibility around to others
  • Disappoint another person on the team (it is a lot harder when you have to see their angry face at the lunch table, etc.)
  • Make excuses
  • Let communications break down
It is said that a chain is only as strong its weakest link – imagine if that chain were stretched around the globe – each link is even more critical. This one reason SuccessFactors has developed social networking tools within its product suite. In addition to keeping teams aligned with group goals and clear, performance objectives, social networking tools encourage the kind of positive interactions that build strong teams. Check out our NEXTlabs website, to see mockups of some innovations that could enhance communication, transparency, and teamwork.
Remember, at the end of the day “virtual” teams need to deliver “real” results. It is critical to tackle the challenges of working in virtual teams early, before team members develop bad working habits that drag down team performance.

Moving Mountains

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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.

Unskilled or Incompetent

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blackboardAsk anyone which is worse, an unskilled person or an incompetent person and I’d bet money most will answer incompetent. Why? The difference in meaning is subtle, but profound. An unskilled person can be trained. The word incompetent implies that the individual at hand does not have the aptitude to succeed or grow – they lack the basic competencies to get the job done.

I mention this because one of the most common mistakes made in Human Capital Management is confusing skills with competencies. Skills can be learned, certificates can be earned, etc. Competencies take much longer to develop. For example, a skill might be profient in C++ (a programming language), but a competency might be high capacity for problem solving. Problem solving is important for programming in any language, and can be applied to many other challenges in the workplace.

SuccessFactors Research conducted a study of competency management of our own customers, and was able to identify what some winners do in various industries. The implication was pretty clear, companies that effectively manage the competencies of their people have greater potential to do better. But competencies aren’t just about overall company performance – they are highly relevant to individuals. If you can figure out which competencies are the most important for a given position, you can better place and develop people to succeed in that position. Competencies aren’t just leading indicators of success for your company, but also for your people.

Ready, Willing, but not Able: Succession Planning in Ireland & the U.K.

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Companies embrace the idea of Succession Planning and Talent Management with great enthusiasm, but rarely put the mechanisms and tools in place to effectively follow through on their initiatives. SuccessFactors Research recently conducted a survey of Succession and Talent Management capabilities across the U.K. and Ireland, and found that this is indeed the case. Companies have initiatives in place, but do not back them up with effective processes and support.

For example,  76% of all companies in the survey were found to have some kind of succession plan in place, yet 40% of companies lacked any process or capability to identify future talent. You simply cannot identify successors effectively, if you do not have a regular process in place  to identify talent within your company. Talent reviews should be the starting point, not the end point of the talent management process. Managers should have plenty of tools to help identify talent. 360 reviews, performance reviews, and competency assessments can all be used to make reasonable assumptions about the potential of an individual.

Losing your best talent can be disastrous during these tough economic times – making Succession Planning a top priority for organisations wanting to build growth and be successful. Organisations routinely encounter turnover across a variety of key positions which often results in significant disruptions if no replacement is readily available. You need to know what you have, at all levels in the organisation, before you can start to think about successors.

SuccessFactors is presenting a  webinar focused on effective succession planning in the U.K. and EMEA, Effective Succession Planning: It’s not just for your CEO, on Tuesday, July 22nd, register here. You can learn more about the tools available to managers, and bring your own questions to our team. You can also read more about the state of Succession planning and talent management in the U.K. and Ireland in the related SuccessFactors Research Data Brief.

A Great Place to Work

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Amy LymanNot long ago SuccessFactors Research and thought leader Amy Lyman hosted the webinar The Business Benefits of Being a Great Place to Work. People who love their jobs work harder and do better. It follows then that creating a “great place to work” should be a top priority for all businesses. Of course, this is easier said than done, or is it? If managers focus on transparency, honesty, diversity and fairness they are on their way to creating a great place to work. Every business is different, so making the leap from a good place to work to a great place to work will involve different factors for each workplace. Ms. Lyman discusses these factors and how they help businesses excel in the webinar she did with us.

Every year the Great Place to Work Institute’s 100 Best Companies to Work for survey is published in Fortune magazine. In fact, SuccessFactors has twice been ranked highly in the small business category. How do we do it? Well, we are very transparent about what drives our success, and have a blog dedicated to employees telling their success stories here at SuccessFactors – the HappyFactors blog.

The response to our joint webinar with Ms. Lyman was electric, and she received many follow up questions from our guests after the conclusion of the webinar. She was kind enough to answer these questions in detail, which are now available for download – SuccessFactors Research Webinar Extra: Amy Lyman . She tackles some tough questions like, how do you start to build trust when employees have lost their trust in upper management, and can you recommend some processes to uncover what’s working in a company in terms of building a strong culture?

Ms. Lyman will be joining us again August 19th for a webinar focusing on Europe and EMEA. Just as the challenges are different for every business, they are different in various geographies as well. Check our events page for the registration link, which should be available shortly.