Is Disjointed Data Blurring Your View of Who to Retain or Fire?

5 Steps to Gaining Application Clarity and Better Decision-Making

Expert Advice from Paul D. Hamerman, Nora Costa and Nick Camelio
March 26, 2009

Agenda
Introduction: Our Team of Experts

The Situation
The HR Dilemma Common Pitfalls and Causes 5 Steps to Fixing the Problem Getting Executive Buy-In

Introduction
Salary.com presents the HR Dilemma Series

Fictional cases that present common managerial

dilemmas ...and, Offer concrete solutions from experts on how to
resolve them

Our Experts

Paul Hamerman Forrester Research

Nora Costa Iron Mountain

Nick Camelio Salary.com

Leading industry analyst at Forrester with nine years of experience specific to business technology, evaluating: software vendor mergers and acquisitions, next-generation architectures, industry-specific strategies, & packaged application deployment models (including software-as-a-service). Expertise: Enterprise Applications

Director of compensation at Iron Mountain, with over 25 years of experience as a business & practice leader in corporate HR, with proficiency in market pricing and skill- or competencybased salary structure design. Industries include business services, higher education, financial services, healthcare, and software. Expertise: Compensation Management

Vice President of Human Resources and Talent Development at Salary.com, with over 16 years of experience providing HR leadership to technology companies specifically in recruiting, compensation and benefits, learning and development, and employee retention. Expertise: Strategic HR Functions

The Situation: Drastic Loss in Jobs

2008 US Job Losses Totaled 3 Million

Entire contents 2008 Forrester Research, Inc. All rights reserved.

Source: Current Employment Statistics Highlights, Bureau of Labor Statistics, March 6, 2009 (http://www.bls.gov/web/ceshighlights.pdf)

The Spotlight on HR
Rising unemployment levels shine spotlight on HR

Personnel costs represent 35% of total operating expenses, on average.*

RIFs, hiring freezes, deferred raises, and bonus cuts are cost cutting measures in play.

Companies need to know:

Who to retain top performers and scarce talent. Which positions are variable for capacity management.

Entire contents 2008 Forrester Research, Inc. All rights reserved.

* Source: PricewaterhouseCoopers Saratoga

Most Companies Dont Know Which Employees to Retain, Promote, or Fire

Q: We objectively know which employees we need to retain, which employees we want to promote, and which employees we want to manage out of the organization.
Importance
Not at all Below average Average Above average Extremely Don't know/NA
3% 0% 9% 12%

Capability
Poor Below average Average
37%
39% 3%

23%
34%

Above average Outstanding Don't know/NA

2% 9%

29%

Base: 100 HR decision-makers

Entire contents 2008 Forrester Research, Inc. All rights reserved.

Source: July 2008 Global Talent Management Best Practices Online Survey

The Acme Company

Leading Pharmaceutical Provider 2,500 FTE 3 Global Offices (UK, Singapore, Tokyo) 15 US offices Annual compensation budget is roughly $250 million 15 Product Lines in US and 10 in Europe/Asia

Our Cast of Characters

Claire, VP of HR at Acme Co.
Seasoned HR veteran with over 15 years of experience. Responsible for US and global HR operations for 2,500 FTE company. Has Team of 20 People. Working on consolidating two operating divisions via acquisitions; manages multiple homegrown and packaged point solutions.

Mark, CFO at Acme Co.

Fiscally conservative CFO. Responsible for HR, Legal and Finance operations. Believes strong balance sheet is crucial to companys health. Believes in paying for results and strategic use of technology to improve business operations. Investing in sales initiatives to drive top-line sales growth inside US.

March 2008: Strategic Planning

Mark and Claire review corporate objectives and set budget: Aggressively recruit in new sales positions in US

Integrate 2 new acquisitions and critical sales positions in US

Implement aggressive pay-for-performance plan across globe Build pipeline of strong leaders for key positions Manage to specific cash flow targets per quarter

Business Environment Changes Underneath Strategic Plan

Tracking to goals

Market Collapses

The New Corporate Objectives

Mark, CFO walks into Claires office: Implement hiring freeze and reduce payroll by 15%

Must maintain high level of customer service, and...

Stay competitive in our key focal areas Craft a plan to execute in next 30 days

The Patch Process

Claires team scrambles to craft the plan and reviews that data she has to work with:
3 HRMS systems for headcount, positions and salaries Excel-based submissions for remaining domestic offices Multiple performance input across company Performance ratings, potentials but no historical data Paper-based job descriptions, development plans with no competency data

Aggregating Disparate Systems

Compiling Org Charts
Performance Reviews

Multiple HRMS directories

Claires HR Dilemma & Opportunity

Claire must pull together a recommended methodology and list:
No standard core system of record;
Has to make over 5 phone calls to pull data requests across IT, Legal Compliances, HRMS directories, performance histories, learning updates & finance Team works overtime to aggregate, organize and validate data. Lack of executive awareness - most executives dont realize they lack the ability and systems to pull the information together

How can she pull it all together so executive leadership can focus on the best methodology and process, ensuring they make the best talent decisions to achieve their business goals?

The Challenge: What Should Claire Do?

Expert Commentary

Paul D. Hamerman
Causes and Pitfalls Multiple core HRMS solutions, lack of global HR data
Outdated HRMS core system with manual processes Processes optimized around payroll, not HR Numerous best-of-breed solutions

Nora Costa
The pain of patching together a view
Turning the executive dilemma into an aha moment Window of opportunity to educate and pitch to senior management and coordinate a plan that saves time and money

Nick Camelio
Administrative burden, time to patch vs. the focus on
strategic decisions Pre and post reduction

How does unified data help through the

aftermath?

Build Case for HR ROI

5 Things You Can Do:
1. Go to CFO with business case
2. Calculate the cost of disjointed data # of man-hours to pull/aggregate across functions Impact of redeploying resources on strategic talent decisions # of people and vendors to manage

3. Calculate the cost of multiple systems and vendors

Cost to operate internally vs. leveraging SaaS options

Build Case for HR ROI continued

4. Quantify the impact of deploying best practices on CFOmetrics:
Revenue per employee and net income per employee Reduction in operating expenses vendor consolidation, (SaaS) Improvement in reporting Lower employee turnover and replacement costs (time, $) 5. Develop a coordinated HR Applications Roadmap and ROI

Total Economic ImpactTM (TEI) Framework for HRM Applications Strategy

Entire contents 2008 Forrester Research, Inc. All rights reserved.

Source: December 19, 2008, Building Your HRM Applications Strategy Forrester report

HR Strategy & Roadmap Steps

1. Develop a comprehensive HRM application strategy and business case. Anchor this strategy to business drivers. 2. Build around a core system of record and integration strategy. Put in place a master data management strategy for people. 3. Supplement the core HRMS with best-of-breed solutions where appropriate. 4. Consider SaaS deployments to minimize upgrade headaches.
Entire contents 2008 Forrester Research, Inc. All rights reserved.

5 Steps to HR Roadmap
1.
2. 3.

Assess/inventory the applications

Analyze alternatives Determine target architecture

4.
5.

Build roadmap
Develop a business case for executives

Entire contents 2008 Forrester Research, Inc. All rights reserved.

Forresters 5-Stage HRM Applications Strategy Methodology

Entire contents 2008 Forrester Research, Inc. All rights reserved.

Source: December 19, 2008, Building Your HRM Applications Strategy Forrester report

No.1: Assess Apps and Processes

Review HRM and business strategies.
Assess current apps and technology environment. Assess process capabilities.

Determine gaps.

Entire contents 2008 Forrester Research, Inc. All rights reserved.

Illustration: Succession Planning Assessment Questions and Scoring Method

Entire contents 2008 Forrester Research, Inc. All rights reserved.

Source: August 1, 2008, Improve Strategic HCM Processes And Technologies Forrester report

No.2: Analyze Alternatives

Categorize application needs into retain, add,
replace, and enhance (RARE) buckets. Determine candidate suppliers.

Evaluate deployment alternatives.

Entire contents 2008 Forrester Research, Inc. All rights reserved.

Retain, Add, Replace, Enhance (RARE)

Entire contents 2008 Forrester Research, Inc. All rights reserved.

Source: December 19, 2008, Building Your HRM Applications Strategy Forrester report

No.3: Determine Target Architecture

Articulate the vision for HRM processes and

technology.
Define functional architecture. Identify technology characteristics and deployment methods. Map integration and data management strategy. Define reporting and analytics standards.
Entire contents 2008 Forrester Research, Inc. All rights reserved.

HRM Apps Functional Architecture

Entire contents 2008 Forrester Research, Inc. All rights reserved.

Source: December 19, 2008, Building Your HRM Applications Strategy Forrester report

No.4: Build a Roadmap

Define apps and process priorities.
Determine project dependencies and timeframes. Define the strategic apps road map.

Entire contents 2008 Forrester Research, Inc. All rights reserved.

Apps Roadmap Illustration

Entire contents 2008 Forrester Research, Inc. All rights reserved.

Source: December 19, 2008, Building Your HRM Applications Strategy Forrester report

No.5: Develop a Business Case

Determine acquisition and implementation costs.
Estimate on-going ownership costs. Estimate benefits.

Assess risks and flexibility.

Calculate Total Economic Impact (TEI). Package results for executive approval.

Entire contents 2008 Forrester Research, Inc. All rights reserved.

Building the ROI Business Case

Use a five- to 10-year time horizon. Understand the usage metrics
number of users, frequency and intensity of use.

Model SaaS costs against on-premise deployment, taking into account the full costs of on-premise upgrades, maintenance fees, internal support, and hardware. Adjust for inflationary increases and the time value of money. Factor in risks, time-to-value, and flexibility. Faster deployment and lower up-front costs with SaaS Higher implementation and obsolescence risk with on premise Flexibility depends on specific solution characteristics
Entire contents 2008 Forrester Research, Inc. All rights reserved.

Total Economic ImpactTM (TEI) Framework for HRM Applications Strategy

Entire contents 2008 Forrester Research, Inc. All rights reserved.

Source: December 19, 2008, Building Your HRM Applications Strategy Forrester report

Thank You for Attending Questions?

If we do not answer your question during the live event, please feel free to send any questions to Alison Kelly: akelly@salary.com, with the name of the speaker your question is for, and we will be happy to get back to you!