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.
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Jason Corsello picks up on our recent research announcement – calling the approach “groundbreaking.”

You can see some early thoughts from SuccessFactors Research as previously posted here. Keep checking back for more of the “From our research” series.

(Note: click on the graph to see a larger version)
I’m closing the vizu.com powered poll that’s been running on the blog for the past few weeks and the results are pretty interesting.

The question asked was “What are the most important factors in employee engagement?” and I based the answers on a Towers Perrin Survey report from 2003 on the topic.

The poll attracted 47 responses, 59% of which indicated that “challenging work” was the most important factor in employee engagement. Close behind were “Senior manager’s interest in employees well being” with 55%, “clear vision from senior management about future success” with 53% and “Input on decision making” and “A collaborative work environment where people work well in teams” with 51% each.

The least important were “evidence the company is focused on customers” with only 25% and “company’s reputation as a good employer” with 36%.

Certainly there’s nothing scientific about this poll, but the split between issues that center around “me” and those that are about “the company” seems clear from these results. The answers that specifically related to my job, the level of attention paid to me, my likelihood of future success, and my input topped the heap.

From these results, it seems fair to conclude that engagement is largely defined by the extent to which people like their work and feel taken care of by those for whom they are working. Or, to put it another way, “What have you done for me lately”

Anybody get something different?

New poll coming soon.

Not the dishwasher detergent. Actually I’m talking about the concept of the goal cascade. In most cases, this means a manager pushing her goals down to her employees. For many, that’s all it is. Honestly, that’s all I thought it was, too.

But earlier this week, I sat in on one of the all-hands training sessions we had and I realized there’s actually more to it. Technology enabled Goal Alignment doesn’t only have to be a mechanism for a manager that enables her to say “hey employee, this is what I’m working on – you work on it too.” It can actually be a far richer and more dynamic process.

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Gautam has a list of the top 10 reasons why people leave organizations. Remarkable how many would fall under the banner of performance and talent management.

I was directed to this very good article from WPS magazine called Succession Planning: The Nuts and Bolts of the Process which is sort of a primer on succession planning. A couple of its most enlightening observations are that 1. people often make the mistake of biting off more than they can chew with Succession – meaning that they try to collect too much data on too many people and 2. the best place to start a succession planning process is during the performance management process.

The author also points out an important decision: the one on which group will own the succession process. To me, the obvious place is HR, because succession fits so snugly with other responsibilities, but alternatives are a corporate strategy group or even a wholly separate succession group. A quote:

Once an organization has established all of the skills and competencies for every key leadership role and formulated a plan that works to take them from the current state of succession planning to the desired future state, the company must decide which department should own the process. “There’s not one cookie cutter answer in the sense that some organizations may have a corporate strategy group,” Kondo explained.

The 2006 talent management survey, conducted by IHRIM and Knowledge Infusion, found that 77% of the HR professionals think that talent management will only increase in importance over the next three years.

Some of the factors, according to Jason Averbrook of Knowledge Infusion, are “the looming talent shortage, the increased focus on redeploying internal employees rather than recruiting and the realization that organizations must link training, knowledge and performance.”

The most interesting piece, I thought, was this quote from Averbrook: “Many organizations roll out a performance management system or workforce analytics system and simply just put it out there. They don’t do a good job of making sure that people know why these systems are implemented, show people the value of the systems, etc. So if organizations don’t market these systems to their employees, the employees will just think of them as another online tool and won’t actually use them to their full advantage.”

Employees can themselves get real benefits from performance management initiatives. And there’s far more to it than just making reviews easier. ( I refer you to a previous post on the topic.) But making those benefits clear to employees and explaining why usage of the system will help THEM is an important part of a successful deployment and not to be overlooked.

Over the weekend, the NYT (again) tackled the subject of top executive compensation. But this time, they added some cool charts and graphs to illustrate how utterly out of synch pay has become with corporate results.

My favorite is this one which contrasts some of the worst offending companies (where pay went up when a company’s performance went down) with some of the best values in CEOs (where performance went up but pay didn’t keep pace).

As more and more companies move to a system where performance is correlated directly to pay for their employees (as well it should be) it seems only logical that the same would be true for top executives. One would think that a scenario in which employees are denied raises of a few percentage points because the company didn’t have a good year, while the CEO walks off with bundles of cash would make “employee engagement” somewhat of a difficult job.

The Times also questioned the impartiality of compensation consultants in a separate piece, from which I truly enjoyed this particular quote from Warren Buffett:

Too often, executive compensation in the U.S. is ridiculously out of line with performance,” he wrote in his most recent annual report. “The upshot is that a mediocre-or-worse C.E.O. — aided by his handpicked V.P. of human relations and a consultant from the ever-accommodating firm of Ratchet, Ratchet & Bingo — all too often receives gobs of money from an ill-designed compensation arrangement.

Here’s an article at Baseline that talks about some of the ins and outs of talent management applications by showcasing some of the companies that have chosen to implement them. We’re mentioned in there, as are competitors Authoria and Vurv.

My most favorite bit includes a quote from (our customer) Gary Short of Kimberly-Clark:

Human-resources professionals caution, though, that it’s important not to use such systems to replace face-to-face meetings, which are vital for evaluating candidates or reviewing employees. “You want an efficient process,” says Gary Short, senior consultant for talent management at paper-goods maker Kimberly-Clark, “but you want an effective process.”

This hits on something I’ve been thinking about lately – the idea of “conversations.” Technology is an excellent enabler, but I’m moving towards the belief that the real point of any of these HR related applications is to support more and better conversations between people. Results come from conversations.

The technology serves, among other things, to provide the supporting data to enforce a process. But the value will remain in the conversations that take place as a RESULT of the technology. The better, more sophisticated and more usable the technology, the better and more sophisticated the conversations.

Jason Corsello of The Yankee Group (who writes a blog in his spare time and has a nice looking dog called Larry) in his growth forecast for the talent management market says: “”As the workforce becomes increasingly mobile and global, companies that invest in talent management solutions and examine it from a worldwide perspective will reap tremendous benefits for their business organization and operations.”

As such, Jason’s firm is forecasting that the market for talent management applications will be growing by 25% year over year (from $2.3 Billion in 2006)for the next 4 years, reaching $4 Billion by 2009.

That’s some wave.

Interestingly, the release also mentions that while Yankee’s definition of of talent management includes “Recruitment management, performance management, compensation management, succession management, learning management and other (knowledge management, self-service, analytics and reporting),” the market is largely being driven by the “the performance and succession management segments.”