1. Change within HR:
The first thing to remember is that change doesn’t happen if you just ask nicely.  People must be motivated to change.  When you’re talking particular behaviors at work, this means rewriting job descriptions and changing evaluations and rewards.  There will also be training involved.  This is fairly comprehensive, so most organizations build the capability in what we call a Center of Excellence (CoE).

A CoE is a small set of employees with specific skill sets who enable workforce planning for the entire organization.  They run the analytics, ask the tough questions, and in the process, train HR business partners over time.  This allows an organization to look at job descriptions, performance criteria, and rewards for around 2-4 people rather than the entire HR community.

Having a software system in place enables the CoE to have a broad reach within the organization as it automates the analytical component, ensures consistency of definitions, consistency of process, and will enable the CoE to train the HR business partners much more quickly.

2. Change in interactions with business managers:
Often, the introduction of workforce planning is one of the first real strategic conversations business managers have with HR partners (this, of course, is not always the case – just a general observation).  While the conversation has previously been around the current state of people and meeting certain targets, it now shifts to a theoretical vision of the future and translating that vision into human capital requirements.

Some managers aren’t comfortable having this dialogue so it is critical that the HR representative has a solid understanding of the strategy, can push back when further clarification is needed, and can facilitate decision-making.  It is also important to maximize the use of management’s time to avoid unnecessary or redundant tasks.  This is the best and quickest way to have workforce planning branded as a business initiative rather than “another HR program”.

I have found a good method for opening the door to conversations with managers.  Approach the manager and say, “I’d like to speak with you about your long-range planning so I can understand the workforce requirements necessary to enable you to execute.”  After all, workforce planning should be a part of strategic planning, and at its essence it’s a risk audit that ensures you have the right people in place to execute on business strategy.

The key here is to establish a process that works with and on the business and is flexible enough to meet varying needs across the organization.  (SuccessFactors has established a methodology based on its 30+ years of practice that you can see below.)

My tip for a successful change management process:
Before you get started with workforce planning, stop and think about the change on each of the groups involved and what communications need to be in place to facilitate awareness and buy-in.  Concentrating on the foundational elements will pave the way for a successful process.

SuccessFactors Workforce Planning Methodology

A pay for performance culture is one where people receive monetary rewards based on the value they provide to the company.  The more value you provide, the more you are paid.   The assumption is people will provide more value if they are financially incented based on their contributions.   Another assumption is the company can accurately measure people’s performance contributions.

Adopting a pay for performance mindset, while generally a good idea, can over-simplify what business leaders truly want and what actually motivates employees.  To illustrate this, consider the following 4 pay for performance cultures in order of best to worst to somewhere in-between.

The best scenario:  performance without pay. Businesses don’t actually want to pay for performance.  What they ideally want is performance without having to pay.   But most employees are not willing to accept this proposition.  We rightfully expect to be paid for what we contribute.  Nevertheless, it is possible to inspire people to achieve high levels of performance without focusing on pay.  Volunteer organizations do this all the time.  There are a lot of things that motivate people.  The motivational value of pay varies depending on the type of job and employee, and business leaders who use pay as the sole tool for motivating employees risk adopting a very expensive and marginally effective leadership approach.

The worst scenario:   pay for poor performance. The worst case scenario for a business occurs when employees are rewarded for doing things that undermine company performance.  This occurs more often than companies would like to admit, particularly in companies whose managers have to comply with restrictive personnel policies, rules, and regulations.    Rewarding poor performance encourages counterproductive behavior and destroys the motivation of high performers.  High performers dislike it when they do not receive any sense of recognition or rewards for their contributions.  But they hate it when they see rewards going to poorer performing colleagues.

A lousy scenario:  performance only for pay. One of the problems with creating a direct link between pay and performance is some people will never feel they are getting paid enough.   No matter how much pay these people receive for doing something, over time they always seem to want more.  Payouts can quickly switch from being a reward to being an expectation.  Today’s financial bonus is tomorrow’s entitlement.  Once this happens, pay ceases to be a motivator and becomes a source of dissatisfaction.

The pragmatic scenario:  performance influences but does not completely determine pay. Research on productivity, fairness, and motivation indicates that there should be a positive relationship between how much people are paid and how much they contribute to the company.  But the relationship between pay and performance does not need to be perfect to be effective.  Many things influence pay levels beyond individual performance (e.g., overall company financials).   Conversely, pay is only one of many things that influence performance.  Companies should create a link between performance and pay, but should not overemphasize pay as the only reason why employees should seek to perform at higher levels.

Establishing links between pay and performance does tend to increase productivity.    But it is not just the promise of pay that drives the productivity.  When you link pay to performance, employees and managers get much more serious around defining what they mean by “performance”.   And clearly defining performance expectations drives all kinds of benefits for increasing workforce productivity, regardless of pay levels.

When done well, performance management creates a shared sense of performance expectations across a company, gives employees meaningful feedback that helps them improve their effectiveness, and provides the organization with insight into the quality and capabilities of the workforce.   When done poorly, performance management has about the same level of strategic value as the process for completing expense reports.  It simply documents what people did in the past (and often does this very poorly), and has very little emphasis on improving what they might do in the future.

Using performance management to drive business execution is largely a matter of focusing on four things:

Accuracy: have you clearly defined the goals and competencies that people are being evaluated against?  Effective performance management starts with accurately defining what you mean by performance.

Relevance: Is performance management data used for anything that is important to the managers who are completing the reviews?  If managers know their performance ratings are going to be examined by senior leaders in the company and used to inform important workforce decisions then they will take them more seriously.  For example, are performance management ratings used to influence succession and promotion decisions?  Are managers expected to discuss their ratings with their peers, or do performance ratings just go into a file cabinet never to be seen again unless they lawyers show up?  Note, pay is probably the most common outcome linked to performance reviews.  While pay decisions are certainly relevant to managers, in terms of impacting the value managers get from performance data, tying performance to the pay of their direct reports is probably relatively low on the list.

Accessibility: Is it easy for managers to provide and use ratings?  Do they have access to the tools, skills and knowledge needed to make accurate ratings and hold productive employee feedback discussions?

Accountability: Do leaders in the company hold managers accountable for making accurate performance ratings?  What happens to a manager if they refuse to complete their performance reviews or provide poor quality data?

Focusing on these four areas will go a long way toward increasing the impact of performance management on business execution.   Conversely, a failure to think through issues of accuracy, relevance, accessibility and accountability is almost certain to lead to a performance management process that solely focuses on tracking the past as opposed to influencing the future.

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!

Think about throwing a spear – the first thing the thrower needs is energy/momentum. The spear will not fly very far unless the thrower invests enough energy in his or her throw. Second, the thrower must have developed the physical coordination to shift his or her weight and pull back the long, weighty spear in preparation to throw. Coordination is a competency that is widely applicable to a number of sports, but critical for throwing the spear. Finally, the thrower must be able to aim the spear. This is a skill specific to throwing the spear, which is markedly different from throwing other objects, such as a ball.

The People Core Assessment© pyramid, illustrates this framework. The base of any successful action in energy and engagement – no task will get done without them. Competencies sit above energy, and tell you whether or not you have the capabilities required to succeed. Finally, the specialized skills required to complete the task form the apex of the pyramid.

From experience in coaching talented cyclists as well, I’ve found support for this same thinking in one of the greatest books: The Cyclists Training Bible by Joe Friel. Mr. Friel suggests similar thinking for building up peak performance through a few selected races over the year. Build core strengths and capacities first, then more specific skills with higher intensity as the race progresses. A common mistake of endurance athletes is to work on the top of the pyramid without having a foundation in place. This is true for our day to day management challenges as well.

When you are confronted with a people management challenge, start at the bottom of the pyramid and figure out if your people are invested in the tasks at hand – do they have the energy and motivation required to carry the project forward? Winners rarely win by accident, people have to want to win. Second, take a good, hard look at the competencies of the people on your team. Do they have the core abilities needed to win? Finally, figure out what specific skills you need to develop in your team and make sure they have those skills, which are the tools you will use to attack the challenges at hand.

Why would a rock star keep performing if he or she were only paid as much as the guy who surfs the web all day instead of contributing? Ignoring pay for performance is a sure fire recipe for low morale and low performance.

Even Communist Cuba gets it! After decades of trying to run an economy where a doctor is paid about the same as the paper boy, they are acknowledging the obvious – if you want great people to do a great a job, they have to be recognized.

Vice-Minister for Labour Carlos Mateu says it best himself, “It’s harmful to give a worker less than he deserves, it’s also harmful to give him what he doesn’t deserve.”

While SuccessFactors Research does not endorse any government or political philosophy, we do endorse people performance, and recognizing great individuals – Viva pay for performance!

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?

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.

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…