Softscape Whitepaper: Aligning Goals, Strategy And Performance

WHITE PAPER

Aligning Goals, Strategy, and Performance Leveraging Web-Based Human Capital Management Systems to Optimize Organizational Performance That Impacts the Bottom Line A Softscape White Paper June 2008

Organizational Challenges In practice, no organization would argue that they did not want to optimize organizational performance. Yet to turn rhetorical commentary into action requires organizational savvy, political influence, technology, and strong marketing. After all, it is ultimately the people that define the success of an initiative; without their cooperation and incentive to participate, even the best defined plans never make it off the drawing board. It is the art of leadership to define, motivate, and make operational the methods required to drive individuals and organizations to perform. The great inhibitor is the leader’s inability to communicate and manage expectations, which leads to distorted perceptions of the expectations in the first place. To gain competitive advantage, organizational leadership must optimize their infrastructures to communicate and support strategic information relating to human resources (HR) and its operational relationships. Companies must communicate priorities to employees faster and be able to make changes more rapidly in order to achieve operational excellence and compete in a rapidly changing business environment. However, companies are consistently faced with the dual challenge of cutting administrative costs while increasing overall organizational effectiveness. The bottom line is to achieve more with less. To do so, companies need to align their employees’ efforts with top business objectives. For HR executives, these challenges are compounded by a lack of technology infrastructure to eliminate inefficient paper-based processes, centralize employee competency data, and maintain a clear picture of how employee effectiveness impacts the organization. To make matters worse, HR executives and HR technology continue to struggle to be viewed as strategic within an organization. Global mandates are making it imperative that HR executives are in a position to assume a completely new set of tasks. These include leveraging the HR function to optimize and disseminate the corporate vision and directly increase shareholder value.

Strategic Opportunity Human Capital Management (HCM) is about nurturing and protecting an organization’s most important assets, its people. HCM is the term used to describe the business processes and technology that aligns people

management initiatives with business outcomes. HCM plays a strategic role in achieving corporate goals through a set of applications and processes that enable companies to better measure, manage, and optimize employee performance. HCM combines transaction processing with analysis to drive improved decision-making at the enterprise level. According to Watson Wyatt, “superior human capital practices are also a lead indicator of good financial outcomes.” Watson Wyatt’s research, which spans over four years and includes interviews with over 750 companies, found a direct link between best human capital practices and business performance.

Solution Requirements An organization’s ability to differentiate itself from its competitors relies on its ability to foster growth and innovation to achieve and sustain a strong competitive position. This requires integrating employee processes and information with business processes and strategies to achieve optimal business results. An ideal HCM solution should include the following components: •

Visually representing strategy and turning it into action

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Monitoring performance of key success factors using external and internal benchmarks

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Communicating goals throughout virtual, inter-enterprise teams

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Quickly adjusting strategy to respond to market changes

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Analyzing and optimizing performance with a unified business model

The key to a successful HCM solution requires recognition and implementation of an end-to-end

“Superior human capital practices are also a lead indicator of good financial outcomes.”

methodology that touches every aspect of the employee lifecycle including:

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Hiring

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Developing

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Performance

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Learning

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Collaboration

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Strategizing

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Reporting

According to Forrester Research, companies should avoid disconnected applications that may optimize individual tasks, but sub-optimize the overall employee management process. To prevent standalone HR applications from proliferating, organizations should build a HR technology backbone that enables information flow across a common infrastructure.

Components of An Effective HCM Suite HCM solutions are critical for every manager in the company – not just the HR department. A fully integrated HCM system encompassing performance management aligned with cascading goals, competencies, learning management, career development, incentive management, and succession planning can enable organizations to increase performance while more effectively managing talent resources and strategic planning. A fully integrated HCM system includes: •

Workforce Planning: Plans, schedules, budgets, tracks, and allocates employee resources

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Talent Acquisition: Streamlines the entire hiring lifecycle from requisition to candidate selection

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Succession Planning: Identifies, prepares, and tracks high potential employees for promotion

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Compensation Planning: Simplifies planning, modeling, budgeting, and analysis of compensation policies

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Incentive Compensation: Motivates employees and manages financial rewards within an organization

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Workforce Performance: Optimizes performance management processes and aligns employee development and goals with corporate objectives

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Learning & Development: Automates and manages employee learning and growth

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360 Feedback: Automates the entire 360 coaching and personnel development process

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Survey Management: Administers and distributes survey-based information across the organization

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Workforce Management: Tracks employee expenses and manages employee time and attendance

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HR Management: Centralizes, consolidates, and integrates HR information

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Workforce Analytics: Provides analysis of workforce metrics and key performance indicators

HCM systems help managers keep their employees focused while improving performance and steering the organization towards its overall corporate goals.

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Before hire planning, sourcing, or scheduling begins, companies must establish strategic objectives and operational goals to make sure that employees are completing tasks that maximize corporate performance.

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Cascade corporate goals across the enterprise to provide a mechanism to relevantly relay corporate goals and strategic objectives to each employee, enabling them to clearly understand how their efforts contribute to the success of the enterprise.

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Performance management aligns operational and individual goals – and then links development, training, and incentives to help employees meet those goals.

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Bind training to task-based competencies and integrating training with day-to-day operational jobs.

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Align company and individual measurements to regularly connect employee performance with real-world job requirements.

Cascading Effects Improving the performance of each individual in a department, business unit, or division inevitably impacts the performance of the organization as a whole. It is a cascading effect that impacts the bottom line and increases shareholder value. For most companies, the initial need to automate the performance management process is simply to eliminate a current inefficient paper-based process or reduce administration costs. For highly successful companies, on the other hand, it is a means to elevate the effectiveness of the organization on the whole and align individual goals with business outcomes. Successful enterprise-wide performance management depends on alignment between individual goals and overall corporate strategy. By further aligning corporate strategy with individual goals, every employee will understand how their efforts contribute to the success of the enterprise.

HCM System Requirements An effective HCM solution should meet the following system requirements:

Fully Integrated HCM solutions should offer both the breadth and depth of functionality, while being fully integrated on a single platform. At the same time, a fully integrated system from a single vendor is a key to success, which in turn avoids the challenges of interfacing with multiple vendors and multiple system integrations.

Rapid Deployment Rapid deployment means implementation that takes weeks, not months or years. HR departments can not afford the time to dedicate, let alone wait, 18 months to implement a system. Successful implementation can range anywhere from 6-18 weeks.

Highly Configurable HCM systems should be able to configure – not customize – to existing processes, workflows, and user interfaces.

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“If you measure it, you can understand it. If you understand it, you can improve it.” - Watson Wyatt

Scalable HCM solutions should be scalable to any size organization, and maintain high performance even with 500,000 concurrent users.

Role-based An HCM system must be role-based in order to support workflow responsibilities and executive reporting, including separate workflows for job type, department, or division.

Hosted or Local Installation Organizations may want to consider a hosted solution that would allow the flexibility of faster deployment and fully independent from IT involvement or support. Or, if they prefer, organizations should be given the choice to implement on-premise.

Intuitive The system should be intuitive to users and very easy to use. If employees find the system too complicated or cumbersome, user adoption becomes a very real issue.

Open Standards The system must be based on open standards, and have the flexibility to interface with existing HR systems or ERP applications. In addition, learning content must be AICC, ADL SCORM, IMS and IEEE standards compliant.

Comprehensive Analytics & Reporting The system should offer robust ad-hoc and delivered reporting that captures both individual details as well as at the department, division, or enterprise-wide.

Rollout Best Practices Successful implementations always start with clear communications with all employees as to the purpose of the implementation, how they will benefit, and how to best use the new system. Additional considerations include: •

Clearly Defined Roles & Responsibilities (Project Team & Vendor)

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Outline Major Milestones & Implementation Dates

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Define Measurements for Success

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Outline Barriers to Success & How to Overcome Them

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Provide End User Introduction Guides & Support

Measurable Results There is a phrase proliferating within the HR industry: “If you measure it, you can understand it. If you understand it, you can improve it.” According to a Watson Wyatt survey of more than 750 international companies, organizations that show a significant improvement in 43 HCM best practices can expect to achieve a 47-percent increase in shareholder value. HCM best practices are the proof that employees are the important assets that boosts shareholder value. Successful organizations that develop employee skill sets and align employee contributions to corporate goals are leading this trend.

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For a large manufacturing company that implemented a Softscape HCM solution, the impact was immediate and measurable. An ROI of $228,000 was achieved within the first year across a 6,000 employee division. That ROI quantifies into an annual savings every year. The results also enable employees and managers to clearly map individual goals aligned with corporate objectives, from corporate headquarters to the manufacturing floor. For a large healthcare organization, the benefits of the HCM solution were more integrated with daily operations. Supervisors can now focus on being high-end value contributors – something every company can benefit from. In addition, performance is now aligned with learning and employees see the company’s commitment to them. Executives now have a better understanding of the organization’s effectiveness at the business unit level and as a whole with consistent performance information.

For a large financial services organization, the resulting HCM system creates what they call a “Culture of Excellence” focused on staff development. The company now leverages common goals across all business units, and learning objectives are now aligned with corporate and individual goals. This led the company to exceed their fiscal year end financial goals.

Conclusion The ultimate goal of an HCM solution is to align business strategy with employee goals and performance that drives growth, enhances corporate culture, and improves organizational effectiveness. These very attainable results are further validated by the research of such analysts as Forrester Research and Watson Wyatt that both find a direct link with human capital best practices and overall organizational performance.

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Authored By Christopher Faust, Executive Vice President Global Strategy, Softscape For more information, contact [email protected]

About Softscape Softscape is the global leader in integrated people management software that enables organizations to more effectively drive their business performance. Recognized by industry analysts as the most comprehensive strategic human capital management (HCM) solution, Softscape provides complete employee lifecycle management, including a core system of record, in a single, integrated platform for improved business intelligence. The company offers customers of all sizes and in all industries the most flexibility and choice with multiple purchase, configuration, and deployment options. For more than a decade, Softscape has helped millions of workers across 156 countries be more successful at their jobs while contributing to bottom-line results. Softscape’s customers represent Fortune 500/Global 2000, mid-market, and government organizations, including Procter & Gamble, Barclays, AstraZeneca, Seagate, GKN, Edcon, LandAmerica, and the U.S. Department of Homeland Security. Softscape is based in Massachusetts with offices in London, Sydney, New York City, Chicago, San Francisco, Hartford, Washington, D.C., Bangkok, Hong Kong, and Johannesburg. www.softscape.com Copyright © 2008. All Rights Reserved. Reproduction without written permission is strictly prohibited. The Softscape logos and referenced products are either trademarks or registered trademarks of Softscape, Inc. All other brand and product names may be trademarks or registered trademarks of their respective holders. 08_0625ls

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