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Author: Ed Frauenheim

Posted on April 4, 2010June 29, 2023

Managers Don’t Matter

The old saw that “people don’t leave companies, they leave managers” has become outdated—if it ever was true. Recent polls on retention reveal that crummy managers aren’t the principal cause of employee defections. While employers say the manager-employee tie is the biggest or second-biggest reason workers jump ship, employees put many other factors ahead of the manager connection, such as stress and base pay.


Still, some experts argue that getting manager-employee relations right is vital now. Managers, observers say, play a crucial role in inspiring workers in firms that are often in flux, frequently riddled with distrust and increasingly distributed across the globe. Studies show employee engagement has dropped during the recession. And in the wake of company decisions to cut staff, freeze salaries and take other cost-cutting steps, many workers are itching to bolt their firms.


To knit alienated employees into cohesive, innovative teams, companies will have to rely on savvy supervisors, says business consultant Karen Lojeski.


“What I’m finding is, managers matter more than ever,” she says.


Key connection
Linda Devlin says her boss matters more these days. Devlin, a senior manager at consulting firm Accenture who is responsible for leadership development and succession planning, says her supervisor has become more important to her engagement in the tough business climate. Devlin’s boss, global director of leadership development Camille Mirshokrai, has translated Accenture’s overall strategy in concrete terms as well as acted as a kind of sentry, passing on information about how the company is doing, says Devlin.


“The importance has grown in terms of feeling connected to our organization and not feeling lost in a black hole,” she says.


Mirshokrai, for her part, says managers are crucial when it comes to an increasingly important retention factor: shaping jobs so employees get to do what they’re best at each day. Generation Y’ers in particular want to be able to tout their achievements at work, she says.


“The company that offers you the best experience is going to get you,” Mirshokrai says. “And that’s where the manager plays a key role.”


For years, managers have been at the heart of Americans’ job experience. Supervisors not only have delegated tasks to workers, but have also judged their performance. Over the past decade or so, managers have been asked to take on more roles for employees, including career development coach and onboarding guide for new hires. According to research firm Gallup, the relationship with the manager is the largest factor in employee engagement, accounting for at least 70 percent of an employee’s level of engagement.


Employee engagement is a concept that captures retention—how committed employees are to their firms—but also reflects how willing workers are to put in extra effort on the job. Gallup has documented a connection between higher levels of engagement and higher productivity and profitability.


Engagement has fallen during the recession, a number of studies show. A May 2009 survey by consulting firm Watson Wyatt Worldwide (now Towers Watson) of 1,300 workers at large U.S. employers found that engagement levels for top performers fell close to 25 percent year over year. Employees overall experienced a 9 percent drop in engagement year over year.


Sixty percent of employees intend to leave their firms as the economy improves this year, and an additional 27 percent are networking or have updated their résumés, according to a late 2009 survey of 904 workers in North America by advisory firm Right Management.


Influence overstated?
  
  But you can’t pin all that dissatisfaction on direct supervisors. Managers have never been the sole factor in worker engagement and retention, says Jack Wiley, executive director of the research arm of employee survey firm Kenexa. Wiley has reviewed data going back to 1994, finding that the key drivers of retention have remained consistent: confidence in an organization’s future; recognition for contributions; opportunities for growth and development; and a good fit between the job and a person’s skills and abilities.


Managers influence the recognition component and probably the development and job-match pieces, Wiley says. But they have limited power over the confidence component and may be hamstrung on employee development if executives slash training budgets.


“If you’re in love with the company, you can outwait a stinker of a manager,” Wiley says. “The role of the manager is often exaggerated.”


A report last year from Watson Wyatt found that “relationship with supervisor/ manager” was the top-ranked reason employers gave for why employees leave an organization, cited by 43 percent of respondents. But employees themselves rated stress levels as the top reason, followed by base pay. Four other factors tied for third place, none of which was the manager relationship.


Similarly, a report last year by Salary.com found that employers ranked “poor relationship with manager(s)” as the second-most-important reason employees leave a job. It was cited as a significant factor by 38 percent of employers. But bad blood with the boss didn’t rank in the top five reasons employees gave for leaving a job, which included inadequate compensation, inadequate professional development opportunity and boredom.


Managers may be less central to employees these days in part because of the lingering recession. The downturn threatened the very survival of firms, forcing employees to pay more attention on their organization overall. The ways companies have responded to the recession also is a factor, experts say. Rusty Rueff, a consultant and board member of job feedback site Glassdoor.com, says lower-level managers used to act as a buffer between employees and company policy, with some control over workers’ destinies. But much of the downsizing and cost-cutting during the downturn has been dictated by top executives, leaving frontline supervisors without any influence.


“At that point, you’ve neutered the manager,” says Rueff, who worked as an HR executive at Electronic Arts and PepsiCo. The result, says


Rueff, is that workers have less reason to care about their connection with their supervisor. “The employee feels they’re out there on their own,” he says.


Brian Kropp, analyst with the Corporate Executive Board, says managers have had less time for their direct reports, which has made it harder for them to be effective at spurring above-and-beyond efforts from their team members. The average manager worked about 10 percent more hours a week in the first half of 2009 compared with the first half of 2008, but spent 20 percent less time with their team members, Kropp says.


Recession’s effect
Kropp also says the ongoing upheavals at so many firms have loosened the bonds between bosses and workers. In a recent Corporate Executive Board survey, 60 percent of employees said they had a change in manager in the past six months or expect one in the coming six months. Given that grooming employees is a long-term process that pays dividends over the course of years rather than months, managers are bound to pour less into their people, Kropp says. “I don’t have the same incentives I had to be with them, to develop them, to care for them, to invest in them as I had before,” he says.


In addition, changes in the workplace that predate the recession have made the immediate manager relationship less relevant for workers, says Ilene Gochman, a consultant with Towers Watson. She notes that many companies have adopted “matrix” structures in which people have multiple managers. Firms have been conducting work in the form of ad hoc projects that may utilize employees from different business units. Rather than asking managers questions about company policies or training courses, employees can get much of the information they need from online portals.


And, Gochman says, companies often have mentoring programs that give employees a connection to another more-senior person in the organization besides their manager. “You don’t have to ‘leave your manager,’ ” Gochman says. “You can work around them now.”


Still, some observers say managers remain crucial to company efforts to win over a workforce that is skittish, skeptical and seeking greener pastures.


By giving employees a good understanding of how their individual efforts contribute to broader company goals, managers increase workers’ sense of control amid challenging times, Gochman says. “A good manager is going to be that guide for you,” she says.


Companies also are under pressure to redefine a worthy employment deal for workers in the wake of layoffs, salary freezes and benefit cuts. Gochman says managers play a key role in reinforcing messages about the new “employment value proposition.”


Managers continue to be essential to engagement at financial services firm Ameriprise, says Nick Nyhus, vice president of talent management at the 11,000-person company. Ameriprise cut about 300 positions early last year, and the firm is highly matrixed—factors that can diminish the importance of the manager-employee tie.


But Nyhus says Ameriprise has a culture of fostering strong relationships, which is a foundation of the firm’s work as a financial advisor. And in an employee engagement survey conducted in the third quarter of last year, Ameriprise found that the significance of the manager-employee bond remained steady. “That relationship was pretty key, still,” Nyhus says.


Building trust
Managers are vital to reducing the “virtual distance” that can exist in geographically distributed teams, says consultant Lojeski. Virtual distance refers to feelings of isolation among colleagues who typically communicate through e-mail, telephone or other technologies, and it can hamper financial performance and innovation, Lojeski says.


Managers need to develop “techno-dexterity,” Lojeski says, which means knowing how to communicate through a range of tools depending on the message and the audience. She cites the example of an executive who sends “video e-mails,” which gives people the richer experience of seeing facial expressions and hearing a voice rather than simply reading text.


Kropp, of the Corporate Executive Board, says a key is to make sure managers are focusing only on the handful of things that matter most. Companies, he says, have pushed many HR tasks onto supervisors in recent years, including greater responsibilities for handing out pink slips. “We’ve just gone too far,” he says.


But organizations would err if they removed talent management duties from managers altogether, says Tim Ringo, global leader of IBM’s human capital management division. The traditional manager, who merely allocated work and judged performance, is “dead,” says Ringo, whose unit sells HR software and services. He says firms need leaders who can hold on to high-potential employees by paying attention to their career development.


To this end, talent management software systems serve a critical function, Ringo says. In an era in which managers may change quickly, tools like performance management systems can help new supervisors quickly grasp the strengths, history and future plans of team members. Without such a system, “it’s just chaos all the time,” Ringo says.


While cutting-edge software may be part of the solution, so is old-fashioned empathy. Brad Federman, president of consulting firm Performancepoint, says that supervisors need to take a genuine interest in others. “The more self-interested we are, the more our relationships will suffer or be superficial,” Federman says. “Firms must help managers learn ways to reduce their self-orientation to build a culture of trust.”


A demanding role
It all adds up to a tall order for managers these days. Accenture’s Mirshokrai says supervising people is tougher now than it was when she first became a manager at the company about 15 years ago. That’s partly because of the rise of virtual teams and the communication challenges posed by managing at a distance.


Mirshokrai has 11 direct reports scattered across North America, Asia and Europe. Back in 1994, she ran a group of about a dozen employees located at a single client site. “We all sat together in one room,” she recalls. “You could tell by people’s facial expressions or moods how they were doing.”


Strong generational differences in the workforce today also are tricky. Mirshokrai has found that younger employees tend to want more frequent assessments. “Some people only want feedback twice a year. Some people want feedback two times a month. Some people want feedback on every interaction,” she says.


Given the demands put on managers, companies would do well to help them do their jobs well. At the same time, organizations should not home in on managers too exclusively, experts say. McGill University professor Henry Mintzberg says companies should fix corporate cultures that hinder managers as they try to lead teams.


For one thing, he calls for an end to incentive plans that single out individuals. He also says firms should stop axing employees casually every time quarterly numbers are missed. “A lot of the coldbloodedness of stock market pressure has driven a wedge between managers and employees,” Mintzberg says.


Kenexa’s Wiley agrees that firms seeking to engage and retain employees have to look at the bigger picture. The most important driver of engagement, Wiley says, is leadership that inspires confidence in the future. Focusing too much on managers, Wiley says, “takes the organization off the hook.”


If companies don’t do a better job putting the importance of managers in perspective, they might suffer more than just the disengagement and defections of individual contributors. They might find effective managers heading out the door as well—and taking teams of people with them who might help rival firms.


Rueff says he knows of cases in which leaders broke off from their companies with a group of employees and became a kind of business-unit-for-hire. “In the free-agent market, you’re already starting to see it,” he says.


Workforce Management, April 2010, p. 18-24 — Subscribe Now!

Posted on April 1, 2010August 28, 2018

Communicating for Engagement During Tough Times

Layoffs added to the challenge of keeping employees engaged during the downturn at the recruitment outsourcing division of Manpower Business Solutions.


Manpower Business Solutions, a unit of the staffing company Manpower, cut some jobs in the U.S. during the recession.


The number of workers affected was “minimal,” says Tracy Qamou, director of recruiting operations for Manpower Business Solutions, which also provides services such as training and workforce planning. Nonetheless, Qamou and her team worked to make sure the 80 or so employees in the recruitment outsourcing division were kept informed of the company’s direction, goals and business prospects. That communication helped bolster morale, Qamou says.


“It created a sense of security,” Qamou says, stopping the panic before it started.


A heavy focus on communication at the company is standard in both good times and bad, Qamou says. That’s important partly because her operation is so dispersed. The bulk of Qamou’s recruiters work from home offices. Given that recruiters may immerse themselves in a client’s operations, keeping them connected to Manpower can be difficult, Qamou says.


“It’s very easy for them to feel they are more associated on a daily basis with that client rather than an employee of Manpower,” she says.


For Qamou, the challenge is to make sure these virtual employees see that what they do contributes to the firm’s overall mission.


“To keep an outsourced, remote workforce engaged, communication is critical,” she says. “In Manpower Business Solutions, management reinforces how the daily, sometimes small actions of the team contribute to the Manpower vision. It facilitates a team-oriented feeling.”


Workforce Management Online, April 2010 — Register Now!

Posted on January 25, 2010June 27, 2018

Talent Software Poised for More Consolidation

The $100 million deal to create Peopleclick Authoria is the latest mash-up in the talent management software field. And experts say more is in store.


Vendors offering just one or a few talent management functions could be candidates to gobble up—or be gobbled up—in the quest for more comprehensive product lines, consultant Karen Beaman says.


“I do expect this consolidation to continue,” says Beaman, who heads advisory firm Jeitosa Group International. “In order to be competitive, they have to have more well-rounded suites.”


OnJanuary 5, private equity firm Bedford Funding said it had acquired talent acquisition specialist Peopleclick for $100 million. Bedford Funding said it was creating a new firm by combining Peopleclick with Authoria, the HR software company that Bedford acquired in 2008 for $63 million. Authoria brings with it recruiting software capabilities, along with other functions such as benefits communication and performance management.


Together, Peopleclick and Authoria boast as customers nearly 60 percent of the Fortune 100. Their combined annual revenue is close to $100 million, says Charles Jones, chief executive of the new firm, Peopleclick Authoria. Jones is the founder of Bedford Funding. He also served as CEO of software firm Geac Computer Corp.


Ron Kupferman, former CEO of Peopleclick, and Jim McDevitt, former CEO of Authoria, will operate as vice chairmen, working on business development, the company said.


The Peopleclick Authoria news is the latest example of tie-ups in talent management software, which refers to applications for key HR tasks such as recruiting, employee performance management and compensation management. Other deals in recent years include Taleo’s acquisitions of compensation specialist Worldwide Compensation and recruiting software firm Vurv Technology, as well as Kenexa’s swallowing up of recruiting software provider BrassRing.


In September, research firm Bersin & Associates projected sales of talent management software would reach $2.2 billion by the end of 2009 and grow 15 percent in 2010.


Josh Bersin, the firm’s CEO, called the Peopleclick Authoria deal the union of “two strong players” in the talent management systems market. “Both companies are product and market leaders in their segments,” he said in a statement.


But meshing technologies could be a challenge for the new firm, says Jason Corsello, vice president at consulting firm Knowledge Infusion. Although Peopleclick and Authoria “have arguably some of the deepest, best-of-breed solutions for talent acquisition and talent management, the two products couldn’t be more different,” Corsello wrote in a recent blog item. (Corsello’s blog, The Human Capitalist, is featured at Workforce.com.)


Jones, though, says that integration hurdles are not new in the software world. He says the secret to successful mergers has more to do with culture than software code.


“It’s about the people,” he says. Jones plans to be busy ensuring happiness among the troops—more than 300 from Peopleclick and more than 200 from Authoria.


Jones, 61, lives outside of New York City but expects to work three days a week in Raleigh, North Carolina, where Peopleclick has had operations, and two days a week in the Boston area, where Authoria has had its corporate headquarters.

Workforce Management, January 2010, p. 11-12 — Subscribe Now!

Posted on December 2, 2009June 27, 2018

Research Highlights Disengaged Workforce

Most researchers have documented a drop in overall engagement during the recession. In September, Workforce Management conducted a survey of about 525 readers at companies with 1,000 or more employees. Roughly 45 percent of respondents reported that engagement had decreased a little or a lot at their organization since the recession began. Nearly 27 percent said engagement had stayed the same, and 28 percent said it had increased.


Organizations with layoffs were more likely to see a drop in engagement, Workforce Management’s survey found. Of the 313 respondents who said they had experienced layoffs, 63 percent said the layoffs decreased employee engagement among the “survivors.”


One HR manager at a large travel industry company says engagement has dipped at her firm during the downturn. The organization went through a major restructuring with significant layoffs about three years ago. Then the recession hit. “It did lead to more job losses, more reduced security,” says the manager, who spoke on condition of anonymity. “Employees are just feeling nervous.”


In a study of employees from across the globe, the Corporate Executive Board found that the percentage of employees who are highly disengaged climbed from 8 percent in the first half of 2007 to 21 percent in the second quarter of this year.


Unlike other studies, surveys by advisory firm Towers Perrin have not documented a slide in engagement during the downturn. But Towers Perrin research has shown signs of trouble for employers. In the second quarter, according to the firm, slightly more than one in five employees said it would not take a lot to make them look for a job elsewhere.


Workforce Management, November 16, 2009, p. 22 — Subscribe Now!

Posted on December 2, 2009June 27, 2018

Counting on Engagement at Ernst & Young

This recession, professional services firm Ernst & Young has tried to preserve its reputation as a best-place-to-work employer. And employees, it seems, have returned the favor.


As of mid-October, the audit and consulting company had not finished compiling the results of a formal employee engagement survey. But anecdotal evidence suggests that the firm is on the right track with its 144,000 workers, says Kevin Kelly, Ernst & Young’s director of the people team for the Americas.


“People are actually feeling more engaged,” Kelly says. “People feel more loyal.”


Business results indicate Ernst & Young is holding its own in tough times. For the year ended June 30, the London-based company reported worldwide revenue of $21.4 billion, a drop of 6.8 percent year over year in U.S. dollar terms. One of its Big Four accounting firm rivals, PricewaterhouseCoopers, posted global revenue for the same period of $26.2 billion, down 7.1 percent in U.S. dollar terms.


Another global competitor, Deloitte, reported a 4.9 percent drop in U.S. dollar revenue for the year ended in May. Engagement has become central for companies eager to rebound from the recession and deter defections once hiring picks up. Some experts argue that a more engaged workforce requires revamping the arm’s-length, layoff-prone relationship many firms have had with employees for decades.


Ernst & Young, though, has bucked the trend of mere transactional ties with workers. The firm has prioritized workplace flexibility, sought out employee views and stood out for strong training investments. It has made Fortune’s “100 Best Companies to Work For” list 11 years running. And it ranked fifth in a list of the world’s most attractive employers for business students published in October by employer branding specialist Universum.


The recession, however, has tested Ernst & Young’s reputation as an employer of choice. The firm gave out pink slips during the past year, sparking criticism. Industry tabloid Going Concern reported that “it sounds like it has been a bloodbath at E&Y,” and an anonymous posting at an online message board accused the firm of treating people as “disposable items.”


Ernst & Young declined to say what percentage of the workforce was cut, but it called the reductions “targeted” and defended its employee separation process.


“Every separation requires a written business case and a team of business unit leaders and HR professionals review each individual situation,” the company said in a statement.


The firm also has sought to retain its employee-friendly culture. For example, Kelly says the company “didn’t back off at all on learning and development” investments, which are slated to total $450 million for the year ended June 2010.


One program Ernst & Young has maintained is Milestone Week, an annual gathering of some 1,200 leaders to train and recognize newly promoted managers and executives. Greg Chapman, senior manager in Ernst & Young’s transaction advisory services group, attended the four-day event in Orlando, Florida, last fall. Chapman had expected Milestone Week to be canceled amid the panic gripping the economy.


“Everyone down there was pretty blown away by what the firm did for us, given the environment,” he says.

Workforce Management, November 16, 2009, p. 25 — Subscribe Now!

Posted on December 2, 2009June 27, 2018

A Skeptical View of Engagement

Increasing employee engagement is a top priority for many HR leaders these days. But some observers warn that fixating on ever-higher engagement survey scores is wrongheaded and may backfire.


Organizations that measure engagement—including Gallup, Towers Perrin and the Corporate Executive Board—have different surveys and formulas for calculating employee commitment. And their findings about engagement overall vary.


Adam Zuckerman, a consultant at Towers Perrin, says it makes little sense to try to pin down a “normal” level of engagement, given variations by geography, industry and job function. The key, he argues, is for firms to raise scores.


“More of it is always good,” he says.


Critics, though, question sweeping claims about engagement. John Haggerty, managing director for executive education at the Center for Advanced Human Resources Studies at Cornell University, argues that engagement surveys that result in a numeric score often amount to hype.


“Too many companies conduct the survey, and then struggle to improve the metric, without any idea of whether their more ‘engaged employees’ are behaving in ways that foster or promote better customer service or higher productivity,” he says.


Companies focus too exclusively on employee engagement at the expense of other key people matters, says Laurie Bassi, head of consulting firm McBassi and Co. The quality of work processes—how well tasks are divided and carried out—is often overlooked in engagement assessments, Bassi says. She says the same is true for hiring practices, which play a big role in the culture of an organization and its business outcomes. “It is of course necessary to have engaged employees,” she says. “It is, however, not sufficient.”


Bassi adds that it is dangerous to apply a one-size-fits-all model of engagement and its causes to organizations. For example, it may turn out that engaging the employees of two similar retail banks requires very different strategies, she says. One bank may need to focus on the quality of feedback from supervisors, while the other—which is more mature in its performance management practices—should concentrate on professional development opportunities to fire up workers.


Theresa Welbourne, a business consultant and researcher at the Center for Effective Organizations at the University of Southern California, says improving the engagement scores of a certain class of employees is actually counterproductive. There are “entitled” workers who are satisfied on the job and feel very valued but perform poorly, she says. Increasing their engagement scores through traditional means such as extra rewards will work against them changing their work habits, she argues. “All you’re doing is reinforcing the status quo,” she says.


Welbourne’s consulting firm, eePulse, offers a version of an engagement survey that also measures employees’ level of “urgency,” which she says is a crucial factor in performance.


Dave Logan, co-author of Tribal Leadership, a book about successful work cultures, says companies set their sights too low by obsessing over engagement. At the most advanced organizations, employees feel “alive,” Logan says.


“Engagement is a bit of a remedial variable,” he says. “There are some cultures that go way beyond engagement.”

Posted on November 23, 2009August 3, 2023

The Rueff Truth on ‘Abusive’ Employers and the Talent Flight Ahead

 

By and large, HR consulting firms have stepped lightly around the issue of how well their corporate clients have cut costs and employees during the past year. It’s rare to hear outright criticism that businesses botched the job.

But Rusty Rueff doesn’t mince words on the subject. Rueff, the former head of HR at video game giant Electronic Arts and now a board member of workplace feedback site Glassdoor.com, remains appalled that so many firms chopped workers between the Thanksgiving and Christmas holidays last year.

“You just don’t do that,” he says.

What’s more, some companies made “cosmetic cuts” designed to please Wall Street with little sense of whether they were appropriate, Rueff says.

Rueff, who also served as CEO of digital music distributor Snocap and worked in HR at Frito-Lay, isn’t a stranger to layoffs. Nor is he opposed to them. But he thinks companies should try to do them once, and cut deeply enough so that no others are needed.

Last year, the initial cuts companies made often were 7 percent or less of the workforce, Rueff says. As a result, firms often required another round or more of layoffs later on, he says. In addition, some leaders have taken advantage of the fact that employees have had few job options during the downturn, Rueff argues.

At some firms, an “abusive” relationship has taken shape, Rueff argues, with employers the guilty party.

“They’ve been callous,” he says. “They’ve been insensitive.”

Rueff and I butted heads some when I reported about overtime concerns in the game industry several years ago. And I’m inclined to think many companies could have gotten through the recession with minimal or no layoffs, partly through furloughs and other methods to trim expenses.

But I appreciate Rueff’s refreshing candor on the question of job cuts. There’s a fair amount of evidence that employees, including top performers, have felt mistreated or let down by their employers over the past year.

A recent survey of 500 U.S. employees from consulting firms APCO Worldwide and Gagen MacDonald found that more than 80 percent of respondents say they are extremely loyal to their company and personally motivated to do all they can to help their companies succeed. But less than half of employees say they completely agree with the statements “My company is loyal to me” and “My company values its employees.”

And many workers say they are ready to bolt. Sixty percent of employees intend to leave their firms as the economy improves next year, and an additional 27 percent are networking or have updated their résumés, according to a recent survey of 904 workers in North America by advisory firm Right Management.

Rueff likens the situation to how an abused spouse may stick with a partner as long as there is no financial alternative. The minute they see light at the end of the tunnel, they’re gone, Rueff says.

“We will definitely see people pick up and start to go,” he says.

Posted on October 28, 2009October 28, 2020

Special Report on HR TechnologyTalent Planning for the Times

Last year’s sudden financial crisis and the massive layoffs that came in its wake beg a question: Is workforce planning possible in any meaningful way?

It is, say firms that sell workforce planning software. Vendors such as Vemo, Infohrm and HumanConcepts pitch products designed to help companies prepare for the future of their workforces.

The tools, which tend to focus on either short-range or long-term planning, aren’t perfect. Over-reliance on data-crunching software can cause companies to lose sight of intangibles that are crucial to a company’s culture, for example. And as the recession demonstrates, business predictions are highly fallible.

But workforce management software is selling at a brisk pace. That’s partly because of a recession that took much of the world by surprise, vendors say. They argue that many firms responded to the downturn with crude people cuts that cost them key talent or handicapped their growth. Wisely implemented, workforce planning tools promise to help organizations handle variable business demand, says Brian Kelly, president of Infohrm for North America.

“We can’t predict economic downturns,” he says. “What we can do is help organizations manage through good and bad times.”

Planning strategies
Workforce planning software refers to applications that allow companies to forecast the number and kind of employees they will need at some point in the future. A cousin to succession management, which focuses on specific positions in a firm, workforce planning tends to home in on key job families or skills that will be required. In many cases, the tools let firms experiment with different scenarios, examining what workforce costs or risks may result from taking steps such as entering a new geographical market or eliminating a business unit.

 


“Having access to as much data as possible and being the owner of the data is a good thing toward achieving the goals of workforce planning.”
—Lisa Rowan, IDC


 

Vendors of workforce management software tend to fall into two categories. The first is short-term or operational workforce planning, meaning preparing for changes within months—such as a restructuring or merger.

HumanConcepts, Aquire and Nakisa offer products in this category, and each has a background in making tools for representing a firm’s employees graphically in organization charts.

Then there are longer-term, strategic workforce planning software providers. Their products are designed to help envision the workforce as far out as three to five years. Vendors involved with long-term planning include business software giant SAP, Aruspex, Vemo and Infohrm.

The amount of spending on workforce planning software is difficult to pin down. Workforce planning applications represent a nascent market, says Lisa Rowan, analyst with market research firm IDC.

“The vendor offerings probably address some but maybe not all of the eventual components,” Rowan says. Long-term planning is missing in most organizations, according to a recent report from research firm Bersin & Associates. In its March report, Bersin said 92 percent of companies have some level of workforce planning, but only 21 percent “take a strategic, long-term approach to addressing the talent demand, talent supply and the actions necessary to close the gap between the two.”

Bersin analyst Madeline Laurano wrote that organizations are, in effect, “bingeing on talent” when times are good and “purging talent” when times are tough. The approach is both costly and hurts the stability of the workforce, Laurano wrote.

“Looking for a more stable path, many organizations are now seriously thinking about workforce planning as a foundation for both a short-term fix and a long-term strategy,” she wrote.

Random cutbacks
Growing interest in workforce planning has to do with the way organizations have focused on their talent in the past couple years, says Cassie Barajas, chief performance officer at consulting firm Knowledge Infusion. Firms have worked harder to identify and retain key performers, she says.

“What we’re seeing right now is the importance of understanding who the workforce is,” she says.

That understanding is limited at the moment, according to a recent survey conducted by Knowledge Infusion and the International Association for Human Resources Information Management, a professional group. Just 48 percent of respondents said their company has necessary workforce data readily available to make immediate workforce decisions such as layoffs.

The figure suggests that much of the workforce cutting during the past year or so was less than thoughtful. Talented people were cut and companies sometimes slashed more than necessary, says Martin Sacks, chief executive of Bay Area-based HumanConcepts. Many laid-off employees eventually were hired back, and the net cost of the cutbacks was higher than it needed to be in many firms, Sacks says.

A sub-optimal experience with layoffs is a major reason firms are turning to workforce planning applications, he says. “Everyone’s coming out of the recession with a bad taste in their mouth, saying, ‘Wow, I don’t want to go through that again.’ ”

They appear to be putting their money where their mouths are. In late September, Sacks said HumanConcepts’ revenue for the three-month period of July through September was growing at a double-digit rate year over year, putting the company on track for its largest quarter ever in terms of sales.

It’s a similar story at New York-based Vemo, which has 20 employees and whose clients include Toronto-based media firm Rogers Communications, Atlanta utility firm Southern Co. and retail giant Sears. Vemo’s revenue doubled in 2008 and is on pace to double or triple this year, says chief executive Peter Louch.

 


Firms may want to categorize their positions into strategic roles. “The big thing here is that you are talking about work activities—roles—and not people.”
—Peter Louch. Vemo


 

San Francisco-based Aruspex also expects revenue to double this year. The 25-person firm, with clients including coffee chain Starbucks and insurance provider Aetna, raised nearly $4 million in financing last year. Aruspex CEO Howard Koenig says the firm might take in additional funding to fuel its growth. Already, investors appear to be champing at the bit. Koenig gets about a call a week from venture capitalists interested in his firm, he says.

There’s increased market awareness of workforce planning, says David Ludlow, SAP vice president of solution management for its HR software suite. SAP sells a joint product with software maker Nakisa. SAP also says clients can tackle workforce planning by combining different SAP products such as its core human resources management system and business intelligence analytical software.

Workforce planning is “potentially one of the next big things, like talent management has been,” Ludlow says.

Scanning the workforce landscape
One of the keys to long-term workforce planning is an “environmental scan.” That refers to considering the range of external factors that may affect a firm’s supply and demand for talent, such as regulatory, political or business trends.

Koenig says that in the energy sector, firms have to take into account the price of oil when predicting retirements. That’s because stock prices of employers are linked to oil prices, and at a certain price per barrel, older employees with significant stock holdings can be expected to exit their firms.

Once organizations figure out what data sources to include in their planning calculations and how to weight different factors, they typically lay out a number of scenarios and segment their talent. Vemo’s Louch says firms may want to categorize their positions into strategic roles critical for a long-term advantage; key roles crucial to short-term results; core roles that are marginally important to business priorities but are nonetheless necessary; and non-core roles that may represent places to cut or make more efficient.

 


There’s an increased market awareness of workforce planning. It is “potentially one of the next big things, like talent management has been.”
—David Ludlow, SAP


 

“It’s kind of like marketing,” Louch says, referring to the way firms cluster customers into different groups and plan marketing strategies accordingly.

Workforce planning strategies might look strange at first glance. Infohrm’s Kelly gives the example of an insurance firm that wants to trim its staff of $100,000-per-year underwriters to save costs, but wants to do so without threatening future growth.

By examining data on the performance and career paths of existing underwriters, Kelly says, an organization might learn that its best underwriters rise from the ranks of its own call center managers, who make $50,000 a year. Such internal promotions also save tens of thousands of dollars per underwriter in recruiting fees.

An optimal choice might be to cut underwriters now but load up on call center managers and actively shepherd them into the underwriting role over time.

At Greater Baltimore Medical Center, the main challenge in recent years has been retaining nurses. The 340-bed hospital experienced 18 percent turnover among bedside nurses a few years ago, says Mark Thomas, Greater Baltimore’s vice president of human resources and organizational development. That contributed to nursing shortages and the need to spend more than $6 million annually for pricey staffing agency nurses.

 


Workforce planning strategies should not remain static. “We’re constantly tweaking those plans. Don’t think that it’s a ‘once and done’ type of activity.”
—Nick Nyhus, Ameriprise


 

With the help of Infohrm’s consulting and technology, the hospital noticed particularly high turnover among new nurses. So it upgraded the onboarding process with better-trained coaches and the use of cohorts for new nurse graduates, which can create a sense of community. Partly as a result of these efforts, overall turnover among the hospital’s 1,100 bedside nurses has dropped to 13 percent, and spending on temporary nurses has fallen to “well under” $2 million, Thomas says.

An advantage of working with Infohrm, Thomas says, is that the vendor has taught his team how to do workforce planning largely on its own. Next up for the hospital is a project to apply workforce planning to its growing hospice unit. “We’ll be doing most of the work,” Thomas says.

Niche firm or big company?
Companies looking to buy a workforce planning application face a familiar issue: Should they go with a specialist or tap a more comprehensive business software provider? SAP’s Ludlow argues that his firm has an advantage when it comes to building sound workforce planning tools, because its software can tie directly into HRMS systems and other key applications, such as business planning software.

IDC’s Rowan says SAP has a point. “Having access to as much data as possible and being the owner of the data is a good thing toward achieving the goals of workforce planning,” she says. Rowan adds that time-and-attendance and scheduling information is important, especially for an hourly workforce. “Being able to visit historical staffing trends is needed.”

Niche providers counter that their systems can be configured to gather a wide range of data, including external sources such as Department of Labor information.

Another challenge related to workforce planning tools is trying to capture and preserve the positive facets of a firm’s culture. Simply focusing on key jobs or critical skills can blind a company to crucial factors, such as firmwide values, that ultimately translate into business success.

Vemo’s Louch, though, says it’s possible to account for the importance of cultural fit in different roles by considering performance review data, if those reviews assess workers partly on how well they embody corporate values.

Louch says it’s generally easier to launch a workforce planning initiative in an individual-oriented, quantitative culture. But, he suggests, workforce segmentation also can be done in an organization that is by nature more group- oriented.

“The big thing here is that you are talking about work activities—roles—and not people,” Louch says. “So even in egalitarian cultures, you may acknowledge that certain work activities drive greater immediate or long-term value for an organization.”

Then there’s the question of the overall power—or limitations—of workforce planning products. HumanConcepts’ Sacks says frequent use of his firm’s tool can help organizations avoid drastic cuts during tough times. Continually updating a firm’s talent structure to fit with business realities and goals, he says, is akin to driving a car with incremental turns of the steering wheel rather than a sudden swerve.

“You make lots of little changes as opposed to a big one,” he says.

That captures the philosophy at financial services firm Ameriprise Financial. The company, with about 11,000 employees, uses software from Infohrm to create workforce plans looking two to three years out. But those strategies are not static, says Nick Nyhus, vice president of talent management at Ameriprise.

“We’re constantly tweaking those plans,” Nyhus says. “Don’t think that it’s a ‘once and done’ type of activity.” Nyhus says workforce planning software helped as Ameriprise downsized during the recession, affecting approximately 300 positions. The company was able to get data quickly on matters such as how long positions had been open, which indicates talent scarcity, and average tenure in positions, which gave a sense of institutional knowledge at risk. The software saved Ameriprise weeks of data analysis, Nyhus estimates.

Still, there’s a danger in leaning too heavily on software that all but implies users have a high-tech crystal ball. Aruspex CEO Koenig suggests even the best tools rely on people plugging in sobering scenarios.

That was largely missing in the latest recession, with its abrupt drop.

“Everybody was so bullish and drunk on growth they didn’t model this scenario,” he says.

Workforce Management, October 19, 2009, p. 37-43 — Subscribe Now!

Posted on October 28, 2009June 27, 2018

Aussies Early to Workforce Planning Game

The workforce planning software that companies are gobbling up has strong roots in the land Down Under.


Two of the vendors selling long-range workforce planning applications—Aruspex and Infohrm—were started by Aussies. And, observers suggest, Australian organizations have been ahead of the curve when it comes to using workforce planning tools.


Australians’ early arrival to the workforce planning party has to do with labor market conditions that led to low unemployment, says Stacy Chapman, an Australian native who co-founded software firm Aruspex several years ago.


“Australia faces a few serious demographic challenges—low birthrates since the 1970s, and a remote island, so almost no illegal immigration—plus a history of very tightly controlled skilled migration,” Chapman says. “It is these low unemployment rates and an aging population which have made planning a priority.”


Aruspex is headquartered in San Francisco, but software development is done in Melbourne. The other workforce planning software company with Australian origins, Infohrm, is headed by CEO Peter Howes, who was on the academic staff at Queensland University of Technology in Australia and formed a precursor to the firm in 1982. Infohrm has operations in Australia, the U.K. and the U.S.


Australian federal government agencies were prompted to consider the future of their workforces some time ago, thanks partly to government policy that encouraged public-sector employees to retire at 54 years and 11 months of age, says Jaye Tanner, a consultant at Infohrm. Tanner, who served in the Australian departments of immigration and employment workplace relations earlier this decade, says Australians were attuned to the issue of the aging workforce by the 1990s. That’s earlier than most Americans or Europeans began focusing on the graying of the workforce and possible labor crunches.


“People were aware of workforce-labor issues,” she says. “Australians probably had to do that earlier on.”


Even recently, Australia has faced relatively tight labor markets. Australia’s unemployment rate was 5.5 percent in August, compared with a 9.6 percent rate in the U.S., according to the Organization for Economic Cooperation and Development research group.


Workforce Management, October, 2009, p. 40 — Subscribe Now!

Posted on September 25, 2009August 31, 2018

Zappos’ 10 Core Values

Zappos calls its culture its biggest asset, and the firm manages as if it means it. About 50 percent of an employee’s performance review is based on how well he or she embodies the 10 values:


• Deliver WOW through service.


• Embrace and drive change.


• Create fun and a little weirdness.


• Be adventurous, creative and open-minded.


• Pursue growth and learning.


• Build open and honest relationships with communication.


• Build a positive team and family spirit.


• Do more with less.


• Be passionate and determined.


• Be humble.

Workforce Management, September 14, p. 20 — Subscribe Now!

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