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.