BlogERP: Jim Holincheck's HCM Software Blog

Next Practices: Crowdsourcing Talent

This is the first in a series of posts of what I call “Next Practices”.  These are practices that look beyond today’s conventional HR approaches to achieve improved business outcomes.

Business Situation:  In a slow growth economy, it is difficult to get approval to hire new employees.  However, there is a strong desire by CEOs to grow the business and innovate.  How can HR help the organization with conflicting goals of controlling costs, yet innovate and return to growth?

Practice: Crowdsourcing – This is not a new idea.  It is explored in great detail in books like “Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business” “Wikinomics: How Mass Collaboration Changes Everything”, and “The Wisdom of Crowds”.  However, it is not a practice that is in the typical talent management toolkit of most HR/Recruiting organizations.  Crowdsourcing allows you to leverage talent that is not part of your organization to achieve your objectives.

Examples

TopCoder – Here is a description from their site:

Our business brings clients into the TopCoder community to get their work done in a new way. These projects range across the full spectrum of software and digital work. They engage our community in a range of disciplines: creative design, software engineering, and analytics. These projects are focused on innovating and implementing new products, releases, and features. At the core of this work is competition – each task is completed by members competing with each other to be the best at that task.

We believe that customers should be able to focus on what they want to build and create, not on measuring how many hours someone spent on a task. We believe engineers and designers should be free to chose when and if they work on a project or task, and be rewarded based on the quality of the results they produce. Empowering individuals to make their own decisions generates the most value for all parties.

When customers and members are brought together in a community and a market based approach is used to getting work done, there is no limit to what they can accomplish.

TopCoder has more than 300,000 people in the community.  That talent pool is significantly broader than one employer could build on its own. LendingTree uses it as a virtual software factory on an ongoing bases to supplement its own website development efforts, for example.

InnoCentive – InnoCentive also provides a platform for what it calls “challenge driven innovation”.  In that sense, it is similar to TopCoder, but is used for a broader problem set.  Here is an example from its website:

Roche’s challenge was to find a means of better measuring the quality and amount of a clinical specimen as it is passed through one of its automated chemistry analyzers. Both Roche and its partners had been wrestling with the challenge for fifteen years. So the company devised a test. It posted the challenge on InnoCentive.com, and through the power of crowdsourcing, exposed the challenge to a diverse, global, and open network of problem solvers. Within two months of posting the challenge, nearly 1,000 unique solvers from around the globe had signed on to the project, and a total of 113 proposals were submitted to Roche.

The result? Roche solved a challenge that had been plaguing it for fifteen years in sixty days. And interestingly, the submitted proposals replicated the entire history of Roche’s research and development program into this particular challenge. In other words, all of the solutions Roche had tried over a fifteen-year period had come in.

Think about that for a minute from a talent perspective.  Roche was able to find nearly 1,000 people for two months to work on its business challenge.  The prize for the winning solution was $20,000.  That was a pretty cost-effective source of talent.

Of course, crowdsourcing is not appropriate for every talent need.  However, HR needs to get outside of the box that says that talent is limited to just employees or contractors.

How many sourcing professionals in your HR/recruiting organization are leading the charge in working with these kinds of solutions (especially if you are not hiring anyone right now)?

Trip Report: Peopleclick Authoria Global Customer Conference

This week I attended the Peopleclick Authoria (PCA) Global Customer Conference (#GCC2010).  I gave a couple of presentations at the conference on Talent Management market trends which is always fun.  In contrast to my usual practice of attending customer case study sessions, I used a different strategy at this conference.  I attended the “big tent” sessions where PCA’s relatively new CEO, Joe Licata, laid out their positioning.  One interesting tidbit included investment in R&D of $23.4 million expected in 2010 which is comparable to the spend of SuccessFactors in 2009.  The clear message was that PCA was investing in growing the business both organically in addition to acquisitions (by parent Bedford Funding). 

They also had Jack Welch (@jack_welch), former CEO of General Electric, as a keynote speaker.  PCA Chairman (and Bedford Funding CEO) Charles Jones interviewed Welch.  The interview covered a wide range of topics (see the Twitterstream at #GCC2010 to see more details).  Welch is definitely a strong advocate for HR’s role in leadership development.  GE’s goal during his tenure was to be able replace someone in a key position within 24 hours.  To do this requires a significant investment in readiness and having adequate bench strength (it also explains why GE has been a furtile ground to find executive talent).  There were many great one-liners, but it was an analogy that resonated with me the most.  It was around the importance of HR vs. Finance. My apologies in advance to my colleagues that focus on the Finance organization, but the example he used was a professional baseball team.  Whose advice should the President of baseball operations (substitute our favorite sport) trust in making a decision on making an offer to a player: the CFO or the Director of Player Personnel?  Who is going to know best how to allocate that budget to achieve the best results?  It is pretty obvious in this context, but given that people-related costs are anywhere from 20-70% of total costs in most organizations, it makes sense that CEOs should view HR leaders as vital to their success.  However, good Directors of Player Personnel bring a lot of player performance data to the table to help the organization make good decisions.  HR leaders that do not bring something to the discussion will likely not be heard.

I also enjoyed the other keynote session, a panel discussion with Elaine Orler from Talent Function, Brad Smart from Smart & Associates (best known for TopGrading, a practice developed and used at GE), Kim Seals from Mercer, and Gerry Crispin from CareerXroads.  Again, you can check out the Twitterstream for more details on the discussion, but to me the most interesting part of the discussion was around performance vs. potential.  Kim was of the opinion that you promote based on potential (assuming at least adequate performance), but reward based on performance.  Gerry has the viewpoint that performance is more important.  High performers should be given the opportunity to show potential in new roles if it aligns with their career aspirations (assuming at least adequate potential for the new role).  I am not sure there is one right answer.  To me, a lot of the answer depends on how well your organization can judge performance and potential and your promotion track record.  Examining your own data around this will be illuminating.  It may also highlight changes you need to make to make in how you do performance appraisals and talent reviews.  From a technology perspective, remember garbage in = garbage out.  I can have the best succession planning process and best technology supporting it, but if I am not looking at the right attributes of performance and potential, it is all for naught.

Ok, back to the change in my conference routine, instead of going to customer case study sessions (though I did have some good conversations at meals with customers), I went to sessions led by thought leaders I admire and who I rarely get to see present.  Gerry Crispin (@GerryCrispin) did a session on candidate experience that was very thought-provoking.  For those not familiar with Gerry, he does the most in-depth research on this topic of anyone I know.  For more than a decade, he has “mystery shopped” as a “candidate” at all of the Fortune’s 100 Best Companies to Work For. 

Near the beginning of his presentation, Gerry asked the audience a simple question: how do you define a candidate?  Needless to say, the audience definitions were all over the place.  I thought he had an interesting taxonomy for thinking about this in terms of customer experience.  In his view, a candidate was someone who has applied for a job (an applicant being someone who is a qualified candidate for a job).  Prior to applying for a job, the person was a prospect.  Gerry points out that experience needs to be different for prospects, candidates, and applicants (and new hires).  Once someone becomes at least a candidate, they have affirmatively expressed interest in your organization.  If they are treated poorly through the rest of their experience, there can be repercussions not only for your employment brand, but also your customer brand because in many cases candidates/applicants may also be customers and/or influence other customers.  That taxonomy also got me thinking about the parallels with Customer Relationship Management.  Many large employers already have people responsible for just candidate sourcing this is akin to the role of Marketing in CRM.  Marketing is responsible for generating leads that turn into qualified prospects.  Sourcers are responsible for finding prospects and converting them into candidates (I am simplifying here a little to make the analogy, but stay with me).  Sales is responsible for taking qualified prospects and converting them into paying customers.  Recruiters are responsible for determining qualified candidates (applicants) and facilitating the process to hire the best one.  So far so good, there is nothing terribly new in this line of thought.  What I had not thought about previously was the third pillar of CRM, Customer Service.  In the CRM context, Customer Service helps ensure a customer is happy (based on customer satisfaction, net promoter scores, etc.) as well as to find additional cross-sell and up-sell opportunities (in some cases).  It was not so much finding the analog for recruiting (or more broadly talent management for the new hire), but that it made start to think about why we do not have a group responsible for candidate (and applicant) service.  If organizations really want to take the candidate experience seriously, it needs to do more than just design a candidate-friendly, employer brand reinforcing, self-service web site.  Why shouldn’t a candidate/applicant be able to interact with your organization in a variety of channels as they go through the process.  Yes, it can be more expensive to provide this level of service, but for many organizations, especially with the viral nature of social media, it may be more expensive in the long run not to offer a high level of service.

I also attended a session conducted by Dr. John Sullivan and his associate Master Burnett (@masterburnett).  Dr. Sullivan is always provocative and expresses a strong point of view.  His topic was the important of contingent labor on workforce planning.  He cited a study of 200 companies where they looked at the workforce-related spend and found that only about 36% of the spend was on regular employees, the rest was for various forms on contingent labor.  That is an eye popping statistic and should give any HR leader heartburn.  It means that the vast majority of HR leaders have ignored how their organizations recruit, manage, develop, and separate from a significant part of its workforce.  In fact, it is even worse than that.  If organizations are actively managing it all, it is driven by procurement whose role it is to help negotiate contracts and manage vendors.  This is one of Dr. Sullivan’s arguments for why Workforce Planning is so important.  Organizations need to make intelligent decisions about where they source the most appropriate talent based not just on cost, but on agility (the ability to scale up and scale down the workforce), speed (how fast are the capabilities needed if we do not have them internally) and how long the capabilities are required (for example, is it just for a project or is there an ongoing need).  We have published a number of research notes on Workforce Planning and Analysis this year, but we still find a relatively small number of clients focused on either contingent workforce management or workforce planning.  This should be a wake up call to HR leaders and the IT organizations that support them.

Innovation Around the Edges of HCM Software

Bill Kutik had a great article in HR Executive magazine about ongoing innovation in the E-Recruitment software market.  I agree with him.  We discussed a lot of the areas of innovation around the edges in recruiting in the Magic Quadrant for E-Recruitment Software (Gartner subscription required).  As Bill points out, there are new vendors popping up all of the time (even since we published our research).  There is always innovation occurring around the edges of established application areas.  E-Recruitment (formerly Applicant Tracking) solutions have been around for around 20 years.  It is clearly a well-established area. 

Yet, we have had profound changes driven by technology (the movement from applicant tracking to e-recruitment solutions driven by the internet and web-based solutions).  In addition, we have seen innovation because these solutions still have not solved all of the business challenges in the domain.  This is a common pattern that we see in many different business software application markets.

There are two implications from this.  First, there are a lot of new vendors that will pop up trying variations of the themes with a variety of different business models.  Most of these will not be successful (or will have limited success).  Few will change the world.  That is not necessarily bad, but it is important to make sure that you do not put all of your eggs in one basket (and make sure that you are easily able to end your relationships) as you try some of this innovation to solve your business challenges.  Second, once innovation starts to become accepted wisdom, it starts to get absorbed into the established solutions (either directly or through preferred partnerships with the "winning" vendors).  This cycle of assimilation occurs all of the time.  So, it becomes important to understand how your core/strategic vendors are moving related to innovations you find useful.

Remember your HCM application portfolio requires active management.  Technology will not solve all of your challenges today, but it is constantly evolving and you need to continually look at your priorities and what is possible to make sure you get the most from your investments, especially in these challenging economic times.

More on Kronos Acquiring Deploy Solutions

I had a conversation today with Jim Kizielewicz, SVP of Corporate Strategy and Chief Marketing Officer, from Kronos about the acquisition.  This is what I learned:

• Deploy's solution will become Workforce Acquisition for Field Hiring v8.  It is immediately available.  Workforce Acquisition for Field Hiring v8 will be the platform upgrade path for existing Unicru customers (Workforce Acquisition v6 and v7 customers).  Kronos will incorporate content from the Unicru solutions (assessment and analytics) into the Deploy platform.
• Kronos will continue to offer the Workforce Acquisition for Corporate Hiring solution through its recently announced partnership with MrTed.  There is some overlap with the Deploy as it supports requisition-based hiring.  However, according to Kronos, most of the salaried hiring customers for Deploy are on legacy solutions, not the new integrated salaried/hourly platform (called aTAO).
• It will be approximately 90 days before Kronos will be ready to start migrating existing Unicru customers to the new platform.  Kronos will continue to support both solutions, but Unicru customers should expect ultimately to migrate to the new platform.
• Kronos has reorganized the Talent Management division.  There will be a Talent Management - West (Unicru) which will continue to focus on content (assessment and analytics) and a Talent Management - East (Deploy) which will focus on the development of the platform.
• Kronos also is keen to leverage the platform to expand into performance management (initially through the performance scorecarding functionality that Deploy had built). 

I do not think I will be publishing a First Take on this, but if you are a Gartner client and have questions on the acquisition, please feel free to set up an inquiry.

Recruiting at Conferences

When you are trying to find scarce skills in the market, you have to innovate.  I am at the Gartner Business Intelligence Summit in Chicago (yes, I am home for a conference -- it is extremely nice).  It has been a good event thus far.  I was passing by the message board for conference attendees and I saw that one company posted a job opportunity.  I was taken a little aback, but when one thinks about it, it certainly makes sense.  It is a role where talent is scarce (Business Intelligence) and a conference where some of the best and brightest in the field are attending.  What better place to find scarce talent?  I am not recommending that everyone go to Gartner conferences as a recruiting exercise (there are other important reasons to go).  However, it does make sense to think outside of the box for your candidate sourcing strategies.

Google's Recruiting Practices

There has been a lot of commentary (a couple of examples are here and here) on Google in the blogosphere spurred on by the article in the New York Times (subscription required).  At first glance, I thought there was nothing that innovative about what they are doing.  Assessments are not new.  Assessments for knowledge workers are not a new concept (see my previous posts here and here on what Gartner is doing with assessments).  They may have built a slightly, better mousetrap, but that is about it. 

I found Dr. Sullivan's post on ERE enlightening though.  I think he put it in the proper perspective.  It is innovative because of the breadth of factors assessed (though again that is something that has been possible) and how they were leveraging the core competencies of Google in creating this assessment approach.  Also, one should not look at it the context of just this one thing that Google is doing in recruitment and talent management in general.  It is part of a broader innovation strategy to ensure that it can bring in quality talent to support the business strategy.  Is that not what we all want to do?

The Danger of Rumors

There has been a lot of traffic in the blogosphere about a hiring freeze/job cuts at Jobster.  The EXCELER8ion blog has a good summary of the rumor as well as some supposed internal Jobster communications.  Jobster also recently announced the appointment of a new CFO which has added fuel to the fire.

Jobster CEO, Jason Goldberg told GigaOM that 2006 revenues would be north of $20 million.  The rumors say that Jobster has 145 employees.  Let's do some simple math.  $20 million divided by 145 employees equals ~ $138,000 in revenue per employee.  There are many technology companies that break even at that level of revenue per employee.  Mature (and profitable) technology companies typically have more than $200,000 in revenue per employee.

However, Jobster is not a mature technology company.  It is a very new company (~ 3 years old) that has grown very quickly (expecting growth of more than 30% for Q406 over Q306).  It would seem unlikely that they would need dramatic cuts (the rumors indicate that potentially half of the staff would be cut) to reach profitability with even flat revenues in 2007.  

However, I would expect that they plan to continue to grow in 2007 and will, on net, add staff.  Jobster may still have job cuts or slow down the rate of hiring in certain areas.  It depends on where they think the growth will come from and the adequacy of staffing.  It may be overstaffed in some areas that are not contributing to growth and understaffed in others based on expected growth.  Jason says it himself in a blog posting about why Jobster cares about profitability; "... you cannot do everything all at once.  at least not well.  that requires tough choices". 

So, what is really going on here?  Did Jobster grow staff too quickly and now has to cut back to achieve profitability or did Jobster examine its market opportunities and decide to realign its staffing (including some job cuts) to go after the best ones?  I do not know.  I am sure we will find out soon enough.  

Often there is a desire in the media (and the blogosphere) to break a story, especially a negative story.  It attracts readers.  Negative stories do have a place.  There are certainly times when it is important to get a negative story out because it is in the public interest.  We publish research at Gartner that sometimes is viewed as negative by technology providers (I know it is hard to believe). 

However, gossip and rumors almost invariably lead to negative stories.  Bertrand Russell is quoted as saying "No one gossips about people's secret virtues".  It is easy to speculate based on gossip, rumor, and innuendo.  However, that speculation is based on information that is often wrong, incomplete, and/or misleading.  Maybe the Jobster rumors will turn out to be true.  Maybe they won't.  Whatever the case, we should all be careful of conclusions drawn from rumors.

My Recent HCM Research

Here are links to some of my most research notes (subscription required):

The Pace of Consolidation Accelerates in the E-Recruitment Software Market -- Large vendors that have not had a presence in talent management are buying their way in through increasing mergers and acquisitions. Talent management vendors are trying to get to a critical mass to compete with the larger, more-established organizations.

Magic Quadrant for E-Recruitment Software, 2006 -- Due to the maturing market for e-recruitment software, Gartner has produced a Magic Quadrant. The vendors included here provide Internet recruitment applications for the full requisition-to-hire process to companies with more than 2,500 employees.

SumTotal Aims to Lead Talent Management Market With MindSolve -- By acquiring MindSolve, SumTotal Systems gains a strong talent management offering, including e-learning, employee performance management, succession management and compensation management applications.

Predicts 2007: Software as a Service Provides a Viable Delivery Model -- Adopt SaaS first using a modular and incremental approach. SaaS predictions provide overall guidance for SaaS delivery adoption and specific market outlooks for human capital management, e-commerce and integration as a service.

Workday's Initial HCM Offering Is Intriguing but Unproven -- The startup Workday's Human Capital Management software-as-service solution includes innovative technology and has had some initial success. Prospective customers will face the usual risks of early adopters.

Case Study: Workforce Analytics at Sun -- Sun used workforce analytics to understand the financial impact of and to target its spending around its mentoring program.

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.