A key theme of the morning’s sessions was building a commitment to learning—personally and professionally. Steve Miranda, CHRO for SHRM, spoke of the importance his family placed on education and being a “learner” (someone who can track quickly with new ideas) rather than the “learned” (who relies on past knowledge).

Ironically, Steve’s experience contrasted significantly with an example I used to kick off my afternoon session—the subjectivity of U.S. Presidential performance rankings. One of the presidents typically ranked near the bottom is James Buchanan, who, during his presidential tenure (1857-1861) vetoed a bill to expand the number of universities, stating “there were already too many educated people”!

Steve shared his belief that today’s HR leaders must have math skills and be comfortable using data—“numbers are the language of the business”. In many cases, HR has the data but is not sure what to do with it. Functional heads should be coming to the table armed with talent management knowledge that is backed up by quantified conclusions.

The last 5 years have seen a dramatic uptick in the number of HR leaders being cited for analytics excellence in a variety of business publications, but we still have quite a ways to go toward establishing workforce analytics as a core competency in how HR delivers business impact.

The demand for workforce analytics will only increase, a fact which heightens the pressure on HR to identify new ways of infusing data throughout the process of talent management. Leaders getting in front of this challenge have been successful in aligning business priorities with workforce decisions and data, and are teaching others with similar functions about the application of analytics to day-to-day activities.

At SuccessFactors, we place great emphasis on learning and will be sharing examples of how industry leaders are changing the way their organizations are harnessing the power of workforce analytics.  We hope you will join us at one of our upcoming events to continue your own learning journey.

In my next post, I’ll share some more thoughts on the workforce analytics presentation I co-facilitated at HR Tomorrow.

Finally, on a side note, I am currently writing an article on “HR Data in the Boardroom” and would love to hear your ideas—feel free to send me an email with suggestions.

One particular question asked “What do you consider to be the three biggest HR challenges being faced by your organization today?”  At the top of that list was ensuring that employees remain engaged and productive, followed by retaining key talent, and developing leaders.

In my mind, the first “business of HR” response came in fourth: aligning people strategies to business objectives.

It reminded me of a conversation I had when running a marketing function. My manager would (rhetorically) ask me, “What should be marketing’s #1 metric?” The answer: revenue. Every other marketing metric and activity, from building brand awareness to identifying leads, is a contributor to the function’s overall goal: to generate revenue for the business.

In much the same way, HR’s biggest challenge should be helping the business design, deliver, and execute on its strategy, in order to achieve its goals. Every other challenge (hiring, retaining, engaging employees, etc) should flow from that.

We operate in difficult times. Resources are scarce, but the workload hasn’t diminished. However, as an HR leader, take a moment to step back from the fray to evaluate whether your talent management strategies are truly aligned with what the business needs…today, tomorrow, and next year.

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.

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.

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.

Sense of urgency, attention, and understanding the reason for change are of course the ingredients required to help change something. It doesn’t hurt if you know where you’re going either to funnel the change in the wanted direction. I think Sam nailed it. Win or lose – that’s the game.

In his upcoming book, Talent on Demand, our research partner Peter Cappelli discusses the need for looking at talent as an input parameter for production, and uniquely applies the same model that is used for the supply chain. You don’t want to build costly excess inventory anywhere in the physical supply chain but, is it acceptable on the most costly asset – people?

Peter will join us at our upcoming customer conference in June to discuss this approach of managing talent along with other SF Research thought leader partners as well as our customers.

After reading this and engaging in discussions with Charlie, it became apparent that we actually help our customers execute on several of these strategies. We do this in a unique way, enabled by our delivery model and the focus of the product suite in terms of what it actually does for people.

For example, many people think of investing in on-demand solutions as an outsourcing strategy – moving administration away from the core business. But a better way to look at our model is to think of it as an INSOURCING strategy, the customer is INSOURCING a best-in-class and ever improving process. Of course, it is very powerful to let someone else do non-strategic activities faster and cheaper for you. But when you truly INSOURCE, you get the best of two worlds: it is someone else’s core business to figure out the best way to do things, and constantly improve it for you, while also being very cost efficient. That cost efficiency is of course a mutual win for INSOURCE providers and customers.

Effective human capital management processes are critical to INSOURCE. Why? Facilitating teamwork and collaboration is critical for innovation. Finding high potentials, developing their skills, and adapting to the new workplace is critical to closing the talent gap. People are the largest variable cost for most businesses (70%), optimizing their performance is critical to reducing costs. The revolution of on-demand software delivery with the SaaS model enables this phenomenon of being able to INSOURCE strategic processes that support your business’s strategy execution.

Max’s Note: We’ve been following an interesting discussion over at Vendorprisey (and Jim Holincheck’s response) on the delta between survey data that shows CEOs consider people issues strategic and the lack of any substantive action in involving HR in strategic matters. Our own Erik Berggren responds below:

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If HR is supposed to help executives make better informed decisions, HR needs to start with relevant data to support them. What is relevant? Well, anything that affects the company’s ability to execute its strategy.

At the most basic, we need to know how many people we have with the requisite skills today. What about retirement? If we do nothing, how many of these people with what skills will we be short? Are we playing scenarios of various turnover rates in various roles? How will those affect our need and our ability to attract the relevant talent to fill this need? Do we look at our talent base both in terms of size and composition today and a few years out?

The idea of “a few years out” – how we will compete in the future –  that is the where strategic decisions are born. It’s why HR needs to be strategic in two ways – defining the strategy AND supporting its execution.

Here is a practical example of how fast this becomes the most strategic issue at hand. A few years ago I was working as a consultant helping a CEO and his COB with a complete turnaround of the business. A new, sustained top line and an above industry standard bottom line margin was the goal. The company was loosing bids and business looked rather bad. But the turnaround took hold, and the company, an engineering firm, started to do better and begun to win significant contracts.

But the lack of integration with strategic HR planning might have cost us dearly. Delivering on these new contracts completely drained critical skills in various engineering areas. Further, a shortsighted reduction in force nearly put the company in a situation where the same people let go would return as more expensive contractors. We became aware of this just in time to correct course and successfully averted the distaster.

Nevertheless, looking at this scenario early on and integrating more tightly with the internal talent pool as well as the external talent market could have led to a more optimistic approach with pricing and left the company with a better margin. And you can be sure that a strategic, HR-driven approach to planning that looks both internally and externally is now the standard way of doing business.

We (SF Research) are currently working on this need for HR to be more forward looking, strategic and predictable. We’re looking at what HCM metrics are predictors of future success. On this topic, we’re currently working with Dr. Jac Fitz-enz on a white paper and are preparing to discuss this topic and early findings in a webinar on July 24.

I invite you to join us to hear our conclusions and our take on how HR can get strategic by thinking forward.

Max’s Note: As part of our quest to post more and more often, I’m proud to present this guest post by Sammi Nuttall.

According to a new survey completed by Korn/Ferry International, nearly 73% of executive level employees believed that they could outperform their manager. Surprisingly, 42% of those surveyed also believed that their boss was doing an “excellent” or “above average” job.

That’s an interesting contradiction.

One interpretation is that employees, even at the top levels, are not leveraging all they have to offer their employers – and as a result are feeling somewhat less than challenged. This puts the onus on managers and strategic HR groups to understand who their high potentials are and to discover and cultivate their strengths. It’s only by developing employees that their full potential can be released, and if you can do that – the sky’s the limit.