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.

DDI and Badbossology.com (that’s actually a real site) did a survey of 900+ employees to determine the worst (and best) qualities of a manager. And, the survey says:

A bad manager:

• Tries too hard to be everyone’s friend
• Micromanages
• Ignores conflict
• Arrogant
• Wishy-washy
• Impulsive
• Unable to delegate
• Impatient
• Stubborn
• Unprofessional

You’ll have to read the article as written up on CNN.com to find out the best qualities and to take the quick “how good a boss are you?” survey.

It’s easy to dismiss this stuff as just for fun – but when you consider that employees often leave jobs due in whole or in part to their relationship with their managers, this kind of thing takes on real meaning. And it’s also fun.

The article tells the story of a nurse who applied for a position for which she was ultimately not selected. What left the bad taste was not that she didn’t get the job, but rather that she found out that she wasn’t selected when the new hire was announced and it wasn’t her.  That’s an understandably difficult blow. If your organization doesn’t have enough respect for you to talk to you personally in such a case, why would it be reasonable to invest your loyalty in it?

Now, such an occurrence doesn’t mean the nurse is headed out tomorrow – but “will she return calls from another organization if called? Yes. Will she look online for openings at other organizations? Most likely. Will she leave? Yes, if something doesn’t happen to retighten her loyalty.”

The negative experience plants a seed of discontent that may one day grow into full blown rejection. So how do you avoid alienating your employees like this? The article first suggests a specific communications program for employees who aren’t selected for promotions -but that seems to me to be a point solution. The second suggestion is more appropriate: talk to your employees.

The truth is that he’s a very insightful guy with real heart (somehow in my mind, I always envision him crying after winning something), and in the article he shares some of his thoughts on managing talent. In part, he talks about how he uses one of the team’s worst moments (letting the Red Sox take the momentum, and the world series, away in 2004) to motivate his people to always be ready. But he contrasts that motivational technique with a keen understanding of the fine balance between emotionality and competitiveness. A quote:

These days it is so important for a CEO, or any manager, whoever it is, to be aware of his or her personnel. We are in an age of computers, and everything is so damn impersonal. But in the end, it still comes down to people. You have to make people feel necessary. Even if their contributions are minor, it adds to everything else. That’s what makes the machine work. I love players with heart, not necessarily emotion, but those who deep down are driven by something more than mind and body. I don’t play favorites. The 25th member of the squad is just as important as the first guy. And I can’t let my own emotions get in the way of competing. I have had to release guys I loved, and keep players I didn’t necessarily care for.