I took away several really interesting points, including the selection of “value chains” (as opposed to the more formal “job families”) as the pilot segment for workforce planning – what a great way to tie forecasts to the value that the workforce provides!

Also of note; the concept of workforce planning networks – beyond stakeholders and champions, who else in the organization will be affected/influenced by workforce planning and what impact will it have?

The idea came to fruition when one of the presenters discussed how their organization’s affinity groups were positive role models in supporting the execution of the workforce planning process. In many cases, affinity groups wouldn’t be a primary audience for workforce planning communications, yet, in this organization, they were seen as very helpful in suggesting the appropriate next steps for workforce planning.

As such, the presentation got me thinking about a modified “social network” for workforce planning – as part of change management, explicitly identifying the broader network of individuals and groups that may be touched by workforce planning.

This might include affinity groups, project teams, data analysts, strategic planners, HIPOs, and staff in leadership development programs, for example. Each group may be affected by workforce planning in a different way – some more directly than others – but it is worth considering how they might play a role in your workforce planning process or in ongoing integration with other activities around the firm.

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

I was reminded of this when I was working with a client recently, developing a metrics scorecard for their organization.  We’d identified a number of metrics that we felt would be useful for the organization, the subsidiary of a larger parent company, to track.  We noticed, however, that some of the metrics were similar to metrics already being tracked by the parent company, though they were calculated a little bit differently.

“Should we just calculate the metrics for our scorecard using the same methodology as the parent company”, they asked?  Now it was my turn to play statistics professor.  “It depends”, I answered.  How were the numbers going to be used, both by the parent and the affiliate?  Was management going to be held accountable to specific targets, or were the measures being tracked to provide guidance and decision support to the organization’s leadership?  How important was it to be able to benchmark the results against other organizations? 

If there were different, and legitimate, differences in how the numbers would be used, there may be reason to calculate them differently.  I cautioned of course, that whenever you have two sets of numbers you need to be able to reconcile the two, and the onus to do so would undoubtedly fall on the affiliate, not the parent.  This obviously creates added complexity and risk of confusion.  Still, under some circumstances, it could be the right choice.

The example I gave for keeping two sets of numbers was around turnover.  This organization, like many, wrestled with whether or not to include certain types of terminations, like retirements, in their voluntary termination calculations.  Many managers argued that the retirement of their employees was something largely or entirely beyond their control (particularly true in countries or companies where there are mandatory ages set for retirement), and as such it should not be “counted against them”.  A debatable point to be sure, but certainly there are some terminations that even a good manager will have little power to prevent. 

However, when an organization is trying to monitor its workforce and plan for the future, it absolutely has to track all terminations, regardless of reason.  So the terminations of retirees, students returning to school, etc. absolutely need to be accounted for.

Again, the key here is identifying the purpose of the numbers – why are you tracking them in the first place?  If the aim is to assign accountability, you may calculate your metrics one way.  On the other hand, if you’re trying to understand the bigger picture for your organization, particularly if you want to  accurately benchmark yourself against other organizations, you might choose another calculation.  It’s all a matter of the broader context.

What’s the right answer?  “It depends”, of course.

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.

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).

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.

SuccessConnect 2010 kicked off today in the beautiful city of Frankfurt, our final SuccessConnect destination for 2010.

The event started with a bang with the ever energetic, Lars Dalgaard taking the stage.  Announcing the acquisition of YouCalc, a Danish company, to a jam packed house, Lars explained how SuccessFactors latest purchase will let business create and share custom reports and analytics from the cloud.

Jay Larson, SuccessFactors Head of Sales, was next up to the podium. Jay discussed HR’s new economic reality – do more with less: more ROI; greater business impact; connect HR with the business; and close the gap between strategy and execution.  He then went on to share success stories from those who have implemented more for less and have “BizX’ed” their organizations.  

Dmitri Krakovsky drilled further into SuccessFactors recent YouCalc acquisition explaining the new Calculator in the Cloud feature that will allow users to perform analytic mash-ups and what-if scenarios from any cloud based application. Dmitri also expressed his excitement over SuccessFactors new partnership with Jobvite, pointing out that the time to hire is not as important as hiring the best.

The final SuccessConnect of the year showcased the best of the best with Norbert Kleinjohann, CIO Siemens AG and Marion Horstmann, Corporate Vice President of HR, Siemens AG sharing their secrets for success.  

Marion Horstmann shared Siemens transformation of the HR function using a global people strategy of which transparency was a key element. Marion expressed her delight that her three requirements for a strong HR strategy were inherently delivered via SuccessFactors solutions: integrated applications for all people processes; a uniform product completely that speaks in a single global language; and recurring efficiency and higher quality.

Norbert Kleinjohann then went on to discuss how Siemens positioned their standard HR system, labeled 4Success, for success. “During the evaluation process, Siemens IT team worked with their HR colleagues to assess 50 possible suppliers, both on premise and in the Cloud. We awarded the contract to SuccessFactors in March 2009, based on functionality and usability and the provisioning of an integrated solution with consistent data models,” says Kleinjohann.  (See article SuccessConnect: The Biggest Cloud in the World) Kleinjohann cites: “We have seven modules in place – target setting, performance management, compensation management, roundtables, career development planning, recruitment management, and employee profiles. We went live within 6 months with the target setting module which we rolled out to 170,000 employees. We now have 400,000 employees information loaded into 4Success and have 40,000 log ins per day.” SuccessFactors had the fastest implementation, best functionality, usability, and integrated capabilities.  Kleinjohann says: “I believe that Cloud Computing will be adopted by IT sooner than we expect.”

The audience enthused over the Siemens presentation stating that it was a pretty impressive story for an impressive first day in Frankfurt!

When you look at the fact that mobility and turnover have decreased at the macro level and retirements have reduced due to the economic climate and the decimation of retirement funds, you can begin to understand why some organisations have not made significant investments in their human capital processes.

BUT… organisations are going to be strong-armed into examining their human capital operating models with recovering market conditions set to double current retirement trends and mobility and turnover significantly increasing. 

The million dollar question at this juncture is: “How can business leaders ensure that their current workforce issues don’t blow up into critical business issues?”

The answer (and I will pocket that million thanks!): workforce planning.  Workforce planning enables business leaders to unpack the anatomy of their workforce, understand key business drivers, implement necessary change to business operating models, and most importantly, align human capital strategies with business strategies.

What are the critical elements for a successful workforce planning process I hear you ask? The workforce planning process must be aligned and integrated with all organisational planning and budgeting processes.

Is everyone committed? Stakeholder engagement is an absolute must to ensure that the process is allocated adequate priority and resources.

Workforce Planning… Is it just a Human Resources initiative? Definitely not! The business needs to adopt workforce planning and have a sense of urgency committing to planning into future years, well beyond this budget cycle. 

Lastly, do we have the skills, capability and experience required to establish and execute on the Workforce Planning process? Resources that are able to initiate and implement all pieces of the Workforce Plan are unique and extremely sought after.  Generally, this is where we see organisations engage expert assistance and seek partners across the business to assist and execute on the planning process.

As talent pools are continually placed under stress, workforce planning at a strategic level will become an essential component of human capital operating models.  Understanding how to position your workforce to obtain the best return on investment will sustain and grow the success of your organisation into the future.

Don’t rest on your laurels, business leaders – it is time to take the bull by the horns and show those environmental factors (such as the economy, labour shortages etc.) who’s boss.

The economy goes in cycles. I know it feels like a long time ago, but do you remember that we had a pretty quick and tough downswing that started in March 2000? 2001 and 2002 felt like a nuclear winter to a lot of people and businesses. I’m not saying that the current situation has the same underlying factors and patterns as the last time that we had this tough economic climate, but businesses and people are to a large extent equally as affected by it as before. Smart companies learned from the mistakes we made the last time the economic cycle entered a downswing and avoid repeating them.

So what did we learn from the last downswing? Some companies really lost and others came out of the economic turmoil even stronger, making real gains relative to the competition. Business, like sports, is very competitive and relative. Making a relative gain is easier when everybody is hurt rather than when all are performing well and happily taking orders serving demand. Furthermore, it was clear that those companies that avoided facing the new situation lost. Inaction is never the solution for advancing down the field. So companies that tried to take advantage of the economic downswing with clear actions won.

Here are some mistakes that losers make to learn from:

• Losing companies that get caught up in internal reconfiguring and take on an inward focus also tend to forget about their customers need and the value provided to them
• Losing companies fall for the pressure to cut people across the board when called on to downsize and reduce costs
• Losing companies alienate talent with poor decisions made through an extreme focus on short-term results; alienation which can last years thereafter.

SuccessFactors Research has recently written the paper Winning Through Talent in Uncertain Times, addressing how companies can get ahead when times are tough. Learn from your competitors’ mistakes, smartly align your resources, and turn an economic downswing into an economic opportunity for your company.