Friday, December 30, 2005
If you are reading this through a feed reader such as blog-lines, please search under systematicHR in bloglines and sign up for a new feed.
If you just happened to find this site, all history, current and future posts will be located at http://systematicHR.com.
Thank you for reading!!!
Wednesday, December 28, 2005
Ok - so I've only been around since March. Who cares? It staggers me to think about everything we've covered. From employer branding, engagement, onboarding, technology, vendors, strategies, and just good 'ol news. I've enjoyed blogging, getting to know many of you, and learning from you as well. I hope you've enjoyed it too.
My apologies - I lost all comments when I converted to the new domain. As a side note - I'd love it if more of you would comment back on my posts. It's a great way for everyone to pick up different points of view. I know you're out there, but I get way more e-mails than comments. Go figure.
Here are my 10 most popular posts as voted on by you:
- Talent optimization and engagement - June 15, 2005
- Branding, Communications, Service Delivery - August 25th, 2005
- Onboarding Part 1: Definition - July 5th, 2005
- Workforce Planning again - The Definition - June 20th, 2005
- Oracle Fusion, and future PeopleSoft functionality - August 23rd, 2005
- Recruiting to Onboarding - July 1st, 2005
- eRecruitment Market Trends - August 4th, 2005
- Onboarding Part 2: Integration - July 6th, 2005
- Employer branding, talent and engagement Part 1 - December 5th, 2005
- SuccessFactors TMS review - November 18th, 2005
But first, another usual item from me – the disclaimer: I’m in agreement with most if this article.
HR technology applications will continue to expand, with a strong emphasis on recruiting, staffing, scheduling and employee performance management.(from Miller, Mark, September 5, 2005. “Outlook for 2006 Technology,” BCSolutionsmag.com. Retrieved December 8, 2005 from http://www.hr.com. )
Ok – I’ll go with that. Basically this is a continued expansion of the TAS (talent acquisition), TMS (talent management) and TLM (timekeeping) suites. No brainer here.
Observations 2 and 3:
Vendors seek to expand market penetration and their software offerings for HR applications.
Ok – I’ll go with this one too. We’ve already seen it with the large TMS vendors expanding their offerings in 2004 and ’05. No doubts this will continue.
Observations 4 and 5:
HRO becomes mainstream and almost a necessity. Vendor consolidation in the HRO space will taper off in 2006.
I reject the first point. In the last 10 years, there have been fewer than 100 HRO deals going live. It costs too much, is too hard to implement well. I’m going out on a limb and saying that by 2010, we’ll still have fewer than 1000 HRO deals.
I accept the second point. There simply isn’t much to consolidate any more. My post last week on a potential buyer for ACS doesn't count since it's not a merger between BPO organizations.
Newly formed entities such as ExcellerateHRO, ACS/Mellon, will join the global giants IBM, Hewitt/Exult and Fidelity in offering one-stop end to end HRO services using either ERP applications from SAP, PeopleSoft or Oracle, or their own home-grown HRMS. This is supported by onshore or offshore call/support centers and strong case management capabilities.
ADP, Accenture, Convergys, Arinso and Aon will continue to focus on mid- to global-market solutions.
I reject the text above. Accenture is certainly not a mid market HRO vendor even though I’ve been the one saying they are trying to break into the mid market space. All their deals to date have been huge. Convergys is also not a mid market player and I’m not sure they want to be yet. On the other hand, I’m not sure Fidelity is a “global giant” and ExcellerateHRO is unproven.
PEOs will start to gain a foothold in HRO as well. Vendors like Administaff, Gevity, and Checkpoint HR will make some noise in 2006.
I reject the text above. I’ve talked about the differences between HRO and PEO’s before. Let’s not compare the two. It’s like saying the horse-and-buggy are getting into the NASCAR market.
Observations 6 and 7:
HRT spend will increase. Money will be earmarked for purchasing applications providing metrics and other measurements which will help HR executives gain strategic impact.
For those of you who know what I do and who I am, you know I’m kinda counting on this happening. But hey – we say HRT spending will increase ever year, don’t we?
Off-shoring initiatives in U.S.-based companies will hit a culture barrier. Eastern European countries, though, will gain favor as an offshore site for IT support.
I actually think this is nonsense. The American economy is on the upswing and we are usually more accepting of things like observation 8. I think we’ll see more off shoring in 2006 with steady growth until the next economic downturn. In my opinion, off shoring has been growing for years with little to no resistance.
Privacy concerns along with other Web communications standards will gain visibility.
No comment – not really my area.
The “Web Services” era of software applications begins to take shape.
The concept of a pay as go, pay for what you use software application model first adapted by the likes of Salesforce.com will move into HR technology in 2006. With a user interface modeled on Amazon.com and a search engine approaching Google-like capabilities, this approach will incorporate technologies under the heading of “Web Services.” Using Java script, limited tables and having endless adaptability, new software will emerge. Already some niche providers are taking this approach. In Workforce management, year-old Hoursdoc.com uses this technology.
Hmmm… not sure about this one… Funny thing is that I’ve already written my first 4 posts for next year, and it all revolves around web services. His observation is right on until you start reading the detail. I’m not sure he knows what web services is. At the very least, it is not dependent on on-demand software.
Industry pioneer Dave Duffield, the co-founder of PeopleSoft, is now actively using this technology to build a new ERP platform. During 2006 we should see his group’s early efforts attract a very visible beta client. This is guaranteed to raise the excitement level in HR Technology as Mr. Duffield’s first application has historically been in HR.
I can’t fault him for this paragraph. It would have been my assumption too. When I first saw that payroll was on the list, I assumed HR was as well (even though I didn’t see it). I have it from a good source that HR is not in the first release. Oh yeah – We’ve known the company was going to be called workday for months. We've been talking about workday.com here for months.
Hey – any day I only get on someone for 30% of their comments is a good day. We’ll call it a present for the holiday season. Everyone have a great year end, and we’ll see you in 2006.
A consortium of investment firms is in talks to acquire Affiliated Computer Services, a technology outsourcing company with clients that include General Electric and McDonald's, for about $8 billion, people briefed on the negotiations said.
The group is led by the Texas Pacific Group and includes Bain Capital and the Blackstone Group, these people said. Silver Lake Partners had been part of the group, these people said, but recently dropped out.
Under the terms of the proposed deal, the consortium would pay about $62 a share for Affliated, which before yesterday's run up in its stock price, would have been a premium of about 15 percent. (from New York Times, December 23, 2005. "$8 Billion Deal Said to Be in Works for Tech Company." Retrieved from http://www.nytimes.com)
Thursday, December 22, 2005
Jason wrote this post about The Manager's Role in Performance
Jason Corsello, Senior Analyst at The Yankee Group, believes that performance management is mainly about aligning business goals with individual objectives. He maintains that, “the one reason performance management has not taken off in a significant way among line managers is the absence in the past of good tools and technology.” Past tools and processes, says Corsello, “have had a negative impact on line mangers in terms of pushing them away from performance management initiatives.” Now companies have a wide variety of tools apart from appraisal tools – such as goal alignment and succession planning – that they can choose from in order to leverage technology in a better way. “If the companies keep in mind the needs of line managers while shopping for solutions and then motivate them to use them, it will not be difficult to get line mangers to fall in line.” Advises Corsello.
The panel agrees that alignment issues are the most important for line managers in performance management. Managers must be able to see their goals and the goals of their team within the bigger picture of the organization and they must understand how they will be measured against achieving those goals.
Human Capital Institute, November 11, 2005. "On The Line: The Manager's Role In Performance." Retrieved from http://www.workinfo.com on December 19, 2005.
At the end of my last post, I lamented that systems are not the end solution of our communication problems. Jason's post helped bring me back to the technological optimist that I usually am. In this briefing, Jason does a wonderful job of explaining in a few words what all of these systems do when combined into a cohesive toolset. In this specific example, performance is nothing without good succession planning, competency management, goal routing, and learning management. And of course, let's not forget a good compensation plan that is tightly integrated with performance.
These disparate tools combine into an incredibly effective employee management package when utilized in an integrated and systematic way.
However, I will go back to my last post and note once again that systems are not the end solution. However, these systems bring to bear the full understanding of a particular employee's situation and how we as HR or managers can guide the employee into increased engagement, effectiveness and productivity. I'm not going to let go of the fact that the systems can't make your managers communicate effectively. However, the smart manager is inundated with direction that she didn't have just a few years ago.
As a final note, I found this blog on employee engagement. The latest post is on communications and market value and the top value additive from a 4 year Watson Wyatt study is dirving manager's behavior. Sorry, I don't have the WWW reference.
Actually, I'll place a healthy bet that all bloggers and almost all blog readers are highly engaged. Let's face it, for you to search out pages like this one instead of SHRM.com takes some effort. But on to the point:
Towers Perrin recently completed what is arguably the broadest survey on employee engagement.
- 84% of highly engaged employees believe they can positively impact the quality of their company’s products, compared with 31% of the disengaged.
- 72% of the highly engaged believe they can positively affect customer service, versus 27% of the disengaged.
- 68% of the highly engaged believe they can positively impact costs in their job or unit, versus 19% of the disengaged.
Anita Bruzzese and Julie Gebauer from Towers Perrin have yet another definition for engagement:
Are you willing to go the extra mile for your employer? Are you so highly committed to seeing that your company does well that you'll put in whatever extra effort is required? ... ''Fully engaged employees have the desire and the capability and are willing to put in discretionary effort for their employer,'' says Julie Gebauer with Towers Perrin, a human resources company that conducted the study. ''In other words, they're willing to go above and beyond the call of duty.''
Anita Bruzzese, December 17, 2005. "Businesses must engage workers to meet goals," The Salt Lake Tribune.
I have also seen a quote from David Ulrich where he uses the same language about "discretionary" work to define engagement. Can't find a reference though.
''Clearly, employees want and need more from senior management,'' says Gebauer, managing director and leader of Tower Perrin's Workforce Effectiveness practice. ''Managers have got to be more visible, more accessible and more open to employees. Leaders have got to understand what makes employees click.''
I'm not going to comment on some of the distinct country statistics as I don't know anything about cultural effects on surveys like this. For example, some Asian populations measured very low on the engagement scale. Are they actually engaged and don't answer the questions the same way, or do they all hate their jobs, but stay because you used to get lifetime job security in places like Japan? I have no idea.
Clearly how one engages an employee will differ with each culture and country. The important point is that engagement is indeed critical to the bottom line and organizational success. What is important to me is that I talk a lot about technology and how these implementations increase your ability to improve the relationship with your customers (employees). However, if your managers are utilizing the automation and spending less face time with employees, this is a serious mistake.
Employees do want to contribute more, but believe they are hampered by senior managers. Only 41 percent believe bosses support new ideas and new ways of doing things, while only 36 percent believe top brass effectively communicates the reasons for important business decisions. Only one-third of workers believe senior managers communicate openly and honestly.
So employee portals and self service are great because nether we nor our employees want to spend time on a manual address change process. However, we need not to think about minimizing the interaction - but to increase the quality of that interaction.
Part to of this series tomorrow.
Tuesday, December 20, 2005
Gautam's post on Tom Peter's 20 dumbest business practices reminded me of something else I read recently:
TP: Mergers of Decrepit Monsters!
GG: Merging for the heck of it!
SA: More Often Than Not, Massive Galaxies Form by Mergers
New data seem to show that galaxies collide all the time. In fact, the oldest and largest galaxies in the universe most likely formed from such intergalactic combinations.
"Our study found these common massive galaxies do form by mergers," Van Dokkum explains. "It is just that the mergers happen quickly and the features that reveal the mergers are very faint and therefore difficult to detect."
"Quickly" on a galactic scale means just a few hundred million years--a small fraction of the 13.7 billion years the universe has been in existence--and, because such collisions rarely involve head-to-head star crashes, they leave few traces behind except in the shape of the resulting galaxy and a general slowing in its formation of new stars.
Biello, David, December 6, 2005. " More Often Than Not, Massive Galaxies Form by Mergers," Scientific American. Retrieved from www.sciam.com on December 19, 2005.
Some strange parallel universe stuff going on here (no pun intended).
Yeah - this is what I read when not reading HR stuff. Sad, huh? So GG and Tom Peters make me think of massive galaxies? hmm....
As ADP attempts to turn into more of a on-demand company (like workday, salesforce and successfactors), they are held back by technology and legacy customers.
Technology is a huge hurdle at ADP - not that they don't have it, they do and are good at it. If you don't believe me, then you should because there's a great chance they process your stock transactions. Their HR services have grown so fast in the last 6-7 years that the technology infrastructure is almost impossible to keep up with. Acquisitions in all 3 major areas (HR, PR, Benefits) have added systems, service centers, etc. This has also mean different code bases that needed integration and bringing them up to single standards.
As of this year, ADP is close. They have fantastic web services technology that lets you subscribe to a portal with on-demand basic employee self service, check-view, MSS performance reviews, MSS compensation reviews, time and attendance, benefit enrollments. All of this is fully integrated into a single portal experience so the employee or manager only logs in once (we're going to talk a lot more about web services in January). So anyway, they are gaining lots of ground on the technology side. The only problem, which may not really be a problem, is that to get their hosted-only portal, you have to host every service you subscribe to - HRMS, Time, Benefits...
Then there's the second problem. "Legacy" customers. The ones on premise (non-hosted) HRMS. As of the current version, ADP doesn't even offer self service tools anymore - they assume you will host and use their portal. We now go back to the "2nd largest provider of HRMS" story. They have at least 5-700 non-hosted clients IMO. In several years, they will have to convert to ADP hosting, or they will be out looking for a new HRMS that has native ESS/MSS. Or option number 3 - go buy something off the shelf. Until this press release I didn't know anything was out there for non-hosted ADP clients. From what I hear, it's a pretty nifty little product. Considering that ADP Enterprise has over 1000 installs currently in live production, it's nice this large user base has another option.
Monday, December 19, 2005
Taleo and Virtual Edge were really a tie with Taleo coming in stronger on the app side, but I'm more excited about watching Virtual Edge right now. Taleo has a slight margin on the functionality side with absurd amounts of flexibility for the end users (managers and recruiters). Virtual Edge is much better in technology architecture. Basically this means easier deployment of web services and accessible API's (if that means anything to you). We'll see if Taleo can pull through some promised technology in their next release. If they don't VE will easily dominate the market - not having web services in 2005 is sinful. Not having it in 2006 is unforgivable.
1) Taleo: Slowed down their R&D processes while preparing for IPO. Still the leader with Virtual Edge creeping up.
1) Virtual Edge: Good technology creeping up on Taleo. This is probably the company to watch and is really the biggest competition for Taleo in the near future.
3) RecruitMax: Poor infrastructure. Installations for each client are separate instances. This is very difficult to manage and support for upgrades and service. Next release of software is supposed to support multi-tenet architecture
4) Brassring: Starting to become a serious mid market play. They are not driving in toward the large employer space. Could not capitalize on early market excitement.
Saturday, December 17, 2005
1. Any and all analysis performed for this post is almost pure conjecture.
2. While I reviewed a few sources of financial data, and have made some pretty reasonable calculations and guesses, many of these calculations were based on educated guesses.
3. I actually have crunched numbers and came up with a few comparisons of profitability, revenues, total clients, total employees. I will not post these numbers since I could be so far off it would be misleading.
4. I have decided to look only at Authoria, RecruitMax, and SuccessFactors. These are private companies and difficult to get data for. For WorkStream, please visit their website here to download the annual report. It’s simply not fair to evaluate WS against “educated guesses.”
5. I have not been involved in a TMS search in the last couple quarters, and don’t have any direct information other than what is on the public internet.
– SuccesFactors seems to be adding clients faster than anyone else.
– Authoria seems to have the strongest base in the Fortune 1000. SuccessFactors is a very close second.
– RecruitMax may not be profitable (I don't know for sure), but is also adding clients as a fast pace. Their average clients size seems to be smaller than Authoria or SuccessFactors.
– Authoria and RecruitMax have more users that SuccessFactors, but it is impossible to tell what product those users are on. For example, my numbers for Authoria may include non-TMS products. However, I have reasonable confidence that Authoria has the most TMS employee subscriptions. RecruitMax has a pure TAS base.
– As SuccessFactor’s client base is 100% subscription based on employee headcount, each employee added is much more significant to the bottom line than for Authoria or RecruitMax.
– Success Factors has been profitable since inception in 2001. I’m not sure if they have ever taken a loss if you exclude cash infusions of about $5M/year. However, this is chump change and I’d guess that they have been turning real profits. I really can’t figure out how they have been cash flow positive since inception.
– Authoria turned a profit in FY’04. They state that they are on course to turn a profit in FY’05 as well. Obviously I don’t know how the acquisition of hire.com will affect the books (or when). Strong revenues from pre-TMS products should help them.
– Regarding RecruitMax, my best guess is that they are not profitable. R&D and acquisitions may affect profitability for a few years, but that's true for anyone in this space.
– In my only comment on WorkStream, they are clearly not profitable. You can look at their financials yourself.
Wednesday, December 14, 2005
The truth about what “integration” means
Employer branding, talent and engagement Part 1
Employer branding, talent and engagement Part 2
Employer branding, talent and engagement Part 3
Technology's role in performance management
Often described as "the right person in the right place at the right time at the right price," workforce optimization combines managerial discipline with newer forms of information technology to produce, in theory, everything from perfectly staffed assembly lines to efficiently deployed consultants to well-crafted succession plans. At its most basic, it builds on earlier time-keeping and attendance systems in order to improve staff deployment. At its most sophisticated, it is essentially synonymous with human-capital management (HCM), a "full life cycle" approach to employees that encompasses everything from recruitment and hiring through training, career development, and compensation. While the ultimate goal — greater productivity and efficiency — is certainly in a company's best interest, many facets of workforce optimization are explicitly designed to improve the career prospects and job satisfaction of employees.
Case Study 1: The tie between Talent Management, Automation and Employee Engagement
That's where technology comes in. As Kimberly-Clark's global team developed the new process, it also shopped for software that could support it. A suite of HCM applications from SuccessFactors Inc. now helps speed the review process, in part by supplying a "robot" that provides thousands of sample phrases and assessments to help managers write reviews. Buthman says a review that once took him six or seven hours to prepare can now be done in a third of that time.
"Every employee needs a clear line of sight between what they do each day and how it relates to our global business plan," Buthman says. "That's how they understand the contribution they make. That's part of what makes them feel engaged by their jobs." And engagement, Buthman and others say, is critical to productivity, even if it can be hard to quantify. "
The connection between employee engagement and productivity may be opaque, but the link between performance and pay is much clearer — or could be. One problem with performance reviews, many experts say, is that managers often lack visibility into an employee's achievements throughout the year and instead tend to make decisions based largely on what the employee has (or hasn't) done lately. Many HCM software companies cite this as a reason to buy a full suite of products that can address everything from hiring and performance management to compensation and career planning. As Buthman says, "The ability to differentiate among performers and match those differences to pay really completes the loop."
Case Study 2: Business Intelligence
Randy MacDonald, IBM's senior vice president for human resources, says that as companies apply new kinds of technology to HR issues, they must also apply new measurements. "The CFO gets to see the CEO faster than anyone else," he says, "because he or she can show a series of metrics. HR is now doing the same." Some of those metrics are old hat, such as time to hire, attrition rates, and revenue per employee. But increasingly, HR departments are looking at other facets of the labor market. IBM, for example, looks at everything from the percentage of summer interns who sign on for full-time work to a rolling three-year forecast of anticipated labor needs. HCM software companies have added various metrics capabilities to their products, or partnered with business-intelligence firms that offer a range of "workforce analytics" applications.
Case Study 3: Competency Management Systems
The "all employees are not created equal" message is sometimes anathema to HR executives, but it reflects a new pragmatism taking hold at many companies. Advance Auto Parts, a retailer with more than 2,500 stores in North America, began to "recalibrate" its workforce three year ago in response to poor performance.
It developed a talent-management process that it implemented manually at first, then automated last year (with software from Authoria that integrates with an underlying system from Oracle/PeopleSoft). "The system gives us data we can analyze to see where competencies are strong or weak," says Bryant.
Case Study 4: Talent Acquisition Automation
Susan Burns, operational vice president for employment initiatives and college relations, says that while the front end of Retailology is essentially informational, the back end is a heavily automated candidate-tracking system that replaces a once intensely manual task, freeing HR staff to address "talent-opportunity areas." For example, if a promising candidate applies when there is no suitable opening, a Federated recruiter will maintain a dialogue with that person and alert the individual when an opening occurs. "Handling that kind of follow-up was virtually impossible when everything was paper- and phone-based," she says. Today, more than one quarter of the 100,000+ employees hired by Federated apply via the Web, and that percentage is growing. "No doubt it's a very cost-effective way to extend your reach," Burns says. "We expect the talent market to get even tighter, and we'll need more tools like this in order to keep the pipeline flowing."
Monday, December 12, 2005
First of all, many of the 170 CFO's surveyed came from "small companies." Second of all, it's obvious that what CFO's/finance see as important HCM issues are very different than what HR practitioners see.
Question #3: Compensation is the biggest driver for employee effectiveness? I've written about this before. Comp drives employee recruitment, but it's engagement, opportunities and satisfaction that drive retention. I think what drives employee effectiveness are opportunities to grow. I will cave in however and say that a good incentive comp plan will also inspire certain types of workers to increase effectiveness.
Questions #4 & #5: It's interesting that employee learning is the best way to increase employee value, but training and skills/competencies are low on the issues list. CFO's in this survey are obviously looking at (in Q5) cost factors and not ways to drive employee value. I'm not entirely sure I want to make this next sweeping statement, but if you look at real cost vs value metrics, I bet the value in enhancing employee productivity incrementally are much greater than time spent shoring up benefit costs. Don't take that to mean they shouldn't work on benefit costs. I just think the CFO's are wrongly focused.
The below image comes from CFO.com. Please click here to read more about their survey.
Competencies to Communicate Job Expectations to Employees: Just about everyone wants to perform well—it’s human nature. And for those employees who do want to perform well, there’s nothing more frustrating than confusion or uncertainty about what is expected of them. Building and maintaining a competency profile for every job role is an excellent way to clearly communicate expectations to employees. This is not only good for incoming employees who are new to a position, but also for experienced employees.
Competencies to Provide a Clear Path to Promotion: A competencies database and a way to search competencies by job position is an excellent vehicle for employees to understand what skills and competencies they must possess in order to be a candidate for promotion. BC Hydro is working to enable and encourage employees to browse different job positions and see the competencies required of each. By comparing their current competency ratings to those of the job they aspire to, employees—with the help of their supervisors—can begin to map out a development plan toward promotion. This not only empowers employees to take more control over their careers, but it also allows the company to have a proactive succession planning tool.
Competencies as a Benchmark to Track Employee Progress: There is probably no simpler or more effective way to track an employee’s performance against development goals than using competencies. Reviewing an employee’s learning and development history is a good starting point, but that approach only tells you what activities the employee has completed. It does not identify and quantify the impact the development activities have had on the employee’s capabilities. Comparing competency ratings for an employee over time is a more comprehensive and quantitative method for tracking an employee’s development progress.
I think most of you will agree that this is certainly not an inclusive list on technology's role in performance management. In fact, this is a bit of an indirect discussion of it. Today's EPS systems do everything from the basic data management of an employee's goals and performance history, to linking or storing compensation, job, learning, etc... However, technology really comes in to play when we talk about self service and how we role this functionality to the end users. In today's world, employees and managers should all be logging into a system to complete reviews. This is not to say that the face to face interaction has been replaced, but that the data management activities have been moved from paper to PC.
Along with this, EPS systems are going to contain any and all routing options an organization needs to manage approval levels or automate 360 degree reviews. The clincher however, is something I mentioned above. EPS systems can collect data from other systems. If you have competencies located on an LMS, the EPS can grab the data (or at least import depending on the skill of your implementor and IT department) and display it in the UI. Rather than your managers looking in 5 different sources for the data required to evaluate an employee, all the relevant data can be represented in a single place. This is crucial since we all know very few managers that will actually attempt to get ALL the data if it's not easily accessible. Next, the EPS should tie directly to the compensation system to continue the data cycle.
The below is part of an e-mail summary of the Wyatt report I received. The line where 52% of employees state their managers tie pay to performance is indicative of my statement above. The lack of data integration is what drives a real ability to tie competencies to performance, and performance to compensation.
WASHINGTON, November 28, 2005 – When it comes to practices that improve employee performance, companies and workers themselves agree there is room for improvement. This finding is based on a survey of 265 large U.S. companies across all industries and a complementary survey of 1,100 workers conducted by Watson Wyatt and WorldatWork.
In designing their performance management programs, most employers have adopted best practices — including providing a formal yearly review (98 percent), helping poor performers improve (96 percent) and offering coaching and feedback (91 percent) — but they have been less successful in implementing them. For example, while 92 percent of programs are designed to link pay to performance, only 79 percent of employers say that managers at their organization are moderately or greatly effective at it. Employees see even more room for improvement with only 52 percent indicating that their managers tie pay to performance.
Managers also struggle with providing formal career development and planning. While the vast majority (82 percent) of performance management programs are designed to include career development, only 37 percent of employers say that managers at their organizations are at least moderately effective at providing it. And only 31 percent of employees say their companies offer career development.
Friday, December 09, 2005
(U.S. centric post follows...)
What does all this have to do with Tax Screening you ask? Well, nothing really. It's just that in my research om Projectix, I noticed a page on their website about tax credits.
What do tax credits have to do with TAS, HR or technology? In my opinion, tax credits have to be the least thought about process for HR professionals, and if your recruiting system/staff is not looking at this, then you're losing huge money. There is already enough complaining about HR being a cost center.
There are 2 general types of credits: welfare to work (WTW) and work opportunity tax credits (WOTC). Please don't kill me if I'm a little bit off here, but I'm not a tax accountant. WTW credits are what they sound like. Tax credits are offered any time you hire someone of a particular category. This could be a welfare recipient, a person of a certain age (usually young), etc. WOTC credits line up with what are called "empowerment zones." If you have a location in an empowerment zone (federal or state) each hire you make could qualify you for a credit.
When we talk about credits, we are talking about an average of $3000 per hire. Some of these credits are one time. Others are annually renewable forthe employee. So lets say you have 10K employees and 10$ turnover. For the 1000 employees you hire in a calendar year, you could qualify for $3M in credits. Credits are also not tax deductions. That $3K is not a tax deduction, it is a credit to the bottom line.
So HR technology? Well yeah. A couple years ago, we would have had our tax departments runing around trying to get all this paperwork in to the government agencies. (in most cases you have 28 days from the date of hire to get the credit) The fact that there are now vendors offering to automate this stuff is great. I don't know if RPO vendors are looking into this or perhaps already doing it, but it's a great opportunity for outsourcing.
Here are a couple vendors I know of: Projectix, ADP
Wednesday, December 07, 2005
CHICAGO, HR Technology Conference and Exhibition, Oct. 20 /PRNewswire/ --
Authoria, Inc., the leader in integrated strategic Human Capital Management (HCM) solutions, won the industry's first Integrated Performance & Compensation Management Shootout today at the 8th Annual HR Technology Conference and Exposition in Chicago.
The 350 human resources professionals in attendance at the Shootout chose Authoria as the winner after witnessing live demonstrations from all four competitors. The demonstrations followed a scripted scenario written by Bill Kutik, conference co-chair, and Mark Albrecht, vice president of consulting at Salary.com. The three other competitors were Recruitmax, SuccessFactors and Workstream.
"Studies continue to show that Performance Management is priority No. 1 for HR executives and the C-suite," Kutik said. "Last year, we staged the industry's first Performance Management Shootout. This year, we went the next step toward getting full business benefits by integrating performance management with compensation management to compare industry leaders in an apples-to-apples contest, back-to-back for the first time."
It's pretty obvious that I consider Authoria, SuccessFactors, WorkStream, and Recruitmax to be the leaders in the field. My original reviews here and here. All of the vendors are undergoing an incredible amount of R&D at the moment as the industry demands more robust and comprehensive TMS solutions. The trick is that as these companies acquire functionality (much more acquiring than developing going on here), that they integrate well in the back end. Equally as important is that they create UI's that look seamless to the end users if the applications really are pieced together.
Interestingly, last year's "shootout" was performance only. A comment I got via e-mail from a reader (Andrew) suggested that all of these companies could probably survive on performance management alone for a few years. Indeed that's where the core demand is, but once performance is up, compensation is very soon to follow. Additionally, workforce planning is about to hit the market big time as the consulting world looks out 5-10 years, and the vendors are picking up on this. So while workforce planning and succession are not huge functional drivers today, I think (hope) that if a few years it will be as big as performance.
A couple of posts ago, I pointed out a talent management article on Deloitte's page. Notice that their discussion about talent management is about what I call workforce management, not performance or comp.
Back to Authoria and why they won the shoot-out. Well, I should first say that I was not there, do not know what the scripted scenario was, nor have I even seen the most current version of all 4 software packages. However, I'm betting that Authoria's background in knowledgebase and integrating data from multiple points into a single UI gives them an edge. I'm betting that Authoria won because their data transactions may have looked smoother and more seamless. I think RecruitMax's foray from TAS to TMS is still too new, but give them another 12 months to patch things together and they'll be a threat. (and actually, RecruitMax won the performance shoot-out in 2004 - however they acquired compensation earlier this year)
So what happened to WorkStream and SuccessFactors? Clearly we can't say that they didn't have the functionality, integration, or UI. In all honesty I bet the shoot-out was a pretty close decision that once again may have come down to UI and useability. The singe scenario demonstration certainly would not be enough to judge a ranking based on functionality.
I'm going to agree and give Authoria a thumbs up for UI and integration. The lead on functionality is highly subjective based on who the client/prospect is and functionality changes at lightspeed anyway. I'm going to do some research on the financials of these 4 vendors (and maybe a couple others too). I'll post that in a few days.
I am a firm believer that while your verbal communications are your most powerful communications, your internet based tools and your call center are your most frequent methods of communication.
Employees will hit your self service portal for anything from viewing paychecks, enrolling in benefits, looking for policies, and just generally getting information. If your portal isn't up to par, the employer brand communicated is one of deficiency or even dysfunction. If integration is lacking and employees are logging in multiple times to multiple systems, you are sending a message about beauracracy and administration. The portal should be a smooth experience that they don't have to think about. OK - forget about the technology and user experience for a moment. The portal is also where you can consistently communicate a message. So if part of your employer brand is about community involvement, perhaps you have messaging about your matching gifts program featured prominently in the home page.
Managers are focused on certain things when they verbally communicate the employer brand. Things like the above "community involvement" often are missed by managers because they don't directly impact the operational business. This is ok - so long as you are effective in using the other communications tools. What managers are more concerned with are the obvious - performance feedback, compensation, employee relations... They are also concerned about hiring and training. Ease of use still apply here. However, the managers will also be exposed to tools and systematic processes that help them along the way. Effective communication requires dynamic tools to explain not only the manager's process, but how to communicate results to employees as well. So managers have access to the TAS, PMS, CMS, and LMS as great tools, but the use of the tools, explanation of policies, and communication to employees are all factors that must be thought about before the tool "goes live."
HR Service Centers and call centers are really another topic series. (forgive me...)
Tuesday, December 06, 2005
So last time we talked about communicating brand and an overview of a chain of effect beginning with the manager communication and ending with the shareholder returns via the Microsoft model.
Andrew posted a link to David Kippen. I found this post about branding, talent acquisition and retention equally interesting. The following text is from David's blog:
Let’s assume key employees are leaving, that we’ve developed consensus that there’s a problem, done our due diligence by conducting exit interviews and qualitative and quantitative research among current employees. If our research indicates employees are being lured away by more generous time policies, better retirement plans—or even better pay, if there’s money and will to address it—HR may be able to do something about it. Now, I don’t want to suggest that HR has no operational impact: if research shows managers lack management skills, for example, HR can create training programs to address issues like this, too. But if the root problem is a misalignment between what the organization says about itself and what’s true about it, HR will need help to effectively address the operational issues that define “your work.”
This is where the need for a resonant, robust internal brand comes into play. Because it messages to what we do and why we do it, the internal brand serves to unify “my work” and “my organization.” Think of the internal brand as a clear light on a dark night: by aligning what we tell the marketplace with what we ourselves believe, a strongly-articulated internal brand helps managers and employees voluntarily align their work with their organization’s mission and values. And that voluntary alignment is a much stronger key to retention success than anything leadership can put in place if the recruitment promise doesn’t receive a payoff in the real day-to-day work experience.
David's idea of "voluntary alignment" is what I would call engagement. Employees who are engaged feel a stronger tie to their work and their employer. Repeating myself from a previous post, we find that cash outlays for direct employee benefit are very important for recruiting, but not as important for retention. They key factor here, is if you can move employees into the satsified and engaged range, you are not as at risk for employee attrition because employees now want to work for the company for reasons other than compensation.
So when David talks about why employees are leaving (better pay, time off, benefits...) the effective communication of the positive employer brand to engage employees would have minimized the entire issue of high attrition.
At the same time, Wyatt's Communication ROI study is suggesting a direct tie between communications to employees and ROI.
The study also found that a significant improvement in communication effectiveness is associated with a nearly 20 percent increase in a company’s market value. Specifically, the study identified nine communication practices that are directly linked to an increase in market value. The three practices associated with the largest increase in shareholder value are driving managers’ behavior to communicate effectively, connecting employees to the company’s business strategy, and following a formal communication process.
I'm taking the "connecting employees to the company’s business strategy" as more branding. In addition to the impact to the shareholder value, "Companies with high levels of communication effectiveness were 20 percent more likely to report lower turnover rates than their competitors."
Monday, December 05, 2005
Depending on the culture of your organization, and this would even vary by employee, I would guess that the web tools or the manager are the most effective means of communicating employer brand. Some people (like me) talk to their direct manager once every other month. However, we should make sure that we include direct training as part of the brand communication exercise contained within managing the employee. Every person to person interaction within your organization becomes part of the brand communication, and management should be particularly aware of the positive or negative niuances. As we think about person to person communications, we must also weigh in the effects of team building and camaraderie. Employees who experience higher levels of camaraderie in the workplace will have a more positive view of the employer brand. Managers must foster camaraderie and can do so by effectively utilizing teams and team building activities.
I'll talk more about "print communications" next post.
Friday, December 02, 2005
- Brand - Trisha clearly already recognized the google brand
- Engagement - she has a high probablitlity of becoming an engaged employee. Being predisposed to liking google policies for employees based on what she sees in the market, she is already proud of her employer. Engagement isn’t that big a leap.
- Talent Acquisition - when you’re ready to make a hire, how quickly can you make decision and onboard the person? In Trisha’s scenario, she went through phone screen to verbal offer in 3 work days. Great candidates don’t come across your desk often enough to be bogged down in decision beauracracy.
- This also hits on a few other things we’ve talked about in my blog… how do you create work life balance, for one. I’ll admit that I check work e-mails every night, a few times on weekends, and when I’m on vacation.
Thursday, December 01, 2005
I don't hesitate to wonder about HR's motivation when it comes to KM. Truly, when we talk about "strategic HR" and the fact that as we head into 20xx we face huge workforce knowledge issues as a generation retires. We also deal with this as training organizations. Everyone in HR is in a state of frenzy over the loss the senior managers and what we should do, from succession planning, to recruiting, and talent management. How is it that HR practitioners are so complacent about working with and networking with KM professionals? Do I give us all the benefit of the doubt and assume that there are not enough KM people in our organizations?
Well, I'll looking forward to seeing how his/er tools and portal implementations go. I'm especially interested to see what Oracle offers his/er organization in the upcoming months.
Wednesday, November 30, 2005
This is a reply to Jeff from the talentism.com blog, who in his post about quality vs cost, invited me to comment about waste in systems and technology.
The Seven Wastes are (defined by Taiichi Ohno,
1 - The Waste of Overproduction
2 - The Waste of Waiting
3 - The Waste of Transporting
4 - The Waste of Inappropriate Processing
5 - The Waste of Unnecessary Inventory
6 - The Waste of Unnecessary Motions
7 - The Waste of Defects
As I think about this, there are so many areas of waste in HRMS and point solutions that it’s hard to decide where to start. Then I add in the HRO and outsourcing factor and it becomes even more confusing.
Unfortunately, most waste is political. In the HRMS world, HR as an administrative center does seem to be pretty low on the totem pole. Operational and lately finance systems have really had more focus (read: Funding) over many years. Add to that the fact that HR hasn’t really had a seat at the table until recently, and political power has not been on HR’s side. Add to that the fact that HR and PR are often separated into different silos (HR and Finance) and you have ever increasing political struggles that now include policy and procedure. Let me just ask: HOW HARD CAN IT BE TO GET A MANUAL PAYROLL CHECK APPROVED??? We haven’t even gotten to the systems waste yet!!!
Jeff’s insight is right on when end users get caught between buyers and the vendor. Add in another twist when the buyer is IT or purchasing departments. We have seen too many times (especially in the ERP 90’s) IT and HRIS departments building large teams of programmers just to support HR. In recent years, many organizations switched to “vanilla” software philosophies where HRIS no longer creates customizations and end users still don’t get what they need as they are forced to live with the system as delivered.
But it gets better…
I actually think that momentum has been changing in the favor of HR For a few years now. The systems are getting deeper, HR strategy is more focused and on target, and systems are focused on catering to the workforce – both user and employee level. A few years ago, you had to pick. Oracle for finance, so we might as well do Oracle for everything. Now, you can take Oracle for Finance, SAP for SCM, and find another HR system altogether – tie the whole thing up on the back end and nobody feels any pain. Then wrap your TAS, TMS, learning and portal solutions around HRMS and pump the whole thing into a data warehouse.
Before it gets worse again…
We were getting so close to a valid and achievable systems model and then we had to drop the HRO ball on everyone. The systems people just got outsourced along with the entire recruiting staff, the HRO vendor wants another $5M to finish implementing the portal, and the generalists are running amuck in confusion!!!
But I’m feeling positive… (or What's my point!!)
Listen, I don’t know if HRO is the right model for everyone, and I don’t know if it will pan out for anyone. What I do know, is that even though we keep playing with process (now in an HRO state), the systems really are a beacon of hope. A couple years ago we were customizing systems to automate our processes which were themselves modified for the systems sake. Today, we configure systems so that they conform to our strategies - not vice versa.
Waste? Sure there’s wasted energy. But I tell you what… I’d rather be in HR technology today than even just 2 years ago. And what else? 2007 and 2008 are going to be a couple years to watch out for.
Tuesday, November 29, 2005
Usually I'm right there with the 3 major consulting firms (Mercer, TP and WW). However, this time I'm not quite sure if Mercer get's what a portal is vs a web page.
Joe Loya and Debbie Slappey of Mercer said here:
In the past 10 years, many organizations grasped that the Web could transform the way they manage their HR activities — and many were quick to create HR portals on their intranets. Today, few HR portals are living up to their creators’ aspirations, and many, in fact, are simply “link-farms” to enrollment forms, vendor pages, outdated material, basic benefits information and change-of-address forms.
Clearly Mercer has a different definition of what a portal is. I'm sticking with Plumtree's explanation here. Basically, a portal brings together a large set of data within what are called portlets or pagelets depending on the specific technology you're using. Either way id doesn't matter. The portal and portlets will read your log-in information and retrieve data from other data sources using the permissions defined by your log-in. So when you go to your Yahoo or MSN homepage and read news, e-mail summaries, maps and whatever, that's a portal. Sure, you might have to launch another area to do more detailed stuff (like reading the entire article), but the fact is, you set a preference to have certain articles presented to you on the page. The HR portal is the same thing. The portal retrieves the relevant data and presents it. The portal does not simply provide hyperlinks.
You've heard me rant about vendors misuse of HR terminology for the sake of sales. For example, my favorite one is Talent Acquisition systems that call themselves Talent Management (to me a much broader category). I think Mercer does the same here. Their "new HR portal" is at first glance a total comp statement that might bring together 401(k), benefits, payroll, etc.. People... a total comp statement is not a portal. The data within the statement is not a dynamic reflection of real time data.
I'll give Mercer the second one. The DHL example really does look like a valid portal experience. Unfortunately, the title of the paper " Companies may be missing the whole picture on HR portals" turns out to be a sales pitch about total comp. I think the authors doe a great disservice to their employer (a great consulting firm) by misdirecting their audience and not really understanding the technology. Clearly these are comp consultants who should not be teaching the world about portals.
What is even more surprising is how agressively Accenture is controlling scope. The mid market is a tough game to play. Companies think they are large and deserve the services of a $500M contract. But then they don't want to spend the money. ADP has long had the best lock on this market. Nobody understands how to sell to it better, so the big guns better be ready for a competitor they see little of in the Fortune 500 space.
Jason is right though - Accenture better get a big win soon before momentum shifts again.
Monday, November 28, 2005
Jeff Hunter of the Talentism.com blog has a very interesting post on the causes of RPO. His experience is the same as mine... internal recruiting organizations with highly positive feedback are getting outsourced more and more.
While I like Jeff's conclusions about how to improve the recruiting function's control over the outsourcing decision, I'm not sure that's persuasive to an executive. The solution is for recruiters to be more accountable for the new hire's success. Jeff argues that the recruiting function looks to find people, not fill positions. The long term objective of filling positions is left to the hiring manager, and the recruiter does not have sufficient stake in the new employee. I've argued in the past that new hire onboarding belongs to the recruiting function, and that onboarding is a process that should last from the date of offer acceptance until possibly 6 months after the hire date. I'm not sure how much longer a recruiter could reasonably follow an employee's onboarding without growing the recruiting staff.
So far I agree with Jeff. Here's where I disagree. Each of these arguments is simply a matter of scale.
First, I believe that executives see two things in RPO. The first is cost reductions. The RPO organization might be able to hire recruiters to recruit for multiple organizations. Therefore, the productivity of each recruiter should be higher.
Second, I think time to hire is critical to executives. RPO organizations will have an easier time creating a pool of candidates that is ready to interview. When a job requisitions reaches then, they should be able to quickly move on known candidates, rather than taking time to advertise for the specific job. Their presence in the market is powerful: they command many more job requisitions, and therefore, they have a much larger, more captive candidate base than any single company possibly could.
So I think the trend towards RPO is growing and picking up momentum. However, this really should allow the smart recruiting manager/director of talent or whatever to focus on things like onboarding.
I got this from BostonWorks which cited WAGEproject.org. This issue of gender pay differentials should be treated very seriously by HR professionals and especially compensation. It's sad to think that even in this century, we are going to struggle with this problem (and race too I'm sure) for decades if not for longer than that.
Women Are Getting Even (WAGE) is a great brand. It suggests that we are getting closer to that elusive equity, but also that women are getting more aggressive (which I agree with). I truly believe that most HR organizations really do care about pay equity, but we are often hampered by managers who don't have the same priorities.
As technology progresses and we are able to better measure skills and competencies vs. job requirements, hopefully we'll be able to tie actual wages to a person's abilities. However, this takes both time and money to roll out, and only the big HR organizations can afford this stuff. Technology brings hope to me, because personal bias is too hard to overcome alone.
(ok - that's my rant for the 4th quarter...)
Sunday, November 27, 2005
I just wanted to make a few comments on the Fusion product. I apologize, but I'm still trying to get more clarity around the scope of this release/product, but it appears to be software that will be similar to middleware, where several applications can run on the same Fusion software. I'm not sure what this means in terms of modifications to the current tech stack, but I'm sure there will be some major changes. The scope of this release is very concerning. I can't comprehend how they are going to seemlessly get all of the suites (Oracle, PeopleSoft Enterprise, PeopleSoft Enterprise One) to operate on the same software. What a daunting task. I can't help but hope that Fusion doesn't stand for:
Anyway, I'm keeping the faith and hoping for the best!!!
The same blogger (Patch Adams) also had a post recently about Oracle HRMS. As many of us in the HRMS world have concluded, Oracle HRMS isn't the greatest thing out there. This post gives a decent comparison of PeopleSoft and Oracle HRMS.
Tuesday, November 22, 2005
First, Arinso recently got certified in their SAS 70 Type 2. I'd like to just say that if you're a public company in the U.S. going for full HRO (with benefits and payroll), please ask to see if your vendor has their SAS 70 Type 2's. I'm not sure what they were certified on, but it looks like it's only payroll processing controls. I'm not sure as I'm not a finance guy, but don't they need to certify not only gross to net, but timekeeping, tax filing, garnishment processing and other payroll processes individually? It also begs the question if they have already done their benefit SAS 70. Since these are also large employer expenses, they will definitely hit the bottom line. Maybe a finance person who's actually read Sox can weigh in.
Second, it's been pretty obvious in my HRO posts that I don't take Ceridian seriously. They were recently awarded an HRO contract for 8000 employees in the U.S. and Canada.
Ceridian will be responsible for a wide range of processes for 8,000 PHH employees in the U.S. and Canada, including HR and payroll management, benefits, time and attendance, talent and acquisition management, COBRA, Flexible Spending Account services, tax filing, work-life and employee assistance program (EAP), and HR compliance. In its role as HRO provider for PHH and its other HRO clients, Ceridian provides functional support of multiple HR and benefits functions, and in turn alleviates recurring administrative tasks and cost burdens for its client companies.I'm actually surprised that Ceridian can put together that broad of an offering. While I really doubt they will be able to handle it in the back end (other than herds of people duct taping the thing together), it is an impressive assortment of services for this company. As the HRO mid market grows (currently dominated by ADP), we'll see if Ceridian can build some momentum.
Friday, November 18, 2005
So after being told that my talent management “scorecard” was incomplete and inadequate, I visited one of the SuccessFactors webinars and got a high level overview. Keep in mind that the opinions here are simply those gained from a 1 hour presentation and I don’t know what I don’t know – these are just first impressions.
That said, the first impressions were rather good. In fact, I’m quite positively impressed. First of all, I really like the on-demand software model. Vendor hosts everything and rolls out modules to clients as needed similar to the salesforce.com or workday.com model. Secondly, they sport a pretty impressive client list. I won’t name them here, but you can check it out at successfactors.com. Third, I love any product with dashboards. Dashboards are a great way to tell managers (who never have enough time) how they are doing on key metrics on a single page. I’m not a communications expert, but navigation and layout seemed pretty intuitive to me.
In terms of functionality, SuccessFactors is really a workforce performance management play with some other stuff. Succession, performance, compensation, employee surveys are all core functions with goals and competencies wrapped around the whole thing (and then analytics further wrapped around that). All in all, a very nice package. Their performance and succession modules were very robust, but I felt a bit disappointed in the comp management side. Granted I didn’t see all there was to see.
I should note here that I’m always disappointed in the comp side of TMS products. Compensation is similar to LMS and LCMS. The functionality needed there is so extreme that you really need specific software. So even though when I talk about integrated TMS as talent acquisition, succession, LMS, performance, comp… there are certain grouping of functionality that easily fit together, and others that require more specialization. So this isn’t really a critique of SuccessFactors since I believe none of the TMS vendors to LMS and Comp that well unless its their specialty.
OK – back to reality. What’s wrong with comp? Well, nothing really. It’s basic comp. This means that you can post merit increases, do some stuff with variable pay and non-cash incentives. When I talk about full comp functionality (that nobody but Hewitt, Mercer, Towers Perrin and Wyatt have) I’m talking about full global compensation databases with job categorizations and the whole shebang. SuccessFactors is not competitive with the big comp players, but sufficiently competitive with the other TMS players.
So all in all, I have very positive first impressions of their TMS suite. I’m hoping to see more of them (perhaps in a vendor selection) in real practice.
Thursday, November 17, 2005
This is a 6 part series in The Edge's Financial magazine - a daily and weekly magazine in Malasia. It was written by Leo Fernandez, a Hewitt employee. When I was writing this, The Edge had let their domain name expire. Therefore, understanding that I'm violating 1000 copyright laws, I'm posting 5 of 6 articles in pdf form. The pdf preserves the copyright mark of the publisher and names the writer, etc... At such time that the publisher wants this removed from this blog, I will do so immediately one I receive an e-mail. I will do the same if requested by the author or by Hewitt. I will not check to see if the Edge gets their domain back.
Exciting times ahead for HRO
Choosing the right partner
No shortcut to success
Management: When partners really partner
There are a couple of factors here. First off, what is the tradeoff between talent and disruptive behavior. We do often find that talent comes with a fair share of arrogant and egotistical people who believe their way is the only wat. It really depends on your ogranization and the culture you are trying to achieve. Sales oriented organizations might be more forgiving of these types of disruptions and the conflicts they bring. Service and production facilities might desire more peaceful operations. I think that heavily sales oriented, entrepreneurial companies are willing to put up with more crap.
Second of all, I wonder what T.O. is doing to his "brand" as he creates these disruptions. Sure, he might be the "best" at what he does, but he can only do his job in a heavily team orented environment. In Tom Peter's "a brand called you" is T.O. destroying his brand be being over the top? I'd love to hear Regina or another branding expert comment on this.
Wednesday, November 16, 2005
Apparently, 32 multi-national corporations have signed on for ADP's HRO platform based on SAP. This is far more than I thought it would be, and in addition to ADP's standard platform (ADP Enterprise) for U.S. domestic populations, I think this easily puts ADP in the #2 spot for total sales.
One other note was that these 32 companies provided service for 190,000 employees. This fits in with what we know about ADP HRO being a mid-market solution. If you average it out, we're talking about 6,000 employees per company. These might be $20-100M contracts, but nowhere near the $300M to $1B contracts that Accenture, IBM and Hewitt are after (over 7 years). So number 2 in volume of sales certainly does not equate to revenue in this case.
Tuesday, November 15, 2005
For those of you who don't know, TPI and Equaterra are the biggest names in vendor searches and are quite well known in HRO and service delivery circles
Monday, November 14, 2005
A reader recently wrote to me requesting my thoughts on payroll outsourcers and their HR products. This was written for a 500 employee organization. I'm posting because I don't think I've ever ranked payroll outsourcers. Here are my verbatim comments below:
I have not done any rankings purely on HR/Payroll outsourcers. Most of my knowledge would also be with larger organizations. However, below are my brief opinions in no particular order (not sure if they are on the blog or not). I only talk about national vendors below. Smaller regional vendors will provide better overall service quality, but their compliance standards
are questionable (tax primarily).
- ADP will almost definitely be the most stable environment for you regarding payroll processing. Their tax, garnishment and print/distribution processes are overall better controlled than their competitors.
- ADP products have changed fairly significantly over the last 3 years. PCPW is being phased out for newer and better internet products. These products will also include decent self service (as will Ceridian).
- If you are in a growth mode or think you will close in on 1000 employees in the next 5-7 years, do not consider PayChex. Period, end of statement. Otherwise, you can look at them but their HR is terrible and technology is very last century.
- Ceridian will allow more flexibility on the HR side. If you can manage an upgrade to their eSource platform, they will have much better HR functionality than ADP will. ADP has superior HR functionality that they only sell to larger organizations (over 1000 employees).
- Ceridian HR (see #3 above) must be used and implemented very carefully. Their product set has been pieced together over the years and is not truly integrated from a database architecture standpoint.
On the Customization comment:
- I find a significant difference between customization and configuration. Configuration is the changing of table values (for example adding cost centers, jobs or location codes). Customization is actually modifying/creating a table and adding core functionality that was not there before.
- Don't customize!!! Find a product that is sufficiently configurable to meet your needs. If you need to customize, Ceridian is more flexible. However, I've been to many companies that have customized their software and basically screwed up their whole PR process. Once again, ADP has stricter controls. For something like PR, this is a good thing.
- Your needs below (allocations, dept numbers) should fall in the config category. Either ADP or Ceridian should work fine.
Rankings for HR (500 employee company) (keep in mind I'm focused on Fortune 1000's and have a bias regarding what I think is decent software)
1. Ceridian eSource
2. ADP (don't remember the product name - and remember we're not talking about ADP Enterprise here)
3. None (PayChex isn't even worth mentioning)
Rankings for PR (you are going to be hostage to whichever processing center you are close to. Some processing centers within the same vendor will be better or worse than others.) You didn't mention what size organization you were 3 years ago. If you have grown, you might be able to expect slightly better service, but the real leap in service quality happens at
around 1000 employees.
Thursday, November 03, 2005
interesting view of the top 5 hro providers. i play heavily in this space as a hr consultant and not sure i would classify the same way.Thanks for the follow-up, it will be great to continue this discussion as the industry evolves. ADP is really the only player I might disagree on. They might be pulling together the HR side of HRO and their international offering is growing on SAP. However, the HRO and international salespeople are silo'd and the offerings may not be compatible.
true global hr bpo providers:
IBM - just because they are IBM... but limited experience to date
Hewitt - 800 lb gorilla
Convergys - well kept secret
Accenture - waffling commitment to hro - maybe doing a deal with hewitt?
ACS - low cost provider. would like to see them do something real after mellon. have been quiet and having contract problems.
ExcellerateHRO - wanna be... no real success.... TP relationship is interesting, but not so sure the marketplace has seen the power of it yet
others providing niche services but not really offering true HR BPO
ADP - payroll plus
Fidelity - hr/ben/pay for us clients
Arinso - pan-european payroll plus
Edited on 11/03/2005: This evening, I received an e-mail from Workforce Magazine requesting that I remove some text of the Fidelity HRO article from my post. In my attempt to be a "good citizen" the text has been removed, but you can still hyperlink to the article. Here you go:
I found this article on Fidelity HRO on the Workforce.com website. As with other articles on specific vendors, I found it to be somewhat misleading. Chances are, Workforce.com interviewed a PR or marketing person for the article and simply reprinted the statements. I've publicly criticized other articles and corporate press releases in the past, so obviously I have no problem doing so now.
For example, the article states that Fidelity provides 2 or more services to over 100 companies with more than 10,000 employees. The first of these services could be 401(k) and the second could be ESPP. There is really no way of knowing how Fidelity characterizes "services" and if they are indeed HRO types.
What (if anything) do I agree with? It says that some analysts say Fidelity is in the top 3 or top 5 of HRO providers. My top 5 are Accenture, ACS, ADP, ExcellerateHRO, Fidelity and Hewitt (in alpha order). There are actually many HRO vendors looking for that 5th spot and are very close and I named 6 because in my opinion 3 of those 6 are tied for spots 4,5,6.
The last paragraph of the article talks about how Fidelity built it's own system and is courting the SAP and PeopleSoft users of the world. I'll just state that I don't have full confidence in Fidelity's build-out. They use the Oracle database as a platform and basically created code and tables from the ground up. Early installations went poorly and the functionality was incredibly weak but I have some confidence that the database is much improved. However, I don't know that it's SAP quality yet.
Tuesday, November 01, 2005
However, I should mention that I found this text in Yahoo! finance:
Leder reported that Hewitt Associates (NYSE: HEW - News) filed an 8-K form granting 65,000 restricted shares to four company bigwigs and "change in control" severance agreements to some 24 executives. She notes that, "The agreements are fairly standard.... But they're probably worth paying attention to, since we've all seen this type of pattern -- expanding the number of folks covered by change in control agreements -- as an almost routine event when a company is prepping itself for a sale."
Friday, October 28, 2005
First a note on the marketplace:
The top 0.1% (930 out of 1.2M) of companies employ about 30% of the workforce. These are organizations with over 10K employees and are relatively difficult to market to. However, when that market has been successfully penetrated, incredible revenues from volume are probable. A similar number of companies (934) employ between 5000 and 999 employees and constitutes an additional 6% of the workforce. You can see from these statistics why top tier companies are trying to penetrate the mid-market and straying away from old philosophies that only the Fortune 1000 was worth selling to. In total, about 40% of the total workforce are employed by organizations with over 1000 employees.
For HR vendors whose source of business is derived from employee volume (HRO vendors, traditional outsourcers like ADP and Ceridian, and many software vendors) increasing volume with fewer sales would be extremely attractive. In the right sales model, sales acquisition costs (incrementally per additional employee) could also be significantly less expensive.
Below, I’ve graphically highlighted from HRMarketer’s published text. Unlike previous diagrams I’ve made, this is wholly agree with their categorization of the market. However, I’ll use it for illustration purposes.
(click for full size image)
I have also moved some of these “pillars” around as I see them. Granted I’m biased as a consultant, but indeed I think most of you would acknowledge that few vendors provide the strategic and objective expertise that a consulting organization will.
(click for full size image)
My simple view of the HR world is that HR organizations (with or without their consultants) need to navigate these “trends” that are occurring in HR. We see constant shifts in these trends, and senior HR management must determine which are useful to their organization. It’s also important to identify which trends have been recycled and re-branded. In many cases a “new” trend has indeed existed for some time and may have been implemented (unsuccessfully). Once the strategies have been formulated, the tactical data framework may be sought out. I separated outsourcing and HRMS from consulting because these are less advisory services, and more data services. For obvious reasons, HRMS and Outsourcing data services reside at a higher level than the point solutions. Once again, for the point solutions, I don’t agree with the categorization, but won’t change what HRMarketer has done for this purpose.