HRExaminer v2.48 December 16, 2011
Table of Contents
Sustainable Recruiting Is A Grassroots Thing
Hopefully, you’ve had a chance to look over the Recruiting is Local presentation and poke through some of the local recruiting resources from last week. As the economy stabilizes, we are dealing with a new reality. Global HR endeavors, while they are all well and good, rarely boil down to an integrated effort. Local labor laws, customs, perceptions of status, wage differentials, costume differences, language, time zone, work ethic, definitions of a company, management style and interpersonal dynamics vary so greatly that seamless integration is only remotely possible.
The same is true of the cities that make up the world. Things are so different between cities that they may as well be separate countries. This is true for more than 400 discrete Statistical areas in the United States alone. All of the countries of the world have at least two distinct recruiting regions. Most have many more.
The first reason local recruiting is important is that small businesses are virtually all local operations. They only hire locally.
Small businesses in the United States
- Represent 99.7 percent of all employer firms.
- Employ about half of all private sector employees.
- Pay 43 percent of total U.S. private payroll.
- Have generated 65 percent of net new jobs over the past 17 years.
- Create more than half of the nonfarm private GDP.
- Hire 43 percent of high tech workers (scientists, engineers, computer programmers, and others).
- Are 52 percent home-based and 2 percent franchises.
- Made up 97.5 percent of all identified exporters and produced 31 percent of export value in FY 2008.
- Produce 16.5 times more patents per employee than large patenting firms
“Small businesses employ about half of U.S. workers. Of the 120.9 million nonfarm private sector workers in 2008, small firms employed 59.7 million and large firms employed 61.2 million. About half of small firm employment is in second-stage companies (10-99 employees), and half is in firms that are 15 years or older. Small firms’ share of employment in rural areas is slightly higher than in urban areas; their share of part-time workers (22 percent) is similar to large firms’ share (19 percent). Small firms’ employment share remains steady since some small firms grow into large firms over time.”
Meanwhile, there are only about 20,000 firms with more than 500 employees, only 11,000 or so have more than 1,000 employees. Here’s that breakdown
- Firms with 1,000 to 1,499 employees 2,916
- Firms with 1,500 to 1,999 employees 1,542
- Firms with 2,000 to 2,499 employees 942
- Firms with 2,500 to 4,999 employees 1,920
- Firms with 5,000 employees or more 1,927
- Firms with 5,000 to 9,999 employees 952
- Firms with 10,000 employees or more 975
Something like 95% of all employment transactions happen in the proximity of the plant. As a result, understanding how to do grassroots recruiting is a survival skill for most people who do it.
However, the best that most current systems (STS, Job Board, CRM) provide is a way to narrow searching to the local neighborhood. Local Recruiting doesn’t mean narrowing your search. It means starting locally and working up.
Please welcome Ed Newman to the HRExaminer Editorial Advisory Board. Ed is an entrepreneur with a deep background in Human Resources and Talent Management and currently the CEO of InsideTMT.com, a community web site designed for people with interests in Talent Management Technology. Over the past 20 years Ed has led the development and implementation of numerous recruiting and HR technology deployments and strategic talent management initiatives for Fortune 500 companies. Full Bio »
What’s in your Talent Management Technology Portfolio?
by Ed Newman
Over the course of the last decade, we have seen major evolution in the Talent Management Technology market. It started out as a bunch of point solutions like applicant tracking, learning management, performance and succession, designed as “bolt on” modules to your core HRIS. But through horizontal growth and mergers and acquisitions, this category has emerged as a significant platform covering up to five functional disciplines with a whole new crop of bolt on products.
Ten years ago it was pretty confusing. Talent Management was a new term and everyone was using it differently. I remember thinking that as the market matured, some day it would all be crystal clear. But as you walk through the exhibit hall of any HR conference, it is just as confusing as ever. There are hundreds of vendors all telling you that their product will help you attract and retain the best talent. Some will tell you they can do it all. How do you know if you have the right mix of products to be competitive? How do you know if you’re missing out on some hot new technology that might make all the difference?
To make some sense of it all I like to think about it like building an investment portfolio. But instead of stocks, bonds and mutual funds, we need to fill it with foundation products, applications, and extensions.
Foundation – The foundation of your portfolio is made up of Payroll, HRIS, ERP products and your investments will be lower risk, like bonds. Companies like Oracle, SAP, ADP, are all solid and proven technology vendors and are not going anywhere. With lower risk comes lower reward, but this level is the price of admission. You need to have a core system of record for things like headcount, org structure, job classifications, and compensation data. You can’t really do Talent Management if you don’t have an accurate foundation of information.
Applications – Your application products provide the functionality to execute any of the core processes in talent management like recruiting, succession planning, performance, compensation, learning management, and workforce planning. The products offer the promise of big returns through lower costs, improved efficiency, higher employee engagement and the analytical intelligence to make better decisions. Most vendors in this group have been moving horizontally in an effort to provide all of these modules on a single platform. But for big companies, no one has it all figured out yet. And like investing in stocks, this is a higher risk/reward category due to all of the M&A activity.
While we have seen some stabilization with public companies performing well, like Taleo, Kenexa, and Cornerstone, the recent acquisition of SuccessFactors by SAP is an indication there will be a lot more consolidation. And you never know who might acquire whom. SuccessFactors customers who use Oracle/PeopleSoft as their foundation for example, may be wondering If you are very risk averse you can make a bigger investment in your Foundation products to support some or all of these processes until it shakes out. But in the short run, it will probably cost you more for a smaller return.
Extensions – These products are the glitz and glamour of the industry, and more like speculative stocks. They are typically leveraging the cutting edge advances in technology such as social media, video, and mobile devices and you really have no idea what will stick. And while the potential returns for early adoption are great, they could easily diminish over time, as they become mainstream or end up as just another fad. There tends to be a greater concentration of extension products in the recruiting function, but not exclusively. Categories like Recruitment Marketing and Sourcing, Candidate Relationship Management, Video Interviewing, Reference Checking, Talent Communities, and all forms of Social Recruiting are growing and expanding weekly. But there are categories like Social Collaboration and Rewards and Recognition that are more aligned with Learning, Performance, and Employee Engagement.
You probably won’t be betting the farm on any one of these products, which makes sense because the risk is much higher. The Foundation and Application vendors are trying to deliver these types of capabilities, but have had a hard time keeping pace. They have their hands full managing the full breadth of their already large platforms. If one of them decides to put the resources behind it, they could easily build some functionality to put one of the categories out of business. But it is more likely that an acquisition will be made, and that is where you could run into some complications. For example, when ADP acquired The Right Thing the AIRS SourcePoint CRM product went with it. If you have SourcePoint integrated with one of ADP’s competitors, you have to wonder how long it will be supported. The SuccessFactors acquisition of Jobs2Web will have similar implications.
Nothing happens over night, but you should closely monitor your investments in these extensions so that you can make adjustments and prepare for change. If you are not paying attention it can start to add up and you probably don’t want it to make up a significant percentage of your portfolio.
What should be in your Talent Management Technology Portfolio?
As for the Foundation segment, if you are more than 100 employees you need to get off the spreadsheets. Microsoft excel is very capable of tracking thousands of rows, but the cost of entry level HRIS products is so low, you can afford it. The bigger you get the more industrial strength your solution should be, but there are enough options to meet everyone’s cost/benefit analysis.
In the segment of Applications with all of the horizontal expansion by the vendors it is hard not to be thinking about moving to a platform. But it does not necessarily need to be a single vendor for all functions. This is a higher risk investment and you may not want all your eggs in one basket. First of all, nobody is even close to having enough depth in each discipline to meet the needs of a large enterprise. I think it makes a lot of sense to have two or three vendors, maybe one with strength in recruiting, and another with strength in Performance or Learning. With the advances of open API’s, integration and data warehousing can give you some cohesion and cover all the bases.
In the area of Extensions everyone seems to be dabbling in social media, and you should most definitely have some sort of front end Recruitment Marketing platform that connects all the dots between job boards, social sites, and your ATS. Additionally, there are two categories that offer huge value and virtually pay for themselves. Video Interviewing and Pre-Hire 360 (Reference Checks). The cost savings alone justify the investment, and there is also a big impact on quality.
Just like a stock portfolio, you should probably have all three types of products, with the amount invested in each aligned with your propensity for risk and reward.
5 Books That Changed Me
by Heather Bussing
About 14 years ago, I gave up TV. It wasn’t exactly on purpose. It had something to do with not wanting to pay the cable company to pull the lines up from the street. That, and I was pregnant and completely overwhelmed and it just seemed like noise and light.
I haven’t missed it.
Instead, I read. These are the books I read in 2011 that changed the way I think about the world and how I operate in it.
Cad Monkeys, Dinosaur Babies and T-shaped People: Inside the World of Design Thinking and How it Can Spark Creativity and Innovation by Warren Berger.
Innovation thrives in wide open spaces and impossible constraints–conditions that rarely exist in most companies. Innovation is often born from mistakes and failure. If you have a problem to solve, think bigger than the problem and always be careful how you define it.
Berger gives examples of designers who have reinvented computers, cities and their own lives. He advises to ask stupid questions, jump fences and make hope visible.
More than any other, this book changed the way I look at every question and difficulty. It’s no longer a problem, it’s just time to look from a different angle.
Justice: What is the Right Thing to Do? by Michael Sandel
Sandel is a political philosopher at Harvard whose lectures on doing the right thing became so popular, PBS did a series on them.
Sandel explores theories of what is just, how we get and enforce rights, and why. Should we enact rules that give the greatest good for the most people? Is there some objective standard of what is good and fair that we should apply to economic and political policy? How do we decide?
It turns out that western politics and culture are governed by a mashup of different philosophies with conflicting principles. It’s no wonder we can’t agree.
Sandel takes on the hardest political questions of our time–gay marriage, assisted suicide, affirmative action, abortion and government bail outs– and gives a framework for deciding what is right and why.
Mindfire: Big Ideas for Curious Minds by Scott Berkun
Berkun is probably best known for The Myths of Innovation in which he takes on the romanticism of how innovation happens. Mindfire is a collection of essays where Berkun continues to call bullshit on our cherished beliefs and habits.
Your time and attention are finite, nonrenewable resources. How do you really want to spend them? Burkun advises “Pick something. Do it with all your heart. Repeat.”
Thinking Fast and Slow by Daniel Kahneman
Kahneman is a psychology professor and Nobel prize winner who has studied how people think and make decisions since the 1970’s.
It turns out we have two related operating systems. The first one is fast, intuitive, and often wrong. The second is slower, more rational and involves self control. Both of these systems are designed for maximum efficiency, which means that neither wants to spend more energy than is absolutely required. So we develop biases, make assumptions and take the path of least resistance whenever possible. This book will blow your mind.
Understanding the physical, emotional and thought process involved in making decisions has changed the way I approach problems and think about solving them.
Firing At Will by Jay Shepherd
This book didn’t change the way I think as much as it validated my approach to employment law. It did make me think hard about the role of attorneys in organizations. Shepherd believes the legal department and HR should focus on people first and running a successful business second. When you do that, there is much less risk to manage.
Shepherd advocates throwing out the policy manual, dealing with people individually, treating employees with respect, and quickly getting rid of the ones who don’t work out. This approach is counterintuitive to most corporate legal departments where the focus is preventing anyone from knowing anything in order to avoid a lawsuit. It also goes against the operating systems of many HR departments, where there is an edict for every action.
The consequence of a more personal, customized approach is that people actually have to deal with each other. Managers must pay attention to what is going on, be willing to make hard decisions and then take responsibility for them. So unfortunately, I don’t see the approach catching on.
But if it did, it would work.
And much of the nonsense about employee engagement would evaporate. People don’t engage with policies, incentives, or the latest rah rah program. People engage with people.
The Tidal Wave of Data About Employees
HR will be turned on its head by the coming tidal wave of data about employees. From moment to moment performance management data to sensor based physical information, HR systems will be asked to handle hundreds or thousands of times the current volume. Expect hardware to break and IT departments to cringe.
The data will find its way in the front door, from the bottom, as HR takes on crowd-sourced functionality for hiring, subcontracting, training, education and actual referrals. As has been the case with social media, the employees will want one thing while the vendors supply another. It’s coming in ways that are beyond the imagining of most in the profession.
Self-quantification (or life tracking) is the art and science of using personal data to improve performance and understanding. Take a look at the Quantified Self Guide for 400 or so tools for tracking various aspects of your life (from blood pressure to mood to physical activity to sleep).
Employees are bringing these things into the office every day. They know more about the correlation between a range of things and their performance than the company. Smart HR folks are investigating and considering the possibilities.
The Apple store has begun to carry a range of these tools. There is an emerging synthesis of personal data and health records. Anyone who is watching the evolution of wellness data ought to be plugged into the trend. You might want to scan through the personal fitness section at Best Buy
Some of the tools you ought to know about:
- Fitbit: this device is worn somewhere on the body. It is like a pedometer, measuring physical behavior and movement. The associated website allows the careful monitoring of food intake and other related measurements. (You can find these at Best Buy and in their airport vending machines)
- Up: it looks like a bracelet and does some of the things that Zeo does and some of the things that Fitbit does. (At the Apple Store)
- ZEO: a sleep measurement tool. It tracks sleep through four stages: awake, light sleep, deep sleep, REM sleep.
- WiFi Body Scale: Wireless unit feeds data to an app.
- Wiithings Blood Pressure Monitor: unit feeds data to an app
- Pocket Finder GPS: Allows the monitoring of movements using an iPad/iPhone interface
- Digifit: Performance management for runners including pulse monitoring.
All of the tools are designed to feed data into portable devices. That gives the user access to the data for a range of purposes throughout the day.
The underlying trend is that people are learning more about themselves and how they work best. Expect to see serious discussion of the related issues (privacy boundaries and access to the enterprise data stream by individuals) as the next couple of years unfold.
If I wanted to attract the attention of regulators, I’d announce an acquisition on the first day that the markets are able to digest the fact that I was acquired. That’s big cojones, astonishing marketing or a combination of the two.
It certainly isn’t the SAP way.
SuccessFactors’ acquisition of Jobs2Web, announced Monday, on the heels of SAP’s announcement of its purchase of SuccessFactors, was a head spinning moment. In the midst of a flurry of claims that the SAP move was about the cloud, SuccessFactors violently reaffirmed its commitment to the Human Capital Software market. The market analyst crystal balls simply clouded over. The market messages are so conflict laden that no one can really tell what’s going on.
A peek under the covers
Jobs2Web is a recruitment marketing platform. This is an idea whose time has come. There are probably 30 competitors in this hyper-fragmented emerging market sector.
The players range from tiny but potent smashfly to the new advertising agency being built behind the firewall at Kenexa. In the 21st Century, the HR Department is a communications engine, delivering brand information to internal and external stakeholders. The advertising and communications spend in HR dwarfs the technology spend already and social media simply amps it up. Every RPO and most HR outsourcing companies have an offering.
The underlying opportunity is the distribution and control of messages from the HR Department to its various constituents in and out of the organization. HR is the trench level operation in any company’s grassroots marketing campaign. The idea, while actively being shaped in the social media and recruiting world, leaves industry fuddy duddies in severe head scratching mode.
The problem with the market is its inherent fragmentation.
The Jobs2Web ‘platform’ behaves like a series of scripting solutions rather than a coherently developed piece of software. While the rhetoric of the cloud is that everything can be synched and integrated, the reality is that the world, HR in particular, is a series of sandboxes occupied by five-year olds who don’t know how to share. The cloud depends on cooperation in the ecosystem. Jobs2Web solves the fact that that isn’t happening. Each solution is a handmade set of tools for the particular case.
It’s just not a scalable approach. (That means that variable costs don’t decline as revenue increases). Each integration is a reinvention.
What that tells you about the newly turbo charged SFSF juggernaut is that it’s all about sales. The subtleties of software design and the truth or falsity of claims about SaaS and the cloud mean little to a customer with a problem. How one fixes the problem is the job of the fixer. That it gets fixed is what customers are interested in.
The SFSF acquisition of Jobs2Web is not about software. It’s not about the cloud. It’s not about SaaS.
It’s a message to the HR Market.
SuccessFactors is telling us
- that they’re in the HCM business to stay
- that delivering solutions matters more than orthodoxy
- that marketing labels (even when they’re data models) don’t matter as much as addressing pain
- that the key to the enterprise cloud is the hearts and minds of the people who work there
It’s a deliciously Frank Sinatra (I Did it My Way) approach.