Josh Bersin - Techniques for Using Technology

Jim

Welcome back to People Performance Radio, you are here with Jim Matheson …

Steve

… and Steve Hunt.

Jim

Steve, it looks like you did a pretty long interview this week.

Steve

I did, with Josh Bersin of Bersin & Associates which, anyone who spends any time in talent management knows about Josh Bersin, because he does these great reports, looking at the state of the talent management industries as it pertains to technology, but also really looking at the impact of technology on business performance, and he just had some tremendous insights on talent management technology, the things that companies should be doing, the way they should be thinking about technology, some of the things that are surfacing as we are using this technology in terms of how it works, and what needs to happen to make it work. He had some really interesting things in terms of how talent management works and what needs to take place to optimize its effectiveness in different companies and, it is a bit longer interview, but Josh just kept coming up with other things that, if you at all work in the talent management space and use talent management technology, this is really worth listening to all the way, because Josh probably knows as much about this field, as I dare say, almost anyone on the planet, so let's give it a listen.

Hi, you are here with People Performance Radio, and today we are very excited to have Josh Bersin from Bersin & Associates and Josh, it's nice to finally have a chance to chat with you. I have read a lot of the stuff that you have written, and I have heard you on several webcasts, but this is the first actual live contact so, thank you for appearing on the show and tell us a little bit about what Bersin & Associates does.

Josh

Thank you Steve, you know it's my pleasure to have a chance to talk to you about this important topic. We are a research and advisory services company, we have been studying the markets and the implementation and best practices, trends and benchmarks, employee performance management and talent management and software systems for a number of years and we have the opportunity to talk to literally hundreds of companies about what they're doing and try to sort out what works and that's really our philosophy is, rather than just try to look at commonly agreed upon best practices which have been written in books, which are often times great, we try to also get under the covers and see what really does drive business impact in different situations so, hopefully I will get a chance to share some of that.

Steve

Yes, why don't we just start? What does work? If you looked at talent management practices, and you were running your own, you are running your own company, and so these are the things that are really going to provide the greatest value for a company—what are they?

Josh

Well I think the biggest thing that I would tell people beginning about all this, is that there is two ways you can look at talent management. One is, you can look at it as a bunch of HR activity to connect the dots and squash together training, recruiting, performance management, compensation, succession, leadership development into a big team, and try to get all the groups to work together and implement software and, collect more data and that is essentially the HR view of what talent management is, and it's a major shift from where HR has been in the past and we can talk about that, but I think what I like to talk about companies first, is that it really isn't about HR, it's really about the company and the business, and in every company we talk to, there are either industry-specific or company-specific problems to be solved, products to launch, new geographies to go into, restructuring, shrinking, maybe to shut down certain parts of the organization, and every time you make a business decision of any kind, there is a related talent decision that has to be made. There are no business solutions that don't have talent related to them and so, what I think the bigger issue with talent management is, can you design processes and strategies that directly support those business problems and those business plans, and that's a little bit different way of looking at it, but I think that's where we're going and that's where I try to push companies early on in the decisions of what to do.

Steve

Yes, I think that makes a lot of sense, I mean when I'm asked about talent management and I talk to non-talent management people, I say it's basically about doing two things: you're either trying to change employee's behavior, that is to act differently than they have in the past to support business goals, or predict their behavior which is, "If we put them in this role, what are they going to do?"—so a number of people say, "What talent management system do we need?" To me, the next question is, well what do you actually need people to do in your company?

Josh

Right, and exactly. What we try to, I will give you an example, we try to basically stop people early and say, "Well, what problem are you trying to solve?", so I will give you an example. We're working with a big oil company right now, and they have a very traditional, old-fashioned, very long-established approach to managing people in the company and rotating people through different job assignments within functional businesses. So, in refining, you go up the chain, you become refinery manager. In exploration production, you go up the chain, you become an exploration production manager and in distribution in marketing. Well, it turns out that in this particular company, and in a lot of oil companies, almost 30% of their employees are going to retire within 10 years so, and it takes five to seven years to develop functional expertise in any role, so they're about to go through a massive change in the skill sets in their company, so, one of the solutions to that is eliminating the vertical career paths within the functional groups, plus they have acquired five other oil companies, so they have refining basically in five different companies, so they have to have a different way of managing people to deal with that, so it's a lot of differences in the way they actually manage people, driven by the fact that they actually have a sort of a risk about to hit them in the way the employee population is changing, and that makes the whole decision of what to do much much easier.

Steve

So it sounds like with this company, for example, that you say, there are challenges, they really need to change their mindset, that historically when they look for people to fill positions technically, they look downward within their function. It's like, they need to look across, similarly when employees are looking at a career, they look across. Now, what processes, for instance we are SuccessFactors, a technology company, so I'm going to ask this straight out—what type of technology would help a company do that? Is there a technology, are there processes that help people do this mind shift?

Josh

Yes, I mean the technology plays a major role. I think if you look at the reason people are buying the technology so quickly, right now it's sort of amazing, even in the beginning of a recession people are still rushing around buying HR software. It's because the decisions of what to do, it's easy to say, "Oh, well we're going to have a horizontal career paths", or, "We're going to take 10% of our employees and select them and put them into leadership development programs." It's easy to say that, but the actual doing of it requires, and maybe you even have a process for it, maybe HR has a process for it, but it doesn't really happen until the line managers execute on it, and line managers for the most part don't think about HR stuff every day, they think about their jobs, so what you're really trying to do in talent management is, you're trying to craft a series of processes, design them in a way that they're really going to solve the business problems, and then the hard part is getting the managers to use them and actually implement them.

In the past the way that was done was, you'd send them a form or you would take them to a class and say, "OK, well once a month I want you to do this, or once a week or once a year I want you to do this", and they kind of get it and then they go back to their jobs, but what the software does is it hopefully, if it's well designed software, like I know SuccessFactors is, it makes it easy for the managers to understand what to do, it makes it quicker and easier for them to actually do what they are supposed to do, and it facilitates the process by giving them all sorts of tools.

So, in the case of a simple process like an annual performance appraisal or an employee performance discussion, the system gives the managers access to information very quickly and easily for many people that, in the past, I remember when I was a young engineer at IBM, in order to do a performance appraisal, my boss had to spend almost a month collecting information from everybody that had worked for me, talking to them on the phone, calling them, meeting with them, taking them for lunch, whatever, and he didn't do it. Well, if that was all available online, he could do that much more quickly and he is more likely to do a good job of it so, I think the software, in fact we have research, you are going to love this, we have research that we just published this last week or two that shows that the companies who are implementing performance management software are actually getting 30, 40, 50% higher returns on their talent management strategies or their talent management investments than those that aren't so the software is really contributing very heavily to this.

Steve

Well, I think basically you're saying what this software does is, it gives information to managers, it allows them to make more effective decisions more easily about people, but it also can, by shaping what information you put in front of them, it can direct their attention to certain things. So, in your earlier example, when they're looking to fill a position, if you allow them to see people in other parts of the organization other than their function, suddenly it captures their attention and they will think differently about who might these candidates be for these positions.

Josh

Right, I mean in fact one of the biggest, one of the threats that's really big right now in corporate America is career development, and the reason for that is that many of the transformational problems that companies are going through are either caused by the changing demographics of the workforce or they are caused by a restructuring of their own company. So, Bank of America buys Merrill Lynch, we have two trading departments, two bond departments, two private asset departments etc. That's being repeated all over the place right now, and who's the right person to move into these jobs, who should be moving into what level, who should be promoted? Those are careers decisions, not just skills and capability decisions, and that is a very difficult thing for an individual manager to do. With the software tools, like SuccessFactors, you have access to basically just more information about people in one place, so when the decisions are made, as to who's to be promoted and who's to be moved into a new job in a restructuring or a growing company, the decision can be made in a much much faster, smarter way and those are big returns on investment for companies.

Steve

Yes, it sort of makes the people, it sounds like the advantage to the manager now is not just focusing on people that they see every day, they are actually able to look across the organization at people and employees conversely. Are there any, in the field of talent management technology which has grown so much over the last 10 or 15 years, are there any technological innovations that you see, are just at this point a no-brainer, to say, "Look, if you're a company that employs people you should have technology that does this."

Josh

Yes, I mean I'll tell you, you know what's a really simple thing that most companies don't benefit from enough, is what I would call an expert directory. Do you know in your company how to reach somebody who can solve problem X, and where is that person? That is a simple application that many companies don't have that can be solved by a talent management system, so that's a very very easy high return on investment applications.

Steve

Basically, a lot of companies don't actually even know who works for them.

Josh

Yes, to say nothing of the fact of where, who's the org chart! Frankly an online org chart would actually go a long way in a lot of companies, so to me those are real no brainers. When you get into employee performance management, like what you guys do, only about 30 to 40% of the companies frankly have an established process that they could automate, so yes, they should have that online, but first they have to actually have a process to put online, so that's another one that's coming along. I don't think it'll be more than within the next three to five years it will be a mandatory, almost assumed part of HR that there's an online system for goals, performance appraisals, annual reviews and things like that. I think it'll just be a standard thing that companies have online.

Steve

Yes, I was talking to a colleague of mine that we'd both actually been working in this field for a long time, actually helped work together on one of the very first internet staffing systems back in 1997, and we were saying that performance management seems to be like where applicant tracking systems were about the year 2000, but now, especially with younger employees, if they apply for a job they expect to do it online, a paper resume would be like, "What sort of troglodyte company is this?", and it seems like we're going through the same thing now with internal processes, that employees will come in and they will just expect all this stuff to be electronic, if it's not electronic they will sort of wonder about, it will be like showing up and being given a typewriter instead of a computer, it would be like, "What is this?" Do you think we're going through a shift like that?

Josh

Absolutely, I think one of the things that's fuelling, like most of the people in HR that are buying the software are in their thirties, forties and fifties. Most of the people entering their companies are in their twenties, and they just got out of school, out of college, where they had access to Google, their university or college portal, Blackboard and who knows what else, to say nothing of g-mail and all that stuff, so they are going to come into the company expecting resources, access to people and planning tools online, not in Microsoft Excel, so they are going to expect that, and I think more and more what today we might consider a sort of performance management software system or talent management software system is really going to be an employee management software system that an employee uses, not just a manager, to manage their career and their job and that is the direction. That's why I think you guys, as a company, and many of the talent management software companies, have such an enormous opportunity, is that you can in a sense bring a lot of tools to the employee's desktop, not just the manager's and to the manager's desktop, that basically either don't exist, or are currently being done in a very fragmented way and the expectations are really high amongst young people. They will use it, if it's there they'll use it.

Unfortunately, I think what is happening is the people that are buying the software are a little older, and the implementation of all this is new, so there's still a lot of work to do in designing the process and implementing the software, but it is going to be a core piece of infrastructure on the way companies are managed.

Steve

As you are looking at this shifting market, what have been some of the more interesting, maybe unexpected results that you have seen as you have studied this?—some of the things that have come out, that you've said, "wow".

Josh

Well, here's one that maybe a little controversial. We just finished a big piece of research on performance management practices, and one of the things that I like to tell people is, performance management is management, take the word "performance" out of it, and think about it as the general process under which managers manage people and what you're really trying to do is aid and assist and improve that process.

We just did a big piece of research that looked at about 18 or 19 parts of that process, and we looked at two models, and what we said to companies was, characterize yourselves in one of two models—are you a company that does competitive assessment, where you try to rate and rank people against each other?—or are you a company that looks at this as a coaching and development process, where you try to develop people into the right jobs? Now, there's no company that does 100% one or the other, but they tend to fall a little bit more on one, and what we found is, that the companies that look at their employee management process as a highly rating and ranking-centric process are actually getting a lot of negative returns on that right now, compared to the companies they are focused much more heavily on capabilities, coaching, alignment, moving people into the right jobs.

So, I think that the old school view of how to manage people is changing, and that today we have to rethink the processes of management, rethink the processes of performance management more towards the coaching and development model. You still have to hold people accountable, you still have to fire people when they don't work out, you still have to very carefully select people, but we have a lot of data that shows that more energy towards coaching and development pays off than simply appraising people and getting rid of the bottom 10%.

Steve

That totally aligns with the research that I have read in this area too, because I get asked that question a lot and, this racking and stacking, ranking, top grading, whatever you want to call it approach, one research has shown that just mathematically it'll only work as long as you have deadwood in the organization but, psychologically, what you do is you create this very "me versus them" attitude, and certain people are attracted to organizations like that who are extremely competitive, but it doesn't lead to collaboration because people start to think of it as a zero sum game —"If you do better, I do inherently worse", and I believe, and I am not certain, but I don't think GE does it anymore.

Josh

They still do it to some degree, I mean there's a lot of companies that still do it. We get a lot of companies that call us up and ask us how to do rating and ranking better, but I agree with you Steven, and the other thing that's interesting about it we found, was that actually if it's somewhat business-cycle dependent, when you're a small fast-growing company with limitless opportunities, then competitive assessment works, but as soon as you reach a stage of maturity where maybe you're in five different businesses, and some of them are mature and maybe some of them were dying, then the way you manage people is different and so companies go through four cycles. I won't go through the whole thing on the phone, but they actually have four different cycles they go through, and the way they manage people, really it seems that the right way to do it changes depending on where they are in their business cycle. It's a tricky area, but anyway that's a big trend.

Another big trend I'll just throw this out there, we found in this research, is that cascading goals are not nearly as effective as people may think they are, they are to some degree, but highly granular cascading goals are very hard to do, and they don't seem to be giving the return that we thought they would in companies, so I think there's ways of doing goals setting that are better than sort of this theoretical top to bottom, everybody is going to line up with the CEO, kind of goals. There is I think some more work to do there.

Steve

I think that's, as you're talking, I am thinking about the research and I have read a lot, there is tons of research on goal setting, and that does align with that. I think what a lot of it comes down to, it's like you talked about earlier the processes is, these things are valuable, goals absolutely drive performance. I think that observation about goals is interesting, because as I'm hearing you talk, I am tying it to my background as a psychologist, and I've read a lot of the research on goal setting, and there is a ton of research on how to set goals effectively. In your comment earlier about processes, I think one of the things that comes out of this is there are certain things that are going to increase performance like goals, absolutely are better than no goals as far as maximizing performance. It's like we are giving feedback, but there's a right way to set goals, there's a right way to give feedback, and to really maximize the value of these technologies, you have to spend some time investing to figure out what's the right way to use them. Just because you have the internet, doesn't mean your productivity is going to go up.

Josh

Yes, and here's what we found, because we don't study at a one-on-one level, we study at organizational level, where one of the really interesting things about performance management that I think is somewhat of a new way of thinking about this, is the concept of having an enterprise-wide standard process actually doesn't work in big companies. You have to have, what a lot of the best practices we have found are that, you have to have a core set of processes that are standard, but then you have to let business units and geographies configure them and customize them differently, and goal setting is a perfect example.

I talked to a bank a year or so ago that had 87,000 goals in their system, and they were really proud of the fact that they all lined up the CEO's goals, and this was somebody from HR who was clearly very proud of the fact that there are a lot of goals in the system, but I don't know that that really is helping that bank, it maybe or it may not, I mean it's a matter of whether the goals are aligned towards what each of the individual business functions need to do, and whether they are being managed locally right by their managers, so there has to be a degree of flexibility in these things, so that the individual business area managers, geographies, functions, can align people in the way that is appropriate to them, because the corporate HR people really don't know precisely what's going on in every business area. That is one of the things we found in the goal alignment research.

Steve

You've hit on a couple, one of the themes I am hearing there is you're saying, look the situation matters, so whether or not you do forced ranking in your performance management depends on the growth area, given the kind of company you are, what sort of goals you have, and again the kind of company, the kind of employees, so I like to say, goals that work for salespeople who are kind of wired a certain way psychologically in general don't necessarily work for engineers who tend to be wired a different way psychologically, they look for different kinds of goals, and you need to think about the situation. The challenge for an organization is, that can get pretty overwhelming pretty quickly though.

Josh

Yeah, well here's another example that I think might help with that. I met with a VP of HR of a very successful, another oil company, a different one to the one I was just talking about, and he said to me, "Look, I really have two groups of employees in the company, I have refining marketing distribution operations, and those people are very important to me, they make our company work. Then I have exploration, and it turns out that the value of our company as an oil company, is dependent on how much oil we have in the ground. It isn't dependant on how much we shift", and it turns out that if you look at the market cap of oil companies, it is very much dependent on their reserves, and he said, "So our most critical, whatever you want to call it, pivotal or critical talent, is these exploration production people", so what I do is I let them really change the way they manage and pay and incent people in a very significant way, and so when we designed our performance management process, we carved them out and we talked to them very specifically about what they needed, because we knew that we needed the absolute top best exploration production engineers and operations people.

So that model really applies to almost every company, there are certain, these groups or these pools that have different strategic roles and value, and they have to be managed differently. You don't have to have 100 of these groups, but there is definitely more than one, and I think that's the model that most successful companies are doing, is they're are finding that they can have five, three, 10 different approaches, but not 100, to these different types of roles in their company.

Steve

You know, your example, also I think almost all companies would be doing this to some degree with their sales organizations. Most companies have a different comp structure, maybe even a different management process for sales, because it's viewed as such a critical role, where they really tailor it and try to spend a lot of time figuring out what will work with our salespeople, but then everyone else gets the exact same approach, whereas they don't go in and say, "Gee, maybe in addition to sales which is critical, another role, that so goes this function, so goes our whole company might be engineering, and we really need to think about a tailor management approach for engineering", but I think historically companies haven't done that, it's sort of like sales has gotten that special treatment and in lot of companies they're the only group that does than everyone else.

Josh

And it's a good exercise, I'll tell you, it's a very good exercise for an HR executive or an HR manager to try to figure out what other roles are really strategically important in the company's current business environment, like in insurance, it's actuarial roles, because in the insurance industry, yes you have to do customer service, yes you have to do sales, yes you have to do billing and all that, but if you don't have the right actuaries, then you price the products wrong and you go out of business, and there aren't enough financial professionals coming out of school any more, so they're really starting to realize they have to spend a lot of their time focused on the succession management and the career development and the training and all that of actuary people. Obviously in hi-tech companies, it might be the software engineers or certain roles of the software engineering groups, so those are really important things to think about in your talent management strategy.

Steve

So it goes back to your earlier point about, if you're looking at talent management strategy, you need to focus on, well what are the people that are critical, and what do you need them to do, and start there, and then identify that.

Well Josh, we're coming up towards the end of the podcast, so I just was curious if you had any sort of last thoughts that you might share with the audience, as you're a person that has spent so much time in the space of talent management technology in terms of, what should companies really be thinking about in this? You hit on a couple, really start with what the business needs, but are there any things on the horizon or shifts or areas where you'd say, this would be a good place for companies to spend more of their time investing in and looking at?

Josh

I think a couple of quick thoughts: one is, don't over-complicate it, we have identified 62 different talent management processes in our assessment process, there's probably more like 100, don't try to work on them all at the same time, start with the business challenges before you start designing all the processes. Give yourself a three to four year road map, you're not going to do it all in the first year, and it really is important to look at the dependencies of one thing on another. So for example, in a lot of companies, the first thing they are going to realize is we don't have a competency or capability model for our critical roles, so that's probably going to have to come first, and then some other things are going to have to come later; or we want to improve succession management, but we don't have a leadership development program, so those things are going to be dependent upon each other, so give yourself a two or three year road map.

In terms of the technology, same thing—it will roll out in phases also, because a lot of the talent management technology is dependent upon annual processes in the company that only get done maybe once a year, or every six months, so you are going to have to roll that out over time too. So I think it's a great area to build a three year plan, and not try to do it all at once, get very connected to the business.

The third thing I would just say is that I think anybody that's in charge of talent management, trying to work on it, should really think about yourself as a business person, not just an HR person, and get very comfortable with the industry and very business-specific things going on in your company, because you are going to make a million little decisions along the way about a form or a process, and the better you understand the business decision behind it, the quicker you'll be able to make those decisions well, and those are quick recommendations I would give.

Steve

Great advice all round, well Josh, thank you so much, it's been a really fascinating conversation, and again we have been talking with Josh Bersin of Bersin & Associates, so thank you for appearing on People Performance Radio.

Josh

Absolutely Steve, thank you.

Speaker

If you would like to be a guest on the show, or sponsor, please drop us a line at podcast@successfactors.com, or you can leave us a message at 650-425-7474. This podcast is copywritten by SuccessFactors. The views expressed are the individual’s own, and do not necessarily represent those of SuccessFactors, SuccessFactors’ partners or customers. See you next week.