Bersin & Associates Analyst Updates

SuccessFactors Unwraps Turbo-Charged HR Analytics Solution

info@bersin.com (Josh Bersin) — Thu, 24 May 2012 07:26:00 PDT

The HR analytics market has gotten white hot. With all the HR and talent management software out there, companies are now starting to invest very heavily in their HR analytics strategies. (For more on this topic, read about our BigData in HR research.)

Our research shows that only around 6-7% of HR organizations have reached a deep level of expertise in HR analytics today (it's probably even lower), and this is because the problem is a multi-disciplinary one. Not only do you need to have analysis skills, database skills, and business consulting skills, you also have to assemble a range of technology tools to bring all your people data together. And as our Talent Analytics maturity model points out, you have to start with a focus on integrated reporting and then slowly evolve to predictive solutions.

Adding to this complexity is the problem of workforce planning. It's hard enough to analyze your current workforce (it's strengths, weaknesses, spans of control, leadership gaps, capability gaps, etc). Organizations also have to create scenarios for the future and map these scenarios against available talent supply, local demographics, and employment branding strategies.

Whew.

Well the tools vendors are not sitting still, and SAP-SuccessFactors has been hard at work. (And I mean very hard.) The team at SuccessFactors has been working with their SAP brethren to pull together an exciting new technology strategy for HR analytics - the integration of SuccessFactors, Infohrm (prior acquisition), and HANA (SAP's high speed in-memory database).

Three Systems in One

Some of you analytics types probably understand that there are many different elements to an analytics solution: data consolidation and cleansing, reporting, analytics, and scenario planning. And of course for each of these various functional areas there are many sources of data. (Our research shows that some of the most powerful analytics you can do involve comparing data from many sources - talent mobility, demographic data, training, compensation, and business data).SuccessFactors Unwraps Turbo-Charged HR Analytics Solution

Over the last few months the SuccessFactors analytics team (led by Infohrm folks) have been working very closely with their SAP counterparts (and remember Sybase is part of SAP now too) to build an integrated, accelerated cloud-based analytics solution.

As the photo above shows, the system can pull data out of all the existing SuccessFactors systems, the legacy SAP systems, and other vendor systems. Using much of the original technology in Infohrm, the system provides a wide range of reporting and data comparisons, including workforce planning and scenario building. So it functions as a reporting system, and analytics system, and a workforce planning system.

But probably most interesting of all, the team not only documented all this in a huge book of HR data elements, but they have also connected the whole system to HANA - SAP's in-memory database.

What is HANA and Why do I care?

Slight digression here. What is HANA and why do I care? Well for those of us with database background, we know that storing and analyzing large amounts of multi-dimensional data can often get very slow. Think about a report that looks at all your employees, their tenure, their compa ratio, their latest engagement scores, and tries to compare all this against their location, manager, or perhaps last performance rating. Not only is a lot of computation needed, but you as an analyst are likely to drill, slice, and analyze this data in many ways.

HANA is a real-time in-memory database platform which stores data by column (a trick I learned in my Sybase IQ days) and can generate in-memory multi-dimensional cubes (large data analysis structures). To put it simply, what it does is make large queries run 300 X faster. I know it's hard to believe, but it makes sense.

Now there are many tools on the market for data analysis (including Oracle Business Intelligence, Mercer's iKnow, SumTotal's data warehouse, Visier, MicroStrategy, and analytics tools from almost every HR software company. There are a lot of them, and the number keeps going up.

What's unique about SAP is the fact that they have so much technology to throw at this problem. (This is a bit of a curse too.) So they're pretty much thrown it all together in a totally integrated solution. And what HANA does is make sure it's going to be very very fast.

Making Analytics Easier

The real problem with HR analytics isn't the tools (there are almost too many to choose from), its the laborious process of collecting data, developing reports, and actually doing the analysis. And this is a journey, not a destination. Our research shows that you need to create a dedicated team, and this team needs to include people with database, analysis, and business experience. And this team must have strong support from IT.

What SAP has done here is take a page from my old data warehousing book (back in the early 1990s I actually launched a whole data warehousing solution at Sybase) and offer a 100 day implementation program. While these types of offerings are often "works in process," this shows that the company is willing to invest in the methodology and services to help you.

What is most exciting about this announcement is the depth of thinking SuccessFactors has done. Not only does the system have a lot of capability, but the company now has 300+ customers and has developed some very forward-thinking analytics out of the box. One in particular is what they're calling "Leader Centric metrics."

Our research shows that one of the biggest levers you have in HR is leadership. While many business related problems (productivity, turnover, performance, etc.) are based on environmental factors, the biggest driver of success is management and leadership. And you as HR can actually have some impact on leadership (this is why we have an entire practice dedicated to leadership and succession). SuccessFactors has already pre-defined a set of "leader-centric" metrics which correlate various business measures to different leadership characteristics.

I wont try to detail it here, but it's the type of "value add" we all need from our solution providers.

Lots more to come in this area - I think this announcement is important, and the first of many more to come.

HR in the Cloud: Upping the Talent Management Ante

info@bersin.com (Josh Bersin) — Wed, 16 May 2012 14:46:00 PDT

Sapphire, the SAP annual event for its customers and partners, provided the debut of SuccessFactors as a SAP company. In a newly created division called Cloud Computing, Lars Dalgaard, founder and CEO of SuccessFactors, is now the king of the cloud, overseeing a team of 5000 employees devoted to executing SAP’s cloud strategy.

Update from Lars on the SuccessFactors’ end of the business: there are3500 customers with 15.6 million unique users, making it 15 times the size in user count of other cloud companies. It is used in 60 different industries in 168 countries (with 34 languages).

Those 15 million users have used the SuccessFactors suite to accomplish 29 million performance reviews, process 23 million job applicants, commit 61 million goals and complete 45 million learning items.

Developments announced? There were plenty.

As SAP runs on SAP products, the SuccessFactors division now runs on the SAP cloud solution, Business ByDesign (BBD), replacing all its previously installed business applications. The deployment was an example of rapid implementation, going live into production in ten days. With the move to Sales OnDemand, 600,000 accounts were moved within that time frame. The result: Lars reports that he has clean data for the first time with Business ByDesign.

This implementation in itself should calm users concerned about the fate of SAP’s current cloud product Business ByDesign. In a session at Sapphire, Lars assured those customers that the product was not going to disappear under his regime. Though he admitted he intended to kill the product when he walked in the Walldorf door, his realization that 350 customers were running their companies with the product nixed that idea. BBD will continue to be supported by SAP.

Another Core HR in the Cloud Entry

The SuccessFactors talent management suite is now presented as an HRIS product, with plans to build on the Employee Central module as a core HR solution. The first addition is the global financial application, Financials OnDemand, ported from the Business ByDesign suite. The second addition, to be announced in July, add multinational support in an area required by many (details to follow!). One might guess that other BBD modules such as Sales OnDemand might be added in the future.

As a likely future ERP solution, right now SuccessFactors is competing head-on with Workday, as both present integrated financials, HR and talent management. SuccessFactors also adds inherent learning management and could conceivable add sales support; Workday partners with Cornerstone for learning and Salesforce.com for CRM.

Jobs2web Prepares to Take the Next Step in Recruiting Analytics

info@bersin.com (Josh Bersin) — Wed, 16 May 2012 07:04:00 PDT

I spent yesterday at the jobs2web conference, a recent acquisition of Successfactors, which is a recent acquisition of SAP. They are a recruiting marketing software firm – they make it their job to make recruiting on the web as easy as possible.

I had a chance to visit with John Greene (Client Services Director) and Phil Schrader (Analytics Manager) about their analytics functionality. They’ve done a nice job of making all sorts of recruiting activities track-able, enabling advanced reporting of the candidate traffic. For example, in what they call their “cost of doing nothing” stacked bar chart, they depict the total volume of candidates as well as the proportion of candidates coming in through various channels, which, because of their work on tracking, accounts for the near-whole picture of candidate behavior and movement. This chart, as well as other reporting functionality, makes evaluating the wisdom of specific recruiting investments quite easy for those in the recruiting function. It fulfills the promise of analytics – enabling better decisions, in this case, in regards to an organization’s recruiting strategy.

It is, however, not quite ‘analytics’ – well, on second thought, I suppose it depends on your definition of analytics. I define it as using statistics embedded somewhere in the program. However, like every provider I know of in the talent management software space, the solution is that of aggregate reporting rather than predictive statistics or forecasting. Many organizations are not yet to the predictive stage in their analytics practice maturity (there still sit in what we call stage 2 – see Josh’s Big Data report http://insights.bersin.com/research/?docid=15430 for more), so this advanced reporting functionality is needed – without a doubt. But the holy grail of predictive analytics is still unrealized.

But give jobs2web a year or two, maybe less. They are perfecting a system of ‘normalizing’ job types across organizations, which will allow them to say with authority the best recruiting grounds for certain types of jobs. This type of analysis uses regression (most likely) and will be useful in predicting the best way to spend recruiting dollars by job type. In other words, rather than adjusting the current recruiting strategy to just-in-time data from their system, they will be able to advise their clients on how to invest smarter from the get-go.

Take the application of normalizing jobs one step further. By tapping social media data or collecting additional data from not-yet-applied candidates, jobs2web could supply those in the trenches of workforce planning a talent supply report, letting them know not only how to recruit certain types of employees better, but where to recruit them as well. Want to open a manufacturing site in China? Where is the managerial talent located within that mammoth country? How about in 10 years when the workforce is even younger than it is today? If they follow a natural R&D course with this capability, jobs2web may be well-positioned to do workforce supply analyses in a just-in-time way that could rival the work done by our economist brethren. Couple this analysis of supply with increasingly advanced predictive statistics applied to the demand side of the equation (extrapolation of workforce segment growth and shrinkage based on the business strategy, employee performance, and turnover) jobs2web might enable organizations to play a whole new ball game. Revel in the power of analytics!

CornerstoneOnDemand Continues Growth: Update from 2012 User Conference

info@bersin.com (Josh Bersin) — Wed, 16 May 2012 05:48:00 PDT

This week CornerstoneOnDemand held its annual user conference in sunny southern California.

Following a very strong earnings release (revenues of $24 million (up 52% year over year, with bookings up 71% YTY), the management team cited the "easiest time selling in the company's history," even in the wake of SAP's acquisition of SuccessFactors and Oracle's acquisition of Taleo.

Company Momentum

The company now has more than 8 million users and 891 corporate clients (not including 275 or so small business clients), which gives the company great staying power and depth in most major industries. While Cornerstone's strength in the market continues to be its enterprise LMS, now close to 50% of new customers purchase Cornerstone's Performance Cloud (performance and succession software), showing how the company has moved well beyond its LMS roots into integrated talent management.

Over the last six months I have personally talked with dozens of companies selecting talent management software, and Cornerstone is now positioned as one of the leading players, often competing directly against Oracle-Taleo and SAP-SuccessFactors. The market continues to be very crowded, with players like SumTotal, PeopleFluent (formerly Authoria-PeopleClick), Halogen Software, Lumesse, SilkRoad, Kenexa, Saba, ADP, and others all offering highly competitive end-to-end talent management systems.

Many of these companies are still bigger than Cornerstone in revenue, but none seem to be growing as fast. I believe Cornerstone's rapid growth continues to be driven by the company's aggressive sales team (the company expects to double its sales team over the next 18 months), clear market positioning, and strong focus on enterprise-class support and product management. Plus the company generates almost 20% of its business through channels, which is unique in this market.

Right now Oracle and SAP are both digesting their recent acquisitions, so their go-to-market strategies are not fully baked, giving Cornerstone the opportunity to continue to close deals in large organizations. I believe Cornerstone's ability to sell into Oracle and SAP shops will soon become much harder, but today the company is benefiting from the product and company integration taking place in these two ERP players.

Product Update

From a product standpoint, Cornerstone has now released its Recruiting Cloud (no significant customers yet, but this will be an area of heavy investment going forward), its Extended Enterprise Cloud (LMS and related portal features to support customer and channel training applications), and a new version of its social networking platform called Connect.

The new version of Connect looks a lot like Facebook (as does Saba PeopleCloud, SilkRoad Point, Chatter, and other new social tools coming from application vendors). Social features play an important role in all areas of HR (social learning, social recruiting, employee collaboration and team management, employee feedback and kudos, etc.) so this functionality will likely be used by many of Cornerstone's clients. All application vendors have the challenge of building social features which compete with IT-acquired social tools like Jive, Yammer, and even Sharepoint. Even in this crowded market, the tight integration of social tools like Connect with the rest of Cornerstone's suite make it a very useful system.

Most application vendors (particularly in HR) are adding social features because they add value in nearly every functional area (PeopleFluent just acquired SocialText, one of the pioneers in corporate social networking). I would expect this type of functionality to become fairly standard in almost all HR-related applications over the next 12-24 months.

Cornerstone also took the wraps of the company's planned mobile offering (which is still not fully released) and a new Salesforce-enabled LMS called CyberU which integrates learning management features directly into the Salesforce platform. CyberU is a seperate subsididary of Cornerstone today, and while small, has a lot of potential to grow by leveraging the huge need for training among sales and service teams and customers of Salesforce's platform.

In some ways the talent management platform market is becoming very mature and most of the products have very similar features. In Cornerstone's case the company can promote its "unified" architecture (all the modules were built internally). This organically-built history gives Cornerstone many long term benefits (a tightly integrated user experience and functional experience), but stresses the engineering team.

Along those lines, earlier this year Cornerstone acquires Sonar6, a small innovative, New Zealand-based provider of SMB (small business) talent management software. While I am not a big fan of this strategy (I may be proven wrong), Cornerstone is very excited about the potential - and Sonar6's product (which will be renamed Cornerstone Small Business) will be promoted and sold all around the world. The SMB market for performance and talent management is huge (and untapped today). While it suffers from much higher rates of churn and different pricing and packaging models, Cornerstone has decided that this is an area they want to focus. Today this business generates less than 2% of the company's revenues, so stay tuned to see what happens here.

Channels and Partners

Cornerstone claims to be "the last man standing" in the talent management market (this is not at all true, but it sounds good). This has given the company a lot of opportunity to partner with Workday (Workday sells its own performance management software and is likely to get into recruiting before too long), ADP, and a number of integrators around the world. The ADP relationship has brought as any as 10% of all Cornerstone customers (around 100 so far) and the company just renewed that relationship. I believe this relationship will continue, but will slow significantly as ADP further markets its Vantage HCM integrated talent and HR management system.

The big "elephant in the room" is what Cornerstone will do about the core HR software vendors (SAP, Oracle, Workday, Ultimate, etc.) who are all expanding into this space. Most other talent management vendors (SumTotal, SilkRoad, ADP) now offer everything - from HRMS to talent management. Cornerstone has no plans to build or acquire an HRMS and intends to remain pure as "the last standing end-to-end talent management software company."

So far this strategy has worked very well, and it is likely to work well for some time to come. However the HR software market has changed its structure and more and more big companies are going to look for vendor-integrated solutions that not only offer end-to-end HRMS functionality, but also integrated data warehousing and packaged external integrations (ie. integrations with payroll, background checking, learning content, recruiting tools, etc.). Cornerstone can continue to operate as a "talent-only" vendor for several years to come, but we expect the HRMS and payroll integration issue to get more and more significant every year. And we have yet to see what companies like Salesforce do to enter this market.

Technology and New Market Directions

One of the things we discussed with Cornerstone is the company's technology direction. Today Cornerstone is a .net-based Cloud system which actually uses a seperate database for each customer. This is not a relevant issue for buyers, but it does lock the company into Microsoft-level API's and various integration schemes. Right now the company is in the middle of an upgrade of its application architecture to create an independent metadata layer and provide "web parts" which plug directly into Sharepoint. Given the huge market share of Sharepoint in businesses, this is going to provide tremendous value to many companies.

Among the large providers, Cornerstone is one of the only .net Cloud systems in the market, which puts the company's underlying technology on one of the older software development environments in the industry. Microsoft is investing heavily in .Net (the company just shipped a huge new array of development tools), but most young engineers coming out of school learn Java, Ruby on Rails, php, Linux, and MySql. So far this has not slowed Cornerstone's development team a bit, but it could inhibit growth some time in the future.

In the hot new sexy areas of "social performance management," "social learning," and "social recruiting," Cornerstone is now taking a bit of an "elder statesman" approach. The company has started to add more and more features which enable these new ways of managing people, but does so with a strategy of maintaining and enhancing the good old fashioned formal ways of training, performance appraisal, and recruiting as well. Right now this makes perfect sense - these new "agile" models are starting to take off, but most big companies will not do away with their formal performance and training programs for many years (if ever).

Summary

This is a company I have been working with from its early days, and the management team and strategy remain among the best in the industry. While the company is now playing in a market with much bigger competitors (SAP, Oracle, Workday, and ADP), Cornerstone's intense focus and passion for client satisfaction continues to drive the company forward and I expect the company to continue to grow at rates faster than the competition.

SAP Means Business

info@bersin.com (Josh Bersin) — Mon, 14 May 2012 08:48:00 PDT

Subtitle: What our members would like me to learn from SAP's Sapphire conference!

There are thousands of attendees at this joint Sapphire and ASUG (American SAP Users Group) meeting here in Orlando. They have come from all over the world with their questions about all the functional areas and the vertical applications that SAP provides. But I suspect our Bersin members aren't too interested in the state of supply chain software (correct me if I am wrong!) so I am compiling the list of HCM-related questions I hope SAP provides satisfactory answers for.

Here is what I suspect you want to know:

·         What is the development plan for SAP's core HR for on-premise deployments?
·         Will SuccessFactors' Cloud talent management integrate with that on-premise product? What is the implication of that for end users?
·         For Business ByDesign users, will that product be integrated with SuccessFactors? All of it? Parts?
·         We have heard a lot about the HANA architecture -- how will that impact my current SuccessFactors installation? The integration of my core HR with other third party products?
·         What is SAP's mobile strategy as it applies to its HCM applications?
·         What will SAP now do with Plateau? Will those users continually be supported? Will the product set be upgraded? Will its integration with SuccessFactors improve?
·         New social software is on the show floor; what will it mean to you?
·         What are the implications for NorthgateArinso users of the new development on Cloud platforms?

And the business reference in the title? This is one of the few conferences where is it "business attire" -- not the normal "business casual" that is the mandated dress code.

Flying under the Radar SilkRoad raises $35M in Round C

info@bersin.com (Josh Bersin) — Mon, 14 May 2012 06:13:00 PDT

Despite the recent acquisitions of Taleo by Oracle and SuccessFactors by SAP, the talent management software market is far from mature. Today SilkRoad, one of the more quiet (not for long) talent management software vendors, announced a $35 Million Series C round of funding.

The new investors include Keating Capital (Nasdaq: KIPO) and NTT Finance (NYSE: NTT), among others, who invested in the oversubscribed round. (Existing SilkRoad investors include Intel Capital, Crosslink Capital, Foundation Capital, Azure Capital and Tenaya Capital.)

SilkRoad intends to use this new funding to support their continued successful worldwide expansion along with R&D. A portion of the funds will also be allocated towards the preparation for a potential 2012-2013 IPO.

Founded in 2005 with the intent to focus upon the SMB marketplace – SilkRoad has demonstrated consistent sustained growth over the years. The company now has more than 400 employees, 20 global offices, and we estimate revenues in the $70 Million range. For fiscal year 2011 the company grew at over 50% (faster than SuccessFactors, Taleo, or Cornerstone, the three publically traded companies).

Interestingly, despite having a primary focus upon the SMB market – SilkRoad can lay claim to having 12% of the Fortune 500 as customers. The company offers a complete suite of talent management products (branded as their LifeSuite®) that includes; recruiting, onboarding, performance, learning and even a core HRMS system.

SilkRoad's core HRMS solution (HeartBeat) is an high-potential play into the HRMS space. While not as robust as the offerings from Oracle or SAP, this less than 1-year old solution has been gaining traction and now has over 25 live customers. For small and mid-sized companies an integrated HRMS provides huge value. Most of these companies are relying on their payroll provider for their HRMS, so implementing an end-to-end HRMS and talent management suite provides huge benefits.

The HRMS market is white hot now, as companies look at Workday, Oracle Fusion, and SAP Employee Central (still a work in progress) as potential alternatives to their decades-old creaky HR applications. In fact I have talked with three other startups working on "next-generation" HRMS solutions in the cloud.

What really differentiates SilkRoad is the company's onboarding system (RedCarpet). It is fair to call SilkRoad the proverbial 800lb gorilla in the onboarding market. With more than 650 live customers, including companies such as IBM, Toyota, T-Mobile and Eaton, RedCarpet has become a true Enterprise class solution worthy of consideration for any organization’s onboarding/life change management needs.

Think a little bit about all the "onboarding" and "transition management" going on in your company. How do you make sure people get access to the right systems, information, education, and training they need when they change roles? The chances are you're leaving it up to the employee and manager. With solutions like RedCarpet this entire process, and the related workflow and content, is fully automated and enabled by technology. I can't think of a company that doesn't need such a solution.

Fig 1: SilkRoad RedCarpet

With all of the spotlight grabbing actions created by this year’s M&A activity, it can be very easy to forget that there are other solution providers out there that have excellent offerings in corporate talent management (SilkRoad, PeopleFluent, SumTotal, Halogen Software, ADP, and many others).

With continued unique innovations in sourcing (talent acquisition) and an impending mid-year release of a centrally integrated social solution (to be called Point), SilkRoad continues to quietly inform the market that they intend to be a formidable competitor. And I wouldn't expect them to be quiet for long.

"Talking the Talk:" Applying Talent Management Best Practices to HR Itself

info@bersin.com (Josh Bersin) — Sat, 12 May 2012 21:35:00 PDT

I had the pleasure this week of participating in a workshop with a group of exceptionally dedicated, smart, and enthusiastic HR professionals who were spending several days together with the common goal of improving their efficacy and the effectiveness of HR within their large global company.

As a group, we looked at Bersin & Associates research – research that looks at best practices in talent acquisition, performance management, leadership development, succession, and learning – with the goal of applying them not to the constituents that these HR professionals serve – but to themselves.

Like the cobbler’s children, the group decided, far too often the core tenets of talent management that they sought to instill within their enterprise were not part of their own internal management practices.

Finding employees with the skills and talent for tomorrow’s jobs in a world of decreasing preparedness as people enter the workforce is oft cited by employers – but how often have we looked at what that implies for the HR team itself? Will the newcomers to the HR community be prepared for tomorrow’s challenges and what are the implications for HR should increased internal training be required? This particular team had years of experience in HR and often long tenure in the company itself (only one millennial was in the group). While they cited the stability in their HR workforce this team recognized that retirement could begin to erode that stability in the near future.

Bersin research on leadership and mobility showed that 47% of organizations do not currently have the ability to easily identify their high potentials; these global organizations participating in our research indicated that they can’t easily identify those employees and leaders who, in fact, do have expert skills. In addition, they have at best an ad hoc, or no, strategy for managing their expert talent into critical leader and non-leader positions (see Laci Loew’s study entitled “A High-Impact High-Potential strategy: Key Practices to Maximize the Performance of Top Leadership Talent for more information.)

Our point here: are HR professionals identifying their own high potentials and planning for the leadership within HR tomorrow?

We know the topic is important: reskilling HR is a critical issue discussed in Cornell University’s ILR School’s publication “The 2011 CHRO Challenge: Building Organizational, Functional, and Personal Talent.” The study reports that nearly all the 200 CHRO’s cite ‘talent’ as the top priority of their CEO’s agenda for HR and that it is the lack of talent in the HR function that is the greatest obstacle to achieving the CEO’s agenda for HR.

Among the top ten best practices for High-Impact HR (see the Bersin study of the same name), one stands out in its applicability to the topic: “Development of internal HR team members is a priority for High-Impact HR teams.” Through such development, organizations can better position HR for success – and ensure that the cobbler’s children are not running around barefoot.

Making the Job Search Work for You - The Science of Fit

info@bersin.com (Josh Bersin) — Fri, 11 May 2012 09:53:00 PDT

Looking for a job is like playing the dating game: you're like a lover looking for the best mate, and the employer is playing the same game in reverse.

( The Dating Game, a TV show in the 1970s, let women select from three "eligible bachelors." It was among the most popular shows of its time. The Match Game, which used celebrities to make matches, was similarly popular.)

I've been travelling around the country the last few weeks meeting with many HR leaders and everywhere I go I hear the same thing from employers: there are a lot of people out of work, yet we are having a very tough time finding the right candidates.

I call this the paradox of today's labor market. Even in the world of high unemployment, the match between employer and candidate is worse than ever.

There are a lot of reasons for this: as the trend toward skills specialization, the tremendous increase in younger workers, and the globalization of businesses (most of the companies I met with told me they're struggling to find people in China and India), and the general decline in education in this country.

And I do not think this problem is going away. This is going to be the nature of the job market for years to come.

So how do you as a candidate (or as an employer) deal with this big matching game?

Well there are lots of tools and strategies to consider here - but let me discuss one which seems to be lost on many organizations: the science of fit. (Research members can download the report here.)

Several years ago we conducted a year-long research effort looking at companies in retail, entertainment, pharmaceuticals, and financial services to understand precisely how they found their "top candidates." And the results were both profound and easy to understand.

1. If you are an employer, you have to understand "what drives success" in your company.

Do you know what drives success in a given role? This is not an easy question to answer, but many don't take enough time to figure it out. One way of doing this is through what we call "A-Player Analysis." You simply analyze the cohort of high-performers you have in a given role, and figure out what they have going for them.

You don't necessarily need to be a psychologist to do this, by the way. Go talk with people in the role, chat with their managers, and look at their backgrounds. You can hire an assessment firm (like Kenexa, SHL, DDI, Hogan, etc.) to help if you'd like - but at the core you, as an employer, need to understand what drives success. Great managers often know, but many times they have not sat down and thought about it enough.

What you find is that "A-Players" have a lot of unique characteristics. They may involve attributes like intelligence, learning agility, friendliness, leadership, quality orientation, or even age. You will also find that they have a strong alignment with your corporate culture. (BigData analysis, by the way, can make this even more scientific.)

What you should NOT do is look solely at experience, GPA, or pedigree. These factors play a role, but all our research shows that they are far less important than employers think.

I recently talked with a senior recruiter from an oil services company (he spent more than 20 years recruiting engineers). He told me that after years of experience hiring people, the single biggest factor which predicts performance is "the experience of the recruiter." What?? What he found was that GPA, school, etc. had almost no correlation to success - but the very senior and very savvy recruiters had a sixth sense for "What it takes to be an A-Player."

Another of the companies we interviewed was a retailer looking for cosmetics sales professionals. The "belief" among managers was that attractive women made good cosmetic salespeople. It turned out, after studying the data, that cognitive abilities (intellectual horsepower) was a much stronger predictor of success than appearance. (This is because selling cosmetics is actually highly complex and requires quick thinking.)

2. Culture plays a major role - and this is why referrals are so important.

The second thing we found in this research is that finding great people is a problem of creating a candidate "tunnel" not a candidate "funnel." In other words, dont cast a wide net, cast a very narrow and focused net.

What does your organization stand for? What is the culture of your workplace? What types of people would you like to attract?

You should seriously understand this, and then focus your employment brand and sourcing to find people who fit that culture.

Ikea, for example, only wants to hire people who live by their values: ecology, minimalist, design-centric, quality oriented. They hire tens of thousands of people every year - yet they rigorously screen for these types of personal characteristics before accepting a resume. Another great example of a company who hires for culture is Decker Outdoors, the makers of Uggs. These companies have built career sites which truly embody their culture.

Also remember also that A-Players will recruit other A-Players. So referrals are very important. People who work for you already know what it takes to succeed, so they will recruit people they know will fit. High-performing companies get as many as 40% of their job candidates through referrals.

3. If you are a job candidate, use these principles in reverse.

I know its tough looking for a job, I've been there. The best advice I can give is simply to do your homework, and look for an organization which feels like "your people." This means informational interviewing, talking with people who have worked there in the past, and doing lots of homework on the company itself.

Most companies have lots of jobs open which may not be posted online. Once you find an organization you "want to be part of," launch a campaign to meet people. And when you do search for employers, talk with all your friends first. If you can be referred into an organization, you will automatically take advantage of the "science of fit."

There are lots of great books and tools to help interview, screen, and assess people. But ultimately this matching game is one of "fit." It's not a matter of finding the "Best" candidate, but rather finding the "Right" candidate.

If you follow these principles you will make the dating game work in your favor.

Why the Buzz around Employee Recognition?

info@bersin.com (Josh Bersin) — Mon, 07 May 2012 15:22:00 PDT

Across the last 18 months or so, we have received an increasing number of questions about the role of employee recognition in today’s organizations. To answer those questions better, we embarked on a new research initiative focused on understanding the world of recognition and its role within talent management. We are now beginning to publish the outcomes of that research. We just launched the new Bersin & Associates Employee Recognition Framework (register for the free webcast on June 12), which is designed to help organizations understand how the different elements of employee recognition fit together as well as all of the critical decision points for developing a strategic recognition program. In June, we will publish our first-ever benchmarking report on employee recognition. We will follow that up by publishing a best practices report on employee recognition at the end of the summer, which will explain the top practices that correlate to better employee and business outcomes.

Before delving into all of this new research, an important question we should all be asking ourselves is, why is employee recognition such a hot topic now? In short, the answer is that the business world – and, consequentially, the workplace -- changed substantially over the last five years. Some of the most significant of these changes include (1) a volatile economy, (2) the need for workforce greater agility, (3) the flattening of organizational structures, (4) the leveraging of technology in novel ways and (5) the rise of the Millennial generation in the workforce. Employee recognition has offered organizations new ways to adapt to these changes, as explained below:

(1) Volatile Economy —As many Western organizations responded to the economic recession, they found themselves unable to increase compensation and had to decrease or eliminate bonuses. Further, many of those same organizations reduced portions of their workforce. The upshot was increased pressure on the workers that remained, but with fewer rewards for their harder work – resulting in lower employee engagement¹. Coaching and development became a popular (and relatively cheap) alternative to show that the organization still valued the employees remaining on the job. Organizations have similarly turned to recognition, particularly the types requiring low cost per employee (e.g., gift cards, thank you notes).

(2) The Need for Greater Agility—As we all know, business is moving faster than ever. Organizations need to be able to reconfigure their workforce to respond to their new business demands. Some of this reconfiguration will come from new hires and some of it will come from the current workforce. The workforce continues to become more globalized, with increasing competition for top talent stretching across multiple regions. One study found that to sustain economic growth, by 2030 the United States will need to add more than 25 million workers and Western Europe will need to add more than 45 million employees². The result is a dramatic need for practices that attract new employees and keep existing employees highly motivated and engaged. To do this, progressive organizations are creating recognition programs that align with business demands and the needs of the broader workforce.

(3) The Flattening of Organizational Hierarchies—The old days of a top-down hierarchy, in which the manager is the “king,” exist in fewer and fewer companies. Every day, more organizations are adopting collaborative work environments and reducing the levels of management within their ranks. The result is a decline in the number of promotion opportunities available to employees. To continue to show employees that they are valued, organizations are turning to a myriad of recognition approaches that do not include promotions.

(4) Novel Uses of Technology — As we all know, social technology has grabbed hold of the public’s attention and time in a big way across the last 5 years. At the same time, transparency, collaboration and knowledge sharing have become more the norm within organizations. Many organizations are attempting to leverage both trends by using social technology to increase the transparency, collaboration and knowledge sharing within the organization. A key element of many social platforms (i.e., LinkedIn and Facebook) is the ability for individuals to give positive feedback directly to others within the network. It is, therefore, a natural extension that employee recognition has become more common in organizations following this approach. In fact, a whole host of technology providers are now offering services that enable this type of online social recognition.

(5) The Rise of the Millennial Generation in the Workforce—Younger employees typically require more feedback (both positive and constructive) and development than older generations. Given that many organizations are in a situation where baby boomers will soon start to retire in droves, employers are searching for a way to keep these younger workers engaged, productive and retained. Employee recognition can be a critical tool in doing all of these things.

Most of these changes are here to stay. Employee recognition can help organizations to adapt to the new reality. Our initial research findings show that an effective employee recognition program can make a big difference to engagement and turnover levels. However, not all recognition programs are created equally – and those programs that are most effective go way beyond the traditional tenure or service recognition awards.

We hope you’ll stay tuned for our new research, as we begin to share the insights from our new data and interviews. We believe that after this summer you will likely never think about a “thank you” in quite the same way again!

~Stacia

¹ Gallup Management Journal’s Employee Engagement Index, 2010 and http://trustmattersgroup.com/spiritoftrust/?p=441.
² “Global Talent Risk – Seven Responses,” World Economic Forum, 2011.

A Glimpse of Your Future Workforce – Now in Middle School

info@bersin.com (Josh Bersin) — Mon, 07 May 2012 06:33:00 PDT

Six months ago Thomas Suarez, a 6th grader from Los Angeles, spoke at a TEDS event about the making and sale of an "app" he created on his own - "Bustin Jieber" (a whack-a-mole type anti-Justin-Bieber game.) (There's nearly 2 million views of the video on YouTube so you may have seen it.) Anyway, he's quite eloquent and now owns his own company. While he's clearly much further ahead than the majority of 6th graders I know, his actions offer a glimpse of our future workforce.

Suarez, who is self taught, started to build, create and sell his own apps and even created a club for fellow students where he shares what he knows about programming. He thinks "students are a valuable new technology resource to teachers, and should be empowered to offer assistance in developing the technology curriculum and also assist in delivering the lessons."

Amen. He's taught himself Python, Java, and C "just to get the basics down" according to his bio.This DIY mentality is why online learning from CodeAcademy and Kahn Academy, are so popular.
Here's his talk:

I had a glimpse of that kind of thing in my house two weeks ago. My son is a gamer. His current game of choice is Call of Duty (COD). He plays LIVE with various friends. He decided he wanted to record the game play so he Googled it ("How to...") and ended up finding something called Dazzle (about $50 US), a video capture device.

He ~~asked~~ 'guilted' me into buying it for him as repayment for the iPod Touch I accidentally dropped, cracking the screen. (He said since a lot of people have small cracks in their screen, he'd rather I not pay to get it fixed but instead buy this Dazzle thingy. This is extortion mixed with love and guilt.) So off we went to BestBuy and, as it turned out, Radio Shack after that for the right connectors which we couldn't find at BestBuy. (Dazzle is not created for the purpose of recording XBox play...it just does but you need to add some cords.) Oh, and we went to Wendy's too. Why not make a day of it?

Back from the road trip....so my son often helps his friends out when they are first learning to play (they help each other) so he thought he'd record a tutorial. I'm not making this up.

Using Dazzle's software, he couldn't figure out why the audio control was grayed out (I suspect it had something to do with the default setting on the computer) and since I didn't want to stop watching the Stanley Cup playoffs to mess with this audio glitch, I told him to look at Audacity (open source audio recording). Unassisted (except for the Audacity tip), he recorded the audio, saved it as a file type he could import (because I later asked and learned Audacity saves with a AUP file type...so he figured that out) , narrated his video recording, set up his own YouTube channel and uploaded it. All in the course of an evening...basically unassisted. He's 13! Amazing since a few folks in the industry (no one reading this of course : ) still say "http what?"

So...later that night, I was watching some lame Stanley Cup Western division playoff game that was boring so I looked up his channel on the iPad and watched what he did. Did I tell you he is in middle school! Yes, these kids are our future workforce. Neither Suarez nor my son would have learned this in school. There's no app class. There's no live online collaboration and video recording class (and least in our school district in NY State). Do you have a similar story?

(As an aside...I know there are people who would not let a 13 year old play a game rated "M" -whether live or not - but my personal approach is one of involvement - Why is the game "M"? Is he mature enough? Do I know who he is playing with? Do I monitor that? Have guidelines and expectations been set along with what will happen if those are disregarded? Am I prepared to recognize the signs that the game is having a negative effect? Is he getting enough physical activity to stay healthy?, etc. The research is mixed on video games, especially violent games.)

-Janet Clarey

Blowout Quarter at LinkedIn: Now the Talent Acquisition Machine (+Slideshare)

info@bersin.com (Josh Bersin) — Sun, 06 May 2012 14:40:00 PDT

Another amazing quarter from LinkedIn: revenues of $188.5 Million, up 101%, with the "hiring solutions" business now driving $102.6 Million or 54% of company revenue. LinkedIn's revenues in the corporate recruiting market are now larger than Taleo, SuccessFactors, Kenexa, and nearly every other software company which sells recruiting solutions.

Let me highlight some of the major changes taking place in LinkedIn's corporate recruiting business.

The company is expanding from "hiring solutions" toward many new areas of talent acquisition.

The term "hiring solutions" is no longer correct: LinkedIn now plays in many areas of corporate talent acquisition. Not only does LinkedIn sell ads, the company now generates more than half its hiring solutions revenue from LinkedIn Recruiter, the product which lets corporate HR managers and staffing professionals source candidates.

This month LinkedIn is expanding its corporate products to include Talent Pipeline, a system designed to support the management of talent leads all the way up to the point of application (at which time they enter the ATS as a candidate). And the company now makes a significant amount of money selling branded career pages and other tools to help promote positions throughout the network.

With a keen focus on leveraging data, LinkedIn is expanding into more and more areas of the talent acquisition market. Remember that the average employer spends around $3500 per hire on all areas of recruiting (from our Talent Acquisition Factbook®), and the spending is much higher in executive positions. This means the entire US marketplace for talent acquisition is around $130 billion by our estimates, so LinkedIn still has a lot of whitespace to cover.

The Slideshare acquisition, which I discuss below, also compliments the hiring solutions business because it gives recruiters even more information about candidates - their skills, their experience, and the way they think.

LinkedIn's dramatic growth highlights the shift from Cloud-based software to BigData Applications in HR.

We have all become quite enamored with Cloud-based enterprise software companies over the last few years. Well as Raj de Datta describes in his TechCrunch article "The Rise of BigData Apps and the Fall of SaaS," the next big thing is data. BigData.

Think about cloud-based software companies. Enterprise HR software is rapidly becoming more and more "commodity like" - many of the features are indistinguishable from vendor to vendor. Can you really tell a huge difference between Taleo, SuccessFactors, Cornerstone, and PeopleFluent?

Sure their products have different features, but most customers tell us that they don't use 80% of the features they have, and it has become easier and easier for these companies to copy each other.

Data, on the other hand, becomes increasingly valuable as you collect more. In the enterprise Human Resources market companies are dying to get more data - data about candidates, workforce skills and demographics, salaries, and of course the reach and power of their own brand. The next big war for HR software is not a set of new features, it's figuring out how to collect and share data among many corporate customers.

Remember that an enterprise HR system (e.g. an Applicant Tracking System) without data is virtually worthless. You have to fill it with job profiles, assessment data, competencies, skill maps, interview tracking information, and ultimately candidates. LinkedIn comes "pre-filled" with candidates, so it can redefine the market by focusing on data first.

LinkedIn represents one of the biggest and most sophisticated "BigData Application" (BDA, as Raj puts it) companies - and is now developing more and more applications around it. Other companies that have gone down this path include SHL, the global assessment provider. SHL recently launched its new Talent Analytics product which gives customers access to tens of millions of assessments to compare candidates against the market and their competitors.

PS. Salesforce has already gone this direction in CRM through its acquisition of Jigsaw and new "data.com" offering.

Watch LinkedIn continue to grow faster than other HR software companies because it leverages its huge treasure trove of data.

The acquisition of Slideshare drives even greater data value - fueling both memberships and recruiting revenue.

The company also announced the acquisition of SlideShare, a great little company that has become the "YouTube" of corporate presentations. This further adds fuel to LinkedIn's data business.

Slideshare is now a vast database of knowledge and expertise, all published through Powerpoint presentations that are easy to view, download, and share. Some of the most powerful thinkers and practitioners in all industries publish their deep expertise in SlideShare, and the content is trivially easy to find and view.

Now that Slideshare is integrated into LinkedIn, we can expect it to grow even faster. (The company claims that there are already 9 million content uploads and we can expect that to explode.) Every time an individual uploads one of their favorite Powerpoint decks their "profile" becomes even more valuable to others. And since people can "like" and "comment" on slide sets, LinkedIn can start to see who the real experts are throughout the network.

All this information is not only valuable for members to view (helping LinkedIn gain new members), it lets LinkedIn better understand who in its network is an expert at what. LinkedIn has quietly building out its beta "skills" module (check out the "skills" button on the "beta" tab), and now it will get better.

Why is skills information valuable? Because when recruiters search for candidates, one of the most important challenges they face is "finding the right skills." (Our research shows that jobs are becoming more and more specialized every years - read "The End of a Job as you Know It" for more details. ) So recruiters will pay for this information.

Plus, of course, Slideshare dramatically increases the amount of information each LinkedIn user can upload - making the whole network far more valuable for individuals and members.

By the way, I noticed that LinkedIn recently removed several features from its free membership service (the ability to see who clicked on your profile, for example). Every time the company adds a new type of data-driven content, LinkedIn can come up with new, higher-value membership packages as well.

LinkedIn is really firing on all cylinders. Watch the company continue to expand in talent acquisition and talent management, all fueled by the company's vast amounts of BigData. With almost no competition in the corporate market, we should see this growth continue and accelerate as the economy picks up steam.

Mobile first -- there's an App --- for HR?

info@bersin.com (Josh Bersin) — Thu, 03 May 2012 12:11:00 PDT

"Develop it first for Mobile."

This doesn't sound like a mantra from a talent management provider, does it?

Yet this was part of the message delivered by Simon Cariss, Senior VP and co-founder of Australia’s PageUp People in an executive session in Bellevue, Washington last week.

Generally, talent management software follows a path from product development on a computer, and then later, interfaces are created to provide access via various mobile devices, porting the application to one platform at a time (iPhone, Android, Blackberry, iPad, etc.). In fact, almost all of the SaaS-based talent management solutions providers have announced cell phone-based mobile interfaces to these products, surpassing the clunkiness of browser-based web site access.

But develop talent management applications on the mobile devices first? Granted some companies create them for specialized applications (PeopleMatter, for examples, has mobile-based scheduling for shift workers), but the vast majority of talent management and HCM applications today, while SaaS, are grounded on a laptop or desktop for presentation. The prevailing concept has been that HR professionals are first of all desk-bound, but then secondarily need that flexible, just-in-time or just-in-case mobile access. In these scenarios, the mobile interfaces provide access to the application; what Simon proposes is that the mobile app is the application.

As we look at the need for HR to develop sound policies for mobile management, this concept just adds one more level of interest and responsibility. Consider such questions as:

Do we have a corporate policy in place on mobile phone access to corporate data? On transacting business decisions via mobile?
Is it mission-critical to Human Capital Management staff to have instant access and response capabilities for HCM-related questions? Is it perceived as critical by the Cxx level?
How many separate mobile apps should each manager, e.g., have to manage their teams?
What are the business risks from dropped data transmissions, mobile network downtimes, unsecured networks, or sluggish performance?

As devices get smaller, data gets bigger, and the business world runs on “real-real-time” not “minute-ago-time,” Simon Cariss may be on to something here! How would you see the ramifications to your organization?

Why Should Mobile Learning Be on Your Mind?

info@bersin.com (Josh Bersin) — Tue, 01 May 2012 06:39:00 PDT

I read the article Here's Why Google and Facebook Might Completely Disappear in the Next 5 Years" and, coupled with some research on mobile video I'm doing, paused because I suddenly felt like I was missing something. It was one of those "wait - what?" moments that I sometimes get as an analyst because you know, I have to know this stuff.

Anyway, the author of the article, Eric Jackson, shares two schools of thought - first, the outsized influence management teams have on organizational outcomes and second, the idea that managers don't really matter all that much because organizational outcomes have more to do with industry effects. He admits to not thinking much of the latter (which comes from organizational ecology research) until recently. He believes that...

"More and more in tech, it seems that your long-term viability as a company is dependent on when you were born."

In the tech world, Jackson identifies 3 generations: Web 1.0, Web 2.0, and Mobile and suggests that prior generations of organizations can't quite see the subtle changes between generations. He goes on to say that social companies born since 2010 (i.e. Instagram), view mobile as the primary (often exclusive) platform for their application.

[Those companies born since 2010] "don’t even think of launching via a web site. They assume, over time, people will use their mobile applications almost entirely instead of websites."

There's an interesting tidbit in the article that comes from Tim Cook (CEO, Apple) about the speed of change...

"...through the last quarter [Q2 2012], I should say, which is just 2 years after we shipped the initial iPad, we’ve sold 67 million. And to put that in some context, it took us 24 years to sell that many Macs and 5 years for that many iPods and over 3 years for that many iPhones."

We don't know the reason(s) why Facebook bought Instagram (born after 2010) for $1 Billion. Plenty of folks have opinions about it. Perhaps it's because Instagram's mobile app doesn't blow. Perhaps it's Facebook's mobile strategy in action. That's my take FWIW.

What does this mean for L&D? We have e-Learning 1.0 and e-Learning 2.0 and now have mobile learning -but are we just taking the 1.0 and 2.0 elements and putting them in mobile form? It seems we have to make sure our mobile learning can stand alone...you know, not totally blow.

-Janet Clarey

New Research: BigData in HR as Huge Opportunity

info@bersin.com (Josh Bersin) — Fri, 27 Apr 2012 13:07:00 PDT

The topics of BigData in HR is white hot. This week we launched our BigData in HR research study, which describes precisely how world-class organizations build high performing talent analytics functions. This research represents the culmination of many years of work, talking with hundreds of companies and many vendors in the market.

In this article I'd like to highlight some of the findings, and invite you to join our research membership program to get more information. You can also come to a free webinar highlighting the findings on June 26 at 2:00 PM EST/11AM PST.

Five Basic Findings:

Let me summarize the research and the maturity model in five basic findings.

1. Most HR organizations have many standalone analytics and measurement programs, but have yet to pull it all together.

More than 80% of the organizations we talk with have lots of great measurement programs (learning measurement, a talent acquisition analytics team, and often a workforce planning team), but they are rarely pulled together. This means that what most companies measure is the effectiveness and efficiency of HR itself.

While this is important, it pales in comparison with the potential to correlate all this HR and people data to the actual running of the business. What sources of hire predictably deliver the best performing sales people? What management factors directly cause high levels of theft in retail stores? What training programs or skills directly correlate with customer retention and upgrade?

Companies have been answering these types of questions about marketing for years. Most advanced marketing organizations know precisely what impact every marketing program has, and how it generates leads and revenue and market awareness.

HR, by contrast, is still often focused on measuring itself.

This is not to say that many companies don't do an excellent job of measuring employee engagement, for example, and using that data to find management gaps and organizational problems. But ultimately when all this is pulled together, into what we call a "level 4 predictive analytics" team, the business results can be transformational.

2. Despite the existence of many HR software tools and systems, tools are not the answer.

I spent many years selling software, and it's very easy to get people excited about the next great tool set which delivers talent analytics. Both Oracle and SAP are starting to heavily market their offerings, and virtually every other talent management software vendor and most tools companies are now selling tools targeted toward HR.

What our research shows, however, is that tools are not the answer. No company ever has all its people-related data captured in one place (so don't plan on it happening). What world-class companies do is develop their own "data dictionary" and put in place a strategy to collect, aggregate, and use data from many sources. They standardize on tools, working with IT, and they learn to use them well. It is far more important to standardize on a set of tools which is supported by IT than it is to constantly search for the "next best thing."

I'm not saying that tools are not important - they are. But tools are not the solution. Many companies have undergone multiple failed projects to build HR data warehouses or other similar programs (I was just meeting with one such company yesterday) and what they find is that the answer is a focus on process, strategy, and patience. Which leads me to point #3.

3. There is a predictable maturity model to world-class analytics.

As we detail in the research, there is a 3-5 year maturity model to building a world-class analytics solution. And this is a journey, not a destination. Just as Wal-Mart's incredible retail analytics systems were not build in a short period of time, similarly the people-analytics solution must be built piece by piece over time.

Our research shows four major stages to success, and these are highlighted below:

Briefly, what the model shows is that organizations must move from "reactive" to "proactive" and then from "strategic" to "predictive." As the research shows, you can try to "skip" steps, but it typically backfires. You can turn analytics into a "project," but then you have the problem of inconsistent data, lack of reliability over time, and ultimately a lot of extra effort.

On the other hand, if you build a function over time, the talent analytics "function" will become highly strategic and actionable. The goal here is to turn analytics from a "project" to a "process" and from a "team" to a "function."

4. Don't try to boil the ocean. Stay very business focused.

There is a natural tendency to try to build analytics from the data outward. While this type of architectural approach is necessary (and you have to get the data dictionary in place), the most important thing to do early is find a single business problem to focus on.

In Levels 1 and 2 you are building infrastructure to move from being "reactive" to being "proactive." But as soon as you have a team and start to assemble tools, focus on a few significant business problems. If you focus on one or two current, relevant business problems (ie. theft in the financial services case, sales productivity in the insurance company, customer retention in the third organization), then you have the green light from the organization to really focus on business solutions.

Remember that in levels 3 and 4 you are not trying to make HR better, you are trying to use the information you have about people to make the company better. And this is best done by focusing on a well-known, financially relevant problem.

5. It's all about the team.

The final little tidbit I'd like to share is that talent analytics solutions must be built by highly skilled, focused, passionate people. World-class analytics teams are made up of people who have deep skills in database, statistics, business analysis, and executive communication. A typical HR staff person or OD specialist may or may not fit here. Our research shows that these teams can be very small, but must be made up of the right people.

Over time the HR analytics function can take over and govern analytics in all areas (in most of our BigData group the HR analytics team took over learning analytics and other areas, but not necessarily recruiting), and they interact with other analytics groups in the company. At level 3 and 4 the team should be partnering with finance and marketing, so that you can share tools, data, and process experience.

As we discuss in our "Agile Model of HR" research, transparent access to talent information is a hallmark of a high-performing company. I think this area, BigData in HR, is one of the most exciting new career and business opportunities in our industry.

We look forward to helping you.

What Splunk IPO Says about BigData in HR

info@bersin.com (Josh Bersin) — Sat, 21 Apr 2012 15:35:00 PDT

BigData is Big News.

Splunk, a company that uses BigData technology to analyze huge amounts of customer and transaction data, just went public with a valuation at 28X revenue ($3.2 billion). This valuation trumps the hot companies in social networking: Jive trades at 20X revenue, Google trades at 5X revenue, and Facebook, well we'll see.

Why the huge valuation? Because BigData is BigBusiness. I now live in the world of corporate talent management and HR, but in my prior life I was the director of data warehousing products for a database company. There is almost no limit to the value of deep data analysis in business. And with more than 8 Exabytes of data now captured in businesses today (expect to grow to 44 Exabytes in the next 6 years), we are all going to want to analyze more data faster. (One Exabyte is equal to 140,000 X the data in the entire Library of Congress.)

I want to highlight a few key issues which affect you as a business leader, and talk a little about what BigData means to HR and talent management.

1. Most businesses today have plenty of data with which to make decisions.

What they lack is fast, transparent systems which produce this data in real time. Hence the huge market for tools and services companies like Splunk. And there are dozens more right behind soon to go public.

I just delivered a keynote speech on Building Business Agility through People at our research conference, and I cited the fact that The Economist asked more than 500 CEO's what would create agility in their company. Of the top four items cited, one of the most important was "delivering transparent information about customers, products, and people to line management."

This solution, delivering transparent information to line managers, is one of the biggest competitive advantages you can build.

2. Outside of customer analytics and marketing analytics, internal talent analytics is one of the most exciting new opportunities in business.

We have been working with a special working group of top companies in the area of BigData for HR. What these companies are doing is consolidating hundreds of data elements about their own people and then correlating them to customer retention, sales performance, safety, fraud, and many other measures. And what they are finding is that BigData in HR is just as valuable as BigData about customers.

Let me give you an example. A large retail bank found that "leakage" (theft) from many of its smaller branches was highly correlated to certain behaviors and people-related data in their company. In fact, there was a direct correlation between branch fraud and the age, location, and travel behaviors of branch managers. Managers who visited branches more often reduced fraud.

This may seem like an obvious finding, but it gave the company a whole range of new strategies for hiring, development, and coaching of branch managers.

Another large organization, the Royal Bank of Scotland, has correlated its employee engagement measures in such detail that they can actually predict branch performance based on management behavior.

3. Talent Analytics is still a brand new industry.

Customer analytics and marketing analytics have been around for years. But talent analytics is new. Human Resources teams have had "HR Analytics" teams for many years, but only now are they starting to rigorously correlate all this internal people-data to business data.

Our working group research identified a four-stage maturity model for talent analytics, and we found that fewer than 8% of all companies are even close to stage 4. This means that most companies have barely started to tap into the huge reservoir of data they have about their employees.

Remember that in most businesses payroll is the largest expense item, and that small improvements in employee productivity drive enormous financial returns.

So if you put as much energy into optimizing your people decisions as you may be putting into the optimization of your product and marketing strategies, you will see a huge change.

4. Tools to implement talent analytics are available today.

The best news of all is that this solution is not limited by tools. Every major HR software vendor now offers an analytics platform which lets you expose, export, and analyze all the data you have about your people. (This includes Oracle/Taleo, SAP/SuccessFactors, SumTotal, PeopleFluent, Saba, Mercer, ADP, Workday, TowersWatson, and nearly every other major HR and talent management vendor - including SHL, which now exposes assessment data across millions of candidates and employees.)

What our research found is that the limitation is you. Only 6% of HR organizations feel that they have excellent analytic skills internally and most have not yet invested the time it takes to build a holistic analytics function. And our studies have shown that ultimately the talent analytics team should be part of the entire company-wide analytics function - because data about people, behaviors, customers, and products all relate to each other.

Think about this as the "rebirth" of the business intelligence and data warehousing industry. Back in the 1980s when I was a product manager we thought it was pretty exciting. Now, thanks to BigData tools and cloud computing, its even hotter than ever.

I will make the time to publish great examples and insights in this area - it's a huge opportunity for business and HR leaders at all levels.