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10 Ways to Prepare Human Capital
Management for a
New Era of Growth
The Foundation for Modern HR in the Cloud
2
After five years of belt tightening and restructuring,
companies around the globe are looking ahead to a
period of growth. With it will come a new set of
challenges for human capital management (HCM).
Organizations define their customer experience strategies as an effort designed to earn
their clients over and over again. Competition for talent will increase, skills shortages will
worsen, and social recruiting tools will make it easier than ever for workers to change
jobs. Organizations need talented workers—motivated, knowledgeable, high-performing
employees—in order to thrive. That has always been true, but never more so than now,
as many CEOs view their workforce as the big differentiator in today’s highly
competitive business environment. After all, the winning products and services that
make a company successful in the marketplace are the direct result of employees’
knowledge, skills, and capabilities. To maintain that success, HR should be doing
everything possible to retain every employee possible.
In this talent-centric corporate landscape, modern HR needs to refocus its strategies
around the employee experience to address the business needs. With that in mind, HR
leaders need to ask themselves whether they are paying enough attention to prepare
HR for the new era of growth in 2014.
Here are 10 ways HR leaders can form the foundation for modern HR:
1. Write a playbook for managing talent.
Strategize to overcome chronic labor market imbalances.
McKinsey projects a shortage of 30 million to 40 million college-educated workers by
2020.1 Already, looming capability gaps in computer science, life sciences, mathematics,
physical sciences, and engineering fields are keeping top executives up at night.
In its Annual Global CEO Survey for 2014, PwC recently found that 63 percent of CEOs
are concerned about the availability of key skills.2 Even before baby boomers begin to
retire in large numbers, human capital shortages have become Priority #1.3 According
1 McKinsey & Company, “The World at Work: Jobs, Pay, and Skills for 3.5 Billion People,” Richard Dobbs, Anu
Madgavkar, Dominic Barton, Eric Labaye, James Manyika, Charles Roxburgh, Susan Lund, and Siddarth Madhav, June 2012. 2 PwC, “17th Annual Global CEO Survey,” 2014. 3 Bersin by Deloitte, “Predictions for 2014,” Josh Bersin, December 2013.
THE FOUNDATION OF MODERN HR
Write a playbook for managing talent.
Know your employees as well as your
customers.
Hire “scary” people in HR.
Differentiate through a personalized
employee experience.
Build a collaborative culture in the
workplace.
Recruit for continuous innovation.
Gamify learning.
Rethink performance management.
Go global.
Move to the cloud.
3
to some estimates, up to 40 percent of today’s workers will retire in the next four to
seven years.4
Couple that uncertainty with rising employee turnover and you have a recipe for trouble.
How well do you know your employees today, and what are your succession plans? It’s
never too early to begin thinking about the workforce you have today and the workforce
you need in the future.
One way to address the challenge is to create a sales-like playbook that elevates the
talent question within the company and documents critical aspects of the company’s HR
strategy. If you give employees the same attention you give to your products and
services, you will increase the employee experience and be able to retain highly skilled
talent. It will become increasingly important to source and retain the best talent as talent
scarcity increases. If you think of talent management as an enterprisewide system, you’ll
be in a better position to compete.
2. Know your employees as well as your customers.
Datafication is the name of the game.
Where should you invest in the workforce? How should you answer complex workforce
questions from the business? Employee insight is key to these decisions. This data
exists within the enterprise, but it is not used effectively today. A dedicated analytics
group can combine workforce and talent data with business and financial data to ground
decisions in the facts and provide better visibility into business performance.
Don’t confuse analytics with reporting here. You need to know the monthly employee
turnover rate and average compensation per employee. But that data is old news by the
time you issue the report. There are many more-interesting questions to ask.
Some HR applications today can predict turnover and performance and model different
scenarios to gauge the impact of different actions on predicted outcomes. This
functionality can be deployed on mobile devices, requires no training, and delivers
unprecedented decision support to frontline leaders—but this is just the beginning.
To unlock even more value, look beyond traditional sources of HR information to include
sources of human-generated data: location data, activity data, sensor data, financial
data, and unstructured sentiment analysis, for example. Encourage employees to build
internal talent profiles as a way of gathering information that can be used for networking,
4 Pew Research Center, “Baby Boomers Approach 65—Glumly,” D’Vera Cohn and Paul Taylor, December 20, 2010.
BUSINESS INTELLIGENCE AND
WORKFORCE ANALYTICS SOLUTIONS
CedarCrestone’s “HR Systems Survey”
found that “Top Performer” organizations
put decision-support tools directly into the
hands of managers more frequently. These
organizations achieve competitive
advantage, as shown by a value chain
statistical analysis. They also report
revenue per employee that is 26 percent
higher than those organizations that do not
support managers with direct access to
business intelligence and workforce
analytics solutions.
4
collaboration, and career development purposes. With access to this kind of data, you’ll
open the door to insights that can shape critical business decisions going forward.
3. Hire “scary” people in HR.
Welcome the data scientists.
Today’s systems were designed by baby boomers for baby boomers, in an era when HR
technology was handled by the IT department and the concept of analytics was yet to be
introduced. Modern human capital management (HCM) requires new strategies for
developing, attracting, and retaining talent.
To discover the insight that predictive analytics can reveal, you need to bring new faces
into the HR organization. A new breed of analytics professionals called data scientists
applies curiosity and business knowledge to plot new strategies for reaching core
business goals. They don’t speak the language of HR—and that is precisely why you
should hire them.
Data scientists ask how and why. But where do you find data scientists when you need
them? Look at other business functions—finance, product development, or even the
marketing department. With the right analytics guru and a database populated with HR
and human-generated information, HR leaders will be prepared to turn HR into a
strategic business function that drives growth instead of hindering it.
4. Differentiate through a personalized employee experience.
Care for employees the same way you care for customers.
No one questions the need to provide a great customer experience. But very few
business leaders prioritize the employee experience in the same way. That is about to
change. If yesterday’s HR was about systems and compliance, tomorrow’s HR will be
about retaining good people, and that will require differentiation.
By 2020, five generations will work side by side in a workplace that is shaped by cloud
computing and social media. Millennials and Generation X workers will have 7 to 10 jobs
and a variety of different professions during their careers.5 In a marketplace where
employees have so many options to advance their careers, you will have to fight to keep
the best people working for you.
Most of us are not starting from a position of strength when it comes to employee
engagement. A Gallup report shows that only 30 percent of US workers are “engaged,”
5 Bersin by Deloitte, “Predictions for 2014,” Josh Bersin, December 2013.
“ Data scientists are the ones
asking and answering the
question behind the question
behind the question. Using
predictive models, they may
identify areas in which an
investment of $500,000 could
cultivate new talent capable of
increasing revenues by $10
million in the coming year.”
—Bertrand Dussert
Vice President of HCM Transformation and
Thought Leadership, Oracle
5
while 50 percent are “not engaged” and 20 percent are “actively disengaged.” According
to the study, the lower productivity of the “actively disengaged” workers costs the US
economy US$450 billion to US$550 billion per year.6
On the positive side, companies with a “recognition rich” culture have a 31 percent lower
voluntary turnover rate than their peers.7
There are a number of resources available to help companies improve the employee
experience. Social listening, using communities to onboard new hires, better tools for
collaboration and mobile work, customized compensation/benefits packages, and
flexible work styles are just a few examples.
5. Bring a collaborative culture into the workplace.
Bring social technologies into the mix.
Social apps and collaboration technology have forever changed the way we live and
work. Americans aged 18 to 64 who use social networks say they spend an average of
3.2 hours per day with these apps.8
When applied to the workplace, these same social technologies can improve
communication and increase productivity, especially when increasing numbers of
contingent workers and contractors are included.
Personal productivity is no longer the most effective way to drive business performance.
Most jobs are bigger than can be done by one person. Collaboration enables a network
effect that makes a much bigger contribution to the enterprise.
HR must embrace and support this new paradigm. The CEO needs to lead the way
toward a more collaborative culture, and then HR needs to manage it. HR leaders who
foster true collaboration will boost enterprise performance.
6. Recruit for continuous innovation.
Get better results from talent acquisition investment.
When the financial impact of hiring a top performer is 10 to 100 times the employee’s
compensation, it’s important to hire the best person for the job.9 New sourcing tools,
6 Gallup, “The State of the American Workplace: Employee Engagement Insights for U.S. Business Leaders,”
2013. 7 Bersin by Deloitte, “Predictions for 2014,” Josh Bersin, December 2013.
8 Ipsos Open Thinking Exchange, “Socialogue: The Most Common Butterfly on Earth Is the Social Butterfly,”
January 8, 2013.
EMPLOYEE REFERRALS: AN EFFECTIVE
SOURCE OF TALENT ACQUSITION
Social networking is a powerful tool that
allows recruiters to reach a pool of qualified
candidates that might otherwise be
unreachable. Establishing your
organization’s presence within social
networks also says a lot about your
organization to potential candidates,
heightening the perception that your
company wants to connect with them. Don’t
overlook employees as a source of
recruitment leads. Approximately 24.5
percent of hires come from employee
referrals, according to the CareerXroads
“2013 Sources of Hire Report.”
6
including social networks, help to lower the high cost of talent acquisition and accelerate
the process of finding skilled workers who will outperform their peers.
Today’s job seekers have a variety of social channels to help them find a match. A 2012
publication by Meisha Rouser found that 18.4 million applicants found their jobs on
Facebook, 10.2 million found their jobs on LinkedIn, and 8 million found their jobs on
Twitter. 10 HR departments can take advantage of this trend by participating in channels
that reach their target candidates.
In addition to social networks, predictive ranking tools help HR automate job board
processes, while databases of suitable candidates allow companies to manage their
own relationships with candidates, instead of relying on third-party recruiting firms. Tools
that allow prescreening of candidates can further improve the efficiency and quality of
recruiting efforts.
These smart sourcing strategies will allow you to recruit from a bigger pool of qualified
candidates, build stronger relationships with job seekers, and earn a higher return on
any talent sourcing investments.
7. Gamify learning.
Make professional development more engaging.
Employees need more-frequent access to learning information just to do their jobs well
today, let alone to advance in their careers tomorrow. HR must support both formal and
informal opportunities with a focus on career development.
Short-term training can help fill critical skills gaps, but it must be adjusted to the way the
new workforce wants to learn—through digital, game-like experiences that provide
immediate feedback and increase engagement with the material.
DDI recommends a 70:20:10 mix—where 70 percent of learning occurs on the job, 20
percent from others, and 10 percent in formal learning experiences. This helps drive a
culture of continuous learning, through which leaders get the support and development
they need, even when they don’t realize it.11
Research from HR.com and DDI backs up this recommendation: Only 9 percent of HR
professionals rated their organization’s development program as very high when they
offered open enrollment programs with a curriculum of classroom-based courses. By
9 ERE, Lou Adler, July 2012..net 10 Meisha Rouser, “Best Practices in Social Recruiting,” 2012.
11 DDI, “6 Keys to a Learning Journey.”
SOCIAL LEARNING
Employees often can’t take a whole day off
for training. But by taking advantage of
social technology, employees can connect
and share information they need in order to
perform their jobs.
Increasingly, employees use peer
recommendations and are looking for
mentors to gain knowledge that can help
them perform better. Leveraging
technology and social media gives
employees the opportunity to collaborate
with each other and learn in an easy way.
Organizations should leverage and harness
social learning because great ideas,
advice, and feedback come from all parts of
the organization.
7
contrast, 91 percent of HR professionals rated their organization’s development program
as very high when their programs used a journey-based approach, with continuous
learning and a mix of methods.12
How do you offer continuous learning to millennials and highly mobile workers? Josh
Bersin says, “Extend the learning architecture to include content, collaboration, and
programs in an easy-to-understand set of offerings that will help people to learn, share
information, and locate and share expertise.”13
8. Rethink performance management.
Focus on business outcomes.
In today’s results-oriented workplace, the success of any individual depends on an
ability to work with others, much more so than how well they complete any given task.
HR needs a performance management model that recognizes this shift and evaluates
performance based on actual measures of work tied to business outcomes.
HR practices will be aligned with the business, and business’ goals are met when HR
understands what matters not only to employees, but also to customers and other
business partners. HR needs to understand how the workforce can contribute to add
value that touches every business decision. HR will need to help line managers to
accomplish their goals, and help employees to be successful in contributing to the
business.
When employee and line manager behavior are linked to results that matter not only to
the organization but also to customers and business partners, then HR becomes the
driving force for business success.
Multilayered feedback must also be linked to engagement. And HR must find ways to
reduce the organizational friction that prevents employees from maximizing their
potential enterprise contribution.
This type of next-generation people operation will more accurately reflect employee
performance. Done right, companies can achieve as much as a 30 percent improvement
in employee performance, says Brian Kopp, managing director of the Corporate
Leadership Council.14
12 HR.com and DDI, “Be Better Than Average: A Study on the State of Frontline Leadership.”
13 Bersin by Deloitte, “Predictions for 2014,” Josh Bersin, December 2013. 14 Forbes, “10 Trends Driving the Mandate for Modern HCM,” February 7, 2014.
8
9. Go global.
Use a shared service model to manage global talent ecosystems.
As the talent pool shrinks and competition intensifies, HR will become an increasingly
global business function. Organizations are expanding operationally into new
geographies and moving talent across the globe in order to fill regional talent needs. An
effective, global HR technology foundation can support this imperative to globalize while
helping to control HR’s operational costs and cater to local needs.
Decisions around recruiting, deploying, and managing employees all will have global
implications. This reality will introduce many new complexities for HR leaders. Reporting
will span countries. HR processes will need to be consistent around the world through
deliberate employee branding efforts. And a number of disparate workforce systems and
tools will have to be integrated.
HR leaders should consider a shared service model that can be managed centrally but
delivered locally, as a way of increasing the level of efficiency in the HR organization.
10. Move to the cloud.
Partner with IT to deliver HR as a service.
As part of the move to modern HR, you need to give employees access to HR apps that
are relevant, personalized, and accessible on the device of their choice. The best way to
deploy and support these capabilities is through the cloud.
Cloud-enabled HR management systems require one-third the staff of on-premises
solutions, according to CedarCrestone. Implementation times also are faster when
solutions are hosted in the cloud. The average length of time for a cloud human
resources management system (HRMS) implementation is 8.4 months, compared to
14.6 months for a licensed on-premises HRMS.15
Perhaps the strongest argument for considering the cloud is to achieve faster user
adoption and an improved user experience. According to the same CedarCrestone
survey, cloud-based HRMS solutions have the highest user adoption, and as
organizations add more users, they are able to achieve increased value from the
solution.
HR as a service is a given in the workplace of the future. The question is not if, but when.
Conclusion
15 CedarCrestone, “2013–2014 HR Systems Survey,” Figures 10 and 11.
ONE SIZE DOES NOT FIT ALL
FOR ALL COUNTRIES
Many organizations have standardized processes and consolidated costs through a shared service model. This transition was enabled in part by a common global technology platform, surfaced in local languages. That platform also laid the foundation for the next development cycle of HR process maturity: a slight swing of the pendulum back toward localization, as HR leaders realize that one size does not fit all for HR shared services.
9
Acquisitions, new product launches, and new markets and geographies all create an
exciting yet challenging environment for HR. Organizations are constantly evolving as
they drive for innovation and growth. The twenty-first-century economy is service driven.
Companies that win today are focused on two things: taking care of their employees and
taking care of their customers. Winning and keeping loyal and engaged individuals—
both employees and customers—is a challenge. These high-value individuals are savvy.
Customers are enabled by myriad choices in their purchasing decisions, and key talent
has many opportunities for career advancement.
To refocus HR in a new era of growth around the employee experience, we need to
move beyond transactions to address business needs. These needs include a talent-
centric view of the workforce, tools and policies that encourage collaboration,
applications that are engaging and mobile, and the insights that enable management to
predict the business impact of modern HR efforts.
Oracle Corporation
World Headquarters
500 Oracle Parkway
Redwood Shores, CA 94065
U.S.A.
Worldwide Inquiries:
Phone: +1.650.506.7000
Fax: +1.650.506.7200
oracle.com
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