Talent Management Scorecard updated

Here's my original post. I have updated Authoria and included Softscape.

So an integrated point solution in the talent space should/may include (1) talent acquisition, (2) new hire onboarding, (3) performance management, (4) compensation management, (5) learning management, (6) succession planning, (7) analytics, (8) ESS, and (9) MSS. This is probably not a complete list. Here’s how they stack up:

• Kenexa: 1, 3, 7, 8, 9
• Recruitmax: 1, 2, 3, 4, 7, 8, 9
• Authoria: 1, 3, 4, 6, 7, 8, 9
• Workstream: 1, 3, 4, 5, 6, 7, 8, 9
• Softscape: 3, 4, 5, 6, 7, 8, 9

Human Capital Benchmarking

So SHRM put out a new survey called the SHRM Human Capital Benchmarking survey. Apparently they are going to do this every year. The metrics that come out of this should be pretty good as they certainly have enough member organizations to pull from. For this year’s survey, they pulled 1500 company responses. (same document says 1000 organizations and 702 as well) At any rate, the study is worth mentioning even though I'm not a fan of SHRM.

Page 18 outlines HR expenses by industry. I would be really interested in HR expenses by company size, but it’s not published in the executive summary. While I’m sure their data is accurate to the respondents surveyed, there are a few areas I found curious:

• Median Government Expense per FTE: $992. Government organizations I’ve seen seem to have a lot of waste when it comes to bureaucracy and administrative expense. However, it’s possible that they are not overstaffed as I would have first assumed. Maybe they are not doing the work at all, which would explain the low figure.
• Median Service (non-profit) Expense per FTE: $1935. This seems extremely high. Many people I know who work in service do so at a salary and benefit premium. However, HR expense does not include benefit expenses, but the not for profits tend also to lack the training and development support associated with HR expense. This very high figure is curious to me.

The next interesting area was the HR to employee ratio. Generally we think that you get roughly 100 employees per HR person. How an HR person is defined is a mystery, but this survey seems to indicate generalists, specialists and analysts, and management. It excludes payroll. Other than one anomaly, I thought the ratios were right on target. Organizations with fewer than 100 employees had a median HR staff of 2.7 employees. Perhaps they have a couple of people doing recruiting and benefits and ER, but my guess is that recruiting in most of these organizations is outsourced along with benefits. As we go up the ladder to higher employee counts, we eventually get to about 0.4 HR employees per FTE. So for a 10,000 employee company, you have 40 HR staff. At 5000, you have about 25 HR staff.

So here’s my critique for the day: The reason I’m saying this is on target is because in my experience, this is actually what I see in the HR workforce. I’d like to say that this ratio is preposterous and organizations really don’t function at good capacity with these staffing rations. Only the most efficient and well set-up organizations can perform well here. In order to do so, you need well centralized HR, call centers, and relatively few deployed generalists.

Paychex vs. ADP

For the vast majority of employers, Paychex is a viable option. If you have followed my blog with interest, and find the players I generally talk about to be potential vendors for your company, then you are probably a larger employer.

Here's an article from Motley Fool about Paychex. And here's a quote:

More important than the broad growth numbers at Paychex is the underlying
growth in the payroll services portion of the business and the additional services related to payroll processing that the company can charge for. Long-term, there is still room for growth in payroll processing -- not only by possibly taking share from a competitor such as Automatic Data Processing (NYSE: ADP), but also from a number of smaller players in the industry. Small business growth in the U.S. could also help.

OK - I'll give up on the fact that Paychex is taking market share from ADP and other players. They probably are. The small market is pretty ripe pickings and Paychex is the low cost leader, but they also have financial strength and some quality. However, They have a terrible product and no market share in the large employer market. They will not get market share until they have better products, but they are not developing anything of interest and would have to aquire a product to be competitive (ADP purchased PeopleSoft source code).

ADP on the other hand, is getting into the HRO market (the number 2 player in terms of contracts signed), has a large benefits outsourcing arm (number 2 behind Hewitt in terms of employees served), is by far the largest payroll and tax vendor, and has a great HRMS solution (compared to Ceridian, Paychex, and even some software vendors like Ultimate and Oracle).

I place my bets on ADP. ADP is growing their market space. As the above quote points out - Paychex is just stealing business from other payroll vendors.

Choosing an HR consultant

As an HR consultant with a major global HR firm, I really enjoyed this article about selecting an HR consulting partner. I would also say the below rules also apply to selecting a good vendor. Not all vendor relationships are like this, but a good HRO relationship will be.

All following text from HR.com

Most HR people are called upon at one time or another to evaluate consulting options and even recommend who ought to be hired. Unfortunately, the process is usually worthless, since all the wrong questions are asked and all the wrong factors applied.

Here’s what you should know about any consultant or consulting firm worth working with you:

1. They are evaluating you just as you are evaluating them. They are not looking for a “sale,” but rather for a partnership. Good consultants will be judging whether or not they want to work with your firm.

2. They will insist on meeting the buyer. Tuck your ego away. It’s an ethical necessity to meet with the person who is actually authorizing the investment and who will be the true partner. If a consultant doesn’t demand this, then he or she isn’t acting in your best interests.

3. They will have references at the right time. No one is going to provide you with valuable references (who shouldn’t be called often) at preliminary meetings and in early discussions. But impressive references should be available at the time that a proposal is requested. (In the meantime, you can evaluate credibility based on the consultant’s discourse, collateral materials, web site, suggestions, demeanor, etc.)

4. They will agree to provide a written proposal with options, so that your company can evaluate ROI alternatives. That proposal should be based on business outcomes (e.g., increased sales, decreased attrition, better teamwork) and NOT “deliverables” (e.g., training sessions, reports, manuals, etc.).

5. They will not suggest nor convey an off-the-shelf resolution to your issues. (Training companies provide pre-packaged “solutions” for a set price; consultants do not. That’s one way to tell the difference, no matter what the business card claims.)

6. They will “push back,” and not merely respond to your requests. Good consultants ask “Why?” when you tell them you want something, and attempt to determine what you really need, which may be different from what you think you want. That’s why you’re assessing outside help.

7. Finally, they will transfer skills to you. You should be enriched after using consultants, not just in problems solved or challenges met, but also in the continuing ability to apply what you’ve learned.

If you find, ironically, that you can intimidate and easily influence the consultant, then you’ve got the wrong person. You really need someone who will assertively tell you the truth, not what you want to hear.

Work Life Balance and Bill Gates

Michael wrote a very nice essay on work life balance the other day and I had a few additions. (partial excerpt below)

Given my general focus is in HR and technology I could also not forget about all this technology that promised extra leisure time? Technology is NOT helping. How can you have a balance when employers expect you to be always available? Originally the very tools to help us attain work life balance have turned on us and now provide employers (and society) with the expectation that we are always available. The simple mobile phone has become a tentacle that keeps us connected to the world, we can be contacted at anytime, anywhere, whenever the callers wants us.

For myself, I personally have no work life balance. I have an office a 2 hour drive away, but I am generally working out of a client site or travelling. My work day can be 12 hours. When I get home, I turn on my laptop and do work while my wife watches TV or reads. Bottom line? I love cell phones, laptops, extended networks, and blackberrys. But hey - I have no kids and my wife is incredibly supportive. Below are some more articles.

Management Issues, Still Unsure About Flexibility. This is a UK article about the problems with flexibility in work/life and how employers still seem to not take balance seriously.

Bill Gates: The New World of Work. ahh Michael, you're right. The majority of this article is not about technology and work/life, but it's clear that Bill Gates and employers think that work is moving into the home space.

So it's not just the PC that's getting smaller and better, it's also this phone and the software that we give to the information worker has to incorporate this in as well. In fact, for many people you've got a PC at work, a PC at home, your portable PC,

Engagement, Engagement, Engagement!!! Again!!!

In the latest rendition of the engagement conversation, Michael had these words to say. It would appear that we're (the bloggers) not the only ones talking about engagement. Here are a few more links with my links or excerpts:

Management Issues, Attitude and Engagement. Along with the below excerpt on engagement, this also speaks to my many posts on workforce planning and the aging U.S. workforce. You might also want to take a look at this article for their interesting "Six Types of the U.S. Worker" and the descriptions.

"Today's workforce already experiences alarmingly low levels of engagement in work. Improving engagement - finding ways to encourage individuals to invest more psychic energy in work - is the single most powerful lever that most corporations have to improve productivity."

"In summary, work plays different roles in peoples' lives," Erickson said. "Employees in each of these segments want different things from their work experience."

In interviews with 7,718 workers carried out by Harris Interactive, the researchers found that paying a worker more money does not, by itself, produce higher engagement levels.

Reasons that people feel engaged by their work vary from one segment to another, Erickson said.

HR.com, Why I Like My Job. HR.com actually went out and interviewed random people with this question. There are all types of people from McDonalds workers to FedEx. These are all jobs I'd loath to have, but it's interesting why some people are satisfied.

The Missing Element

One thing should be of paramount interest to all of you. Even with the person who demonstrated dissatisfaction with their job, the one element that did not affect job satisfaction was amount of pay. No matter how many dollars and cents you throw at a person, if a positive work environment, quality challenging work, and a sense of worth are missing, the level of satisfaction and amount of quality productivity will plummet. You may as well invest precious dollars in a dry oil well.

Dialog Newsedge: HR Managers Go For Employee Empowerment. This article talks about empowerment which is clearly quite different from engagement. However, the two are probably indirectly related and there are some OK strategies for increasing empowerment and decreasing attrition.

Mercer HRO takes off

Well, I was wrong again. I really thought the Mercer SynHRgy merger was going to be a flop. In fact, I was fully convinced that Mercer would spin the HRO arm off sometime this year. Instead, they have 15 new deals so far in 2005 adding an additional 300,000 employees to their services.

For those of you who don't really know what pricing is like for full service HRO, let's call it $10 to $20 per employee per month. $10 might be for just payroll and call center, and $20 might be for PR, benefits, and HR call center. I'll split the difference and we'll just say $15 pepm. 300K ee's times $15 pepm times 12 months comes out to a staggering $54,000,000 of additioanl revenues per year. And that was just the first quarter. Keeping up this sales pace, they will be adding $200M in revenues each year.

OK - next few days I'll put up a post regarding why HRO is so hard and why nobody is making huge money.

Commitment vs. Engagement

In response to a recent post, Regina said:

I am back and something is niggling at me these days about "engagement." I guess I am struggling with the differences between engagement and commitment. The terms of engagement are different. I am thinking about how to articulate the differences. Maybe engagement is the default since commitment is so hard nearly impossible to get these days??

Initially I thought I had an easy answer, but as I thought about it, some confusion grew in my own head. Here's my attempt at an answer:

Commitment to me seems to be the idea that the employee feels some sort of responsibility to the wellbeing of the organization as a whole. This may be a responsibility to the company, his/er product, facility, or department. Engagement is commitment and it adds to it the feeling of excitement and enjoyment of one's work. Basically, engagement is a deeper level of commitment.

Let's take for example Coca Cola employees (just because Regina has me thinking about this brand thing). A Coca Cola employee is probably pretty darn committed to the Coke organization compared to Pepsi. That is to say that a Coke employee would never jump ship and go work for Pepsi. However, While you're average Coke factory worker loves the product, they may not feel that engaged in their work. Another example would be GM automobile employees. This may be stereotyping, but your average detroit UAW member would not drive a Japanese care. But at the moment, they all hate their jobs and are pretty distance from commitment.

Human Resource Lessons Learned from Star Wars

This was a rather amusing post on talent management and Star Wars. You will also be able to gather from my previous posts on employee engagement and my readings of Regina's blog that in addition to the below problems (lack of good communication and what not), that the Jedi unsuccessfully communicated brand. The fact that Anakin could make such an extreme jump in employers shows that the Jedi ineffectively communicated the brand. Many of us who are "engaged" employees would never dream of jumping ship to go to a competitor!!! Obviously the Jedi did a poor job helping Anakin understand the differences in their core values and missions.

I'm pasting a couple of excerpts below:

/24-7PressRelease/ - New York NY, June 22, 2005 - Through George Lucas' storytelling, filmgoers have come to know Darth Vader as the epitome of evil. But as viewers learn from the latest Star Wars trilogy, underneath that intimidating exterior beats the heart of a man whose turn to the dark side was largely a result of his frustration with his former employer.

What if the Jedi had an effective human resource program? Perhaps we would have seen Anakin chatting with Yoda over intergalactic eggnog at the Jedi holiday party, rather than Darth Vader bowing to the evil emperor in Revenge of the Sith.

So where did the Jedi's HR program go wrong? At first glance, there doesn't appear to be a problem. After all, the Jedi offer an excellent training program for new employees, surely making them one of the galaxy's employers of choice. Where else can you learn how to wield your very own lightsaber and do Jedi Mind Tricks? They don't offer that type of training even at Microsoft.

"A Career Progression program could have helped in this situation," explained Michael Maciekowich, National Director, Astron Solutions. "Building career paths lets employees know that they are moving forward within an organization, giving them a sense of direction. Anakin would have realized that the Jedi cared about his career growth, and that the promotion to Jedi Master was an attainable goal, had there been a clear career progression program in place."

One major reason why Anakin eventually turns to the Dark Side is because he believes that they offer better "benefits" (and we don't mean a good dental plan). The confused, young Jedi is concerned that he is going to lose someone close to him due to medical reasons, and believes that his new position will offer him the "ultimate" in healthcare insurance. As he quickly learns, however, his new employer wasn't exactly truthful about the health coverage. Perhaps the Jedi weren't clearly communicating their own benefit plan to Anakin.

Increased communication and attention to employee feedback could have helped in this situation as well.

Authoria buying Hire.com

Wow wow wow... This is huge for point solutions. Authoria is buying Hire.com, meaning they will be that much closer to being a full service talent management suite. Check out my old scorecard of talent management solutions here. All Authoria needs is an LMS and LCMS.

Workforce Planning again - The Definition

I read Regina's post and immediately became judgemental regarding the person she linked to. I really should have read Brossard's entire interview prior to jumping to conclusions, but as Regina wrote specifically about Brossard's step 3, I decided to keep my tunnel vision glasses on.

Apparently however, (not that I've taken the time to read Brossard's interview), his perspective on workforce planning is very similar to mine. Certainly I'd at least like to make a distinction between workforce planning, workforce management, and position management (which I define very broadly in response to Regina's post).

Also, I'd like to include a link to a nice workforce planning whitepaper by Wisdomnet.net. You can also do a search in my blog on worforce. I've written a few times about this. Below is a definition by wisdomnet.net that is much more precise than mine on Regina's board.

"Workforce planning is the purposeful process by which an organization determines future human resource requirements needed to achieve the strategic objectives of the organization. It requires an analysis of numerous factors including current staff, long and short-term needs, and weaknesses in the talent pool. It also calls for a detailed understanding of the skills of the workforce and advanced decision support tools to help maximize the organization’s talent pool. Workforce planning includes sub-processes such as staff planning, capacity planning, and forecasting; its purview is the entire breadth and depth of an organization. Companies that maintain an effective workforce planning process have an understanding of the capabilities and trends in the marketplace and can use that knowledge to make effective decisions about the talent pool."

McKinsey on Global Outsourcing

It ain't so bad as we think. McKinsey Global put out a new study basically stating that the ability of organizations to outsource is slower than we think. The core operations that are being outsourced are usually simply done. Most organizations have difficulty piecing out processes and can't outsource.

"Moving tasks to faraway sites isn't simple. According to McKinsey's study,
many business processes are difficult to separate into discrete chunks that can
be sent away. Many insurance companies use information technology systems that
have been cobbled together over time and would be difficult to manage remotely.
Managers can be unwilling or unprepared to work overseas. And sometimes the
tasks that can be sent offshore are too small to make the move worthwhile. "

The truth about what "integration" means

Integration? What does integration mean to you? Does integration mean the constant and immediate transfer of data between tables of different modules? Does it mean that there is no transfer of data between tables because tables are perfectly shared? Does it mean that you run a process to move data from one module to the next?

I have heard many words used interchangeably. Integration, synchronization, interfaced… What do these mean and what is the affect on your working life? The problem is that every vendor will tell you that their product is integrated. So if you are purchasing an HRMS with payroll and benefit administration components, and you are told that the product modules are integrated, chances are that you believe you will only have to enter an employee address once and the system takes care of itself after that.

Scenario 1: In some systems, many base employee tables are actually duplicated. Let’s stick with the example of employee address. If the employee address is entered into HR, and then you run a process to “move” the data over to payroll, and then you run another process to “move” the data over to benefits, then you don’t really have an integrated system – do you? It might be better in that you might have a system that automatically initiates the process of “movement” for you so you never know it’s happening. The fact of the matter is as database design goes, it’s not really integrated. Why is this a problem? Simply because the constant movement of identical data to database tables will eventually cause integrity issues. You data will get out of sync and then you have bad data to clean up.

Scenario 2: In order to create your payroll and benefits file, you actually have to run a process at the end of each day (or hour, or quarter hour) to move data around. Now the problem is that it’s not real time. This may not be critical in most functional areas, but most large organizations have a problem with not being able to see stuff in benefits when a change has been made in HR.

Scenario 3: What if a database was designed from the ground up? Well, that address table would be located in one and only one place. Then HR, payroll and benefits would all look at and pull data from that single table as other tables and processes needed said data. Therefore, everything is always real time, and you never have data integrity issues. It’s much cleaner.

So why does anyone do what’s in realities 1 and 2? Simply put, many of today’s vendors – even the larger ones – purchased their software as separate components and then melded them into a single application so you could not tell the difference. This adds yet another complexity called normalization (which is problematic in other ways not discussed here). A perfectly normalized database should have appropriate unique identifiers. For example, an employee ID should be the same ID for HR, payroll and benefits. However, if you purchase disparate softwares and lump them all together, I guarantee you the components have different employee ID parameters. Smart vendors fixed this problem. However (and one large HR vendor comes to mind) actually has different ID’s for HR, PR and benefits!!! This might be transparent on the UI, but try a couple of outer joins in an ad hoc and you’re dead.

I can sit around and lecture you for hours regarding the negatives of each software vendor. The key is to be aware of the technology you purchase and not be fooled by the sales spin.

Turnover analytics and employee utilization

Unicru put out a nice whitepaper entitles "Why Analyzing Turnover Is Not Enough." You can register to download it for free here. In it, the author describes how extending the conceptual data framework around turnover and expanding data results across other measures, your turnover statistics can become drivers for higher employee utilization and cost savings. I think this whole thing fits quite nicely with the previous post on employee retention and utilization.

The author's measurements illustrate what we all already know through quantitative analytics. We modern HR professionals all recognize that this is how we get things done - by showing impact to the bottom line.

Decreased turnover = increased tenure = decreased unproductive new hires
= decreased overall learning curve = increased workforce experience
= increased productive time = increased revenues

So along with turnover, we add the following metrics to create a total picture:

• Time to hire
• Time to competency
• Average length of service
• Retention

Which brings to mind another topic for the future - I've never done a review on reporting systems...

Talent optimization and engagement

Somehow, I’ve gotten myself into a bind by promising a write-up on what I perceive to be the linkage between employee acquisition, retention, satisfaction, and engagement. I’ve mentioned it here and here, but have not really had the time to put this all on paper.

First off, let’s start with a very simple pictorial and move through the elements from there.



I’ve called it a productivity continuum simply because I could not think of anything better. As with my post on the employee engagement study featured by Regina and Neville, we should understand that there is linkage between these concepts/activities and distinction as well. Here are a couple more links: About.com: Job seach is about the money and a BLR thing that hints at satisfaction and engagement. We also know that antecedents for each of these employee measures change as we move right and down along the continuum.

As we move right, we find that cash outlays for direct employee benefit become less important. Major/Primary drivers for talent management:
Employee Acquisition: Cash Compensation, Benefits
Employee Retention: Total Compensation, Work-life balance

As we move down towards optimization, we find that cash is no longer important, but instead the cultural factors take over. Cash is still important because you need it to retain the employee, but it is not a factor in engagement. Major/Primary drivers for talent optimization:
Employee Satisfaction: Work culture, stress, ability to impact work
Employee Engagement: Culture, job design, ability to impact customer, management.

So while each of these are antecedents to each other, they all also have separate and distinct requirements that feed them. Well, I think that’s enough strategy theory from me for one day.

Free downloadable HRMS comparison

HR Executive magazine has this on their website. It's a nice grid of software that is fairly simple to read. http://www.workindex.com/hrexecutive/images/hrms_bg.pdf

They also had this guide to specialty software (what I call point solutions) in the same format. So if you are looking for LMS, ATS or whatever... http://www.workindex.com/hrexecutive/images/specsoftware_bg.pdf

ADP's SAP platform comes to North America

I've been hinting that ADP would go to SAP globally for HR/PR. The U.S. and central/south America will be the last ones, but here's a press release saying Asia, Europe and Canada are on.

Total Comp Statement Implementations

Regina had this to say about total compensation statements (TCS) and branding. I absolutely agree. However, I wanted to write about some of the technical considerations around TCS as well. We all know that implementation for any system is never as simple as it should be.

Ideally TCS should be composed of ALL the elements of your compensation package AND overhead components. This means that cash compensation, employer paid taxes, benefit premiums, time off, 401(k), defined benefit plans, ESPP, ESOP, relocation, training costs, etc... should make an appearance. Not all of these costs need to make it to the employee bottom line. You don't want the employee thinking you're artificially inflating the total comp number, but you do want the employee to know if you are spending a significant amount of money on (say) training.

So now we have a few components to work with. The next problem is acquiring the data needed from disparate systems. Anyone who has ever tried to get a consolidated report knows how hard this can be. Keep in mind, not only are you trying to get data, you need a file feed, in a specified format, and that data needs to be scrubbed prior to feeding the TCS. As I'm sure Regina would agree, no point communicating your brand if you do it wrong.

So now we have data, and we think it's been scrubbed. Your next step is to provide appropriate calculations. You probably don't want to do this without your actuary for the DB plans, but for things like 401(k) plans and cash balance plans, put in a few assumptions for growth (your salary will grow by 4% a year, investment balance will grow at 6% and inflation at 3%). Therefore, an employee knows what the potential balance of retirement funds looks like at age 65.

Now we need a website. Perhaps you have a self service or portal technology that will support this for you. Hopefully you are not building this from scratch, although if you are, you might have more flexibility. The site should have all the standard security features on it, but you might make it cool with some employee modeling capability. (for my 401(k), what happens if the my salary grows at 6% and investment returns are 10%, and I retire at 55?) one of the key points I want to drive home is that we've talked about a fair amount of complexity. Now that we're using an on-line TCS, much of this complexity is going to be repeated every month, or however often you allow the TCS to be updated.

If this all seems like too much, start small. Many vendors (outsource benefit vendors or software and ESS vendors) provide canned TCS right out of the box. More complexity means more cost. You can start with basic cash compensation and benefit costs, add 3rd party interfaces from retirement plans later, and add cool graphics web sesign after that. It might start out at $20K or you can spend $500K. The point is that it's a fabulous opportunity to communicate your value to your customers.

Work life balance and retention

Also from World at Work, Watson Wyatt announced a new study saying that work life balance is a major driver of retention. However, the study that 80% of employee think work life is important and 40% are looking for jobs is not news. The question is if the 2 factors are related. I can't buy this survey, so if anyone reads it, let me know.

Based on recent posts, I think it's time we had a discussion on the difference between employee attraction, employee satisfaction, employee retention and employee engagement. Look for that in the next few days.

Many to Many internet applications

Harold Jarche pointed to this at the same time that elearnspace pointed to this. In these businessweek articles is a nice overview of the internet application transformation. I'm a bit short of understanding of where we are in this framework as HR practitioners though. Does HR currently have many to many HR applications (dispersed HR practitioners interacting with dispersed HR customers (employees)?) or is this overreaching? In theory perhaps it's correct, but in most organizations, we're looking at several applications to perform the function of linking many HR people to our customers. Rarely do we see perfectly integrated applications and UI's that allow us to interact in that single environment. In fact, my discussions around point solutions would seem to insinuate that the opposite is true. While we might be able to reach many to many relationships is narrowly focused areas, as an end to end process, HR is very far away from this.

Marsh Mac not selling Mercer

I hate being wrong. Here's a story saying MMC is keeping Mercer.

Just a couple of HRO news notes

New press release from EquaTerra who apparently did a new BPO study. Basically it says that the majority of BPO (includes HRO and FAO) clients are satisfied with their process improvements and that the market is expected to grow. No surprises here, but I thought I'd include the link in case anyone finds it useful.

I've written previously regarding my distaste for "self serving press releases" that are really just marketing opportunities. World at Work published a press release from Hewitt. Actually it’s a not-so-well-disguised marketing release. In it, Hewitt announces that they have consultants who are able to evaluate potential cost savings from HRO. Wow – and I wonder what surprises are coming next?

Workscape code development certified

I honestly don't know much about Workscape code, architecture and design. I was involved in a project with them about 5 years ago when the organization and product were in their infancy and they were impressive at that time. Since then, further product development and functionality have lead me to believe they are among the top vendors for employee HR portal technologies. They provide great functionality and useability, and their development and code have not been certified by CMMI. From what this sounds like to me (I have not heard of CMMI) this is similar to being certified by ISO 9001, meaning that their design and development process follow rigorous policies and procedures for work, audit, testing and QA. For anyone who buys software, knowing that the coding process is solid should net better client results.

Oracle Grids

I love Oracle. I’m not a DBA or even a halfway decent technologist. Just a semi-technical HR guy. But when Oracle came out with 10g application servers last year, I was a pretty excited guy. I saw a new press release about 10g and thought I’d write a little note.

We probably all know about Oracle clusters that have been out for a while. Clusters allow multiple servers to share processing power. Oracle app server and DB server 10g allow disparate clusters to share processing. Basically it’s a cluster of clusters. It’s the most powerful engine out there and it scales like no other. This means that your system should almost never bog down because there’s bandwidth an a server somewhere in the network.

ADP and web services

I keep talking about ADP. (1, 2, 3, 4, 5, 6) but in my defense, they are the largest of the HR outsourcers. CIO Insight has a great article on what they are doing to create a seamless web portal for their multitude of services and systems. I'm not sure if any other traditional outsourcers are anywhere close to the web services ADP is offering. Certainly software vendors like SAP are well ahead, but if you outsource your HR/PR and a self service strategy is central to your service delivery, ADP is a good place to be. Potentially, you could also pruchase web services, but who wants to build this stuff???

This really goes to my previous posts on web services: to some extent, it really does not matter how non-integrated your systems are if you can create an integrated presentation layer for the initial UI.

Employee Engagement Study and Commentary

Regina pointed to Neville Hobson who pointed to a very interesting study by Northwestern University. I’d like to add my 2 cents to their existing commentary.

Fist of all, as Neville points out, this was not some lame and insignificant study. They sent out over 100,000 surveys to employees of target companies, got over 30,000 responses, and then further re-surveyed the non-respondents for bias. I’d like to have seen some more of the quantitative data, but I’m sure they are retaining that for their own consulting uses.

Basic Premise:
Employee Satisfaction = Employee Engagement = Better Financial Outcomes

Mainly I’m interested in the employee engagement and antecedents to that. First off, here’s my definition of employee engagement: the desire of the employee to apply above average effort and dedication to the employer’s work. Based on my read of the numbers, predictors of employee engagement with rankings are: (#4) employee satisfaction, (#1) managerial facilitation, (#3) job design, and (#2) culture (I am aggregating multiple components in the study). Unlike Regina, I was quite surprised that managerial facilitation was the leading indicator, and employee satisfaction was the least of the top 4. I believe that each of these areas are very much interconnected and I’d like to explore that.

What is employee satisfaction? As defined by the survey, employee satisfaction is a function of stress and level of comfort, job satisfaction, and control over quality of service. If we take a look at the 3 of these components, we can mentally derive that culture, communications, and job design are all reconnected here as antecedents of employee satisfaction even while they are direct antecedents of employee engagement. Here’s a majorly convoluted picture of it.



Next, we look at managerial facilitation. Basically this was simplified to managerial supportiveness, communication of established expectations for performance, and effective up and downwards communication. Quite vague, but in short, more communications in a generic sense.

Next on the list was a top priority for me. Job design was the only solid strategic HR activity. All the other cultural, communication, satisfaction aspects are based on somewhat tenuous and less measurable cause and effect. However, the idea that effective and appropriate job design has a direct relationship to the employee’s feeling that they are able to perform, affect, and achieve their job related goals resonated with me. If they can do the above, combined with supportive management, and a culturally sound workplace, then you have engaged employees.

What is especially interesting is that the survey did not find a correlation (by my read neither a positive or negative correlation) between selection, development, performance, or compensation. Certainly other surveys have measured these correlations, and the specific methodologies and language across surveys may have produced some bias. It is also possible that the survey’s definition of satisfaction and engagement precluded these correlations. In fact, the survey notes that managerial facilitation includes expectations for performance, so I’m not sure what to make of it. At any rate, quite an interesting study and you should read it if you have the time.

Really cool job board integration

A recent HR.com interview with WebHire CEO Susanne Bowen piqued my interest when they started talking about integration. Most of the time we’re talking about basic interfaces from a job board back to the ATS. However, WebHire and Monster.com have gone one step further.

If you own WebHire ATS, you can now browse the entire Monster.com candidate pool in a completely integrated UI with WebHire. In other words, you don’t have to leave your WebHire application to go look for candidates outside your database. If you do identify a candidate, the candidate information in Monster.com can automatically be imported directly to the WebHire application. Therefore, a candidate does not have to recreate their profile when they apply for a job at your company, nor does anyone have to keep the interface files up to date.

WebHire is one of the oldest ATS systems out there (remember Restrac?). I have never written about them before because I consider them a Tier 2 player at this time. Back in the old days (hmmm… maybe a decade ago?) the only real players were WebHire and Resumix. These 2 vendors really created the industry. Today, Resumix is owned by Yahoo, and WebHire is sailing along on 15 years worth of client acquisition. By the way – I think they are the only 2 ATS organizations that can survive without external capital.

Anyways: WebHire probably has a few hundred clients which is much better than any other ATS vendor. Unfortunately their clients generally are not the huge revenue generators that Taleo and BrassRing have. However, because they do have so many clients, they have a better recurring revenue stream than the others do.

Candidate sourcing and the tech advantage

A recent HR.com survey focused on how different types of candidate sourcing lead to improved candidate quality and cost effectiveness. I only want to talk about the quality piece here as you can go to HR.com for the survey if desired.

There was more detail in the survey, but I break the results down into 3 basic source types. There is the relationship source, the high-tech source, and the low-tech source. The relationship source includes employee referrals and people from professional networks. This source of candidates provided the highest overall quality of people. The high-tech source includes company websites, job boards, etc.. and this yielded a candidate quality slightly above average. Lastly were the low-tech sources such as newspapers and walk-ins. These were deemed to generate below average quality candidates.

None of this should be at all surprising. Obviously we want our employees to bring in people they know fit the organization, want to work with, and want to benefit from the organization. In order to cultivate this environment where employees are readily giving your recruiters leads, you have to do some communications to let them know its available, provide some monetary incentives, but most of all provide a work environment where people would be happy to recommend their friends into.

That means recruiters are left with the traditional sources, of which the most effective is the technology source. This is obvious for a couple of reasons: people who can navigate the web and do so comfortably are more likely people you want to hire compared to people you find in the newspaper (clearly this is a white collar bias to candidate quality on my part). Technology also has the wonderful capability of notifying potential candidates when a possible job match comes up. This allows employers to somewhat tap into the passive market as well. (Case in point – this is what happened to me. I wasn’t looking for a job, but had auto notifications turned on for years at a job board. Finally one of them interested me.)

I’m a bit out of order, but my next post is on WebHire and Monster.com integration. Take a look at that when it’s posted.

HRO Rumors

This is off the street with no substantive documentation. Word is that Hewitt is being shopped by the investment bankers. I'm not sure who can put up the cash, but possibly IBM or HP? If it does happen though, you heard it here first.

Another rumor is that IBM has been in talks with Mercer. While I have no idea why Marsh Mac would want to spin off this business unit, it makes sense for IBM to bring in some HR expertise.

This next one does have some documentation. My guess is that a Bank of America and Fidelity merger is entirely speculation though.

I'll be putting out real content again soon (once I think of something interesting to talk about).

My opnions on Lawson / Intentia software merger

I got a message requesting my thoughts on the purchase of Intentia Software by Lawson. I have not commented on this previously, because Intentia does not offer anything in the HR space – they are a pure CRM, MRP, SCM play as far as I can tell.

As you already know from previous posts, I don’t think Lawson is a great company. Their software is ok, but that’s about it. That said – the Intentia purchase was another bad idea. Intentia cannot give Lawson much from the financial standpoint. They operate in different core geographic areas, Lawson didn’t buy great new technology, they didn’t buy a huge install base, they can’t convert any of the Intentia clients over to the Lawson platform, and there are basically no operational synergies. It’s a small player buying another small player and getting almost nothing out of it. Anyway – just another example of Lawson not executing well.

Ceridian Rumors

OK - not really rumors, but sounds like Ceridian will be moving all of it's payroll processing over to Atlanta, GA and Chicago, IL. This is a part of their "centers of excellence" and will take them from 4 major processing centers to 2. There will be local print centers, but a major consolidation in other infrastructure. From a people perspective, there will be some layoffs, but the call centers and service support should not change a whole lot.

Employee Development and Workforce Planning

Actually, I just like validation, especially when it comes within a week of my posts. This Brittish article hilights some of the salient points I've been making over the last couple of weeks regarding workforce planning and knowledge management.

• More than a quarter of the current working U.S. population will reach retirement age by 2010.
• In addition to seeking new talent to replace the flood of retirees expected in the next few years, organisations must develop their current employees to avoid the loss of organisational knowledge and experience from those retiring
• a report from consultants Accenture also found that many U.S. organisations were failing to capture critical knowledge and experience from older employees approaching retirement and few seem able to transfer valuable knowledge to newer employees.
• A quarter of those surveyed by Accenture said that their employers will let them retire without any formal transfer of knowledge.

HRO update

This is actually an Indian update on the HRO market, but it has some interesting facts and opinions. First off, I had no idea that Hewitt was creating an outsourcing center there, but it's not a surprise. I'm sure that most organizations outsourcing call centers are looking at or going to India.

An interesting opinion was: "The history of HR outsourcing (HRO) industry can be traced back to more than five decades, when ADP (Automatic Data Processing) set up its payroll processing services in the US. Today, the company has annual revenues of $7 billion and 40,000 associates." While I actually can't dispute this, I thought it was interesting that anyone looks back 50 years to find the roots of HRO. It is true that most HRO is payroll and beneftis centric, a space that ADP dominates alongside Hewitt.

Here's my opinion: HRO is really no more than a decade old. Sure ADP set up transactional payroll processing 56 years ago, but the transactional support combined with technology and employee call center is relatively new. More appropriately put, HRO is the newest evolution in employee centric services and outsourcing. Well, it's just a name anyway.

ADP v. Ceridian

I’ve been pretty clear in past posts regarding my preference for ADP over Ceridian. I have also been clear that Ceridian has more robust HR services. The market seems to agree with me, and if I take a guesstimate, 25% of the U.S. Fortune 2000 outsources payroll and/or HR to ADP, and only 5% does so to Ceridian. I’d like to take some time to explain. As a note, I’m talking about ADP Enterprise HRMS and Ceridian HR/PR (formerly eSource).

Facts (really opinions of Dubs)

1. Ceridian finances are under investigation (and a second link)
2. Core HR/PR is roughly equal
3. Ceridian has more/broader HR services and offerings
4. ADP has a better payroll engine and track record
5. ADP has better inter-product integration

Point #1 has been established and is well documented in the press. I won’t go into it further here.

Point # 2 is fairly compelling and interesting. The major point here is that if you want HR, you must have payroll and this is true for both vendors. Both bring hosted HRMS solutions to the table which are sufficiently robust for the Fortune 2000 to 5000 market.

Ceridian advantages are

• a working and easily implemented benefits administration engine, and
• self service for both employees and managers that can be bought piece-meal
  simpler UI configuration without a toolset.

ADP advantages are

• better effective date handling,
• the ability to purchase a non-hosted system
• better learning management (not LCMS)
• generally more robust functionality
• more options on database engines.

Ceridian disadvantages are

• Microsoft SQL Server as only option limits scalability
• lack of toolset means there is no MAJOR modification to the system.

ADP disadvantages are

• Self service is only available if the HRMS is hosted
• robust benefit eligibility rules are not delivered (think PeopleSoft base benefits).

Point #3 is true if you don’t need integrated HR and Payroll, or if you only need HR. Ceridian offers a relatively decent talent management suite including recruiting, performance, compensation, competencies, succession, and LMS. They fully own the recruiting engine and offer it for pennies. The other functions are from SoftScape through a partnership. I recently wrote about talent management suites and did not include SoftScape in my vendor review. SoftScape is a tier 2 TM suite, so it’s good, but not up to the Fortune 1000 market. ADP can’t touch much this functionality. They do no offer ATS (applicant tracking is in the HRMS), or succession planning. For LMS, performance, compensation and competencies, ADP might be slightly less robust, but these areas are all part of the core HRMS application and do not require additional installs. As a full TM suite, the edge goes to Ceridian.

Point #4 ADP is simply more experienced and has the money to spend on development and compliance. I won’t comment on this further as it’s a gut feel and I don’t have the metrics around it.

Point #5 that ADP has better integration. As per point #3, if you can live with a slightly less robust HCM suite, it’s all in the core app for ADP. If you purchase ADP Self Service (employee and manager), you also get access to other services through their portal technology. So if you have ADP FSA administration, benefits administration, timekeeping, etc… you have a single login for all your ADP services. Ceridian also has good integration, but their SoftScape suite is not connected and self service is not as robust (not a portal based technology).

Web services and non-integration

This article found on the Harvard Business School website speaks to the failure of web services and the trouble of integration.

These days, rather than doing large integration projects, we’re using portals to bring single views to users, but avoiding having a huge integrated database with 100% of the data in one spot. For reporting, we dump everything into a data warehouse or other analytics tool and crank out information that way. In many cases, this type of reporting requires a highly specialized position.

How does this apply to our current strategy of scaled down HRMS combined with point solutions? We really just have some base “census” type data going to the point solutions from the HRMS to the point solution, and summary data going the other way. Gone are the days of full integration, at least for the time being. It is true that integration is getting easier. But with the incredible specialization of HR functions and HR software, the need for generalists to know about every little detail is disappearing.

Workforce planning and best practices

All this talk about talent management. Basically, to dig through the confusion, break it up into 2 components: Talent Acquisition, and Talent Retention. Obviously you can break these 2 areas up to many other sub-functions. Today, I’m talking about workforce planning, something I’ve been building up to for some time.

Workforce planning can also be divided up into several subsets: understanding your current workforce, understanding your future workforce requirements, understanding market supply and demand for employees, and talent strategies to obtain this workforce.

Understanding your current workforce: Basically this is simply knowing who your employees are, where they work, how old they are, and if they have the appropriate skills for today and the future. A factor related to age is when will your employees be retiring. I have spoken with organizations with where the average age of their workforce is in high 40’s. I’d say that if a significant portion of your employee population is retiring in the next 5-10 years, you are at risk. This is due to a large amount of knowledge, skills, and strategic experience with insufficient replacement. If you don’t have replacements, you need to begin thinking about it very soon. If you have a large base that is retiring soon, but you have a large mid-career base, then your strategy will be retaining and transferring knowledge.

Understanding future workforce requirements: This is important because as your business changes, retools production, or automates processes, workforce skills will need to change. However, most of these are long term adjustments you can make. You may also be moving facilities from one city, state or country to another.

Understanding market supply and demand: In the U.S. a large population is about to retire. The mid-career professional is in a shortage situation, but this will not be clearly felt until the baby boomer generation is mid-way through retirement. The supply of younger and unskilled workers is actually exceeding demand for the moment, but this will also turn into a shortage situation as these people enter the mid career market in 15-20 years.

Talent strategies: Between active career pathing, succession planning, and all the other standard talent strategies, organizations must be able to hang on to the talent they have, and attract the talent they don’t. However, organizational communications and work environment shaping are also critical. There has been considerable discussion over the last couple years about “employee engagement.” Studies have shown that certain issues make employees happy: they feel like they contribute, they feel valued, they acre about the success of the organization, etc… Lastly, compensation and benefits may also play a role. From incentives for pre-retirement employees to work longer than planned, to structuring retirement benefits to promote the same, these are critical strategies as increased competition for ever decreasing supply becomes a normal part of the economy.

Management capabilities and catalysts for business innovation

This article found on the Harvard Business School website really addresses the capabilities of management and their ability to apply real change to the organization. As competition intensifies, organizations must look at strategic partnerships to ensure they have the capabilities required, even if these capabilities may not exist within the core organization. These strategic partnerships will also allow the business to strategically grow the market, not simply attain a larger share of a static market.

I’ve done an incredibly poor job at summarizing a couple of many interesting points. I bring this to your attention as I wonder how many HR professionals think about business strategy at this level. Clearly it’s not appropriate to think that an HR generalist will understand long term business strategy, but even our HR executives don’t always have a great grasp of this.

Part of HR’s talent management, learning management, workforce planning and succession planning requires an understanding of where our businesses are going in order to prepare the workforce and management ranks.

Hosted point solutions take advantage of weakness in ERP/HRMS market

There’s some serious movement in the hosted and integrated point solutions arena. Mostly I’m talking about Workstream, Kenexa, RecruitMax and Authoria. All of these solutions are offering portal oriented employee talent solutions. Each of these 4 vendors are also organizations I like a lot.

What is an integrated talent management point solution? Well, first of all, realize you still need an HRMS. The goal is to decrease your ongoing expenditure in the HRMS and minimize implementation expense by limiting customization. If you have a point solution (aka “best of breed”) then the chances you’ll need to customize the solution decrease dramatically. We all know that (for example) SAP and PeopleSoft recruiting is not ready to go out of the box for most organizations. So an integrated point solution in the talent space should/may include (1) talent acquisition, (2) new hire onboarding, (3) performance management, (4) compensation management, (5) learning management, (6) succession planning, (7) analytics, (8) ESS, and (9) MSS. This is probably not a complete list. Here’s how they stack up:

Kenexa: 1, 3, 7, 8, 9
Recruitmax: 1, 2, 3, 4, 7, 8, 9
Authoria: 3, 4, 7, 8, 9
Workstream: 1, 3, 4, 5, 6, 7, 8, 9

Note that none of these vendors has really expanded to full LMS or LCML yet as it’s too big and at this point is really a project of it’s own. It should obviously be included as part of the overall talent management strategy, even though the systems implementation may be a separate sub-project. As per a previous post, you may ask why Taleo is not included in this list. Taleo is really just an ATS and does not include other components of TM.

Not only are these integrated portal solutions offering some of the best functionality out there, the hosted model with a monthly fee per employee is often more cost effective. As a subscription, there isn’t the huge sunk cost of software purchase, no investment in infrastructure, not IT staff to depend on, and no upgrades.