“The VIEW on HR Trends & Best Practices – a Virtual HR World”
I’m in Singapore on my way out to Jakarta for my second visit to Indonesia this year. So it seems an appropriate point to reference a presentation I will be providing in December on ‘Global HR Trends and Differences’.
In a previous post I noted the opportunity for the UK’s CIPD to use social media as a basis for improving its annual conference.
Well, recognising that no dedicated resource currently exists to help develop a virtual network within the HR community, HR.com is launching its new role as a provider of virtual conferences for HR (VIEW: Virtual Interactive Educational World) with a special 2 day event on 12th and 13th December.
HR.com aims to take the most successful elements of a live HR conference and transform them into the virtual world of the Internet. HR.com’s virtual sessions will include online presentations, over 100 virtual booths, online chats, product demonstrations, and opportunities to gather information.
After Harrogate, I said that the benefits of using social networking for this type of conference would be social as well as educational. And the VIEW conferences will provide the ability for over 1000 attendees to network and to interact with each other online, and to exchange information.
HR.com explain that VIEW events will use the latest tools and technologies to provide a “unique opportunity to learn, interact and connect with members of your community”
The events will allow HR professionals to attend a full-day of interactive learning through webcasts, group chats, break-out sessions, ask the expert workshops and even keynote addresses from industry leaders (HR.com have mentioned Carly Fiorina, Marcus Buckingham, Dave Ulrich, Kenny Moore, Keith Ferrazi and Beverly Kaye) - all without ever leaving the office. Whole HR teams can also get involved – customizing and prioritizing their attendance according to what is important to each person.
I think there is a great opportunity here – in the UK at least, HR practitioners are finding it increasingly difficult and costly to take time away from the office to attend traditional events.
The format also allows presenters and participants from all around the world to get involved. I will be participating in the inaugural 2 day event, presenting on ‘Global HR Trends and Differences’ in the Training and Development pavilion at 4.00pm ET (9.00pm GMT) on the first day of the conference (Wednesday 12th).
I think this will be an important session within the programme. HR.com’s technology undoubtedly provides significant benefits for global participation, but it’s important that we don’t extrapolate this point and start thinking that we can treat everyone from all corners of the world in the same way.
As I’ve posted previously, despite the flattening of the earth, there are still some big differences between countries, cultures and populations. My session will look at how we can best take account of these.
Come along and join me there if you can (attendance is free for all HR professionals). The session will also be available for 7 days after the original presentation.
For a quick preview of VIEW, visit www.hr.com/virtual.
Wednesday, 31 October 2007
“The VIEW on HR Trends & Best Practices – a Virtual HR World”
The author's idea seems to be that organisations can successfully differentiate themselves by developing 'strange' cultures, as well as product / service features etc.
So Stefan Stern comments:
"Strategy gurus tell us that businesses have to differentiate themselves in the market if they want to achieve a competitive advantage over their rivals. Customers will not be interested in a 'me too' experience that offers nothing not already available at a similar (or better) price from another well-established player. A superior product or service may help you pull away from the pack for a limited period of time. But products and services can and will be copied sooner or later.
Much harder to imitate is the unique culture your organisation possesses. So, far from 'benchmarking' yourself against your competitors' best practices and formalising the way you do things to eliminate quirks and eccentricities, maybe you should be heading in precisely the opposite direction. Accentuate your differences, even to the point of becoming a little bit weird."
Or for a non-business example, a winner at a hot-dog eating contest who has a special and unparalleled devotion to the craft, someone who "executes a process like a machine".
"The trick, Prof Cable says, is to find your organisation's equivalent of a hot dog eating contest. 'What strange activity is it that you and your workforce have mastered better than anyone else?'... Sure, this is not normal behaviour. It is obsessive. But it will set you apart - and be hard for your rivals to copy."
Tuesday, 30 October 2007
Just a reminder about InfoHRM's European conference in December.
For those of you who have not seen this, Knowledge Infusion have now launched their
HCM Centre of Excellence, a new service dedicated to delivering the industry's best research, insight, and intelligence to the HCM community.
Some great content is already available. I particularly recommend their presentation from the HR Technology conference, ‘Great New Technologies Just for You’.
Collaboration is also a key focus of the centre, and you can now find my first contributions there at www.knowledgeinfusion.com/coe.
A sense of fair-play is an innate characteristic of humans. There is a well known psychological experiment in which a 'proposer' divides a reward between him / her and a 'responder'. The responder can either accept or reject this. If he / she rejects it, both players receive nothing. Economics suggests that the responder should accept any division in which their share is not zero. But that is not what happens.
An article in last week's Economist explains:
"Scores of studies have run the ultimatum game across cultures and ages. Universally, people reject any share lower than 2-% - apparently to punish the greed of the proposer. People do not act like Homo economicus. Instead, they are the arbiters of fairness."
The article then goes on to review a series of experiments that contrast this sense of fair play in humans compared to its absence in chimpanzees. So this characteristic really is something rather special.
Gary Hamel explains how this is put to effect at Semco:
"The company has no internal audit staff. No one double-checks expense reports. Instead, Semco works hard to cultivate a deep sense of honour and trust among its employees, and since employees share in the profits of the unit, they have a big stake in rooting out fraudulent behaviour."
I bet fraud isn't a big an issue for Semco as it would seem to be elsewhere.
Last week’s Personnel Today included a short story on fraud. I’ve already posted on a similar survey looking at issues associated with a potential influenza pandemic and this is another key issue which is easy to miss as HR focuses on its strategic agenda.
Firstly, the Personnel Today story:
Fraudsters are costing British businesses a staggering £4m a day, according to new research. A survey from accountants BDO Stoy Hayward has revealed a 40% increase in reported business fraud in the UK last year, with the total sum lost around £1.37bn. The most common scams include bogus invoicing, manipulating of accounts and ghost employees appearing on company payrolls.
The warning follows the annual Global Economic Crime Survey by business consultancy PricewaterhouseCoopers, which revealed that the average cost to UK businesses affected by fraud had doubled to £1.75m in the past year.
The survey found a 21% increase in the implementation of whistleblowing systems, but half of the 5,400 respondents said they were effective, and only 3% of serious incidents were detected by such systems.
Stuart Little, commercial litigation partner at law firm Shoosmiths, warned that size was no protection for companies when it came to fraud.
“Employee fraud is now one of the largest problems that UK businesses have to face, and the problem is escalating. Some of the most vulnerable sectors are recruitment, where we have seen many cases of temporary workers falsifying timesheets, as well as IT, where there have been problems with wholesale fraud.”
Little said the best way for businesses to protect themselves was to create an anti-fraud culture where whistle-blowers were happy to come forward.
“We advise companies to tighten internal procedures to clarify the amounts that have been claimed from them and keep electronic evidence as this will help support any potential claims. Be proactive with regular checks, particularly for ghost employees and contractors, and issue legal proceedings for the amount fraudulently obtained.”
My response which was summarised in Personnel Today was that although business and in particular, employee fraud is clearly a significant issue for most organisations (and troublingly, PwC's, BDO’s research and Shoosmiths’ comment suggest that the problem is getting worse), I’d suggest that just focusing on the problem isn’t going to provide the whole solution.
The right internal procedures and controls will help to manage the problem, but if people are going to engage in fraudulent activities, they will soon find other means of doing this once one activity is controlled.
The real issue is why employees are conducting fraud. Have recruitment processes failed to select honest people? Or has trust between the organisation and at least some of its employees completely disappeared?
Positive psychology suggests that focusing on a problem just tends to make this problem more likely to occur. A good example is absence management. If absence is a problem, there are certain things that an organisation can and should do to reduce it. But even more importantly, the organisation needs to improve the engagement of its staff.
Engaged employees will not participate in fraud, and will also be less likely to tolerate those few who do. This is why I agree with Stuart Little’s comment that the key is creating a culture in which whistle-blowers are happy to come forward.
Thursday, 25 October 2007
In my previous post, I noted that integrated HCM systems like Authoria can go some way towards helping organisations create value through their people.
But more is needed.
This is my view about what.
Firstly, an organisation need a clear HCM strategy that focuses on developing a particular organisational capability (human, organisation and / or social capital). This capability needs to be something that will make a difference for the particular organisation at a particular, although relatively long-term point in its development.
Secondly, the organisation needs to identify the sort of people who will be key to providing this organisational capability, and thirdly, it needs to focus its management and HR processes on a) creating this capability, and b) appealing to the group of people it is targeting (ie becoming an employer of choice for the people it chooses). Doing this is likely to result in best fit vs best practice HR processes.
Once these processes have been identified, the organisation can then review what technologies will best enable and integrate these best fit requirements.
Some of Tod's examples got quite close to this. For example, Hess requires quality decisions on oil to be made by some of the best petroleum engineers. This is difficult because less people are graduating in petroleum engineering, and particularly because Hess finds it difficult to attract engineers to its location when it is competing against organisations with very strong employer brands / propositions like Google. So it needs to retain the engineers it has.
HCM strategy = people who will make the best decisions about oil
People = sufficient petroleum engineers
HR processes = retaining these people.
But this is still a fairly traditional type of approach / level of value, so I would say the example relates to HRM vs HCM. Hess is only going to create value through its people if it finds a way to differentiate the organisation through its people, rather than simply dealing with problems in executing its business strategy.
I was talking about this at a session run by Infobasis last week. I was challenged that my views on organisational capability / HCM are pretty much common sense (I guess that this is actually a fairly good thing!). I responded that yes, that this is probably the case, apart from the identification of the organisational capability itself. This is where the real art in HCM strategy development lies: what is it that is going to enable an organisation to create value through its people?
And, despite some of my recent posts, I'm not against measurement in HCM. I just think it's important to recognise that answering the question above lies in taking an emotional leap into the unknown, rather than rational analysis of data.
Wednesday, 24 October 2007
For a number of years, I’ve tended to believe that given the time and cost required to implement HR systems, organisations should generally focus on implementing the HCM modules of their ERP systems to the fullest extent, and then supplement this with particular best of breed / point solutions to provided additional functionality in areas which are important to them (ie fit with their individual HCM strategy).
For those organisations which need to purchase point solutions in performance management, compensation or recruitment, Authoria may provide a good choice. However, I am slowly coming round to the view that a using an integrated HCM suite in preference to the HCM functions of an ERP system may increasingly provide an appropriate approach. And Authoria looks like a very good best here.
This isn’t just my opinion: Authoria recently came top in HR Technology conference’s integrated recruitment and performance management shootout (and their performance and compensation shootout in 2005).
The Forrester Wave: Integrated Performance and Compensation Solutions, Q3 2007, also notes that Authoria, together with Softscape and SuccessFactors, are leaders in this space, due to their "deeper product functionality and inherent integration capabilities":
"Authoria provides strong performance and compensation features across the
suite, particularly in the areas of succession planning, and provides a very
rich User Interface with embedded tutorials and wizards."
So yesterday, I attended Authoria’s European roundtable meeting. Their CEO, Tod Loofbourrow did a great job of explaining the benefits of integration, describing clients which have used this functionality, being able to identify who is performing, how to get more people like this, and from the other direction, which sources of talent produce people who can perform well over time.
One of Tod's examples was Pepsi Americas (one of the drink's major bottlers). The point that the 'rubber hits the road' in this business is product placement in the retail stores. So if one of the company's representatives notices that the store is near a local University, they need to be able to suggest that the store may want to stock more high caffeine drinks to help the students through their exams. So it's important that the company's truck drivers are able to talk to the store owners, and for this they need well developed social skills. This implies a very different set of competencies, which can be managed through integrated systems spanning performance management and reward. Authoria's extension into recruitment is another plus as the bottler can also benefit by linking the truck driver competencies into their recruitment systems.
And what about using the ERP system to do some of this? Well, Tod's perspective is that there is a greater requirement to share data across the front office: the various elements of HCM functionality (recruitment, performance management and compensation), than there is between these elements and the back office: the data contained in the ERP system.
And now that HR can integrate automated HCM processes in this way, Tod believes that “there is no fundamental reason that HR cannot be the most strategic function within the business”. I agree with this vision, and that integrated HCM technology can be an enabler towards this goal, but I think that a lot more is required too, which I’ll try to explain in my next post.
Wednesday, 17 October 2007
I've posted fairly recently on integrated HCM systems, but this post has been getting plenty of traffic so I thought you’d be interested that Leighanne Levensaler at Bersin & Associates has been presenting on Bersin’s new research, focussing on the challenges organisations are facing as they move from disparate, siloed systems to integrated talent management (I would say HCM) systems. I've just caught Leighanne’s webinars delivered via their own site yesterday, and via Plateau tonight.
Like AMR Research, Bersin stress that this is early days for these integrated systems. Only 13% of Bersin’s sampled organisations have an integrated HCM system strategy in place today. The rest use a range of ERP and point solutions with the main point systems in use, more in less in order of their evolution, being recruitment, learning, performance management, compensation, competency management (I found it surprising that this central requirement comes out so low) and succession.
However, 62% of these organisations are in the process of developing an HCM system strategy. 29% expect to build their strategy upon a number of best of breed / point solutions (often requiring the organisation to deal with complex challenges including building a data warehouse, a portal interface etc), but what I found to be a surprisingly high 28% expect to use an integrated HCM approach. Only 13% expect to use the HCM modules of their ERP system. This is lower than I would have expected and as I suggested in my last post (but then I did suggest that organisations might use their ERP – plus – one or more best of breed solutions in areas which are most important for them – depending upon their business and HCM strategy).
Also like AMR Research, Bersin stress that there is no boilerplate system strategy solution – what technology is appropriate depends upon an organisation’s business strategy and should focus on solving critical business problems rather than just simplifying implementation and operations.
Bersin also provide some additional conclusions. Those I have found particularly interesting are:
- Organisations should start to develop their HCM system strategy by starting with a business problem and the overall HCM strategy to deal with this problem – but – they should also explore what is possible with integrated technology and let this influence their overall HCM strategy - if their options are not to be limited. (I think Systematic HR had a good post on this earlier this year but I can't find it).
- The overall shape of the HR organisation is also increasingly influenced by the possibilities of HCM technologies – with strategic functions being grouped together under an HCM or talent management banner - see picture. (Also see chapter 12 of my book.)
- The use of integrated HCM systems does seem to help organisations implement key talent initiatives, for example workforce planning, employee engagement and retaining top performers.
After my last post on HCM technology, Scott McArthur ranted about the number of HR professionals who are aware of these opportunities. I suspect not that many. So it’s disappointing that neither of Bersin’s webinars were attended by that many people. The subject and the research are both important enough to have deserved more.
Monday, 15 October 2007
Diversity is an absolutely critical part of just about any organisation's strategic capability, and a core accountability for HR.
Today is blog action day. Bloggers around the web are uniting to put a single important issue on everyone’s mind - the environment. Every blogger will post about the environment in their own way and relating to their own topic. The organiser's aim is to get everyone talking towards a better future.
The environment has been selected as the 2007 theme - both for the clarity of its importance and the undeniable urgency that issues like global warming and pollution have. It is an issue that can relate to virtually any subject, any blog and anybody.
I only came across this initiative at the end of last week and had a quick think over the weekend about what I might write, but I have posted on HR's role in supporting green issues fairly recently, and more generally have commented on environmentally friendly initiatives at the Work Clinic. And I'm out of new stuff.
Thursday, 11 October 2007
Gary Hamel’s main proposition has much broader impact than just creating innovative organisations. He argues that management itself is out of date and acts as a drag on organisations’ success.
Hamel’s criticism of management links very closely with my own assessment of HRM. And just as I say that HRM has produced huge benefits for organisations, so Hamel is careful to stress that management has not been a failure. Indeed, he notes that it has succeeded in co-ordinating the efforts of tens of thousands of employees. It is just that given today’s frantically accelerating rate of change we need to do much better to inspire people to bring all of their capabilities to work every day:
“The diligent application of those industrial age principles has been a boon to economic prosperity. Yet if the goal is to create organisations that are highly adaptable and fully human, these principles are insufficient and often toxic… The machinery of modern management gets fractious, opinionated and free-spirited human beings to conform to standards and rules, but in so doing it squanders prodigious qualities of human imagination and initiative. It brings disciple to operations, but imperils organisational adaptability.”
Referring to Charles Handy’s sigmoid curve, Hamel explains:
“Our industrial-age management model is languishing out at the far end of the S-curve, and may be reaching the limits of its improvability. Could the practices of management change as radically over the first two or three decades of this century as it did during the early years of the 20th century? I believe so. More that that, I believe we must make it so… To jump onto a new management S-curve, we’re going to need some new management principles.”
Hamel expresses his vision of the future of management as a dream:
“I dream of organisations that are capable of spontaneous renewal, where the drama of change is unaccompanied by the wrenching trauma of a turnaround. I dream of businesses where an electric current of innovation pulses through every activity, where the renegades always trump the reactionaries. I dream of companies that actually deserve the passion and creativity of the folks who work there, and naturally elicit the very best that people have to give.”
Supporting Gurnek Bains thinking on meaning, Hamel explains that companies are unlikely to get this high level of contribution from their employees unless they feel they are working toward goals which encompass bighearted ideals: “the moral imperatives that have aroused human beings to extraordinary accomplishment down through the ages: beauty, truth, love, service, wisdom, justice, freedom and compassion.”
Sorry to go on, because I’ve mentioned this a few times already, but HR functions that aim simply to ‘talk the language of business’ are going to find it tough to raise these themes. HR 2.0 needs to talk the language of people, and encourage business 2.0 to do the same.
Note: you can also see Gary Hamel’s blog and listen to his first podcast at http://discussionleader.hbsp.com/hamel/.
Gary Hamel provides some great suggestions for increasing the general level of innovation taking place in organisations (mainly supporting Rita Gunther McGrath's perspectives on entrepreneurial leadership presented at the CIPD Conference):
1. Dramatically accelerate the pace of strategic renewal to build a company that is as nimble as change itself (eg Google’s aim to be capable of evolving as fast as the web itself). Avoid:
- A dearth of new strategic options
- Allocational rigidities.
2. Make innovation everyone’s job. Avoid:
- Creative apartheid (“If folks don’t appear to be creative at work, it’s not because they lack imagination, it’s because they lack the opportunity)
- The drag of old mental models
- No slack.
3. Create a highly engaging work environment that inspires employees to give their very best. Avoid:
- Too much hierarchy, too little community
- Too much exhortation, too little purpose.
- Everyone has a voice
- The tools of creativity are widely distributed
- It’s easy and cheap to experiment
- Capability counts for more than credentials and titles
- Commitment is voluntary
- Power is granted from below
- Authority is fluid and contingent on value-added
- The only hierarchies are ‘natural’ hierarchies
- Communities are self-defining. Individuals are richly empowered with information
- Just about everything is decentralised
- Ideas compete on an equal footing
- It’s easy for buyers and sellers to find each other
- Resources are free to follow opportunities
- Decisions are peer-based.
I think this highlights the challenge organisations have in being truly innovative while operating under the traditional management paradigm. Google, Gore and other similarly innovative companies are likely to have a clear competitive advantage for some time to come.
Travelling up to Sheffield to give a presentation on HCM to clients of the Chamber of Commerce on behalf of Learning Light, I listened to one of Lucy Kellaway’s recent FT podcasts on the joy of fresh stationery.
Asking her colleagues how they could create the same level of happiness experienced by the children in the Sound of Music, Lucy’s colleagues suggested ‘going home’ and ‘being left alone to get on with work’! Persevering, Lucy describes the ‘small pleasures’ she experiences at work, and of which she sings (to the sound of ‘my favourite things’): “stationery cupboards and lattes with lids on, small ego boosters and…”.
But surely work can offer people more than these small things? From a purely humanistic perspective, people spend so much of their time at work, that there must be a need to ensure work in itself is a fulfilling and engaging activity. And from a business perspective, if people aren’t fulfilled and engaged, are they really going to act as an organisation’s ‘most important assets’?
I talked about this at my presentation in Sheffield, contrasting the traditional perspective of people management as Human Resource Management (HRM), and what I believe is now emerging as Human Capital Management (HCM).
HRM has proved itself as a significant step forward from the more basic perspective of Personnel, which focuses mainly on the administration of people management. HRM’s main focus is on the business, and on what the business strategy means for people and people management, ensuring that all employees are aligned behind business objectives. This process of alignment has delivered huge benefits for organisations, but its downside is that, as the name suggests, HRM tends to treat people as resources. It provides a great way to gain compliance from employees, but not necessarily their commitment. Just look at most organisations’ engagement surveys of evidence of this.
HCM focuses, again as the name suggests, on human capital. This isn’t meant to suggest that we should think about people as capital: that wouldn’t be any more empowering than treating them as resources. It’s about how organisations can accumulate human capital which is an intangible capability provided by their people (managing FOR human capital rather than OF human capital). It’s about building jobs around people rather than fitting people into standard job descriptions. It’s about personalising people management activities to each employee’s individual needs. It’s about understanding each person’s own engagement drivers and ensuring that these needs are being met.
I explained that given the fact that we are all emotional beings, HCM strategy development is likely to depend at least as much on creative and emotional (right brain) thinking as it is on analytical, logical and left brained analysis. I pointed to the increasing use of Emotional Intelligence in organisations as evidence that there is increasing appetite for this sort of approach.
The message seemed to resonate with some of the audience, although I was challenged at the end that it all seemed a little bit intangible, a bit ‘emperor’s new clothes’.
When I got back home, I found that I had been posted Gary Hamel’s new book, the Future of Management, which I have just read on another train trip up to Birmingham. This isn’t supposed to mean that it’s a light read, just (despite its dreary cover) an engrossing one, or at least I found it as such.
One of Hamel’s points is that we need to use the right paradigm for a particular problem. He quotes Thomas Kuhn's explanation that we will typically only be able to solve problems which fit within our paradigm:
“To a great extent these are the only problems that the community will… encourage its members to undertake. Other problems… are rejected as metaphysical… or sometimes as just too problematic to be worth the time. A paradigm can, for that matter, even insulate the community from those socially important problems that are not reducible to the [familiar] puzzle form because they cannot be stated in terms of the conceptual and instrumental tools which the paradigm provides.”
“We are all prisoners of our paradigms. And as managers, we are captives of a paradigm that places the pursuit of efficiency ahead of every other goal. This is hardly surprising, since modern management was invented to solve the problem of inefficiency [eg HRM]… And while progressive managers may work hard to ameliorate its stultifying effects, there are few who can imagine a root-and-branch alternative.”
However, the need for this new paradigm is increasing:
“What s true in other fields of human endeavour is also true for management: you can’t solve new or chronic problems with fossilised principles… To untangle the story of life, Darwin had to abandon traditional views and conjure up a new theory based on the principle of natural selection. Similarly, physicists eager to understand the anomalies of the subatomic world had to look beyond Newton’s clockwork laws to discover the principles of quantum mechanics. I believe we are now at a similar juncture in the history of management. Put bluntly, there is no way to build tomorrow’s essential organisational capabilities atop the scaffolding of 20th-century management precepts.”
Without the right paradigm, HCM will smack of the emperor’s new clothes, and it reinforces the need, that I’ve referred to previously, for HR to ensure that it’s using the right paradigm to consider the opportunities for people management in its organisation, and for maximising its own role.
More on the future of management to follow shortly…
Friday, 5 October 2007
One of AMR Research's other conclusions is that organisations should place competencies at the core of their HCM programmes:
“Competencies, or the individual characteristics and qualities that personnel exhibit as well as the specific skills required for success in a position, are the backbone of sophisticated strategic HCM, but are often one of the last things companies consider. For enterprises with an HCM blank slate, we encourage you to start with competencies because they can inform every other HCM business process you undertake.”
One system that does, although with a more granular and potentially more useful focus on skills, is provided by Infobasis, a provider of a Total Capability Management system (TCM), for whom I am making a presentation next week (one of their Directors, Don Taylor is also presenting on TCM in a Learning Light webinar on Tuesday 16th October).
Don’s white paper explains that TCM provides a means of managing different HR processes holistically with a joint focus on people’s skills and knowledge as the crucial building blocks of an organisation:
“The TCM focus is not to merely ensure that a series of processes can be put together to manage the individual’#s experience within an organisation. Neither is it simply to ensure that these different processes share data, although both of these are important. More fundamentally, it is to ensure that all HR processes are driven by the same priority: ensuring that the organisation is as effective as possible by ensuring it has the right skills in the right place at the right time.”
One build I would make on these approaches is just to suggest that we need to remember that employment is a two-way relationship. It is great to be able to measure and assess someone’s and the organisation’s skills and competencies. But organisations also need to think about what value they are providing to their employees if their relationship is going to be both productive and enduring.
I therefore recommend that organisations think about not just one, but two fundamental frameworks at the heart of the HCM strategy: a skills or competency framework, and an engagement framework that articulates employees’ expectations of their employment relationship, and how well the organisation is doing in delivering against this. Like a skills or competency framework, the engagement framework can be constructed at all different levels in the organisation, from the top, high-level view to each individual employee (at least those identified by the organisation as its most valuable sources of human capital ie its talent).
I’ll come back and post further about this at a later date.
AMR Research have published a report helping organisations to understand their options for investing in integrated HCM technologies (which AMR define as systems spanning at least two out of the following four HCM processes: acquisition, management, development and assessment).
The firm finds that vendors have been using both acquisition and organic development to quickly develop their systems’ capabilities to integrate these HCM processes. So spot systems that were initially designed to solve just one business problem (eg not finding enough qualified candidates, tracking employee time, providing large-scale distributed training, and doing annual performance reviews) are now being developed to have much broader coverage.
So whereas organisations used to face a fairly straight forward choice between using their ERP provider's HCM module and implementing best of breed point applications, managing data and process integration between them (increasingly enabled through open standards such as XML), they are now increasingly being provided with a third option: to standardise on applications that are part of an integrated HCM suite.
And this option looks to be increasingly attractive. AMR Research’s report notes that organisations tend to prefer staying with one vendor as their organisation’s HCM programme matures, with a view to pursuing other areas of functionality, rather than purchasing many separate point solutions.
However, in my view and experience, for large organisations at least, the best solution will still most usually be the HCM suite of their ERP system. Many organisations are still not using anything like the full functionality that comes within these systems. AMR Research note that SAP’s strategic capabilities, for example, have, by and large, “not been deployed among the more than 10,000 enterprises that have licensed SAP HCM to date”. Only about 2,000 customers use SAP’s training and events (development) and time and attendance (management) capabilities, and only 125 use its assessment functionality which are included in its ERP HCM 6.0 system. “For the SAP E-Recruiting and E-Learning modules that are sold separately, the company has shipped about 400 licenses each, of which it believes there are 150 live in deployment.” However, AMR Research also note that “interest in the product offerings’ latest developments has been very high”.
An alternative model is a combination of ERP and one or two best of breed spot solutions to provide enhanced functionality in particular areas highlighted within the organisation’s HCM strategy. These systems still offer enhanced functionality and usability in particular HCM processes. As AMR Research note:
“While (in ERP systems) much functionality exists, the usability and lack of componentisation in these traditionally transactions systems can make it challenging to execute and interrelate processes. Today’s best of breeds have the benefit of being able to take advantage of newer technologies to make it easier to visualise information and workflows.”
A good example of this enhanced usability is Taleo’s new performance management systems. Although I’ve not seen this myself, Jason Corsello at Human Capitalist, amongst others, note that some design concepts otherwise unseen in today’s market make the system look very impressive. An example is the ‘talent card’ based upon a baseball card with the employee picture on one side and their employee stats on the other.
Another of my favourite systems is Authoria which we are using alongside PeopleSoft on ASC's HR outsourcing project at GSK.
The sort of usability these systems offer is a very big plus. AMR Research state that they believe “the solutions that are most compelling to front-line employees to want to use them everyday will drive strategic HCM suite and ultimate strategic HCM initiative success”.
However, even best of breed systems are only a couple of years ahead of their ERP rivals and this distance is diminishing as the ERP firms catch up and buy up their competitors. And the ERP systems offer other advantages through providing a single source of truth for strategic as well as transactional views on all employee data.
So although I understand that best of breed solutions may add value when used alongside an ERP system, I am less convinced that non-ERP integrated HCM suites will often offer the same level of value for large organisations. AMR Research note that no single provider truly supports the entire breadth of HCM processes, and in many cases, their systems’ functionality and marketing messages are well ahead of customer requirements.
For small to medium sized organisations, it may be a different issue. However, SAP's move to Software as a Service (SaaS) should help their system become much more appropriate to small and medium sized organisations too.
However, if you are going to invest in an integrated HCM suite, you need to understand your potential suppliers’ heritage ie whether it has developed from a focus on acquisition (eg Kenexa, Taleo, Vurv), management (Authoria, HRsmart, Workstream), development (Plateau, Saba, SumTotal) or assessment (Pilat, SuccessFactors), as well as their plans for expanding functionality. And you need to ensure that this fits with your organisation’s particular perspective on HCM.
What do you mean, you don’t have this perspective?! If you don’t, the first step in your process, well before thinking about your HCM technology requirements, has to be to identify what human capital and business results you want to create through your HCM strategy. Secondly, you need to understand which HCM processes will deliver these results, and then, and only then, consider what technology will enable these processes. Knowledge Infusion’s strategy map is a good example of this process. Also see The Importance of Selecting The Best Fit Vendor posted on their blog, Knowledge Infuser, earlier this Summer. Focusing specifically on SuccessFactors, Knowledge Infusion note that even the ‘hottest’ vendor may not provide the ‘best fit’ for every company:
“As you focus on the vendor evaluation for your talent management initiative, be sure to focus on process, requirements, and the business outcomes you are trying
to produce. Also, don’t ignore how the product will fit into your unique environment, and hot your existing HRMS might fit many of the requirements you are looking for.”
Whatever systems you decide to use, the most important message in AMR Research's report is a reminder that:
“Strategic HCM is transformation, not simply automation… Done right, executing on strategic HCM is a reengineering undertaking that requires significant soul-searching on the part of executive, massive change management, and ongoing commitment to improvement.”
I've not seen it, but if you have a Gartner subscription, you may like to look at their recent report, Hype Cycle for Human Capital Management Software, 2007 (Jim, perhaps you could let me have a copy???)
Bersin are also releasing their new research into integrated 'talent management' suites (for example, in this Plateau webinar to be presented by Leighanne Levensaler).
Wednesday, 3 October 2007
I'm working my way through Lynda Gratton's Hot Spots.
One of the key elements of hot spots is boundary spanning. As an example of this, Gratton provides BP's peer assist process, which she has talked and written about for several years.
This is a process that was introduced by BP's former Chief Executive, John Brown, to break the organisation into small businesses in order to encourage learning and avoid duplication across the separate businesses. The process fundamentally shifted the organisation from a vertical axis to a horizontal axis, creating groups within the separate 150 business called peer groups, each made up of up to 12 business units all operating in the same area. Brown then introduced two sets of conversations, peer assist and peer challenge, which held the top two business units in a peer group responsible for the performance of lower two units. And BP linked 50% of managers' bonuses not to how each individual business unit behaved, but how these two lowest performers behaved. So instead of one oil refinery manager competing with another, which is what would normally have happened, the top one would go to the lowest and say, "What can we do to help you?" It has gradually become a part of the culture for peers to help each other.
Of course, it's always a risk to profile any organisation as an example of best practice (think for example, of the companies listed in In Search of Excellence). And BP seems to have already moved on from peer assist.. On the 3rd August, the FT noted that
BP has called in Bain to simplify the company's structure.
BP apparently blames Brown's complex organisational structure* for its recent problems with lapses in safety. Explaining this in an e-mail to staff, a senior vice-president said:
“It’s not difficult to find examples where our complexity has driven inefficiencies, negatively impacting performance in one way or another, and I am sure each of you could cite specific examples. Many of you will agree that complexity has often reduced BP’s efficiency and diluted our focus on delivery of the core business. That’s why I welcome having Bain’s help.”
So what does this change mean for boundary spanning and the development of hot spots? Not that much really. Gratton provides peer assist as an example of a 'signature process': 'a process that differs significantly from general views of best practice' ie demonstrates best fit. This signature is a 'direct embodiment of the history and values of the company and its top executive team'. So it's no wonder that when the executive team changes, and particularly when this team needs to signal a break from previous problems, the signature processes should be adapted too (although I do think to be effective they need to be maintained over a relatively long term).
As Gratton explained at a presentation I attended a few years ago:
“There is no right answer here. As a management team you have to be intelligent and sensitive to all the data that you have got and make adjustments.”
* Note I'm not doing any work at BP so I can't confirm whether this simplification relates to the peer group structure, and to the peer assist and peer challenge processes. But it does seem likely.
Tuesday, 2 October 2007
- HR's role in strategic people management
- Management's human touch
- Talking metrics and people evaluations is not enough
- Talking metrics and people evaluations is not enough 2
- Which direction beyond HR?
- Can / should HR take on more accountability?
- Can / should HR take on more accountability? 2
- Jose Mourinho: HR business partner