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

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.

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.

The title of this blog entry is taken from a song on one of my favorite David Bowie albums, “Scary Monster & Super Creeps”. If you own this album, there is a good chance you are a member of my generation (X). In my experience, knowledge of pop music and television shows is one of the single greatest differences between generations (at least in the United States). For example, most guys in my older brothers’ generation know the opening guitar riff from the song “Rock n Roll” by Led Zeppelin:

“hey hey momma say the way you move, gonna make you sweat gonna make you groove” – da na na nuh nuh nuh nuh, nuh nuh nuh nuch nuh nuh, da na nuh da na nuh nuh nuch nuh waaaaaaaaaaa!

In contrast, many guys in my younger nephew’s generation know the riff from Seven Nation Army by the White Stripes:

duhn, duh duhn duhn duhnnn duh, duh duhn duhn duhnnn duh duh duh duh!

But once you get past music and TV, generations tend to be far more similar than many “generational experts” would have us believe. By generational expert, I mean anyone who makes money selling books, workshops, or programs based on telling you how to manage different generations. Simply put, I don’t believe the hype that the work goals and expectations of the baby boom generation are somehow qualitatively different from generation X, generation Y, generation Z, millenials, or generation “insert the name of whatever book is next marketed on this topic”. This point was made quite nicely in a research book recently written by Dr. Jennifer Deal:

“Fundamentally people want the same things, no matter what generation they are from. You can work with or manage people from all generations effectively without becoming a contortionist”. From Retiring the generation gap: how employees young & old can find common ground, published by Jossey Bass, 2007.

I would argue that many supposed differences between the employee attitudes of generation Y and those of the baby boom generation can be boiled down to two basic factors.

Supply and demand: There are fewer skilled workers in today’s economy than there were in the 1970’s. If you graduated from college in 1978 you were competing against a lot of other people for fewer jobs so you had to put up with some pretty demanding requests from employers. The tables have turned for people graduating in 2008. Now the demanding requests are flowing the other way. Generation Y employees expect more from employers because they are more likely to get it.

People who are young act differently from people who are old. Here is a newsflash, people in their 20’s who are early in their careers, unmarried, without children, etc. just might be a bit more idealistic and optimistic than their older coworkers who have suffered more of life’s “slings and arrows of outrageous fortune”. Talking about generational differences without controlling for how people’s interests and needs change as we grow older is like talking about differences in fashion without taking into account the temperature where people live. Saying younger people have unrealistic expectations about work because they are more idealistic than older people is like saying people in Florida are more risqué because they wear skimpier clothes in the winter than people living in Minnesota. Its not about generational differences, its about differences between being young or old.

When putting together talent management strategies, don’t lump employees into broad generational groups and treat them as though they all want the same things from work based on some book you read. Ask them! You’ll probably learn that what employees want is remarkably similar regardless of their age: a challenging job where they feel appreciated and respected, have a reasonable sense of security and career growth, and believe they are making a difference in the world that they can be proud of. While there are some interesting generational differences in terms of people’s collective experiences, memories, and communication styles, when it comes to the basic things that make a job rewarding employees tend to be more similar than different regardless of the year they were born. But since I’m a member of Generation X you might just chalk my negative attitude toward generational differences as a result of the “fact” that people from my generation have a cynical, mistrusting attitude toward authority.

SuccessFactors Research is pleased to post this guest blog from our friend and Thought Leader Dr. Steven Hunt.

Note: This post was written by SuccessFactors’ Director of Customer Results, Erik Berggren.  Erik is leading a team focused on understanding - through detailed, data-driven analysis - how specific talent management behaviors drive business results – and then working to build those learnings into our product for the benefit of our customers. I’m excited to host his thoughts here, and I look forward to sharing more of our new knowledge via this blog in the future. So please enjoy Erik’s contribution and as always, I encourage comments. We want to know what you think. – Max

Talent management is about more than efficiency
Pull, don’t push your way to meaningful ROI

I recently came across The 2006 talent management survey, conducted by IHRIM and Knowledge Infusion, which found that 77% of HR professionals think that talent management will only increase in importance over the next three years. In general, I think that’s great, because it means that people as an asset is a concept that’s making its way into the HR mindset. But, it also worries me, and here’s why: If HR Professionals think they can simply buy the software, put it in, turn it on and get full benefits, they are mistaken.

To maximize the return on investment in talent management, the solution isn’t just to put the processes out there and hope for the best, nor is it to push it out with smart internal marketing and hard selling. HR professionals need to make sure that their internal customers believe that there is value in using it the enhanced process, and get involved in making it work. That “pull” is critical, without it, organizations will not get a full return on their investment.
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