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.

To create pull, there first have to be some underlying factors in place. The first is a reliable tool that supports the process it intends to. Without that foundational piece, there is nothing. Second, executive buy-in is a must have. Without that complete, top-down endorsement, pull will be nearly impossible to create. Finally there must be value perceived by the larger employee population in general and middle management in particular. This is the source of the pull.

What we have found from working with several customers that have been using our solutions over a number of years is that HR delivers immediate value by providing an automated, efficient process that is consistent across the company. But, among those customers, some stand out because they have done a better job of calibrating their whole company’s culture around performance and talent management. They have created the pull.

Recent research we’ve done in assessing the internal change in terms of efficiency (as measured by SuccessFactors Efficiency Index©) is that, on average, our customers have increased the efficiency of their performance and talent management processes by 100% over 2 years. But what we also found is that those very same companies have managed to change their cultures – create pull (as measured by the SuccessFactors Talent Management Index) – only inconsistently, by an average of about 15%.

To put it another way – we have seen that the companies that have made the most out of their investments have had balanced improvements in the two dimensions outlined above – in both efficiency gains and culture change.

The good news from working with this in more detail is that there is a great opportunity to improve stepwise and integrate technology investments with the goal of a more performance and talent management oriented organization. We are working with several of our clients to leverage this learning and to create a climate for change that allows benefits beyond simple (though powerful) efficiency gains.