The Acquisition Spree 1

Last modified on 2011-12-09 02:03:21 GMT. 5 comments. Top.

If you read Monday’s piece (Whale Eats Fish), you might think of this one as Whale Risks Indigestion.

I’ve spent some time at the SuccessFactors offices in Silicon Valley. Not enough to be a citizen, more like the number of times you use your museum membership. It’s one of the most intriguing cultures I’ve ever run across.

I used to joke that the company had a ‘raw meat bar’ just outside of the areas visitors were allowed to witness.The joke was that the culture was so aggressive that it metaphorically resembled the meat eaters in the first versions of V. The company was, and is, an anomaly in both Silicon Valley (with the exception of its spiritual progenitor, Oracle) and the HCM Marketplace. The company dreams big, runs on rocket fuel and mania, and has a take no prisoners strategy.

The business, its products and its gestalt are not everyone’s cup of tea.

In the end, that gives our market a much needed bunch of segmentation. If you’re in HR and actually want (as opposed to liking to say you want) to be involved in corporate strategy, you get there by breaking stuff, by innovating. The folks at SuccessFactors never worried much about breaking things (or throwing an HR manager under the bus to get a sale).

The only possible way that you can understand the acquisition is to see SAP as extremely desperate. Adding the SuccessFactors vibe to the extremely smart but terribly plodding EuroGiant is a sign of impending house cleaning.

SuccessFactors is a performance management company. Here’s what that means. Their tools rigorously (when well used) document and quantify performance. The underlying model is a ‘my way or the highway’ approach to vision and accomplishment. The core SFSF mantra is meet the number or get going.

It’s actually a great way to run an organization (particularly a group of Special Forces Soldiers). It’s hyper competitive, radically transparent and completely intolerant of fluffiness. Some observers suggest that almost all of the testosterone in the industry is inside the walls of SuccessFactors

SAP has some fluffiness. How else can you explain the firm’s inability to keep up with the marketplace. Sales come; new features emerge; but, market agility isn’t on the list of core competencies at SAP.

Over at SAP, it’s also a sales culture. The captive customers get the opportunity to buy the next big thing. It’s always an acquisition and never a real integration. The SAP version of sales is the ‘working the fields’ variety. The team harvests the crops when they are ripe.

Hope for a culture clash and civil war. Anticipate Walter Mitty. Old cultures die hard.

Whale Eats Fish

Last modified on 2011-12-09 01:21:37 GMT. 4 comments. Top.

Whale Eats Fish

The difference between bravery and foolishness is hard to distinguish in the sorts of people who are willing to bet it all on their ideas. Small scale entrepreneurs and the founders of startups all share a kind of temperament that makes them bad fit in larger organizations. Clarity and focus are less effective in political environments.

As the economy continues its evolution, big companies are less and less able to be at the heart of product innovation. Moore’s law, the force behind technological and social change in the 20th and 21st Century, drives movement faster than hierarchical organizations can run. The result is bigger companies behaving like banks while new ideas emerge from smaller entities.

You can see it in the accelerating acquisition patterns. Big fish swallow smaller fish who swallow smaller fish and on and on. Big always seems to mean wealthier and slower. Smaller can sometimes mean smarter and more adaptive.

There’s a rhythm to startup life that you’ll recognize from your own work. At the heart of venture creation is the desire to discover alternative solutions to tough problems. Great startups are solution factories that generate a series of approaches to a resilient problem set.

When you first encounter a problem, it almost always looks simple. This is where an entrepreneur’s enthusiasm starts to percolate. "This is so simple", they tell themselves, "I can’t believe that no one has solved it before." All problems look like this on first viewing.

It’s never that simple.

Under the hood, intractable problems have all sorts of complexity. What looks obvious turns out to be structural. What looks trivial is actually hard. It’s usually the case that things are the way they are for really good reasons.

The first level of startup brilliance emerges when the company overcomes the complexity with a solution of equal complexity. When you listen to emerging competitors talking about job boards, this is the essence of their critique. The job board, they notice, is an equally complex solution to an old fashioned problem.

It’s possible to build a ‘monstrous’ company (or a dozen of them) without ever having solved the problem itself. Often (as is the case in a lot of technology stuff), simply moving the problem to a new platform is enough to make it rain money. The first generation of performance management software was like this. Simply moving the same old forms online was enough to create several companies worth billions.

Still, the problem remains essentially unsolved. Complex solutions to complex problems create the feeling of change but leave the essential pieces in place. Markets (like all of HR and Recruiting) remain open to massive disruption because the solutions have made the problem ever more complex.

Great solutions (and this piece is a quiet homage to Steve Jobs) turn the solution on its head. The complexity disappears and something better emerges in its place. They hardly ever happen in the world where big whales swallow smaller fish.

‘Quality of Hire’

Last modified on 2011-12-09 01:51:06 GMT. 2 comments. Top.

Recruiting is a ‘bi-directional consultative sale’ (hat tip: Hank Stringer).  That means the recruiter is always juggling a close on both ends of the deal. When fitst viewed, the recruiting problem looks simple. Really, though, there are so many nuances that generalizations end up being the source of problems.

One of the most bizarre notions in the current HR culture is that ‘quality of hire’ is a meaningful measure of anything.

The complex relationship between the Recruiter and various hiring authorities strains conventional definitions of organizational boundaries. Simply described as ”workflow” or the hiring manager input, these relationships range from those in which Recruiters are logistics coordinators/sourcers (and the hiring manager has exclusive decision making authority) to more collaborative arrangements to situations in which Recruiters have actual hiring authority.

If anything is clear about recruiting processes it is that Recruiting represents the entrance to the organization. As such, it includes processes that are designed consciously or unconsciously to provide organizational evaluation of both the candidate and the process itself. The wide variation in Recruiting processes is not a flaw. It is an initial indicator of the organization’s culture. The process from initial courtship through the completion of “onboarding” always includes a number of very soft cultural evaluations and rites of passage.

Hiring decisions are typically made at the workgroup (department) level. New team members can be understood as levels of quality”

Typically, the highest level of quality is something like: The person most likely to bring synergy to the team.

The second level of quality is: A person who can do the job without adding additional burdens to the team.

The third level of quality is: A person who can do the job without adding burdens to the team after a short learning curve.

The fourth level of quality is: A person who has the skills and temperament required for the job but needs complete training.

The “hiring manager” is tasked with maximizing the output of the total team in pursuit of a set of assigned objectives. In other words, the hiring manager’s assessment of “quality” is a function of expectation (based on resources available to fill the slot) and overall consequence for the team. This molecular quality level is, occasionally, at odds with the atomic level because of the unique composition of a particular workgroup.

For example, adding a high powered, fully qualified no training required member to the team may upset the apple cart to the point that productivity is reduced. In cultures that emphasize longevity, hiring less qualified candidates allows the organization to continue its forward movement in more critical areas. The third or fourth level of quality is the right choice in these circumstances.

The State of HR Measurement

Last modified on 2011-12-09 03:05:40 GMT. 3 comments. Top.

Please welcome Cathy Missildine-Martin to the HRExaminer Editorial Advisory Board. Cathy is Co-Founder and SVP of Sales & Marketing at Intellectual Capital Consulting and a nationally recognized speaker on “metrics that matter.” Cathy also serves as an adjunct Professor at Kennesaw State University and Emory University. Full Bio »

The State of HR Measurement

by Cathy Missildine-Martin, SPHR

With the conference season just ending, I have had a lot of time to think about what I have learned and heard over the last few months about measurement and Human Resources.  I have focused on HR Measurement for the last 10 years, and the journey has been an interesting one.

I believe that analytics for HR can be the strategic weapon HR needs to bring value and insight to the business.  Michael Echols, EVP of Strategic Initiatives at the Human Capital Lab, said it best at The Conference Board a few weeks ago, “The opportunity is for HR to create FUTURE value from current human capital investments.”  That one statement for me solidified my theory.  HR must move past activity-based measures like time to fill, cost per hire, and turnover in order to get to investments that add value and create impact.

I believe a couple of definitions need to be cleared up before I discuss what is happening in the world of HR measurement. Metrics and analytics are used almost interchangeably, but there is a definite difference.

Metrics are simply measurements. For example “Our average engagement level is 80%,” “Our annual turnover is 50%,” “Our average performance score is 60%.”

Metrics track activity, but don’t necessarily show a causal relationship. Metrics alone do not show what affects engagement, what causes turnover and what drives performance.

Human capital analytics examine the effect of HR metrics on organizational performance. In more general terms, analytics look for patterns of similarity between metrics. For example, do high performers leave at a higher rate than low performers and if so, what is driving that turnover?   Statistical tests are necessary to get to those answers through analytics.

The journey to HR Analytics has been a long one for HR, with most companies just starting.  Below are the phases of a typical analytics journey: (adapted from Steve Woolwine, Chief of Staff Talent and Human Capital Services, Sears Holding Group)

1)  Justification-In this initial phase, HR metrics are tracked and have limited reporting.  No actions is taken at this stage and data is still quite dispersed.

2)  Measurement-In this phase, metrics are better defined.  Reporting is now in the form of a dashboard/scorecard, and leadership may have some accountability to the metrics.

3)  Effectiveness-At this stage, HR has more sophisticated technology and leadership is widely held accountable for results.  Actions are beginning to take place because of the data, and KPI’s are tied to results.  Analytics are now being discussed.

4)  Value Creation-At this stage, decisions are being made based on analytics, and genuine insights are created.  Predictive modeling begins here with an eye on future value creation from HR investments.

5)  Impact-This is where the strategic HR professionals really want to inspire the company to be.  At the impact phase, change is being created as a result of a predictive mindset, strategic goals are being achieved, and the culture has shifted from being performance based to analytics driven.

In my experience, when asked where most companies are in their metrics journey, phase 1 and 2 are the most common answers. Of course, there are pockets of analytics excellence from companies like Google, Sears, Well Fargo and others, but HR seems to be “stuck” in the early phases of the journey.

I think now is the time for HR to get themselves “unstuck” as HR tasks are still being outsourced and non-HR professionals are making their way into HR departments in companies both large and small. It’s all about supply and demand.  The CEO and other C-Suite Executives are currently risk-adverse due to our economic situation.

It’s not that companies don’t have money on their respective balance sheets as we know the money is there waiting to be invested. The issue is the C-Suite want DATA to back up their decisions. With service companies spending at least 60-80% of their operational budgets on Human Capital related expenses, the investment is significant. All CEO’s want to know is this:  Should I make this investment and if yes, did my investment pay off?

HR, here is how to get unstuck. Start by understanding your organizational strategy and what the drivers are for your desired results. Make sure you have a team that understands the business and has a curious mind to start asking the right questions. Some questions to consider when moving towards impact:

q How can I use analytics to move the organizational strategy forward?

q What business problem can I solve using analytics?

q Which investments in people should be made in the next 2-3 years?

Next, start small by solving a business problem with data.  Make sure you tell a compelling story and not just report rows and columns and data. Tell your leadership team something they didn’t already know and you will have their undivided attention.

HR has been wanting to be strategic, to add value, and to have a seat at the “you know where.”  Show impact and your presence will be requested at every single strategic meeting, as they won’t be able to have the discussion without HR.

 

The Flow of Social Technology In HR and Recruiting

Last modified on 2011-12-09 01:24:23 GMT. 1 comment. Top.

If you missed the Webinar I held with RecruitingTrends.com on Wednesday, here are the presentation materials. – John

Play mp3 Audio from Presentation