The Suite Spot

Talent-management suites can provide a holistic view of the workforce. The trick lies in finding the right one for your organization.

Tuesday, October 2, 2007
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As is usually the case when a company rolls out a new initiative, Arrow Electronics had a substantial "business pain" that it wanted to solve. According to Ted Nouryan, director of organization effectiveness for the Melville, N.Y.-based company, Arrow's method of accounting for its people was haphazard and ineffective, with no reliable way to access its internal talent.

"It was a bit of a mess," he recalls. "There was no way to evaluate people consistently. We weren't really understanding how [managers] were measuring their people."

In the midst of this chaos, an executive mandate made a change inevitable.

"Our new CEO, Bill Mitchell, had a companywide vision of shared leadership, and a lot of that shared leadership was around talent management," says Nouryan. "What he wasn't seeing [in the company at the time] was any kind of an integrated approach within HR or within our managers' tool kits, to be able to manage our talent the way they manage their [profit-and-loss ratios]."

The need for this "integrated approach" was real. Arrow, whose 12,000 employees populate 260 locations in 55 countries, had no central accounting of talent whatsoever. A Lawson enterprise-resource planning system was in place for North American employees, Europe and Asia workers were managed by spreadsheets, and no one central repository could report on them all. Mitchell's vision would be impossible to realize without the ability to view all of those people -- especially their strengths and weaknesses -- as a whole.

"We needed to be able to understand where our talent was, and be able to tap into that talent at the right time."

Arrow, like any company that moves talent management to the top of its priority list, quickly found that "finding and tapping into talent" is a more holistic task than reporting a simple statistic, such as the percentage of employees who scored highly on presentation skills.

It was also a task incompatible with HR's typical "siloed" approach to talent, which treats performance, goals, compensation, learning, recruiting and other disciplines as separate. To provide the necessary big picture, Arrow chose to purchase an integrated talent-management suite.

Instead of siloing data, talent-management suites operate more like an HR management or ERP system, with all modules drawing from a single, common source of employee data. Integration also reveals the interplay between two or more areas of talent management, such as how well performance correlates with compensation, or which learning is appropriate for an employee's personal goals and development plan. All are available, in context, at a glance.

"We wanted to create a one-stop shop for managers to be able to manage their talent," says Nouryan. "We wanted them . . . to look at the right information, to know what to do with their people and how to do it."

A Big Caveat

Arrow's new suite (from San Mateo, Calif.-based SuccessFactors) includes modules for performance management, succession planning and individual development planning. The system quickly filled with data with the help of employees, who used a feature called Live Profile to build their own internal resumes in a MySpace-like fashion.

While there is still a lot of work to be done, Arrow's managers can now, to some degree, search their own people when they have an opening. The organization also has greater visibility into who reports to whom and where the pockets of talent are, and can thereby set reasonable goals across the company.

Arrow's need for visibility into the talents of its people is not uncommon. A Bersin & Associates study found 55 percent of companies polled were interested in an integrated suite, and 51 percent of companies ranked "Filling gaps in the leadership pipeline" as their No. 1 or No. 2 problem. Forty six percent ranked "Creating a performance-driven culture" in their top two.

"It's the perfect storm of issues today. We're still experiencing quite a bit of economic growth, but companies are still very cost conscious," says Leighanne Levensaler, principal analyst in talent management at Bersin & Associates in Oakland, Calif. "Competition is still very steep, and people are your best competitive advantage. If you're constantly losing them and having to hire and train new people, you're losing your edge on competition."

Levensaler, who recently completed a major study of talent-management suite software, says every company's pain is different, so those who are in the market for a suite should spend some time analyzing their needs before buying. [Note: Levensaler will be presenting the findings from her report at the HR Technology Conference in Chicago on Oct. 10.]

"First, define your business challenges," she says. "Then, define a talent-management strategy to support that. You identify the specific processes that will enable that strategy. So perhaps it's career development, because [you have a lot of incoming] Millennials. Or maybe it's knowledge management, because you have people who are retiring and you want to capture what they know."

If a company needs to optimize learning, for example, it should be aware that not all TM vendors offer a learning module. Moreover, some vendors' learning-management systems are better than others. As a good rule of thumb, Levensaler suggests giving priority to vendors whose heritage stems from the area of your greatest business pain.

Here's the big caveat: While conducting her research, Levensaler spoke with 25 software providers that claimed to offer an integrated talent-management suite -- or at least, their respective marketing departments said they did, at any rate.

"There are a lot of companies positioning [their products] as suites, yet they're not all integrated," she says. "A lot of them are an amalgamation from acquisitions, and a lot of them are just developing stuff and have enough to put a label on something, but not much depth."

In truth, only a handful of that 25 met all of Levensaler's criteria for an integrated suite, which include having only one database, shared employee profiles and a common interface across all applications. The list was short and included -- but was not limited to -- SuccessFactors, Plateau Systems of Arlington, Va., and Wayland, Mass.-based Softscape.

"If you can measure it, you can improve it. In a few words, that's exactly why it needs to be integrated," says Christopher Faust, Softscape's executive vice president of global strategy. "You have to be able to extract data that gives you a real-world picture, that tells you where you are and where you need to go."

Faust says measurement and reporting are far more difficult if an application uses multiple interfaces or does not draw from one common pool of data.

"Because it's integrated -- because it's in one central database -- I can draw real-time data and look at that across different sectors and come up with things that I otherwise wouldn't have access to," he says. "Take the example of linking performance to compensation. Is there a direct correlation between my top performers who are underpaid and [lack of] retention?"

Faust adds that a company using a non-integrated system faces another big hurdle. Implementing any new process requires a change in behavior, so making the change as easy as possible is paramount. Requiring users to log in and out of several systems that look different and generate separate reports simply raises barriers to adoption.

Synchronization Needed

LandAmerica Financial Group, a real estate transaction-services company headquartered in Glen Allen, Va., is nearly as scattered as Arrow, with 12,000 employees spread across 900 offices in 49 states. According to Susan Sinkiewicz, vice president of operations and analysis for talent and learning resources, barriers to adoption at LandAmerica were already high due to the nature of the industry.

Title and escrow is an old business, with a history of being conducted from isolated mom-and-pop outfits. As LandAmerica acquired these small operations, it acquired their way of doing things -- which sometimes included performance review and sometimes didn't.

At the top of LandAmerica's "needs" list was simply getting people to use the system. "From an end-user perspective, the more we can simplify and just direct them to one system that will help manage their development, the better," says Sinkiewicz. The company's choice was a talent-management suite from Softscape. The software's single, integrated interface fit the bill of making things easy, she says.

"What we found really enticing was that it was seamless to the user," says Sinkiewicz. "We weren't having to send them to one system to do their performance review, get the development plan as output, and then have to send them to another system to work with the development plan. [Softscape] was one piece, in a centralized location."

The real payoff will come when LandAmerica is finally able to mine that performance data, says Sinkiewicz. The company hasn't fully delved into reporting yet, but she says the one-stop-shop nature of Softscape's back end makes the data much more available to HR than it would be using an isolated approach that required generating multiple reports and marrying them by hand.

Paul Sparta, chairman and CEO of Plateau, says the contextual data provided by an integrated suite is like a souped-up version of the customized suggestions gives its customers based on their past purchases.

"Imagine if, when you went to Amazon, the system already had a broad spectrum of understanding of what your interests were, and what you wanted to buy for the next year or longer," he says. "The difference between a company just using Plateau Learning and a company using Plateau Learning and Performance is that if you're using both, you're immediately going to see, from one click, all of the assets available in learning to help you get to where you want to go."

One of the companies using both Plateau Learning and Performance is Pinnacle Airlines, based in Memphis, Tenn. The company wanted deep learning functionality to train employees ranging from pilots to ground staff, but wanted these courses to sync with individual performance results and goals.

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"For an employee who's a ground ops agent but wants to be a pilot, they can say, 'Here I am today and here's where I want to be, and these are the steps I have to take to get there,' " says Mary Ann Morrow, Pinnacle's director of people. Employees can then take the courses comprising those steps at the company's on-site corporate training center in Memphis.

While the Plateau system is still in the testing stage and won't deploy company-wide until September, Morrow says its integration of performance review and learning is very attractive. Employees will set up goals during performance reviews, including learning activities for the coming year.

At their next review, employees can revisit goals in the context of courses they've completed or still need. It's a huge improvement from the company's old spreadsheet-based review process.

One interesting wrinkle at Pinnacle is that at around the same time the decision was made to implement Plateau, a concurrent decision was made to switch the company's human resource management system to one from Lawson Software. Lawson offers talent-management applications, but Pinnacle was more impressed with Plateau's learning -- and with integration in mind, performance moved to Plateau as well.

The Final Hurdle

Frequently, when companies debate whether to purchase additional talent-management capabilities, the omnipresent HR technology question of "ERP or niche provider?" rears its head. And the answer, as always, is "It depends."

All other things being equal, Bersin & Associates's Levensaler says it's a good idea for a company that already has an ERP to first consider the talent applications offered by that provider. The integration will be smoother, reducing overhead costs.

The common "con" argument against ERPs is a lack of functional depth, given the perception that a "jack of all trades" such as Lawson or SAP can't typically match features with a company whose focus is in only one area.

However, depending on the needs of the company, this might not even matter. "I've asked the question point-blank, 'Would you be willing to sacrifice functional depth to get all of your talent-management needs met on a single technology platform?' " says Levensaler, suggesting that the "single platform" might be an ERP. "Almost without fail, everybody says that they would sacrifice some features."

Really, she says, the latest releases from ERP vendors match niche providers' functionality pretty well. The challenge for a company that already has an ERP is to get that latest release, and the truth is that the daunting nature of an upgrade is what pushes many ERP customers to niche technology, which typically interfaces easily, deploys quickly and is sometimes available on a Software-as-a-Service basis over the Web.

Walldorf, Germany-based SAP, for its part, recognizes that even SAP customers who intend to upgrade to the 6.0 or subsequent releases may not be planning to do so for a few years. In such cases, the company acknowledges that a niche provider may sometimes be the best option.

"[Customers] may be on an older release, and all of our newer functionality is based on our most current release," says David Ludlow, SAP's vice president of HCM solution management. "If an organization doesn't have an upgrade planned for two years but needs to solve an immediate pain point, that's when we find that they are looking at these other [niche] applications."

The question is this: After a year or more of using something like SuccessFactors, will those SAP customers make the switch to SAP's talent-management product once it's finally been upgraded?

Ludlow admits this is a significant concern, and one that SAP may have a formidable challenge in swinging to its favor.

"We would have to come up with something at least as good, or better than, what they're using," he says, "and the company would need to look at their cost structure and say, 'It's costing us a tremendous amount of money to continue to use this on-demand vendor, and we can reduce the cost by some percent if we were to go to an integrated on-premise solution."

Arrow's Nouryan, who says the company is considering the purchase of a global ERP, is skeptical that any ERP's talent offerings could lure his company away from SuccessFactors because he doubts it could match that system's capabilities. And even if one could, the "cost motivation to switch would have to be substantial" to make it worth the effort, he adds.

Arrow has deployed its TM suite to its locations in Asia, North America and parts of Europe, with the rest of Europe to follow soon. Performance reviews are now done in 13 languages. Where there was no central repository of people information before, there is now an expanding global picture of the company, with visibility into the organization as a whole -- or, by changing the view on an executive's dashboard, drilled all the way down to the profile of a single employee. Nouryan says the only big hurdle remaining is getting everyone to take full advantage of it.

"How do we get everyone else in the company this excited?" he asks. "How do we get the general manager out in the field to really start driving the heck out of this stuff?"

The truth is that while the technology has allowed Arrow to do things it couldn't do before, it's the mentality throughout the company that really needs to evolve.

"This is just a tool," he says. "This is about behavior, and it's about helping people to change their behavior. The tool is an enabler for us to get there; it's not the be-all and end-all."

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