WSR March 2017 by IHRIM Publication

January â&#x20AC;&#x201C; March 2017

The Official Journal of the International Association for Human Resource Information Management

IHRIM.ORG

Building the Business Case: a critical step for the selection, adoption and deployment of new HR technologies

See the 2017 Annual Buyers Guide Page 20

Contents

Volume 8, Number 1 • January - March 2017

features 2017 Annual Buyers Guide

Page 28

columns From the Editors

Bruno Querenet, Lead Editor Roy Altman, Contributing Editor Jeff Higgins, Contributing Editor

The Chicken and the Egg, Proof of Concept or Business Case: Which Comes First? 30 By David Vance, Center for Talent Reporting

Pre-hire Talent Assessments Must Be a Part of Your Predictive Talent Acquisition Strategy 32

How Agile Methodology Applies to HR Technology Solution Selection

By Greta Roberts, Talent Analytics, Corp.

By Gray Cole and Brian Borzone, Deloitte Consulting, LLP Early and clear communication with potential solution providers is key in the agile approach. Applying the agile solution selection concepts to your program requires a focus on the value-add areas of interest, solution differentiators, and early collaboration with solution providers. With the right leadership and guidance, your organization can successfully navigate this process.

Building a Business Case: A How-To Guide

The Back Story

Building the Business Case for HR By Katherine Jones, Ph.D., Mercer

By Jeff Higgins, Human Capital Management Institute Making a business case is so important that those who are good at it are far more likely to be successful in the organization. Simply put, the ability to put together a good business case and obtain approval is a critical career skill and sadly one that is not taught in most university programs.

Managing the C-Suite: The Politics of Business Cases

By Scott Bolman, Sierra-Cedar Competing priorities, changing financial conditions, personality conflicts, and hidden agendas can derail even the best business cases and presentations. However, following the steps outlined in this article should improve your chances of success. Of course, once your business case is approved, the real work begins!

Make the Business Case for Talent Management: Seven Best Practice Strategies

By Charles Spofford, PeopleFluent The depth and consistency of senior management team engagement in talent development and succession management practices clearly distinguishes organizations with best-in-class talent management systems. A hallmark of high-performance talent management systems is the cultivation of a compelling, evidence-based business case for sustained investment in talent management capabilities.

Proving the Business Case – Are We Getting the Return We Forecasted?

By Dr. Tom Tonkin, Cornerstone OnDemand When setting out to create a proposed ROI, we default to what is considered hard costs (IT equipment) versus soft costs (employee engagement). However, I would classify these differently. Soft costs are difficult costs, meaning they are a challenge to measure (but certainly not impossible). There is a myth in our business that achieving a return-on-investment means that we need to satisfy an IT metric. The fact is that an HR ROI needs to satisfy an HR metric, i.e., employee engagement.

What’s the Value of Adopting Workforce Intelligence?

By Lexy Martin, Visier Organizations that are adopting workforce intelligence are on a journey along a maturity spectrum to achieve value. As organizations move to higher stages of maturity, the value of workforce intelligence increases, impacting organizational performance in three distinct ways: Technology/efficiency value, HR effectiveness value, and Business impact/strategic value.

Workforce Solutions Review (ISSN 2154-6975) is published quarterlyy for the International Association for Human Resource Information Management by Futura Publishing LLC, 12809 Shady Mountain Road, Leander, TX 78641. Subscription rates can be found at www.ihrimpublications. com. Please send address corrections to Workforce Solutions Review at the address above. www.ihrim.org • Workforce Solutions Review • January-March 2017

Volume 8, Number 1 • January-March 2017

Workforce Solutions Review is a publication of the International Association for Human Resource Information Management, whose mission is to be the leading professional association for knowledge, education and solutions supporting human capital management. Opinions expressed herein are not necessarily those of the editors, the IHRIM board of directors or the membership.

ERIK BERGGREN, VP, Customer Results & Global Research, Success Factors, San Mateo, CA USA eberggren@successfactors.com

BRIAN RETZLAFF, Head of IT for HR, Legal & Communications, ING US Insurance Americas, Atlanta, GA USA brian.retzlaff@us.ing.com

JOSH BERSIN, Principal and Founder, Bersin by Deloitte, Oakland, CA USA jbersin@bersin.com

LISA ROWAN, Program Director, HR, Learning & Talent Strategies, IDC, Framingham, MA USA lrowan@idc.com

NAOMI LEE BLOOM, Managing Partner, Bloom & Wallace, Fort Myers, FL USA naomibloom@mindspring.com

EDITORIAL COMMITTEE

YVETTE CAMERON, Global Vice President Strategy, SuccessFactors, Littleton, CO Yvette.cameron@successfactors.com

Managing Editor SCOTT BOLMAN, Strategy and Analytics Practice, Sierra-Cedar bolmanscott@yahoo.com

Co-Managing Editor SHAWN FITZGERALD, Managing Director, Total Rewards and HR Technology, Blue Cross Blue Shield Association, Chicago, IL, USA shawn.fitzgerald@bcbsa.com

Associate Editors ROY ALTMAN, HRIS Manager - HR Analytics & Application Architecture at Memorial Sloan-Kettering Cancer Center, New York, NY roy@peopleserv.com DAVID GABRIEL, Ed.D., Global Reach Leadership, Berkleley, CA davidcgabriel@gmail.com JEFF HIGGINS, CEO, Human Capital Management Institute, Marina Del Rey, CA USA jeff.higgins@hcminst.com ERIC LESSER, Research Director, IBM Institute for Business Value, Boston, MA USA elesser@us.ibm.com MICHAEL H. MARTIN, Partner, Aon Hewitt Consulting, Organization & HR Effectiveness, New York, NY michael.martin.6@aonhewitt.com BRUNO QUERENET, Head of HR Technology/HR Operations, Genentech Bruno.querenet@gmail.com

LEW CONNER, Executive Director, Higher Education User Group, Gilbert, AZ USA lconner@heug.org ELENA M. ORDÓÑEZ DEL CAMPO, Senior VP Globalization Services, SAP AG, Frankfurt, Germany elena.ordonez@sap.com GARY DURBIN, Chief Technology Officer, SynchSource, Oakland, CA USA hacker@synchsource.com Dr. CHARLES H. FAY, Professor, School of Management & Labor Relations, Rutgers University, Highland Park, NJ USA cfay@smlr.rutgers.edu DR. URSULA CHRISTINA FELLBERG, Owner & Managing Director, UCF-StrategieBeraterin, Munich, Germany ucfell@mac.com ALSEN HSEIN, President,Take5 People Limited, Shanghai, PRC Alsen@take5people.com CARL C. HOFFMANN, Director, Human Capital Management & Performance LLC, Chapel Hill, NC USA cc_hoffmann@yahoo.com

LISA STERLING, Executive Vice President, Chief People Officer, Ceridian, Lincoln, NE USA, lisa.sterling@ceridian.com DR. DANIEL SULLIVAN, Professor of International Business, University of Delaware, Newark, Delaware USA sullivad@lerner.udel.edu MARK SMITH, CEO, Chief Research Officer, and Founder of Ventana Research, San Ramon, CA USA mark.smith@ventanaresearch.com DAVE ULRICH, Professor, University of Michigan, Ann Arbor, MI USA dou@umich.edu DR. MARY YOUNG, Principal Researcher, Human Capital, The Conference Board, New York, NY USA mary.young@conference-board.org

IHRIM BOARD OF DIRECTORS Officers and Executive Committee JAMES PETTIT, HRIP, Chair SHAFIQ LOKHANDWALA, Vice Chair, Program Committee Chair, Strategic Alliances Lead GARY MORLOCK, CFO, Finance Committee Chair, Operations Committee

JIM HOLINCHECK, Vice President, Services Strategy & Marketing, Workday, Inc. james.holincheck@workday.com

JOYCE BROWN, Board Secretary, Finance Committee, Program Committee, Education Committee Board Sponsor

CATHERINE ANN HONEY, VP, Customer Services, Radius Worldwide catherine.honey@comcast.net

KEVIN CARLSON, Past Chair, IHRIM Foundation Board, Membership Committee Board Sponsor, Executive Leadership Council Chair

DR. KATHERINE JONES, HCM Research, Bersin by Deloitte, San Mateo, CA USA kathjones@deloitte.com

Board Members

SYNCO JONKEREN, VP, HCM Applications Product Development & Management, EMEA, The Netherlands synco.jonkeren@oracle.com

DAVE BINDA, Operations Committee, Toronto 2017 Conference Co-Chair

MICHAEL J. KAVANAGH, Professor Emeritus of Management, State University of Albany (SUNY), Albany, NY USA mickey.kavanagh@gmail.com

MICK COLLINS, Finance Committee, Program Committee, Vendor/Alliances Committee Board Sponsor, Marketing Board Sponsor

CECILE ALPER-LEROUX, VP Product Strategy and Development, Ultimate Software, Weston, FL cecile_leroux@ultimatesoftware.com

BOB KAUNERT, Principal, Towers Watson, Philadelphia, PA USA robert.kaunert@towerswatson.com

MARY ANN MCILRAITH, Program Committee, Marketing Advisor

BILL KUTIK, Technology Columnist, Human Resource Executive, Westport, CT USA bkutik@earthlink.net DAVID LUDLOW, Global VP, HCM Solutions, SAP, Palo Alto, CA David.ludlow@sap.com

PUBLISHING INFORMATION

MARK BENNETT, Oracle Corp., Redwood Shores, CA USA mark.bennett@oracle.com

MICHAEL RUDNICK, Managing Partner, Prescient Digital Media Michael.rudnick@gmail.com

EDITORIAL ADVISORY BOARD

RHONDA P. MARCUCCI, CPA, Consultant for GruppoMarcucci, Chicago, IL USA rhonda@gruppomarcucci-usa.com LEXY MARTIN, Independent Consultant/Researcher, Meadow Vista, CA Lexy.martin1@gmail.com

January-March 2017 • Workforce Solutions Review • www.ihrim.org

STUART RUDNER, Toronto 2017 Co-Chair

TOM FAULKNER, Publisher, Futura Publishing LLC, Austin, TX USA, tomf@futurapublishing.com PATTY HUBER, Advertising Manager, Austin, TX USA phuber2@austin.rr.com

Bruno Querenet, Lead Editor Bruno Querenet is head of HR Technology/HR Operations at Genentech. Prior to his current position, he served as a principal consultant providing services to help HR organizations improve their efficiency and effectiveness through the adoption of relevant processes and systems. Previously, he was the head of HR Systems and Operations for several companies in the medical and high tech sectors. He can be reached at Bruno.Querenet@gmail.com. Roy Altman, Contributing Editor Roy Altman is manager of HRIS Analytics and Architecture at Memorial Sloan Kettering Cancer Center. He is responsible for putting actionable data in the hands of workers to assist in decision-making, manages a work stream of their Workday implementation, and determines short and long-term application architecture strategy. Previously, he was founder/CEO of Peopleserv, a software/services company. He has published extensively and serves on IHRIM Workforce Solutions Review editorial committee and can be reached at altmanr@mskcc.org. Jeff Higgins, Contributing Editor Jeff Higgins is the CEO of the Human Capital Management Institute, a driving force in workforce analytics helping companies transform data into intelligence via workforce planning and predictive analytics. Higgins is a founding member of the Workforce Intelligence Consortium, a member of the ISO Technical Advisory Group (TAG) developing human capital standards, board member of the Center for Talent Reporting (CTR) and editorial committee member for IHRIM’s Workforce Solutions Review (WSR) magazine. He can be reached at jeff.higgins@hcminst.com.

from the editors Building a Business Case is a critical step for the selection, adoption and deployment of new technologies, but a step which is seldom done well and may result in delayed investments or stalled projects. Building a business case is not a simple process; it requires time, energy, the adoption of a thorough methodology, a mixture of solid quantitative information, great visuals, a compelling story line, and an appreciation for the path to follow to overcome the politics attached to the suggested changes. This is what will be discussed in this issue of WSR through a series of passionately written articles. With Gary Cole and Brian Borzone, from Deloitte, you will learn about the use of the Agile methodology for the management of an RFP, with the end result of cutting dramatically the time needed to go through such exercise while improving the quality of the selection made. With Jeff Higgins, from HCMI, and with Katherine Jones, from Mercer, you will be presented with a set of logical steps to build a business case. Each one of those steps constitutes the tip of an iceberg but, at least, you will know what to look for and progressively address to build your business case. Scott Bolman, from Sierra-Cedar, helps us dive into the politics of business cases. Each investment, even if backed by a strong business case, may not be validated if the political landscape at the level of the C-suite is not understood, and the different executives briefed and influenced, prior to the formal presentation of the business case to an ad-hoc committee. Based on experiences with his company, PeopleFluent, Charles Spofford identifies reasons for us to invest in talent management solutions, linking them to strategic business objectives, and positioning talent management as a critical business process. Tom Tonkin from Cornerstone shares with us some provoking thoughts to help us realize that the ROI is a lagging indicator, and that we need to elevate the discussion to identify the true purpose of the investment. He advocates the need to build a culture addressing the “knowing-doing gap” and celebrating mistakes, or investment proposals will not be as strong, meaningful, and timely as they should. Getting a strong workforce intelligence environment, leveraging the data available to us – without even speaking about big data – is paramount to creating strong business cases. Lexy Martin from Visier describes the value of adopting workforce intelligence to identify the true causes of issues and be able to focus, with the right justification, on the most impactful projects addressing current business challenges. Dave Vance, from the Center for Talent Reporting, raises the “chicken or the egg” question concerning the proof of concept and the business case. Do you need a proof of concept to be able to justify a business case, or do you need a business case in order to justify a proof of concept? In her article, Greta Roberts from Talent Analytics looks at the pre-hire talent assessment, getting into the business case for investments to improve talent acquisition. And we close with Dr. Katherine Jones’ Back Story column where she tells us the value of a good business plan for your technology journey is that it helps provide milestones so you will know when you have reached your destination. Together, Roy, Jeff, and I hope, with this series of articles, that you will have more ammunition to build your future business cases and enhance your ability to be ahead of the curve, and provide competitive advantage to your company by adopting new and promising technologies. Happy reading! www.ihrim.org • Workforce Solutions Review • January-March 2017

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Gray Cole and Brian Borzone, Deloitte Consulting, LLP

How Agile Methodology Applies to HR Technology Solution Selection Selecting and implementing a new cloudbased HR technology solution can be a lengthy process and represents a major investment for most organizations. The entirety of this process includes the development of an HR technology strategy, development of an implementation roadmap, selection of HR technology solution, pre-implementation preparation, and the implementation itself. When organizations embark on this journey, they often focus their time and attention on the length and complexity of the implementation and ways to make that shorter and cheaper. While that attention is certainly critical to the overall funding of the project, little consideration is given to the 9 to 18 months that it takes for most organizations to assess, select, and align around a future HR technology solution. Just as applying an agile methodology to HR technology implementations can decrease time, effort, cost and risk, applying agile methodology to the activities prior to implementation can also decrease time, effort, cost and risk. In this article, we will focus on how to streamline the HR solution selection process, which can create a meaningful impact on the overall implementation program and, ultimately, the overall strategy and financial impact on the business. In a traditional approach, HR technology solution selection is usually a long and painful process that can take from several months to a year or longer. While good decisions are often made in the end, the time and resources required to make these decisions are unacceptable. Casting a (too) wide net – The traditional process often starts with an unwillingness to short-list solution providers early in the process. Many organizations invite several HR technology solution providers to participate in the selection process, regardless of whether

January-March 2017 • Workforce Solutions Review • www.ihrim.org

these providers would ever be right for their organization. Including more solution providers in a selection process does not necessarily give your organization more leverage in pricing or contract terms; it merely dilutes the time your organization is spending devising the best solutionwith the viable ones.. Death by RFP – Next, there is the development of the dreaded request for proposal (RFP). An organization will bring together dozens of people for several days to review hundreds (or thousands) of lines of requirements to include in an RFP. No requirement is overlooked, no matter how small, exception-based, or common among the solution providers. Because of the size of the RFP, you now have several weeks of inaction while you wait for the solution providers to respond. Once the solution providers submit their response, HR, IT, and Procurement are rewarded with the opportunity to review hundreds of pages of responses and score the answers. As the solution providers mainly answer “Yes we can” to their ability to address your requirements, they all receive basically the same score – yielding little solution provider differentiation. They all scored well, so now what? Next are several days of meetings where you ask the solution providers to demonstrate the mass of requirements you provided them in the RFP. Several days of demos, countless details reviewed, and your organization is reeling from information overload. So, despite weeks of reading, scoring, discussions and demos, the organization still will not have found what is truly unique about these solution providers. And, they have not even begun to discuss what matters to them in areas such as user experience, integration with their overall technology environment, customer support, and long-term roadmap/viability. This means that several months after starting this process, there is little

to no differentiation, and there is no clear path to a final decision. The traditional approach may have been applicable in prior years when HR technology solutions were evolving at a different pace. Today, HR technology lives in a different world. The leading HR technology solutions have matured functionally. Product development cycles are measured in months versus years, allowing top solution providers to quickly close gaps and functionality differentiation. In most cases, the traditional approach no longer meets the demands of the agile world in which we work. Indeed, in today’s technology world, a product can dramatically change in six months, filling functional gaps and establishing additional key milestones on the product roadmap prior to your implementation. This all points to a better way of approaching your HR technology solution selection and enabling your organization to undergo the process more quickly and efficiently. We advocate that our clients apply an agile selection methodology, allowing you to accelerate the selection process, focus on business impact, value-add activities, and bring efficiency to this part of the overall solution selection and implementation program. Narrow your focus early to drive collaboration – This streamlined approach starts with a short list of solution providers and a sharp focus on critical business requirements, i.e., scope. This serves two purposes. First, the smaller the solution provider list, the less overall effort is required for review of materials, demos, scoring, and development of the final recommendation. Second, you can immediately focus on developing relationships with the solution providers, if this hasn’t already happened, which is much easier to do with a smaller set of solution providers. Also, having scope discussions early in the process and creating clear prioritization of what is truly critical allows you to accelerate your evaluation of each potential solution, and clarifies what is most important to your organization to the solution providers. It is much easier now to reduce the solution provider set than it was a few years ago. With a consolidation of solution providers, clear leading solutions in different size market segments, the acceleration of R&D leading to commoditization of core functionality, and availability of solution provider information, only a few solution providers comprehensively serve organizations of a certain size and complexity. This

allows your organization to pare the solution provider list early and with confidence. Slim down the RFP, for now – With a shortlist of solution providers prepared, it’s time to engage the solution providers and gather the information to make a decision. There is no need for a detailed RFP at this point in the process. Instead, engage your short-listed solution providers with requests that focus solely on your unique business requirements. Push the traditional pricing, terms and conditions, company history, etc., to the end of the process. For years, HR technology decisions have been driven largely on how each solution provider addresses current-state individual functions and features, i.e., the dreaded thousand line requirements list. Our observations of the market, backed by Bersin by Deloitte research,1 show that these individual functions and features no longer should drive the decision. The decisions are now driven by: •

Interoperability – The ability of the solution to technically fit across your broader technology landscape;

•

Extendibility/extensibility – The ability to extend the solution to accommodate data or functionality not supported by the deliverable capabilities;

•

User experience – Ease of use within the employee, manager, and system administration communities, and continuity across the employee life cycle;

•

Solution provider partnership – Track record of servicing customers (the “service” in Software-as-a-Service), the record of ongoing innovation and product roadmap, and your company’s larger market relationship with the solution provider; and,

•

Cost – Moving from a capital expenditure environment to an ongoing expense environment and ability to manage those ongoing costs.

Today, HR technology lives in a different world. The leading HR technology solutions have matured functionally.

With relatively few functional areas driving differentiation among the solution providers, there is no reason for a complex RFP process focused on broad functionality that yields little in useful information and overall differentiation. Get expert opinions early – In place of the complex RFP, a consulting company such as Deloitte provides subject matter experts with hands-on experience in each of the packages you are evaluating. It will help you get to those www.ihrim.org • Workforce Solutions Review • January-March 2017

About the Authors

Gary Cole is a principal with Deloitte Consulting LLP, specializing in Human Resources transformation, technology strategy, and technology implementation. He leads Deloitte’s HR Technology Strategy practice and is an active speaker/blogger in the market on HR related technology trends. Prior to joining Deloitte, Cole held a global technology leadership role for a large professional services company. He is a graduate of Virginia Tech and currently lives in the Washington, D.C. area. He can be reached at gcole@deloitte.com. Brian Borzone is a principal with Deloitte Consulting LLP. He is a recognized leader in HR technology, as well as mergers and acquisitions, which are often a catalyst for technology transformation. He has led transformations of HR systems and processes for numerous global organizations, having helped clients strategize, select, and implement HR systems for over 25 years. He can be reached at bborzone@deloitte.com.

critical business requirements that will be differentiating and outline how the solution will meet your other functional needs. Armed with that information, it can then guide the discussions and demonstration to be focused on critical, high-impact business processes and the decision drivers listed above. Leveraging an inventory of use cases as a starting point can develop highimpact use cases through a series of discussions with business process leaders, technologists and HR/business leadership. Because this process focuses on key differentiators and not the entire litany of functionality found within each scope area, the discussions are much shorter and more efficient than the multi-day workshops of the past. A full set of these discussions can occur within a day or two. You can then quickly develop the demonstration content and send the solution providers a set of high-impact use cases and an initial cost request. Within a few weeks from the project start, you are collaborating and engaging the solution providers and getting a focused look at their solutions. By focusing solution provider discussions on key decision criteria and high-impact business processes, an organization only needs to spend one to two days with each solution provider to gain the necessary insight into their solutions. Make your selection (or at least get closer) – Armed with early engagement of the solution providers and a focused look at their offerings and initial pricing, an organization is able to determine the relative fit of each provider and an order of preference. At this point, an organization can select the preferred provider and engage in next-level negotiations. This is an informed decision in a fraction of the time usually spent on assessing solution providers! However, many of our clients choose instead to down-select to the top-two solution providers. They are not prepared to make a final decision at this point and want to conduct some additional follow up. Reducing the solution provider set to two allows for less time needed for follow-up and negotiations. In addition, we find that if a solution provider knows that they are one of only

Endnotes

two left in the running, they become much more aggressive in working through contracting and pricing discussions. Because an organization focused the solution provider discussions on high-impact use cases instead of a broad set of functionality, the amount of follow-up is typically much less than in a traditional approach. Organizations can create a short request for information to those two solution providers for final pricing, contracting and the identified follow-up items. There is no need for an exhaustive RFP and the reading, scoring, and interpretation that comes with it. Instead, organizations are focused on the preferred solution providers, all in a fraction of the time spent on a traditional approach. The organization is now able to review the final pricing and follow up with key functional leaders and quickly come to terms with a new HR technology solution provider. Given that the selection activities took weeks instead of months (or years), this allows an organization to accelerate their overall implementation schedule and begin to realize the positive business impacts much earlier than with a traditional approach. The HR, IT, and Procurement teams will appreciate that they spent a lot less time on your HR technology selection process and only were asked for their participation when absolutely necessary. Meanwhile, the solution providers appreciate that they didn’t have to spend much time on a non-value-added, lengthy RFP and didn’t have to go through a long, drawn-out sales process. Of course, though the agile solution selection approach can provide many benefits, it requires your organization and the solution providers to move more quickly and be more flexible than they may be accustomed. Early and clear communication with potential solution providers is key in the agile approach. Applying the agile solution selection concepts to your program requires a focus on the value-add areas of interest, solution differentiators, and early collaboration with solution providers. With the right leadership and guidance, your organization can successfully navigate this process.

1 Katherine Jones, Ph.D., The Buyer’s Guide to Selecting HCM Software, Bersin by Deloitte, July 2014.

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Jeff Higgins, Human Capital Management Institute

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Building a Business Case: A How-To Guide The Business Case Imperative

Note: This article is an update of an article published in the August/September 2013 issue of Workforce Solutions Review entitled, “Getting to Yes: Building a Winning Business Case.” (See http://www.ihrimpublications.com/WSR_archives.php. Aside from day-to-day operations in any organization, almost anything that requires additional cost, major investment, a change in a business process, or new staff resources will need something more than a good idea – it will typically require a “business case.” In the business world, few things are as ubiquitous as the business case. Whether your organization is large or small, public or private, non-profit or for-profit, or if you work in a professional or managerial role, you have or will be involved in preparation and presentation of a business case. Making a business case is so important that those who are good at it are far more likely to be successful in the organization. Simply put, the ability to put together a good business case and obtain approval is a critical career skill and sadly one that is not taught in most university programs. Wikipedia’s definition of a business case is: “A business case captures the reasoning for initiating a project or task. It is often presented in a well- structured written document, but may also sometimes come in the form of a short verbal argument or presentation. The logic of the business case is that, whenever resources such as money or effort are consumed, they should be in support of a specific business need.” Human Resources, just like all other departments and functions of an organization, must get approval via a business case to invest in new systems or software, hire new staff, increase its training or other budgets, and to restructure – to name a few examples.

Information Technology and HR functions are generally considered support functions, thus a well-constructed business case can be the difference between getting something done or not. Of course, this applies to every other functional group, but in HR and IT related cases it can be doubly difficult to get approval to spend money. Therefore, a great business case may be the difference between getting or not getting the resources, systems, and tools to improve organization productivity, knowledge, and capability. The original article had a strong focus on defining the elements of business and explaining why they are important. This article will summarize the elements of a good business case into a step-by-step list combined with multiple examples of successful and unsuccessful business cases.

Business Case Rules of Thumb •

•

The larger the cost or resource investment, the more detailed the business case. The higher the organization approval needed, the more detailed the business case. Always offer multiple options (typically three), which include a base case of “do nothing.”

Making a business case can be as simple as requesting permission to attend a conference or offsite training workshop. For example, a simple business case to attend training, because the cost involved is typically low, is often no more complex than writing an email listing the reasons why the training or conference will be valuable and what the attendee would expect to gain from it. Of course, it also helps to have direct supervisor approval if the costs associated with the conference or training workshop are budgeted for the curwww.ihrim.org • Workforce Solutions Review • January-March 2017

rent year, ideally in the specific department for which the event is requested.

What to Include in a Business Case

Those who put together a strong business case are able to successfully impact the organization by getting leadership to commit resources, which is no small undertaking in today’s cost-conscious environment. Mastering what to include and how to pitch a business case is a career journey since a compelling business case captures both quantitative and qualitative project characteristics. However by following these simple steps and including the right components, you can go a long way toward establishing credibility, obtaining buy-in, and getting approval for your business case.

Step 1. Compelling Questions or Problem Statement The initial step is creating a well-defined problem statement and compelling question(s), which may be the most difficult part of a great business case. The reason is that it is simply not enough in most organizations to just define a problem or ask a question. A problem statement or compelling question must first pass the “so what” test, which is a test of why management should care about the question or problem statement in the first place. A question or problem statement that management does not feel motivated or compelled to address is not going to make a good business case, or get approval for significant resources. The singular most important aspect of this step is to successfully connect the problem statement or compelling question to a business imperative such

January-March 2017 • Workforce Solutions Review • www.ihrim.org

as “business growth” or “improving customer satisfaction.” Establishing a business imperative or need – Establishing a business need means establishing a strategic context for the current state. A robust business case must show how the proposed investment fits strategically in and contributes to strategic goals, vision or strategic plan objectives. By showing that answering key questions or resolving a problem impacts strategic goals, then a business imperative can be established. A simple way to do this is to obtain documents on the company vision, mission, strategy or goals, often found within a strategic plan, annual report or operating plan. Failure to link the question or problem statement creates an opening for “so what” questions such as “how does this fit into the organizational strategy,” or “why should we care about this project versus other projects.” Compelling Questions – For some organizations a compelling business case is as much about unanswered questions seen as critical (i.e., link to business strategy) for the organization to answer, as it is about a problem. In today’s business world information is increasingly key to maintaining or enhancing an organization’s market position and, as such, answers to difficult questions and their insights can confer competitive advantage. Example high level workforce questions organizations may consider critical include: • How do we attract and retain the top talent needed to execute our strategy? • What workforce do we really need? How do we know we have the right workforce size? • How good is our talent? Where do our stars come from? • What will our future workforce cost? • Is workforce productivity increasing? How are we performing versus peers? Problem Statement – A problem statement clearly states the nature of the challenge, issue, or risk facing the organization. This step is to identify the need (problem or risk) to the organization and a desired business future state (i.e., vision of the future) outcome. Such a gap analysis could use a company vision, strategy, or goal statement from a strategic plan, annual report, or operating plan. One way to do this is to outline the gap between “Where we want to be” versus “Where we are now.” In some cases,

a problem statement may only state an unacceptable current state in order to create a need for change. For example: HR and/or HRIT wishing to be more of a strategic business partner are asked by the business to provide predictive business intelligence for better workforce decisions such as hiring superior talent or predicting which employees are most likely to leave the organization in the next 12 months. This makes a great problem statement simply by sharing a current state reality such as “HR cannot answer key business questions management is asking. We need the resources, tools, skills, and data to do so.”

Step 2. Objective Facts and Data

This step is about building the support and or proof of pain for a problem statement and is the credibility foundation for the entire business case. This is the area most likely to be challenged during a review. In fact CFO’s will nearly always study the underlying analysis, conclusions and trends looking for errors, bias or logic gaps. Therefore, a strong business case needs strong quantitative data analysis to support it. Business case quantitative analysis – The quantitative analysis is the foundational core of a compelling argument for action and it should highlight the size of the problem. This is the research and homework part of a business case and is summarized in a high level ROI cost-benefit analysis or PowerPoint executive summary. Gathering documentation, researching alternatives, and quantifying facts using data are compulsory in a business case. Surprisingly, while not having a good quantitative analysis results in rejection of most business cases, having a strong quantitative analysis does not automatically get a business case approved. A quantitative analysis is absolutely necessary but is not sufficient by itself for business case approval. It would require a book to fully explain what data to use in a business case since data requirements vary dramatically by problem, industry, size of investment, business complexity, etc. Simply including the use of one or two high impact visual charts that include trended multi-year data and a clear cost benefit are winning components of any fact-based analysis. For some organizations, leadership requires more thorough analysis than others so it is key to know the organization, its culture and stakeholders (approvers and champions) for any project, regardless of level of detail required for an

analysis. As stated previously, the entire analysis is typically condensed into an executive summary, which may be the only part seen by senior management for buy-in and business case approval. However, finance or project management typically reviews any detailed analysis thoroughly. Key elements of the quantitative analysis include: Assessment of current state – The current state assessment is part narrative and part factual presentation. The current state. a.k.a., the status quo, is the context that shows where you are and the narrative to describe how you got here. For example a current state narrative for one client organization was: “Our current recruiting process is entirely paper driven and manual. In the past this process worked fine but our recruiting and hiring activity has more than doubled and management has asked why we don’t have an active database of all candidates who have applied or been interviewed so that we can better compare compensation versus experience levels at peer organizations and the local market.” Alternatives evaluated – Flowing directly from the current state assessment, a list of possible alternative options should be highlighted starting with one of the options listed as “no action” or “doing nothing.” Doing nothing is always an option in stakeholder executive minds, so the option of “what if we do nothing” must be addressed, or stakeholders may feel the business case lacks integrity. A good business case clearly shows the impact of doing nothing and connects current state quantitative analysis to the imperative for why change is necessary. A good business case should typically include three or more viable alternatives and as a backup, a list of other alternatives considered but rejected. For example, a good list of viable alternatives for a new automated applicant tracking system (ATS) might look like the following:

Objective facts and data must show proof of pain to make problem statement compelling.

Note: the alternatives did not promise ROI, but focused on data quality and automation versus cost.

Step 3. Visual, High-Impact Charts

High impact charts or visuals, ideally a single impactful chart on one page, should be included in the executive summary of the business case. www.ihrim.org • Workforce Solutions Review • January-March 2017

A more detailed set of charts can be included in the full quantitative analysis and referenced as needed in review meetings. The high impact visual must clearly focus the issue/opportunity in a way that is both actionable, insightful, and directly supports the recommended business case course of action. When it comes to a high impact chart, one visual is worth a thousand words. A great visual can often convince stakeholder management to make a change more effectively than a book full of financial cost-benefit calculations. Case study example: Imperial Retail Services Corp. (pseudonym) is a U.S. based specialty funeral services retail products organization with 21,000 employees and 1,800 locations worldwide. Imperial’s sales force of nearly 12,000 associates generated $2.3 billion in revenue in a recent year. Over their 40+ year history, Imperial has seen steady revenue growth, opening new store locations and selected competitor acquisitions, and now has nearly 50 percent market share in North America. However, recent year same-store sales have been flat. Also, sales employee turnover has increased, generally thought to be from poor sales skills of new hires. As a result, sales productivity per sales person has varied dramatically by location. While the marketing department believed location and market were primary drivers of store sales performance, management asked HR to use data and workforce analytics to address the critical business problem of “poor sales performance.” The key business questions were: Can we improve sales productivity? Do sales associates matter? The HR analytics team created a presentation capped by a single high impact chart (figure 2). The chart shows that sales employees taking

January-March 2017 • Workforce Solutions Review • www.ihrim.org

job shadowing training from sales managers with far higher sales than those who did not take the training.

Step 4. Quantitative ROI Cost-Benefit Analysis

The quantitative ROI analysis should include a summary of the alternative options laying out costs and benefits, including any potential ROI or expected financial gain. The analysis should include a clear ROI if there is one, which can be a high-level analysis or detailed research study result. Entire books exist on how to calculate ROI and prepare a solid cost-benefit analysis, the most important elements of which include the following: • Cost, impact or risk of doing nothing (i.e., failure to grow revenues and profits; lower engagement, higher turnover rate) • Intervention costs of each alternative evaluated (i.e., $100,000 for training program vs. $1.0 million for a new learning management system versus $0 for doing nothing); • The financial benefits of each alternative evaluated; • Expected return on investment (ROI) (basic ROI = Financial benefit – Intervention cost); • The selection criteria for selecting a preferred option (optional); • Longer-term implications where applicable (i.e., total cost of ownership including ongoing maintenance costs).

Step 5. Qualitative Story

A good story is the defining element in convincing executive leadership to move forward with a new project or investment. The qualitative story summarizes the analysis, telling a memorable story, answering key questions, and explaining in a clear and compelling way why the project, investment, or resources are needed. The qualitative story combined with a well-crafted business case problem statement, key questions, and strong cost-benefit analysis get the stakeholder audience ready to hear a reality-based story conveying the imperative for change. As the final element, a compelling story in the business case can move even the most resistant stakeholder executive with not just facts and data but a story and emotional element combined. An opportunity statement or future vision – An opportunity statement should describe

the future state vision or potential future state for the organization and the final result or benefit the organization can expect to achieve at the end of the project or intervention. Fundamentally, the opportunity statement is an illustration or vision of the compelling future outcome of the project and is, therefore, highly impactful to a successful business case. The simplest opportunity statement could be one that paints a beautiful vision of the future, highlighting the organizational gains or ROI. Trying to describe how a change will create competitive advantage may sound questionable or may come across as too “pie-in-the-sky” unless it ties to an organization’s strategy and direction. The best opportunity statement or future vision is one that is simple and intuitively understood by the stakeholder audience, ideally painting that beautiful picture in their minds.

Step 6. Risk Analysis

While typical business case analyses are driven by significant gains or ROI, the truth is that many leaders and executives have inherent bias and let emotion, often risk aversion or fear of failure, take an outsize role in business case decision making. Therefore, when all other steps have been followed in proper order, the last line to pitch is articulating the risk or potential failures that will occur if no change, solution, or intervention is approved. The most compelling arguments around risk entail the failure to address known business issues, failure to seize potential opportunities, and failure of management in their fiduciary duty to the organization’s success – all of which can spell doom to an executive business career. A good way to structure a risk analysis is to do a side-by-side list of the pros and cons of all viable alternatives evaluated. Also, including a

more detailed separate list of risk factor pros and cons for each alternative evaluated can add to the overall analysis by helping stakeholders to see the various risk types and how they might impact the business under various scenarios. Examples of risk types include legal risk, cost based risk, talent risk, process risk, and customer risk to name a few.

Passing a Business Case Finance/CFO Review

As a former CFO with 15 years in Finance and Accounting, more than 14 years in HR leadership and now as a current CEO, I have reviewed many business cases in a variety of forms. From my time in Finance, as a person charged with reviewing and approving business cases for organizations, I can say that most business cases fell well short, often being little more than a problem statement with single solution and little or no thought given to alternatives. Even worse, some business cases would include ridiculous ROI claims that either failed to include all costs (immediate fail) or had such optimistic assumptions for success as to make the likely reality of any ROI remote (also an immediate fail). Many business cases lack adequate analysis of the problem, fail to consider obvious alternate options, or are thinly veiled requests for nearly unlimited resources to pursue a project because the presenter feels it is right. I can honestly say that I shot down three business case pitches for every one approved. Not a good track record of success – and in talking to other CFO’s and controllers the ratio is similar. Even worse, HR’s track record of success was far less with only one project in four getting approved due to HR’s inability to put together a strong business case with objective fact based analysis to support it.

Many business cases lack adequate analysis of the problem, fail to consider obvious alternate options, or are thinly veiled requests for unlimited resources and budget to pursue a project because the presenter knows it is right.

About the Authors

Jeff Higgins, CEO of the Human Capital Management Institute, is a driving force in workforce analytics and planning, helping transform workforce data into intelligence and ROI while effectively quantifying workforce productivity linkage to business results. With his unique experience as both a senior HR executive and former CFO, he helps organizations rapidly advance their journey to data-driven decision-making. Higgins is a regular speaker at HR events, a founding member of the Workforce Intelligence Consortium, a member of the SHRM Global Standards Committee on human capital, and a former PricewaterhouseCoopers Saratoga Institute advisory council member. Previously, he was EVP of client services at Inform, a global workforce planning and analytics software, consulting, and training provider, EVP of Workforce Planning at Countrywide Financial Corp., as well as senior HR leadership roles implementing workforce analytics and planning at The Irvine Company and IndyMac Bancorp Inc. He previously spent 15 years in finance and accounting roles of increasing responsibility for companies such as Johnson & Johnson, Baxter International, and Colgate Palmolive. He can be reached at jeff.higgins@hcminst.com.

www.ihrim.org • Workforce Solutions Review • January-March 2017

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Scott Bolman, Sierra-Cedar

Managing the C-Suite: The Politics of Business Cases Almost every day, presentations are made across the globe to convince executives to invest in someone’s vision for a new technology system. Why do some of these presentations result in approval and some result in denial? Or worse yet, why do some presentations result in a non-decision and die a slow death? Some may say it’s the financials and the return-on-investment, others may say it has to do with competing priorities, and still others may say there was not a compelling story shared to bring the solution “to life.” In all cases, like it or not, politics plays a role. This article attempts to provide guidance on managing through the politics of business cases. Hopefully there will some insight here that will ultimately improve your odds of getting the funding for that new system you so desperately need!

Corporate Politics

First, let’s clarify some terms. What do we mean by politics in the context of business cases? One working definition for politics is this: the informal network of relationships and interests that work concurrently to determine organizational behaviors and outcomes. Most people think of the negative aspects of politics first, which occur when there are competing interests and hidden personal agendas among the informal network that tend to drive poor organizational outcomes. However, there are a few cases where the political environment can be positive, where interests and personal agendas are transparent and healthy dialogue occurs, which yields positive organizational outcomes. If this is the way it works at your organization, enjoy your situation. However, most of us work in organizations where competing interests and personal agendas, especially in the C-suite, make getting approval for a business case particularly challenging, especially for human capital management (HCM) systems.

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The Basics

This article assumes that the basics of your business case are in place including: • A formal presentation that outlines the business drivers for the initiative, an analysis of why the current state will not suffice, a description of alternatives, a recommendation, and an analysis of benefits, risks, assumptions, and constraints; •

A financials analysis including costs of the various alternatives, forecasts for the benefits of each alternative, and a returnon-investment analysis for each alternative. What type of metrics to include (net present value, economic value added, etc.) should be based on what your CFO is interested in seeing (see Work the Financial Relationship on page 13); and,

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A compelling story of what the future will look like once the new system is in place and how that vision of the future aligns with the overall corporate strategy.

Playing the Political Game (or increasing your chances of success)

Some professionals loathe the political game and try to avoid playing it. They see it as something that is “beneath” them or will cause them to be viewed as unprofessional. However, if you choose not to play, you reduce your chances of a successful outcome. And playing the game does not mean you have to lie or cheat. In the political arena, “how” you play is just as important as choosing to play. Let’s look at the following example.

How not to Play the Game

Let’s assume that you have your business case basics in place. The next step is scheduling the

meeting with the approving committee, right? Just get the meeting on the calendar, review your business case documents, and ask for the investment. Of course, because of how well your presentation has been put together and the financial return, the committee will sign off on the funding and you will be on your way to your future state in no time. Ideally, this is all it would take to get the funding to move forward. However, over the years, industry veterans have heard (and seen) this approach time after time, and the reality is that this approach rarely works. At best, you get sent out of the meeting with more research to do and questions to answer, and at worst you get denied outright. Let’s take a look at a different approach.

How to Play the Pre-Game

Again, let’s assume that you have your business case basics in place. How do you ensure that you create the best possible chance of getting approval for your business case? 1. Identify a coach – Find someone in your organization who can help you with the process of getting approvals. Serious professionals in any sport use coaches and mentors. 2. Become a student of the process at your organization – In most organizations, there is a process for obtaining funding for an initiative. Some are very scripted and formal, others are more informal. To increase your chances of success, talk to your peers about their experiences with the process. Reach out to other areas of the business to get a perspective outside of HR. What worked? What didn’t? What questions did they get? What would they do differently? Who are the real decisionmakers? Networking with your peers is a great way to gain insight, but it also allows you to practice telling your story and explaining your business case. Your coach should be able to help you identify the right individuals and make connections if you need them. 3. Work the financial relationship – A critical (and often overlooked) step is understanding the financial environment within which your potential initiative will be considered. You need to find an ally in the Finance organization and use them

to gain insight into what is happening in their world. Questions you need answered are: Is the business meeting the financial goals for the month/quarter/year? If not, why not? Are there “spending freezes” on the horizon? What major initiatives are being considered that will require significant funding in the next six months? Answers to these questions will help you frame your business case and story appropriately. In addition to understanding the financial environment, use your ally in Finance to review your financial analysis and validate your numbers. Nothing derails a business case discussion faster than a mathematical error, which someone on the approval committee will find at the worst possible time – you can count on it! 4. Meet with the committee members individually prior to your formal meeting – Do your best to get individual face-to-face meetings with the members of your approval committee. Most executives like to be briefed ahead of major presentations. These individual meetings can provide answers to key questions: a. What is this person’s general interest in your business case? Are they willing to meet with you ahead of time? If not, this can be a red flag. b. Does your solution align to their goals? Will it help them do their job and manage their teams more efficiently or effectively? c. Are the assumptions in your business case valid, in their opinion? If not, why not? Are there other assumptions you should be making? d. What questions or concerns do they have? What do you need to research before the approval meeting to prepare for these questions and concerns? e. What other projects are they considering investing in? Will your project compete with these projects for funding? Are there any synergies between projects? f. Are there other people in their organization that should be briefed? In some cases, the executive will identify someone on their team who they trust to give them a recommendation about your project or initiative. If you can convince www.ihrim.org • Workforce Solutions Review • January-March 2017

that person, chances are that you will have the executive on your side during the final presentation. Conducting these meetings might sound like a waste of time (or at least an inefficient use of time), but the insight you gain can be invaluable when it comes to the final presentation. 5. Update your business case presentation based on the information obtained – If you follow the steps above, you will obtain vital information to use in updating your business case. For example, can you rephrase some of the benefits of your solution to more directly make a connection to one of your committee member’s goals? Do you need to add information to address any concerns raised? Do you need to alter any of your assumptions? Are there conflicting personal agendas among the members of your approval committee? How will you address those in a “politically correct” manner? 6. Get an outside opinion – Once you’ve made your updates, ask a peer from outside your organization to review your presentation materials. Ideally, do a “dry run” of your complete presentation and ask your peer to play the role of “cynical executive” and challenge you on everything and anything. If your coach can be present for the “dry run” they will be able to give you some constructive feedback to incorporate in your final presentation.

How to Play the End Game

The time has come and you are ready to go for approval. You have done a fair amount of work to get to this stage, but don’t assume your business case will be approved based on all the preparatory work you’ve done so far. Things can change quickly so be ready to be flexible during the final meeting. 1. Ensure that you understand the meeting logistics: a. Will this be an in-person meeting or video/conference call? Will there be a need for handouts during the meeting? b. Do you want to send your materials ahead of time? In some organizations, this is a mandatory step, with docu-

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ments sent a certain amount of time prior to the meeting. Don’t miss this deadline! c. Will there be a need for a scribe? A time keeper? d. Do you need to have a flip chart or white board in the room? Should you create a flip chart page called “parking lot” so you can capture items that would otherwise derail your presentation? 2. Check with your financial ally and coach within a week of your presentation to see if there is any late-breaking news you need to consider. Most importantly, you want to know if there are any changes to the financial results of the organization that may factor into reduced receptivity of your committee members. 3. Rehearse your presentation to the point where you can be relaxed during the actual meeting. 4. During the meeting, keep a few things in mind: a. Do not get defensive – most questions are really just asked to help the executives understand your proposal. b. Answer questions directly and avoid editorializing during your answer. c. Tell a story – try to create a visual picture of how the organization will perform in the future if the committee approves your business case. If necessary, be prepared to tell a story of how the organization will not be able to perform if they deny funding. d. Ask for any objections or concerns before asking for approval – make sure you allow time for objections or concerns to be raised and discussed. More than likely, you already know what will be raised based on your individual meetings, but you need to be ready for a few new ones. e. Ask for approval before leaving the meeting. If you can’t get a decision, try to get at least conditional approval. Too many meetings end without a formal decision on funding. Do what you can to get a decision.

How to Play the Post Game

At this point, you either have approval, conditional approval, or have been denied. In terms of “post-game” activity, it doesn’t matter what the outcome is (even though it may be painful). Do not miss the opportunity to build your brand and reputation based on the experience. Here are a few steps to consider: 1. Send individual “thank you” emails to each of the committee members, and ask if you can have 15 minutes with them to get their insight on the meeting. 2. If you can get 15 minutes with them, ask them for feedback with just two questions: What went well? What could have been done to improve the business case? 3. Inform your coach, your financial ally, your inside peers, and your external peer of the outcome of the meeting. Offer to help them in similar circumstances.

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Conclusion (the Post-Post Game)

Business cases are an important part of securing funding for technology initiatives; however, the art of playing the politics in an organization can be the difference between success and failure. Playing an effective game can increase your chances of success, but, by no means, will they guarantee your success. Competing priorities, changing financial conditions, personality conflicts, and hidden agendas can derail even the best business cases and presentations. However, following the steps outlined in this article should improve your chances of success. Of course, once your business case is approved, the real work begins!

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About the Author

Scott Bolman is a currently with the Strategy and Analytics practice at Sierra-Cedar. He has been partnering with Human Resources and Information Technology leaders for over 25 years. He has led numerous strategy, service delivery, and technology projects and has expertise across a broad array of HR functions. He is currently based in Chicago. Prior to joining SierraCedar, Bolman served with several organizations, including Walgreens, Mercer, Towers Watson, and Accenture’s HR Outsourcing business. For the past two years, he has been the managing editor of IHRIM’s Workforce Solutions Review magazine. He can be reached at scott.bolman@sierra-cedar.com and at https://www.linkedin.com/in/scottabolman.

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Charles Spofford, PeopleFluent

Make the Business Case for Talent Management: Seven Best Practice Strategies Many organizations have proactively invested in the development of talent management and succession planning capabilities. Studies of organizations with exemplary talent management systems consistently report that the first and most important step to building a best-in-class process is engaging senior leadership teams and the governing board by demonstrating a compelling business case. Given the myriad challenges facing today’s executive teams, the business case for developing talent management capabilities must be clear, compelling, and evidence-based.

Best Practices from the Field

For organizations seeking to enhance an existing talent management system or for those in the nascent phases of building such capabilities, the adoption of best practices or “lessons learned” from industry leaders is an effective strategy. A consistent set of best practices for engaging senior leadership teams has emerged. Here are seven strategies that will help create that compelling business case that will empower your senior management team/board to action and elevate the strategic priority of talent management. 1.) E levate the Strategic Priority of Talent Management Organizations with exemplary talent management systems create a sense of urgency among board members and senior management teams by elevating and clearly articulating the strategic priority of talent development and succession management capabilities. For many executive teams to elevate the strategic priority of talent management will demand greater awareness of the impact of talent management’s capabilities. The best practice model includes the following capabilities:

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1. Talent Management Support 2. Talent Assessment & Succession Planning Practices 3. Performance Appraisal Practices 4. Incentive Pay Practices 5. Leadership Development Culture 6. Role-based Leadership Development 7. Selection and On-boarding Practices 8. Talent Management ROI In addition, the results of benchmarking studies and similar research should be presented to top management team members and the governing board as an evidence-based rationale for investment in talent development and succession management practices to facilitate the transition to value-based performance. Actionable Insights: • Create a formal mentoring program for senior leadership teams that integrates high-potential employees you’ve identified through talent review sessions. •

Engage senior leaders in teaching courses or holding learning sessions, as part of leadership development.

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Ensure that high-potential employee development plans include participation in system-wide initiatives.

2.) Illustrate the Looming Retirement Wave Organizations effectively sharpen the business case for investing in talent development and succession management capabilities by conducting forecasting analyses that visually demonstrate the anticipated retirements and leadership bench strength across executive roles and other critical leadership positions. Without the influence of a graphically illustrated, data-driven argument

concerning workforce demographics, HR decision makers may fail to establish a clear business case for the significant investment of time and resources to build a best-in-class talent management system. A common refrain concerning the business case for talent management is the clear practical need for “leadership stability” in critical executive roles. Of the many benefits of talent management capabilities extolled by HR leaders, the single advantage that holds the attention of many executives is the ability to maintain stability in key leadership roles and avoid the massive disruptions associated with unexpected retirements or exits. A critical best practice for establishing a clear business case is annually assembling the necessary workforce demographic data to illustrate the coming “retirement wave” across management levels and other key leadership roles. “There are about 76 million baby boomers in the United States, more than 40 million of whom are already age 65 or older. As a generation, they have shaped and altered every life stage they’ve moved through, and their sunset years promise to be no exception. They will retire at a rate of 10,000 per day through at least 2030, when almost 73 million Americans, comprising more than 20 percent of the U.S. population, will be age 65 or older,” (https://www.myirionline.org/docs/ default-source/research/boomer-expectationsfor-retirement-2016.pdf). Best practice organizations conduct annual retirement forecasts that plot employees in leadership positions (supervisor, manager, director or executive) across key age groups (< 30, 30-34, 35-39, 40-44, 45-49, etc.). For each leadership position, the following metrics are consistently reported and discussed with top management teams and board members: (a) the overall percentage of leaders who are greater than 55, and (b) the percentage of leadership positions that have at least one “ready now” candidate (leadership bench strength). The presentation and spirited discussion that result from these forecasting figures at leadership team and/or board meetings will inevitably lead to an increased appetite for talent management best practices. Actionable Insights: • Use the data and analytics you have in place to show retirement and departure predictions and share them with your management team and board. • Create charts that illustrate where you have bench strength, and where antici-

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pated gaps exist. Analyze your looming retirement forecasts across key age groups (40-44, 45-49, 5055, etc.) annually. Create a leadership development program that will be ready to help you grow your future leaders.

3.) C onduct Annual Talent Reviews that Assess Strategic Talent Pools As a powerful supplement to a comprehensive visual retirement forecast across management levels, best practice organizations conduct annual talent reviews of strategic talent pools that include the creation of “talent profiles” identifying the potential risks and costs of vacancies in critical leadership roles. This practice is consistent with leading companies across industries and sectors for aligning human capital practices with business strategy.1 In short, the resources devoted to talent management activities are strongly aligned with talent pools that have the greatest strategic impact. For best practice organizations, annual talent review sessions are executed with the same rigor and discipline as the annual performance review process. Importantly, the goal of the talent review process is not replacement planning—the identification of the most likely direct report to replace an incumbent leader—but to cultivate strong succession plans for strategically critical positions and create a central, searchable repository of leadership talent. Highly effective talent reviews are full-day sessions facilitated by HR professionals where management teams assess their direct reports, calibrate ratings across team members, and discuss personalized development plans for employees rated as high potentials and high performers. Actionable Insight: • Demonstrate visually where you have bench strength and where there are potential risks across key functions with tools, including 9-box grids. •

Schedule full-day talent review sessions with HR and the management team to assess high potential employees.

4.) B enchmark Your Organization’s Talent Management System While leading organizations consistently monitor and assess their competitors’ services, products, expansion efforts, and other business www.ihrim.org • Workforce Solutions Review • January-March 2017

The selection of metrics for talent management scorecards is an invaluable activity for HR leaders and their senior management team colleagues.

activities, they also compare their talent development and succession management capabilities to industry peers in an effort toward continuous improvement and establishing an “employer of choice” distinction in key labor markets.2 The most effective driver of greater investment in talent management capabilities often derives from external forces, namely the status and reputation of key competitors concerning talent development and succession management practices. As part of participating in annual benchmarking surveys, best practice organizations create talent management scorecards that include key performance metrics for measuring the impact of talent management practices. The results of participation in benchmarking studies are utilized as part of balanced scorecards or dashboards that are communicated to key stakeholders across the system. The selection of metrics for talent management scorecards is an invaluable activity for HR leaders and their senior management team colleagues. To further establish an organization-wide appreciation for the value of highly developed talent management strategies, leading organizations annually report their scorecard results to multiple internal stakeholders, including the governing board and management teams across the organization. Actionable Insight: • Participate in annual benchmarking surveys to allow for direct comparison. • Focus the benchmark against other organizations considering academic, specialty, for-profit/investor-owned, community, etc. 5.) Communicate the ROI of Talent Management Capabilities For many executive teams, the most important driver of their support for talent development and succession management activities is clear evidence of the ROI of such practices. In short, what is the evidence that talent assessment and succession management best practices drive superior performance outcomes? Across all talent management capabilities, selection and on-boarding practices represent the most powerful driver of low turnover at highperformance organizations. HR leaders engage their senior leadership team colleagues in an evidence-based discussion of the ROI of talent management capabilities, particularly those that directly impact the organization’s “pain points,” key development areas, or strategic initiatives.

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Actionable Insight: • Use resources and tools to demonstrate strong evidence of the impact of highly effective talent management practices. • Share examples of other organizations that have achieved impressive ratios. 6.) Align Talent Management Practices with Diversity Initiatives Many leading organizations have adopted workforce diversity initiatives that represent system-wide efforts to enhance the gender and ethnic diversity of management teams at all levels. Organizations that adopt talent management best practices accelerate workforce diversity initiatives by enabling consistency and transparency with talent review practices, specifically the high potential leadership assessment process. Ensuring that employees are assessed using a validated, standardized assessment of high potential leadership is critical for enhancing diversity metrics across management and executive positions. Best practice organizations avoid assessing leadership potential with simple categories (e.g., “high potential”, “solid performer”, etc.) and the rater errors and biases that accompany such approaches. Highly effective talent review practices utilize validated leadership potential assessments that measure the traits and leadership competencies associated with performance in future leadership roles. These assessment tools measure core traits or personal characteristics, such as the aspiration to be in a leadership role and energy or drive, as well as behavioral competencies including change agility and learning agility.3 When consistently applied over time, these practices cultivate a more diverse pipeline of leadership talent that can effectively accelerate an organization’s diversity initiative. Actionable Insight: • Demonstrate how a talent management suite that includes a workforce compliance and diversity solution will enable you to proactively address your diversity initiatives. •

Benchmark your C-Suite positions that are occupied by women and ethnic minorities with other organizations.

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Use analytics to match your staff’s skills and abilities with the needs of customer base. To facilitate this process, have

employees and their managers log their skills. When the time comes to map their skills to customer needs, you will have that information at your fingertips. 7.) Engage Senior Leadership Teams in Assessing and Developing Talent Organizations with highly effective talent management systems ensure that senior leaders are fully engaged in the design and execution of bedrock practices, particularly talent assessment practices and leadership development programs. As part of the ongoing talent review process, senior leadership teams are intimately involved in the rigorous assessments of their team members that are utilized to drive discussions in talent review meetings. HR leaders work diligently to demonstrate the value of requiring leadership teams to assess the leadership potential of their direct reports, and then utilize such data to populate 9-box tools that plot employees according to job performance and leadership potential. To fully engage executives in the process, HR leaders work collaboratively with management teams to identify a range of developmental experiences for high-potential leaders that are aligned with the hospital’s strategic initiatives. Management teams must be fully engaged in identifying the leadership development opportunities, such as organization-wide strategic projects, job rotations, participation in “leadership academy” programs, and LEAN projects, that will be offered to employees who are assessed as both high potential and high performer. In addition to full participation in talent assessment and succession management practices, leading organizations engage senior leadership

teams through formal and informal mentoring programs, sponsorship of action learning projects, and teaching modules as part of internal leadership development programs or courses. The signature, capstone-learning experience of many leadership academies is the completion of a team project that addresses a challenge or issue that is strategically aligned with the organization. High-potential leaders from across facilities and regions participate in intensive, team-based projects that require executive sponsorship, utilization of operational, market, and financial data, and presentation of findings and recommendations to senior leadership teams for implementation consideration. Actionable Insight: • Leaders should be involved on a regular basis in assessing employee performance and potential. •

Make talent and leadership development everyone’s responsibility. Establish mentoring programs, formal and informal leadership programs, and create a culture focused on continuous talent development.

Conclusion

Overall, the depth and consistency of senior management team engagement in talent development and succession management practices clearly distinguishes organizations with best-inclass talent management systems. A hallmark of high-performance talent management systems is the cultivation of a compelling, evidence-based business case for sustained investment in talent management capabilities.

End Notes

Mark A. Huselid, Brian E. Becker, & Richard W. Beatty, The Workforce Scorecard: Managing Human Capital to Executive Strategy, Boston, MA, Harvard Business Press. 2 National Center for Healthcare Leadership (2015), Best Organizations for Leadership Development (BOLD) Award. Accessed August 5, 2015 at www.nchl.org/index.asp. 3 Michael M. Lombardo and Robert W. Eichinger (2000). “High Potentials as High Learners”. Human Resource Management, Volume 39, No 4, pp. 321-329. 1

References

PeopleFluent (2016), “Make the Business Case for Talent Management in Healthcare.” http://mktg.peoplefluent.com/makethe-case-for-talent-management-in-healthcare-white-paper.html Kevin S. Groves (2015), “Impact of Talent Management Practices on Financial, Workforce, and Value-Based Purchasing Metrics,” Pepperdine University & Groves Consulting Group. www.grovesconsultinggroup.com/index.php/research/

About the Author

Charles Spofford is the director of Customer Marketing at PeopleFluent, a leading provider of enterprise HCM software. He can be reached at Charles.Spofford@peoplefluent.com.

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Dr. Tom Tonkin, Cornerstone OnDemand

Proving the Business Case – Are We Getting the Return We Forecasted? Rationalizing return on investment (ROI) is something that many of us have had to deal with for quite some time. In the late-1990s and early 2000s, I was an advisor to new e-commerce startups. I met with companies that wanted to create senior citizen portals (let that sink in) to sites that would sell hand-crafted goods. We discussed traffic, viability, and marketing strategies, but we never discussed ROI. This was a time in IT history where, as the movie quote states, “build it, and they will come” was a strategy – and it was short-lived. The need to have a quantifiable ROI as a means for funding approval became paramount in the early 2000s as a checkpoint of sorts to keep technological expenditures at bay, but also to keep the complexities of technology away from those who needed to approve funding. The language of software usefulness moved from bits and bytes to total cost of ownership (TCO) and ROI.

What is a Return-on-Investment?

Currently, there isn’t an organization that doesn’t have the ROI process incorporated into every procurement workflow. Most change management and transformation discussions can’t start without someone sharpening their pencil and proposing a return-on-investment. I can only surmise the amount of time and money consumed on creating ROI proposals, yet how much time is spent verifying if the ROI was met? Are we even looking in the right places for savings and gains? As we unfold this discussion, I want to be sure that we are all on the same page. A return-on-investment proposal is a hypothetical calculation we create to obtain funding. This calculation, itself, is not the ROI.

January-March 2017 • Workforce Solutions Review • www.ihrim.org

Return-on-Investment is a Lagging Indicator

McChesney, Covey, and Huling (2012) assert that one of the biggest reasons why we don’t achieve a goal is that we don’t understand or manage the differences between lagging and leading indicators. These are rather self-explanatory; lagging indicators are those indicators that suggest whether or not you have achieved your goal, while leading indicators suggests whether you are on the right path to achieving your goals. Therefore, ROI is a lagging indicator. However, are we monitoring our leading indicators, which tell us if we are on the path to success? For example, let’s take a goal that many of us are very familiar with: losing weight. Given the context here, the weight on the scale would be the lagging indicator; it reflects what you did before weighing yourself. However, the question for us is: What are our leading indicators, the activities that tell us what we did before we weighed ourselves? An example of a leading indicator might be spending 30 minutes (measured by a timer) on a treadmill, on an empty stomach (nothing to eat prior) at our optimal heart target zone (measured by a heart monitor). Doing that daily (along with a sensible diet), one would expect to lose weight as reported by your scale (lagging indicator). Perhaps the ROI you are looking to achieve comes from implementing a new solution for your recruiting process, your lagging indicator. What are your leading indicators? For example, it might be reducing the time it takes to process an offer that is the opportunity for improvement. If it takes four hours at $50 per hour, that portion of the process might be $200 for every new hire. What happens if implementing a new system reduces that time to two hours, only costing us

$100 per new hire – a 50 percent savings? This approach suggests that you must have a mechanism to measure this aspect of the process (time savings) to be able to make the claim that you are gaining on the leading indicator. When working with a customer to create the ROI proposal, my experience is that many find themselves trying to measure activities that they don’t currently measure, which may provide an opportunity for reflection. If one is not currently keeping this metric, should we start now? Perhaps there are other underlying issues, such as the feasibility of measuring a parameter, which is difficult to measure in the first place. Therefore, the cost of measuring must also undergo an ROI discussion. Perhaps allotting the appropriate resources to measure may produce a gain or savings.

The Realities of the ROI

You are an HR professional and embarking on purchasing a new HR system. Your procurement process requires you to include a ROI proposal. You may immediately think of the IT cost that could be saved, but this is not where you should start. When setting out to create a proposed ROI, we default to what is considered hard costs (IT equipment) versus soft costs (employee engagement). However, I would classify these differently. Soft costs are difficult costs, meaning they are a challenge to measure (but certainly not impossible). There is a myth in our business (which we need to squelch) that achieving a return-oninvestment means that we need to satisfy an IT metric. The fact is that an HR ROI needs to satisfy an HR metric, i.e., employee engagement.

The Knowing-Doing Gap

We all know what to do, such as examining our ROIs, measuring our achievements, and adjusting for greater improvement, yet we don’t do any of this. Well, this was precisely what Jeffrey Pfeffer and Robert Sutton set out to understand when publishing their book: The Knowing-Doing Gap, (2000). The research question was: “Why are there so many resources, such as management consulting, business research, and associated books and articles and yet, we see so little change?” The fact remains that implementing change emerges from adopting what is known, as opposed to venturing into the unknown.

There is a tremendous amount of evidence that the Knowing-Doing Gap is alive and well and Pfeffer and Sutton cite several examples, including HP and Xerox. However, the one study that caught my eye came from a restaurant chain. Very simply, Pfeffer and Sutton asked employees across 120 restaurant units to answer, for every statement, if they knew that they should be doing something and if they are really doing it. In their survey, they focused on talent management practices. Some statements were “getting good ideas from other units in the chain” (employee engagement) and “providing employees with frequent feedback” (performance review). The results were very telling. For example, for the first statement, knowing what they should do scored 4.9 out of 6. However, when asking the employees if they get good ideas from other stores, the score was a 4.0. Running a simple statistical calculation, these findings were significantly different; employees knew what to do, but did not do it. There was an obvious discrepancy between what they knew they should do for good talent management practices and what they actually did. Being more specific to our discussion, looking at proving whether you have achieved your ROI is implementing what you know is the right thing to do, and yet we do not do it. After all, “different is not always better, but better is always different.” Through their research, Pfeffer and Sutton concluded that there were five reasons why implementing what we know is right never comes to fruition: 1. Talk substitutes action – There appears to be a tendency to equate the feeling of discussing issues to the feeling of solving them. I am particularly familiar with this topic since I help organizations create and challenge their mission statements. Mission statements are a classic example of when talk substitutes action. How many companies work on their mission statement only to hang them up on the wall, or store them on a shelf? I met with a large retailer several years back. They asked me to help them measure their ROI. I thought we needed to start with their mission, specifically the mission of the talent management project. They were very pleased that they formalized their mission statement (at least on paper). When I asked, “How do you know you are excellent?” (excellent was a word from their mission statement), there was a pause. Bottom line, there

www.ihrim.org • Workforce Solutions Review • January-March 2017

is no way you can realize your ROI if you cannot measure your objectives objectively. 2. Memory is a substitute for thinking – Organizations are prone to resist change, and tend to solve problems with past solutions. This is what happens from not taking the time to reflect, but acting on instinct and habit. As humans, we have the tendency to resist anything that challenges our values and beliefs, even if we know they are not optimal. 3. Fear Prevents Acting on Knowledge – This is probably the number one issue when it comes to proving the ROI. This knowing-doing gap challenge presents itself when we are unsure of the consequences of being wrong. If we are doing something different, then is it plausible to suggest we do not know what we are doing, and there is a chance of making a mistake. In a change management scenario, as humans we tend to put more energy into avoiding issues than into achieving new goals. In our case, what if we were funded to improve a set of ROI metrics, but fail to achieve this task? When working with a specific insurance organization, the question came up whether a certain system report for staffing was available. As the question stood, the answer was “no.” After further review, asking the requester what purpose the report fulfilled, the individual did not know, and he did not want to ask for fear of repercussions from senior management for “asking a dumb question.” However, this “dumb question” could prevent misallocated funding; uncovering an important leading indicator in achieving ROI. Do yourself a favor and remove those leaders that humiliate others and make them feel less of themselves. 4. Measurement obstructs good judgment – Knowing that you are going to measure something, in a very public way, lends itself to some “gamesmanship” when setting targets. We tend to place our goals in the comfort zone; however, we know that nothing worth achieving is in the comfort zone. In addition to setting very low goals for our ROI, which may not even yield the transformational goals we seek, there is a tendency to alter our behavior to achieve those goals that may be harmful to us and the organization (see When Fear Prevents Acting on Knowledge above).

January-March 2017 • Workforce Solutions Review • www.ihrim.org

5. Internal competition turns friends into enemies – No one questions when two firms compete in the same industry; however, when two peers within an organization begin to compete, vying for management attention and reward, this negatively impacts people’s careers. There might be room for healthy competition that makes both competitors better through the sharing of knowledge, if there is that perspective. I can see you nodding your head up and down. Many of these reasons align with the challenges that we all face when trying to prove the ROI. You may have thought of ways to address some of these issues in your organization – or will you be too affected by the knowing-doing gap?

Want Some Advice?

Up until now, we have examined the challenges and the reasons for those challenges in providing the ROI. It is usually about this time in an article that the reader is looking for some solutions, and that might be you. Maybe by now, you have thought of some of your own, and that is great. Most ROI solutions usually emanate from the technology and the processes that it affects. However, the most productive methods of proving the ROI lie within the intangible assets of the organization: human capital, business process, and culture.

Understand the “Purpose,” Not “Why”

In his book, Start with Why (2009), Simon Sinek encourages leaders to start with asking “why?” to inspire others to act. I appreciate the sentiment and agree with his premise. However, I will politely disagree. I would suggest that you start with asking “for what purpose?” Asking “why” suggests that you are looking for justification, which places one on the defensive and, ultimately, does not provide you with the correct information. We do not want to know the justification for ROI. Rather, we are looking to understand the purpose, which is equal to value. By understanding the purpose of a return-on-investment, we do not alienate our coworkers and can attain the appropriate information to make informed decisions about how to adjust our operations to gain optimal performance. For example, as part of a learning rollout, a financial services talent management director stated to me, “We need a robust compliance platform.” Speculatively, had I asked her “why?,”

maybe the answer might have been, “So we don’t get fined for not providing this training.” However, I did ask, “for what purpose?” The answer was, “By understanding compliance issues, we may be able to avoid costly litigation.” By applying ROI models to each answer, you will quickly see that understanding the purpose will yield a more significant impact. Fine avoidance is a good practice, especially in the health care and life sciences world, but litigation avoidance, and all that comes with it, is a much better strategy since litigation can be significantly costlier than the fines themselves. Mind you, both fine and litigation avoidance may support the other as far as strategy, but it is important to understand which has a greater impact. • Always start with “purpose” in mind. • Look for value before justification, as it will lead to greater ROI for the same activities. • Elevating the discussion towards purposes will elicit a response that gains greater business impact.

Celebrate Mistakes

One of the keys to a learning organization is that mistakes are celebrated and viewed as a means to an end. Kouzes and Posner, in their book, The Leadership Challenge (2007), state that if we expect mistakes and embrace them, we can then drive success. Most success initially comes from making mistakes. Thus, if the impetus of understanding our ROI comes from

looking to improve (read: success), then mistakes must be part of our journey. •

As the adage says, actions speak louder than words. Praise, pay, and promote people that deliver bad news to their bosses. If you want to discourage a behavior, discourage inaction, not positive behaviors.

•

Leaders, speak about your failures and what you learned, not just your successes. Modeling this level of understanding and tolerance will motivate others to do the same.

I worked on a transformation project for a health care provider. They had not engaged on a transformation project for over seven years, mainly because of their culture of intolerance for mistakes. When discussing this with their CEO, I expressed my concern for this cultural norm. She went public by saying that to make this transformation successful, mistakes are needed. One such leader took a step forward and made his fair share of mistakes. After the project was completed, he was promoted for his actions in the project. This was a very public act to institute a new learning organization. Every organization has a unique set of individuals, processes and culture. However, I am hopeful that this article sheds light on some different areas for examination. The ROI aspect of our business is not going away, so let us embrace it.

References

Kouzes, J. M., & Posner, B. Z., The leadership challenge, 4th ed.. San Francisco, CA: Jossey-Bass, 2007. McChesney, C., Covey, S., & Huling, J., The 4 disciplines of execution: achieving your wildly important goals, First Free Press hardcover ed., New York: Free Press, 2012. Pfeffer, J., & Sutton, R. I., The knowing-doing gap: how smart companies turn knowledge into action, Boston, Mass.,Harvard Business School Press, 2000. Sinek, S., Start with why: how great leaders inspire everyone to take action, New York: Portfolio, 2009.

About the Author

Dr. Tom Tonkin, principal, Change Management and Transformation Thought Leadership & Advisory Services at Cornerstone OnDemand (CSOD) is an executive in professional services and software sales arena, with more than 30 years of business and technology experience. Prior to joining CSOD, Dr. Tonkin was the CEO and co-founder of the Sales Conservatory, where he specialized in helping sales leaders that have revenue generation responsibility between US$5M and US$1B and are looking for a trusted advisor to guide them to materially increase revenue. He spent 19 years of his career at Oracle Corporation as the senior director of the Sales Performance Group in Oracle’s Global Sales Academy. Dr. Tonkin is also a speaker at leadership and business conferences where he presents throughout the year. He can be reached at ttonkin@csod.com.

www.ihrim.org • Workforce Solutions Review • January-March 2017

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Lexy Martin, Visier

What’s the Value of Adopting Workforce Intelligence?

Figure 1.

Arguably, almost all organizations do some type of people analytics.1 Sierra-Cedar reports on adoption of one or more forms of analytics tools, including a full platform business intelligence solution, embedded solutions, statistical or visualization tools, or a dedicated solution. What’s more important is that 44 percent2 of organizations have adopted some form of people analytics solution that aggregates human resources, talent management, possibly workforce management, and even financial or operational data into a framework from which data about the workforce can be analyzed to glean insights. We call these adopters “data-driven” organizations. They make informed decisions about their workforce using these analytics. When researchers look at the value these datadriven organizations achieve in comparison to those that do not have such solutions, it’s significant: Bersin reports that data-driven organizations have a higher stock performance from better insights.3 Corporate Leadership Council found these organizations have higher gross margins from better decisions.4 Sierra-Cedar HR Systems Survey reports a higher return on equity (ROE) for these organizations.5 Since joining Visier last summer as a researcher, I’ve had the opportunity to dig into the challenges that led organizations to adopt workforce intelligence, their approaches for using this practice, and the value they achieved. I think aggregate numbers are critical for informing organizations on which technologies to adopt next, but I think it’s the individual stories that best show the value. Before I get to these stories, let’s look at a frame-

work in Figure 1 that shows the range and kinds of value organizations develop as they mature their analytics practices.6 Organizations that are adopting workforce intelligence are on a journey along a maturity spectrum to achieve value. As organizations move to higher stages of maturity, the value of workforce intelligence increases, impacting organizational performance in three distinct ways: 1. Technology/efficiency value – By creating cost efficiencies for technology and labor. When organizations replace traditional ways of responding to workforce data requests with a workforce intelligence solution, they create technical efficiencies and achieve labor cost savings for reporting and analytics staff. 2. HR effectiveness value – By improving the effectiveness of HR practices, processes and metrics. When organizations standardize HR processes and start to align HR with the business, they use workforce insights to make interventions that improve key workforce metrics that matter to HR. 3. Business impact/strategic value – By generating business outcomes that matter. When organizations align HR with the business and craft their analytics to focus on metrics that matter to the C-suite, they improve business outcomes such as revenue, profit and customer satisfaction.

Technology and Labor Cost Efficiency Value

As organizations adopt a true dedicated workforce intelligence solution, every company I spoke with reported two areas of value: 1. Headcount savings – From achieving efficiencies from the reporting and analytics staff. For example, at Yahoo “to provide the same level of support, the analytics team would have needed to hire up to four more staff at an annual cost of approximately $500,000.”7 2. More focus on strategic business –

January-March 2017 • Workforce Solutions Review • www.ihrim.org

They moved their reporting and analysis teams from an operator-type focused on data collection, aggregation, and reporting to more of a strategist-type, particularly as they moved from addressing HR requests to addressing business demand. For example, at the Commonwealth Bank in Australia, the team used to spend 50 to 60 percent of its time analyzing, creating, and iterating a wide range of workforce reports and turnover or manager stability metrics. With a dedicated workforce analytics solution, the team no longer needs to spend half its time building reports and instead focuses on strategic business issues. There is a third area of value, but it depends on the organization’s choice of solution. When choosing a dedicated workforce analytics solution over adopting a data warehouse, they saved significant money. • A study by IDC found an average price for building a data warehouse was $2.3 million.8 This cost may actually be underestimated when considering requirements such as hardware (processor and disk storage), software, and personnel (database administrators, data modelers, and potentially consultants and data experts). There are also hidden license costs for workforce analytics software, data integration tools, and data visualization tools.

Achieving HR Effectiveness

After as little as eight weeks from first adopting their technology solution, organizations saw value as they understood and analyzed metrics that improved HR practices, processes and programs, and achieved outcomes that matter to HR. Turnover reduction is often a first focus of analysis. Here are some case studies: • First West Credit Union in British Columbia, Canada is a business that is the result of merging several regional credit unions. In order to address the challenge of unwanted turnover from the merger, HR leaders used a Software-as-a-Service (SaaS) workforce intelligence solution that enabled them to bring together disparate data from each of the merged credit unions so that the analytics team could see where turnover was highest and which roles were most affected. They found that customer-facing roles were most at risk and put corrective solutions in place such as training for managers to discuss career opportunities at the merged organization. The result of these efforts

•

was over 13 percent turnover reduction in their personal banking officers and service reps, with cost savings totaling almost $500,000. BBVA Compass is one of the 25 largest U.S. commercial banks, operating almost 700 branches. They used their workforce analytics solution to benchmark to other commercial banks, and then focused on looking at turnover by region, branches and roles. They found that a small percentage of branches had the highest turnover among certain roles, so they conducted exit interviews with departing employees and their managers and found issues they could address, such as: better training of new hires, better onboarding, and better training of managers to set expectations. This targeted focus resulted in a 44 percent reduction in turnover for a key revenue producing role – account managers – enabling them to maintain their key customer relationship personnel. Electronic Arts (EA) is a leader in video game development and interactive entertainment software. This is an example of workforce analytics applied to improving HR itself, as EA sought justification for continuing its University Relations Recruiting Program. It looked at performance, promotion rates, and salary data from hires over the past four years. The team showed that after two years of tenure, new grad hires were consistently promoted at a higher rate, were more likely to be rated as high performers, and cost the company less than their more experienced peers. From this analysis, they encouraged the business to commit to a more aggressive new grad hiring target through the continuation of the program.

About the Author

Lexy Martin is principal, Research and Customer Value at Visier. She is a long-time contributor to IHRIM, having served as guest editor and managing editor for the magazine for eight years. She was also the manager of the Sierra-Cedar HR Systems Survey for its first 16 years. Please contact her at Lexy.martin@visiercorp.com with comments and just to stay in touch.

Business Impact and Strategic Value

The most mature adopters of workforce intelligence make workforce decisions with the focused intent on impacting metrics that matter to their C-level executives. Business objectives and associated metrics span a broad range from general targets such as increasing revenue or improving profits. Others focus on industry-specific goals such as improving patient satisfaction in healthcare, increasing EBITDA in manufacturing, or boosting margins in retail or professional services. Data-driven HR teams start a conversation with www.ihrim.org • Workforce Solutions Review • January-March 2017

business leaders to identify the goals and metrics most important to them, and only then begin Sierra-Cedar 2016-2017 the process of analysis. Not all analysis results HR Systems Survey reports that 98 percent of all firms in actual hard-dollar results, but the results are use Excel for analytics and definitely strategic: goes on to tally a range of • A professional services firm continuously a “disparate range of tools needs to attract and retain qualified staff cobbled together for business and must understand the cost of their intelligence (BI) analysis (see pages 70-71). people needed to deliver projects while 2 Josh Bersin, People Analytics maintaining profitability. It must always Market Growth: Ten Things You be able to respond quickly to requests for Need to Know, July 1, 2016. information or requests for proposals to be 3 Bersin by Deloitte: High Impact competitive. The firm I interviewed analyzes Talent Analytics. its total cost of workforce on attributes of 4 CEB Corporate Leadership experience, tenure, salary and location. It Council: The Analytics Era. also conducts scenario-based workforce 5 Sierra-Cedar 2014-2015 HR planning to ensure that it has the right mix Systems Survey. 6 of junior, lower paid consultants with the The Economic Impact of right skills, and senior staff. It can now Workforce Intelligence: The Journey to Business Impact optimize the staff makeup of its consulting and Strategic Value, to be teams for multi-year, multi-million dollar published February, 2017. contracts. From knowing how salary costs 7 Yahoo’s Use of Workforce will rise as staff receive pay increases and Analytics Shows $2.5 Million increase their skills, they can now help Savings, Forrester. business leaders choose the right mix of 8 The IDC Datawarehousing junior and experienced consultants for each Study: An ROI Analysis. 9 project. The impact of this right-staffing The savings from turnover strategy is improving margins by one to reduction is calculated using “the real cost of turnover” in three million U.S. dollars per contract. a report by Bersin (Calculat• A leading financial services organization ing the True Cost of Voluntary used their workforce intelligence solution to Turnover: The Surprising address turnover issues, and then began to ROI of Retention, Bersin by assess the impact of various interventions Deloitte, 2016. In brief, the savings comes from tallying they used to improve retention. These intera reduction from not having ventions included addressing pay inequities, to pay costs per hire, per new improving manager communications, focushire orientation and training, ing on onboarding training to get new hires up less reduction in labor costs to speed fast, and on ongoing development of while a position is vacant, plus retained staff on new products. This last one lost productivity in revenue lost while a position is vacant. – ongoing development training – resulted in Turnover reduction is 13% an increase in revenue of the retained staff at we’re seeing with Visier US$200,000 per employee per year. customers over a three-year • A global technology firm needed to reduce time frame. expenses worldwide and chose to do a reduction in force. Rather than doing an acrossTable 1. the-board reduction in force (RIF), it only did

Endnotes 1

January-March 2017 • Workforce Solutions Review • www.ihrim.org

it after looking at the workforce by location, against dimensions of revenue generated, cost, and risk of being in a region. By asking, “Are we in the right regions in terms of costs versus productivity of labor?,” managers were able to identify the geographies where a RIF would have the least impact on the business. This delivered the same cost savings, but the strategic focus set the organization up to better compete in the future. • A Fortune 100 financial services organization needed to generate workforce efficiencies and more accuracy with its annual workforce planning. Using a workforce planning solution, it changed its annual process to a continuous planning effort. The results include cycle time reduction and improved accuracy of its hiring plan and headcount plan. In absolute numbers, this translates to a significant increase in precision. Plans that had previously been padded by over 1,000 headcount were now within 30 headcount of what was needed – three percent accuracy. At an average headcount cost of US$100,000, this translates to an additional US$97 million in headcount cost that the business can invest elsewhere immediately.

A Summary of Value

The value for each organization is a function of many factors in play – size of organization, complexity of systems environment, and business issues. Nevertheless, workforce intelligence creates significant results. In Table 1, I summarize the dollar value from the above case studies for the various analytics and planning solutions they implemented. Value comes in many forms, including savings from labor cost efficiencies and technology choices, savings and gains from making HR more effective, and strategic benefits such as increased revenues and improved margins. There is a mix of measures in this table. Some are savings per organization, such as a choice of a dedicated analytics solution versus a data warehouse. Some are per system(s), as is the case of reduced costs of data integration. Some are per employee, such as with revenue lift or reduced risk of gender bias. Some are per initiative – as is the case with savings from turnover reduction.9 Hopefully, you can see some of the potential value organizations achieve from workforce intelligence, and this article has given you some ideas for your own investment justification efforts or for fine-tuning your current analytics efforts.

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www.eir-inc.comwww.ihrim.org • Workforce Solutions Review • January-March 2017

2017 Annual Buyers Guide The 2017 Annual Buyers Guide will serve as a valuable reference tool. For your convenience, the guide has two sections: a Categorical Listing and an Alphabetical listing. In the Categorical Listing, companies are listed under the product and service categories of their choice. For information on a specific company and its products and/or service, please refer to the Alphabetical Company Listing. While a listing in this guide does not constitute an endorsement by IHRIM, it does indicate that these companies are interested in serving the needs of HRIS professionals. We hope this Buyer’s Guide will assist you in your 2017 purchasing decisions.

Product Categories

Core HRMS

Optimum Solutions StarGarden Corporation

Compensation Management

Deferred Compensation Decusoft Executive Compensation Decusoft Incentive Compensation Decusoft Enterprise Information Resources Inc.

Paid Advertising

HR Service Delivery

Cloud Computing Enterprise Information Resources Inc. Optimum Solutions Self Service Optimum Solutions

Onboarding

First Advantage

Payroll Software

Optimum Solutions

Performance Management

CRG emPerform Enterprise Information Resources Inc.

Rewards/Recognition

Crystal Plus.com

Self Service

Employee Self-Service (ESS)/Manager SelfService (MSS) Telliris

Time & Attendance Systems

Optimum Solutions Telliris

Alphabetical Company Listing* *Systems and applications referred to in this section are trademarked, registered, or in progress. These names should not be used generically.

CRG emPerform

6 Antares Dr. Phase 1 Suite 200 Ottawa, ON K2E 8A9 877-711-0367 613-232-4295. info@employee-performance.com www.employee-performance.com CRG emPerform makes it easy to automate & streamline vital performance management efforts and engage your company’s talent in easy, effective, and ongoing feedback & development. emPerform’s intuitive software includes an entire suite of flexible functionality to help save time and transform traditional once-a-year performance management into a year-round conversation. Did we mention everything is included for the best value guaranteed? Online appraisals, goal management, 360° reviews, surveys, succession, and compensation planning. Get it all plus dedicated setup and guidance at every stage. Achieve performance management success with emPerform. Contact us to get started. See our ad on the back cover.

Crystal Plus.com

DECUSOFT

CrystalPlus.com is a leading supplier / manufacturer of crystal awards and corporate gifts. We offer free engraving and no setup charges on all of our crystal awards and gift products. We have in house professional graphic designers, engravers and customer service specialists to serve our customers making ordering crystal awards and gifts easier than ever. At Factory direct prices and with huge inventory selection at our California warehouse, you can’t find any better prices and faster turnaround for the same premium quality of custom engraved corporate awards, sports trophy and personalized gifts. See our ad on page 15.

You have an HCM software suite but you are managing compensation outside the system. Now what? You need COMPOSE, a specialized compensation management software solution that handles any level of variable compensation complexity, reduces your total cost of compensation administration and integrates with existing HR solutions. Not so suite but oh so right. See our ad on the Inside Front Cover.

18475 E. Valley Blvd. City of Industry, CA 91744 Michelle Smith 888-779-8803 888-669-0838 service@crystalplus.com www.crystalplus.com

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70 Hilltop Rd Ste 1003 Ramsey, NJ 07446 Michele Weiss 201-258-3395 201-785-0774 michele.weiss@decusoft.com www.decusoft.com

2017 Annual Buyers Guide

Alphabetical Company Listing* *Systems and applications referred to in this section are trademarked, registered, or in progress. These names should not be used generically.

Enterprise Information Resources Inc. 271 Waverley Oaks Rd. Suite 207 Waltham, MA 02452 Gin O’Leary 855-589-9451 617-924-4802 info@erpinforesources.com www.erpinforesources.com

EIR is a certified SAP SuccessFactors build and services partner. We are a team of compensation and talent management solutions experts specializing in Perform & Reward bundle implementations and configuration optimization. Our transformational services help clients maximize the value of their SAP SuccessFactors investment. See our ad on page 27.

StarGarden Corporation

Telliris

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www.ihrim.org • Workforce Solutions Review • January-March 2017

Proof of Concept or Business Case? David Vance, Center for Talent Reporting

The Chicken and the Egg, Proof of Concept or Business Case: Which Comes First? Professionals new to measurement or to a learning management position often ask this question. They want to know whether they should run a pilot to prove the concept (which they could then incorporate into a business case assuming it was a success) or start with a business case based only on planned results (which may or may not include a pilot). A successful pilot with measurable results would certainly contribute to a more compelling business case but how do you get the resources for a pilot without a compelling business case? The question is important because there are risks to either approach. If you create a very compelling business case, but fail to deliver the promised benefits (perhaps because you did not prove the concept first), you will lose credibility. If you continually fail to deliver what you promised, you will acquire a deserved reputation for all talk and no results. Not good for your department or your career. On the other hand, you may be able to deliver results (prove the concept) without first building a business case. But, without a compelling business case, how did you get the resources? And, even if you had the resources for a small-scale pilot, how will you get resources for widespread deployment without a good business case? And, without the proper planning that goes into a good business case, how do you know that you are working on the right learning? Even if you deliver a program with very high return-on-learning (ROL) that does not mean it was the best use of your resources. This path will not be good for your department or career, although it may take longer to realize the negative implications. I don’t think there is a simple answer to this very basic question. Rather, it depends on two factors: 1. Cost and scope of the learning program; and, 2. Culture with regard to uncertainty, accountability, and transparency.

January-March 2017 • Workforce Solutions Review • www.ihrim.org

Let’s start with the cost and scope of the program. If the cost and scope are large in absolute terms or large relative to other learning programs, then you definitely should prepare a business case, which is nothing more than a comparison of benefits and costs. You owe this to your senior leaders, your own staff, and to yourself. You should all want to see the numbers before proceeding. Benefit will usually be in terms of Kirkpatrick level 4 business results or Phillips level 4 business impacts and level 5 gross benefits (the monetary value of the level 4 impact of learning on business results). Cost should include both accounting costs like salaries, consultants, and room rental as well as opportunity cost, which is the value of the participant’s time while engaged in the training. The business case usually will include the net benefit (gross benefit less total cost) and return-on-investment (ROI minus net benefit divided by total cost multiplied by 100, expressed as a percentage). This provides decision-makers with an explicit comparison of benefit and cost so that they can make a decision about whether to invest or not. A good business case should also show the importance and alignment of the planned learning to the organization’s goals to ensure that learning is directed first to the highest priority goals of the organization. So, the more expensive or far-reaching the program, the more important it will be to have a business case. That said, we still have not addressed whether the proof of concept should come first. Many programs require significant spending to get to the pilot deployment stage where proof of concept would occur. For these, you will need to make the business case first and the business case should include a plan for a pilot before the program is put in full production. Since there is no proof of concept initially, the level 4 impact and net benefit will simply be best guesses based on the learning professional’s experience and any benchmarking which is available. Ideally,

the learning professionals are working closely with the goal owner (like the SVP of Marketing for a sales training program) to agree on the specifics of the program including target audience, learning objectives, cost, reinforcement plans and, most importantly, planned impact. After all, neither party alone can deliver the planned results. Learning professionals are best positioned to design and deliver a quality learning program, but only the SVP of Marketing and his or her supervisors can ensure that the target audience takes the training and actually applies it on the job. They both must commit to jointly achieving the planned impact in the business case. There may be some cases where the learning already exists or could be refreshed at low cost. It may be possible to conduct a pilot without getting an explicit budget approved for the proof of concept. This allows you to “fly under the radar” and get some actual results. If the results are good, you can use them to inform your planned net benefit and ROI in the business case. If they are not good, you might just drop the idea. If the results are good and the cost to deploy to the target audience is small, you might just proceed to deploy. To sum up, if the cost or scope is large, you should always prepare a business case. If the proof of concept will be expensive, then the business case must come first. If the proof of concept is inexpensive, you may be able to do it first and then incorporate it into the business case. If the cost and scope of the learning program is small, you may not need either a pilot or a business case. Simply proceed as efficiently as possible. The second factor to consider is your culture. Here the focus is on your culture with regard to uncertainty, accountability, and transparency. How comfortable are staff and leaders with regard to uncertainty? If the business case comes first, the plans for net benefit and ROI will all be best guesses. While this is typical for all business planning, some people are more comfortable with

plan numbers than others. And many professionals in learning and HR are very uncomfortable with plan numbers since they have had very little experience creating business cases. Moreover, even senior leaders (CFOs and CEOs) who are comfortable with plan numbers from marketing may not be comfortable with plan numbers from learning, especially if they sense that the learning leaders themselves are uncomfortable. So, if your culture is uncomfortable with plan numbers, then you may want to create a two-step business case. First, ask for a budget to complete a pilot, which might be a scaled-down version of the ultimate program (e.g., the pilot may not include coaching and all the follow-up activities planned for full deployment). You should still provide your best guess for planned impact and cost, but you are requesting only enough to prove the concept. You will then come back after the pilot and report out. If the pilot results are favorable, you will update your business case based on the results of the pilot and ask for the resources required for full deployment. Many learning leaders also are uncomfortable with accountability and transparency. Here, our profession differs significantly from sales and manufacturing, where leaders have always been accountable for results and where year-to-date results are compared to plan in monthly (or weekly/ daily) reports. Typically, learning has not operated with this business-like discipline. Specific, measurable, agreed upon, realistic, time-based (SMART) goals have not been set, reports have not been generated comparing actual results to plan, and leaders have not been held accountable for making a plan. If this is your culture, there will be increased reluctance to create a business case with plans that are not informed by a pilot, so it will be important to try to do the pilot first. The good news about culture is that with practice, everyone will become more comfortable creating a business case with just plan numbers.

About the Authors David Vance is the executive director of the Center for Talent Reporting, a nonprofit organization dedicated to the creation and implementation of standards for human capital reporting and management. He is the former president of Caterpillar University, which he founded in 2001. Until his retirement in January 2007, he was responsible for ensuring that the right education, training, and leadership were provided to achieve corporate goals and efficiently meet the learning needs of Caterpillar and dealer employees. Prior to this position, Vance was chief economist and head of the Business Intelligence Group at Caterpillar Inc. with responsibility for economic outlooks, sales forecasts market research, competitive analysis, and business information systems. He has a B.S. in Political Science from M.I.T., a M.S. in Business Administration from Indiana University, and a PH.D. in Economics from the University of Notre Dame. He is a frequent speaker at learning conferences and association meetings and is the author of The Business of Learning: How to Manage Corporate Training to Improve Your Bottom Line. He can be reached at DVance@CenterforTalentReporting.org.

www.ihrim.org • Workforce Solutions Review • January-March 2017

Greta Roberts,Talent Analytics, Corp.

Pre-hire Talent Assessments Must Be a Part of Your Predictive Talent Acquisition Strategy Over the past 30-plus years, businesses have spent billions on talent assessments. Many of these are now being used to understand job candidates. Increasingly, businesses are asking how (or if) a predictive talent acquisition strategy can include the use of pre-hire assessments? As costs of failed new hires continue to rise, recruiters and hiring managers are looking for any kind of pre-hire information to increase the probability of making a great hire. For all of the marketing Hype, all predictive analytics projects have three very simple steps: 1. A system reads “input” data – perhaps assessment scores or CV information. 2. The system does some math to apply a “predictive model” to the input data. 3. The results of the model are shown as “output” data of the model – perhaps the likelihood of the candidate achieving a certain level of sales performance or another key performance indicator (KPI). At heart, it takes “inputs” and turns them into “outputs” or predicted business outcomes. But, to build and validate a model, you need a healthy, logical set of both input and output data for that role in your company. If you are using a talent assessment alone, this is just input data. To be predictive, you need to include the other two steps.

Most current talent assessments used today for talent acquisition are not predictive. For most companies, their current pre-hire talent assessments are wasted data. Results are delivered in an individual report that often cannot be analyzed or aggregated. For most “legacy” talent assessments, it’s difficult or impossible to determine what positive (or nega-

January-March 2017 • Workforce Solutions Review • www.ihrim.org

tive) business effect the assessments are having. It often comes down to the question of “how much the HR person believes in the results” versus “how much the business is able to document and realize real results.” But, it doesn’t have to be that way.

Predictive talent acquisition solutions use predictive talent assessments. At Talent Analytics, we include talent assessment data (generated from our own predictive assessments), as an additional data point in every predictive project. In predictive-speak, “our assessment data has proven to be a very strong independent variable for our predictive models.” We repeatedly prove that our scores predict business performance, such as the probability of someone making their sales quota, or the probability of someone lasting in a contact center role for at least 12 months, the probability of a bank teller making errors, and so on for most quantifiable KPIs.

It can be daunting to figure out what solutions will actually deliver a predictive solution. To help, I wanted to share 15 important questions to ask of your talent assessment vendor. Here are the questions to ask your talent assessment supplier – to determine if they are a good part of a predictive talent acquisition strategy: 1. The predictive company itself – Are you dealing with an assessment company that is trying to learn how to be predictive? Or, is it a predictive company that also uses assessment data? How long have they been doing predictive work? Are they invited to speak at predictive conferences or at basic HR conferences?

2. Their predictive team – Does the company have data scientists on staff as well as industrial organizational psychologists (I-O). This is important because data scientists tend to utilize more modern and rigorous methods for prediction and validation. Industrial organizational psychologists tend to be focused on the instrument, while data scientists tend to be concerned with predictive validity and business results. 3. Are they predicting for your company, or for everyone? – There are companies that create “industry benchmarks,” or general performance predictions for general industry categories, such as retail sales or customer service. These predictions are significantly less accurate, because they are based on companies different from your own, with different cultures, goals, and regions. Not all “customer service” is the same. Modern computing methods enable leading providers to create and validate predictive models for roles in your company, and to continuously update the model over time. 4. Do they care about our outcome data? – Generally, these solutions predict attrition or performance for a candidate or employee. Has the assessment company asked you for the attrition or KPI data for your employees in your target role? If they don’t know your employee outcomes, how can they predict your outcomes? They can’t. Most job roles have multiple KPIs that describe performance; do they predict each of these separately? For KPIs that naturally contradict each other, e.g., speed versus accuracy, how does the predictive solution resolve the contradiction? Just getting a “green light” isn’t good enough, in many cases. What sample size did they ask for? Real predictions require a reasonable sample to properly validate that you aren’t being fooled by randomness. If they only ask for 15 top performers, your sample is too small to create a real prediction. 5. Does the solution base its predictions on outcome data or a job fit, job match, or job blueprint survey? – Data science predicts what you ask it to predict. If you want lower attrition or higher KPIs, the models must

be trained and validated with those data alone. The process looks for fact-based patterns to drive your business. Surprisingly, many solutions don’t use this approach, but fall back to managerial bias. These solutions ask well-meaning committees of managers to list competencies that they believe are needed for success in a role. The resulting criteria are not predictive at all – they just find candidates that match the laundry list of beliefs and biases held by that committee. Nowhere in this process is a connection to actual attrition or KPI outcomes. Again, if the system doesn’t know about your outcomes, how can the process predict them? Start with data, not bias. 6. Does the solution use machine learning to recalibrate your predictive models? How often? – Business needs, role descriptions, and culture changes over time. Local labor conditions change. For example, service representatives may be incentivized to cross-sell related products, or new regulations may require new compliance to be performed. It is important to update and re-validate your predictive models two to four times a year to keep up-todate with seen and unseen trends. Some solutions have not changed their models for 30 years; do not expect these solutions to find great sales reps for you. 7. The new validation question: criterion validation? – Human Resources has been taught to ask if the assessment is validated. The first level of validation checks whether the assessment measures are self-consistent. Continue to ask this question. But, ultimately, you care about whether the assessment feeds predictions that accurately correspond to improved business outcomes.That is, are the predictions actually working? This level is called “criterion validation” and is a high bar that is not commonly reached by vendors. A top-tier predictive talent assessment vendor will perform criterion validation for the solutions several times a year – with every client. Criterion validation is the highest level of validation possible, and is the most preferred by regulatory agencies. 8. Can you easily access or download

www.ihrim.org • Workforce Solutions Review • January-March 2017

About the Author Greta Roberts is an acknowledged influencer in the field of predictive workforce analytics and co-founded Talent Analytics in 2001. The company is now the globally recognized leader in predicting an individual’s business performance, pre-hire and post-hire, and one of the only firms predicting business outcomes, e.g., predicting someone’s probability of making their sales quota, or being able to process a certain number of calls, or make errors, etc. The company’s predictive solutions are easily deployed into employee operations to teams without a background in analytics, statistics, or math. She is a contributing author to predictive analytics books and a frequent speaker at high-end predictive analytics and business events globally. Roberts was elected and continues to be chair of Predictive Analytics World for Workforce, an innovative, annual predictive analytics event dedicated to solving workforce challenges. She is an instructor on Predictive Analytics for HR and Workforce at UC Irvine; she is a faculty member with the International Institute for Analytics (IIA) and is a member of the INFORMS Analytics Certification Board. She can be followed on twitter @TalentAnalytics, @GretaRoberts.

your company’s talent assessment data? – Talent assessment data is a critical dataset for your company. If your talent assessment vendor makes it difficult or impossible to access your talent assessment data, this is a good indication they are using pre-predictive technology and that they don’t appreciate that this data is your asset. True predictive solutions know that your workforce data scientists will want to use your talent assessment data to find correlations and predictions in many areas of your business. You need to insist on easy and direct access to the raw assessment scores. 9. How easy is it to deploy the solution into the talent acquisition process and use the predictions? – How much training is required? Do your talent acquisition professionals need to read long text reports, or get out a calculator to use the predictions? The complexity of a prediction should be kept out of the way of daily operations. If your team still needs to “think” about what the answer is, it is probably not a predictive solution. 10. Is there a different assessment for every role? Or one assessment with multiple predictive models? – Multiple assessments make it impossible to predict one candidate’s performance against multiple roles. This may also be a signal that you are working with an older, legacy (less predictive) talent assessment supplier. 11. Is there an answer key for their solution on the web? – For many assessments, there are answer keys and guides on how to fool or pass the test. One example is here: http://on.wsj. com/29Che0n. When you see this, it means two things: (a) that the test is easily fooled, lacking internal controls to prevent spoofing, and (b) it means that you are looking at an “industry benchmark” with one clear set of answers. A data science-driven model would be custom to your role in your company, and be continuously evolving, therefore, very difficult for answer keys and to catch spoofing.

January-March 2017 • Workforce Solutions Review • www.ihrim.org

12. Does the company itself, i.e., Myers Briggs, specifically tell you not to use their solution for hiring/ talent acquisition? – Some assessments, notably the Myers Briggs survey, specifically implore users to not use the tool for talent acquisition, saying that, “It is not ethical to use the MBTI instrument for hiring or for deciding job assignments,” http://www. myersbriggs.org/my-mbti-personalitytype/hiring-an-mbti-consultant/guidelines-for-hiring-an-outside-consultant. htm. 13. Can you see their company policy on employee predictive modeling, discrimination, disparate impact, and fairness? – It is important that a predictive solution has “thought through” the specific outcomes of their models and how they fit into creating fair opportunity for all applicants. In particular, it is vital for the solution to satisfy or exceed any government requirements for hiring and selection. 14. Do your own (internal) data scientists approve of this predictive solution? – We recommend asking one of your own data scientists (from HR, marketing, or another area inside your own company) to accompany you in your evaluation. They know what is a rigorous approach and what is marketing fluff. 15. How does the predictive solution regularly prove to you that the models are working? – Ideally, the company you select will be able to show you two to four times a year how your predictions are working, i.e., turnover is going down, sales are going up, calls are going up, errors are going down, etc. Only use a predictive model during talent acquisition if the predictions are accurate. If they’re not, you should stop using the models. You need this feedback. Predictive talent assessments can have a prominent place in your predictive talent acquisition process – but you need to be careful in choosing the real predictive solution versus a legacy talent assessment with a predictive marketing wrapper.

The Back Story Katherine Jones, Ph.D., Mercer

Building the Business Case for HR Initiatives Last summer I was speaking on change management in Austria, and asked my audience — all of whom were embarking on implementations of new HCM or business software – how many began with a business case? Much to my surprise, not one hand was raised. The attendees all reported that the funding for the project was allocated based on a corporate-perceived need for the products in question. This is not just a European phenomenon. Research I had previously undertaken revealed that only 48 percent of the companies surveyed had built a well-understood business case to justify the project on a cost / benefit basis at the beginning of a software acquisition project. In fact, 11 percent of respondents in that study did not create a business case at all.1 While avoiding a business case may sound like Nirvana to you, there are some very practical reasons for having one beyond getting the funding to acquire the technology or service (which is enough in itself). A sound, well thought-out, and clearly articulated business case can prevent future mishaps in the project and eases the path for the change management activities that are to follow. Here is a step-by-step model of points to consider and their use in creating a business case:

Step 1. Clearly identify the problem to be solved as explicitly as possible. Recent Mercer research showed business goals such as “a corporate-wide single system of record for all HR and talent data,” or “replace a legacy HRIS that no longer meets operational requirements,” although very broad, often formed the first level of drivers for a new software business case. Companies reported that their intended project would address needs such as provision of “reliable, consistent reporting for compliance,” “integrated HR data for workforce analytics,” or “standardization across geographies.”2 State your business drivers in clear, unambiguous, and, when feasible, measurable terms.

Step 2. Explain in business terms why it matters. This is the “so what?” part. While it may be blatantly obvious to you why statements like those above are important, you cannot assume it will be apparent to all. Consider this: let’s say you want a new integrated talent management system, primarily because you want to “improve the employee experience in interacting with HR.” This has been a goal of HR technology replacements for years, but consider what this may sound like to your CFO. Clearly state the anticipated outcomes and the reason they are important in business terms. If new software will lessen the time employees need to spend doing time entry or expenses so they can spend more time with customers or in more productive activities, this is where you articulate that.

Step 3. Determine and state who cares and why. In this step you are identifying the stakeholders who will stand to benefit from this investment and the likely impact on all stakeholders. This step will help you manage the changes required in the implementation and user acceptance process.

www.ihrim.org • Workforce Solutions Review • January-March 2017

In past research, I found clients saying “this software will make HR’s work easier,” but today’s business cases are more successful by demonstrating how the technology acquisition helps employees become more productive or enhances responsiveness to customers. This step will help you identify the different levels of stakeholders and their differing needs for information throughout the implementation. If you are applying design thinking to your project, this step can also help you identify the people who would be “touched” by the software and prepare for getting their input.

Endnotes Deploying HCM Technologies: Making Change Work, Bersin by Deloitte, Katherine Jones, Ph.D., June 2014. 1

The Journey to Digital HR: What Research Tells Us About Implementing A New HRIS, Mercer, 2016. 2

Step 4. Present your solution and consider alternatives. As you address your proposed solution, present alternatives: first, so reviewers know you have thought through your request, and second, so you have a viable plan to propose if you do not get just what you are asking for. Present at least three options (one of which is what you are requesting) with the pros and cons, risks, and cost/ benefits of all three, noting why your proposed solution is the most viable. The inclusion of cost here leads you to the next step.

Step 5. Delineate the assumptions that drive the cost of the solution you are proposing. It is not enough to say Software X will cost Y dollars. In this part of the business case, you need to consider all the costs impacted by your proposal. What is the cost of running parallel systems if you elect to do so during product rollout? What is the cost of employee training — not just initially but with each new release of the software? What will the cost be to augment staffing such that “day jobs” are uninterrupted when employees are pulled into the project team for implementation? Here is where you also map out the anticipated expenses over time – considering how you will implement (big bang or

module by module, for instance), when outside resources such as consultants may be used, and what you pay upfront for your Cloud implementation to begin.

Step 6. Define the intended outcomes and how they will be measured. What will define success for your project? Just getting the software installed? User adoption? Cost decrease? It is important that you identify what will illustrate success up front – so you will know if you have indeed accomplished what you intended. If just getting the software up and running is your intent, I posit that that is not a winning business case – yet in the past that was used as a measure of success, albeit a weak one. Many HR teams seek to use adoption as a defining point—and often the software fails to be widely used in the timeframe they had hoped for. If that is to be your defining measure, you will want to allow for sufficient training and acceptance time before measuring. If you define success in increased customer satisfaction or enhanced employee engagement, plan how you would measure those intangible results. If you want to evaluate more concrete returns such as cost decrease or revenue increase, ensure you know precisely what those numbers are at the point you begin for comparison purposes.

Conclusion Past research showed a correlation between companies that thought their new software project was a success and the fact that they started with a business case. From an analyst’s point of view, that doesn’t say too much, as perceptions of success without identified proof points are just that: perceptions. But there is something to be said for the care in articulating a well thought-out plan before beginning it. The value of a good business plan for your technology journey is that it will help provide you with milestones so you will know when you have reached your destination.

About the Author Dr. Katherine Jones is a partner and director of Research at Mercer in Talent Information Solutions. With both academic and technology industry experience, she has been a high-tech market analyst for 18 years. Her doctoral degree is from Cornell University. She can be reached at Katherine.Jones@mercer.com or @katherine_jones.

January-March 2017 • Workforce Solutions Review • www.ihrim.org

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2017conference.ihrim.org Since 1980, the International Association for Human Resource Information Management (IHRIM) has been the leading membership association for HR technology professionals offering a unique community that blends education, collaboration and professional certification. www.ihrim.org • Workforce Solutions Review • January-March 2017

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