BlogERP: Jim Holincheck's HCM Software Blog

Succession Management: Is It All That It Is Cracked Up To Be?

The fall travel season has started.  I find myself at the Toronto airport with a little bit of time to post.  I have been reading Peter Cappelli's book "Talent On Demand".  It is well worth reading.  It gives a nice historical perspective on why we have the talent management practices we have today and why the assumptions that underlie those practices have changed significantly, leaving conventional wisdom wrong in many cases.  I found one particular passage around succession management extremely illuminating:

"We do succession planning to an unbelievable degree.  But once we do it, we don't use it.  Never have we received a senior vacancy and looked at the succession plan.  It's almost done as just another tick in the HR box"

One reason that succession plans do not work, at least for executive jobs, is that the events that trigger them --usually dismissal-- signal that the organization wants to move in a different direction with the next hire:  "We do not want someone like the last guy."  And succession planning is designed to produce candidates who look more or less exactly like that last guy...

Does that ring true for your organization?  I imagine that it would for most HR professionals.  Succession plans that are tied to individual characteristics or that do not change as the organization direction changes are not particularly valuable.  Like much of talent management, the use of succession management software is only as good what goes into it.  If you do not define the right characteristics for key positions (and adjust them regularly as the organization evolves) or do not develop broader talent pools that can be slotted into multiple critical roles, then a lot of time and effort can be spent on succession management with little results to show for it.

What do you think?  Is succession management worth the effort?  Is it better to not plan and fill needs as they emerge with a talent pool made of internal and external candidates?

Collecting Data on Talent Management Applications

Now that Google Docs supports offline editing of documents, I thought I would try it as a blog authoring tool.  I like it as a word processor so it may make an ideal offline blogging platform (especially on my Asus EEE).  Anyway, I digress.  I just put the finishing touches on the customer reference survey we will be doing for the Magic Quadrant for Employee Performance Management Software.  I am pretty excited about the data we will be collecting about usage and purchasing plans for talent management applications. I sent the survey questions to the vendors today so they could communicate to their customers what will be on involved in completing the survey. Of course, we will be gathering data about more than usage and purchasing plans (like satisfaction with the vendor and its products), but we have great plans for additional research based on the results.  If you are a Gartner client (subscription required), you can see how we leveraged this kind of data in the Magic Quadrant for E-Recruitment Software.  What are your most pressing questions about talent management application usage?

Reflections on Talent Management

Thomas and I just finished the first round of vendor briefings for the upcoming Magic Quadrant for Employee Performance Management (EPM) Software.  As Thomas bicycles his way through the Alps for the next two weeks (you can keep track of what he is up to here), I had a chance today to take a breath and reflect on the last few weeks.

We have seen a maturing of products as vendors continue to add functional depth to their EPM solutions.  We have also seen an increased focus on usability.  Not surprisingly, we have also seen many touting new social networking capabilities. 

At the same time we have been doing these briefings, I have been getting the usual steady stream of client inquiries.  I looked at the list of clients this month and it struck me that there were at least three of the very large variety (greater than 65,000 employees) plus another of that size tomorrow.  All four of them wanted to discuss integrated talent management.  All of them have some solutions in place in some talent management areas already but want to know more about the market for the broader suite. 

In "Unlocking the Strategic Value of Talent Management Application Investments" (Gartner subscription required), we discuss the adoption patterns of customers.  In terms of buying behavior, the research conclusions still hold true.  However, just because the really large companies have not bought talent management application suites does not mean that they would not like to do so.  Now, the vendors just need to be able to deliver the depth and breadth required by these customers.  What do you think?  Are vendors ahead of customer demand or do customers want more than the vendors can deliver?

Employee Performance Management: Two Sides of the Coin

Thomas Otter posted a while back about the problems with appraisals (including a link to a video from the UK version of "The Office" which is extremely funny).  Gautam Ghosh provides some good advice on about how to improve the performance appraisal process.  New Employee Performance Management software, in and of itself, does not improve performance appraisals.  It requires the right processes, culture (i.e., appraisals are fair, high performance is rewarded, etc.), and content (as Gautam points out, bad goals or too many goals can be problematic).

Upcoming HCM Research

I have not posted much to the blog recently as I have been trying to finish the update to the MarketScope for Employee Performance Management Software.  It has been a long (longer than expected) process.  We are near the finish line and should publish by the end of the week (maybe even tomorrow, but probably Friday).  I'd better be finished as I am leaving on vacation at that point.  I will not have ready access to the Internet so posting may be very infrequent (if at all).

I am working on some other notes that will get finished when I get back from vacation.  I am in the process of completing our first Hype Cycle for HCM Applications.  In addition, I am finishing up a note that provides our definition of Workforce Analytics.  Also, I hope to have some good news to report to you about the future of this blog when I get back from vacation.

Some Recent Research

I have not published much recently (or put it on the blog), but do have some very good stuff in the pipeline.  Here is a summary (subscription may be required):

Hellman & Friedman Acquisition of Kronos Will Fund Further Growth

This is the first major purchase by a private equity firm in the human capital management arena. Kronos will gain access to more resources to support its global expansion and movement into talent management applications.

Cool Vendors in Finance and HCM, 2007

Though many view financial and HCM solutions as mature and stable markets, the reality is that significant innovation is happening.

Plateau Bolsters Talent Management Suite With Nuvosoft Buy

Plateau's acquisition of Nuvosoft helps round out Plateau's talent management suite. Nuvosoft has strong functionality, but a limited customer base.

Key Issues for Finance, Human Capital Management and Procurement, 2007

Financial management, human capital management and procurement applications form the administrative "backbone" for all organizations. These Key Issues for 2007 summarize Gartner's research in these areas.

Also, if you are a Gartner for IT Leaders client, check out the new ERP/SCM specialty page off of the Application Management Home Page.  There is an Analyst Corner section that I post blog entries to on occasion.

Coming Soon

"MarketScope for Employee Performance Management Software"

"Defining Workforce Analytics"

A Long Week

Things started out very promisingly last week.  On Monday, I had a few client inquiry calls, but much fewer than normal.  I was able to finish up a presentation for the Gartner Outsourcing Summit in March.  On Tuesday, I flew to Las Vegas to Gartner's annual Research Offsite and then attended some meetings around research agenda management.  I am taking over responsibility for management of the Financials, HCM, and Procurement research agenda so it was a good learning experience.  I agreed to take on the role only if we hired an additional person to cover HCM applications.  So, that is what we are doing (e.g., good candidates are always appreciated -- especially if they are located in Europe and have a background in ERP as well as HCM).

On Wednesday, the Offsite kicked off proper.  We had the usual 2006 corporate review and priorities for 2007.  In addition, there was a meeting with the broader Software team to discuss 2007 priorities.  This was all good.  During one of the sessions, my wife called and informed me that one of her relatives had passed away.  This particular relative had been very kind and helpful when my Father-in-Law and Grandmother-in-Law had passed away and we wanted to be there.  So, I picked up my wife and Mother-in-Law in Chicago and flew to Miami on Thursday.  It was a full day of travel.  We attended the funeral on Friday and flew back to Chicago on Saturday night. 

It was a long week.  I am just now getting back in the swing of things now.  We are starting the vendor briefings for the update to the MarketScope for Employee Performance Management Software today.  Over the next three weeks, I will be spending a lot of time with the many vendors who offer EPM solutions.  I am looking forward to digging into the details on performance, compensation, and succession management.  However, given the time required for briefings and the additional responsibilities, I will probably be posting a little less frequently for the next few weeks.  Thanks for your patience.

Improving Performance Reviews

The SystematicHR blog has an interesting post about discussion on the Harvard Business Review Working Knowledge site about performance reviews and what can be done to make them better.  Below are a few of my guiding principles for making performance reviews more effective:

• Garbage In = Garbage Out -- One can have the best system in the world, but if they do not set SMART (Specific, Measurable, Actionable, Realistic, Time-based) goals, then it is hard to have accountability.  In addition, if you do not have the right competencies identified, then the best assessment technology will not help identify the right developmental opportunities.
• Begin With the End in Mind -- I am borrowing here from Steven Covey.  However, it is important that you understand what you want to accomplish by doing performance reviews.  For example, there are religious debates about whether or not assessments should be part of a performance review.  I will not takes sides on this because I think the mechanics of this is less important.  What is important is the conversation you want to facilitate between supervisor and employee.  Do you want to focus on development?  Do you want to focus on motivation (e.g., how performance impacts compensation)?  Do you want to focus on career development?  Do you just want to make sure that everyone gets a performance review?  Do you want to do all of the above?  This is where most performance review processes fall down.  Most organizations do not think about what they want to get out of the process and how they can best facilitate the conversation to make that happen.
• Performance Reviews May Be An Annual Process, But Performance Management Should Happen All the Time --   This is my biggest pet peeve.  Let's face it.  In most organizations, performance reviews are annual administrative exercise.  it is something that managers have to do.  It is something employees do not think is fair and balanced (much less really aligned with compensation).  Good managers should be communicating with employees regularly about performance and development.  It should not be an annual event.  Again, it is the conversation (in this case the frequency of that conversation) that is important.

OK, time to get off the soapbox.  What else should be on the list of guiding principles for performance reviews.

SaaS Usage Increasing in Large Enterprises: Not New News

The Ponderings of Woodrow blog talks about an upcoming report based on a McKinsey survey of CIOs that reports that usage of SaaS is on the rise in large enterprises.  The survey found that 61% of North American companies with sales greater than $1 billion dollars plan to adopt one or more SaaS applications over the next year (2006) compared to 38% in 2005.  The Ponderings of Woodrow blog points out some potential issues with the survey.  However, for anyone in the HR world, this is not particularly new news.  Large enterprises have been readily adopting SaaS applications for e-recruitment and employee performance management many years.  Maybe CIOs have not been in the loop on these purchases?  However, anything the dispels the myth that SaaS solutions are only for the SMB market is probably a good thing.

A Couple of Things Caught My Eye Today

I would like to thank Alice Snell at the Taleo Blog for posting on McKinsey's new thinking on talent.  Here is the link directly to the McKinsey site. 

I agree with all of the "New Way".  I think if you asked most people in the HR profession today, they would agree too.  So, why does the "New Way" not happen and how can more organizations implement the "New Way"?  Let's consider each in turn:

Talent Mindset -- All managers -- starting with the CEO -- are accountable for strengthening their talent pool -- Of course, managers should be accountable.  However, why are they often not accountable?  Performance and compensation systems are not aligned to encourage accountability.  The culture does not support accountability.  It could be a number of things.  The important thing for HR professionals is that they need to support managers so that they know what they can do to strengthen their talent pool and help make sure that the accountability for this is institutionalized.

Employee Value Proposition -- We shape our company, even our strategy, to appeal to talented people -- I do not know if I agree with this entirely.  I think the strategy, what uniquely defines the competitive advantage in the marketplace, should shape the people I have in the organization.  I think it was put quite well in the book "Good to Great".  Great companies make sure that they have the right people in the right roles and that everyone is committed (i.e., engaged) to successfully executing on the strategy.  I am paraphrasing here, but I think you get the drift.  Having said that, it is still important to have a strong employee value proposition to attract and retain the best talent.  Dr. John Sullivan has done a great job of discussing this on ERE in many different ways.  I am not going to link to all of the posts.  Just visit ERE and see what he has written.

Recruiting -- Recruiting is like marketing -- It is like sales, marketing and supply chain management.  All of the disciplines are important to apply.  As I have said in previous posts, when was the last time your recruiting organization talked to people in those other parts of the organization to understand best practices.

Growing Leaders -- We fuel development through stretch jobs, coaching, and mentoring -- I agree that these can be important to developing future leaders.  How do you know what is having the most impact and where you should invest and what results you should expect?  C-level executives want to know.  See the case study I recently published (subscription required) on using Workforce Analytics to show the effectiveness of a mentoring program.

Differentiation -- We affirm all of our people, but invest differentially in our A, B, and C players -- Again, I agree, but have you truly differentiated your A, B, and C players?  Many organizations I talk to have grade inflation.  They do not do a good job of calibrating their performance appraisals.  This has a negative downstream impact on compensation (especially if you are not truly paying for performance), succession management (you do not have the right talent pools identified), and morale (employees do not trust the system and true "A" players feel less appreciated).  Technology is not a cure to these problems, but it can help.  Employee Performance Management systems that include integrated performance management, compensation management, and succession management can provide an infrastructure to help managers and executives differentiate their talent investments.  This is one of the reasons that updated MarketScope for Employee Performance Management Software will include performance, compensation, and succession management.