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P e r f o r m a n c e & T a l e n T m a n a g e m e n T

Trend Survey

P e r f o r m a n c e & T a l e n t M a n a g e m e n t

2007

© 2007 Copyright BPM Forum and SuccessFactors.


T r e n d S u r v e y 2 0 0 7P e r f o r m a n c e & T a l e n T m a n a g e m e n T

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INTRODUCTIONWe’re in a talent crisis that is growing in intensity.

The global talent war is upon us. As organizations struggle to find, retain, motivate, and develop their people adequately, they face an ever-dynamic talent landscape that is more globally competitive, demanding, and expensive than ever before. Adding to the challengeare growing numbers of aging retiree candidates, shifting business requirements, andattractive competing job offers that keep executives and HR professionals up at night.America’s largest 500 companies will lose 50 percent of their senior managers in thenext five years, according to RHR International. And a survey by the Society for HumanResource Management said that 83 percent of workers were likely to search for a new job inthe coming couple of years.

But this aging of the talent base and restless workforce are just two of the forces impactingtoday’s talent war. Fundamental and rapid changes in the world economy, coupled withstrong economic growth, are making it far more difficult for companies to adequatelyaddress their need for talent and growth.

Talent Management Leaders are Making InroadsThere’s no doubt about it -- the struggle for top talent has gotten more intense this year. As a result, more and more leading-edge companies are looking to identify, foster and develop better peformance from within. And they’re making huge inroads towards winning the war. The Success Stories section of the report will explore several specific examples of these changes at work.

Survey on Trends, Challenges, Priorities, SuccessesIn order to study the issues affecting companies in their struggle to keeptheir talent competitive, the Business Performance Management Forum and SuccessFactorsin cooperation with the Human Capital Institute conducted a survey of more than 725 performance and HR professionals. The 2007 Performance and Talent Management Trend Survey is a year-end audit and assessment of talent management trends and trajectories for 2007. This benchmark study examines the critical issues impacting businesses in their effort to remain competitive by acquiring, sustaining and managing talent across the enterprise.

The study clearly and compellingly demonstrates that the battle for talent is intensifying.Executives and HR professionals from large and small companies alike overwhelmingly report that increased competition for talent is leading to higher compensation packages, slower time to new hires, strains on quality and customer service, and reduced business flexibility.

As a result of rising costs and time required to hire good new talent, organizations areincreasingly looking inward to train, develop, maintain and evolve their existing workforces.In other words, talent management will be an even greater strategic imperative for businessin 2007.



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One of the key drivers for talent management is the changing skills and competencyrequirements of today’s business environment. Growing technical demands, new globalbusiness models and growth opportunities, shifting market requirements, new managementpractices – all these factors and more are intensifying the need to retrain and redeployexecutives and staff in order to keep pace with the competition. Bigger companies aretaking the lead in embracing formal talent management practices, processes and systems,and smaller companies are further behind the curve. However, the great majority of our survey respondents agree: talent management is now critical to better achieve businessgoals, stay competitive, and be global.

But there is a long way to go. Even the most sophisticated organizations and industries arejust scratching the surface of the potential benefits of better attaining and retaining goodtalent towards better outcomes. And small businesses are lagging even farther behind inthe quest to optimize their workforces. Deloitte estimates that an average company in theU.S. spends nearly 50 times more to acquire a $100,000 professional than it spends ontraining for that individual once employed.

Measurable Performance Gains – Better Financial GainsAll is not lost though – on the contrary. The benefits and implications of advancedtalent management systems and programs go beyond just producing more motivated orbetter performing people. Recent research by SuccessFactors and human capital expertDr. Jac Fitz-enz shows that smarter human capital management leads to better financialperformance. The study showed that two-thirds of companies with stronger financialperformance manage all managers and others with their performance management systems. And 63 percent of the high growth companies review performance more than annually. Thus, the benefits and potential for talent management are real. The nearly greenfield opportunities for organizations to embrace sound talent management solutions, methodologies, and strategies are huge. Those that do it right will ultimately win the war for talent and the land grab for global business.

Top line findings of the 2007 Performance and Talent Management Trend SurveyLaunched in November of 2006, The 2007 Performance and Talent Management Trend Surveyincludes online responses from 726 HR and performance professionals primarily in NorthAmerica along with perspectives from interviews of a half dozen representative corporateexecutives, talent management experts, and organizational performance authorities on theconcerns, priorities, drivers and predictions in the talent management landscape.



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Key Findings:▶ Increasing competition for talent is universal.

98 percent of respondents say competition for talent is increasing in their industry, and 65 percent say it’s increasing to a “high” or “very high” degree.

▶ Talent costs this year are inflated.Nearly 95 percent say the cost of acquiring and keeping talent rose in 2006, and two thirds say to a somewhat or high degree. One executive interviewed pegged this cost increase at 25 percent this year.

▶ Time to talent is growing, as are requirements for developing it in-house.55 percent note higher salaries were required in their organization in 2006. And 68 percent identified the need to implement internal talent development in their companies.

▶ Talent management leaders are achieving significant benefits in a short period of time.Companies that have adopted advanced solutions for improving performance and talent management have done so in as little as a month, and are reaping the benefits in the form of dramatically reduced turnover, improved goal alignment, and better engaged and peforming employees.

▶ Most companies, though, are way behind and playing talent management catch-up.Though internal talent development is seen as a critical step, only slightly over half have formal plans in place to identify, grow and retain talent. Only about a quarter have formal talent scorecards, and only 29 percent can link talent performance to business value creation.

▶ Small business is behind the times.More than 80 percent of smaller companies lack any kind of talent management scorecard, and 60 percent lack formal plans to grow and retain talent.

▶ Shock is heard round the world.Organizations point to an increasing influence of globalization and easing of business boundaries as having a profound effect on talent consideration. 77 percent of all survey participants say that global factors are making a difference in their talent management and acquisition strategies.

“Firms are realizing that money is only one factor. Having access to training and development, as well as creating an appropriate culture, are key. Being more flexible and adjusting to peoples’ various schedules are essential. Managers need to be increasingly aware of things like this and be prepared to make adjustments accordingly.

– Paul Tiffany, Global Consultant and Senior Lecturer in Management - Haas School of Business at UC Berkeley, BPM Forum Advisory Board Member

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© 2007 Copyright BPM Forum and SuccessFactors. �


KEY FINDINGSTalent Management is Top of Mind

Respondents overwhelmingly said that talent management is a strategic corporate focus. There is a growing concern and emphasis upon developing, engaging, and harnessing the potential of the company talent pool to drive further growth, success, and sustainability. Three quarters of participants said that talent management is a high or very high priority, and over one quarter gave talent management the highest priority rating on the scale. This growing concern over organizational talent is particularly critical as a new tide of challenges and dynamics rolls on to the scene.

1. On a scale of 1 to 5, to what degree is talent management a strategic priority in your organization?

Response Percent Response Total 1 Not at all 1.2% 9 2 Slightly 9.2% 67 3 Neutral 16.3% 118 4 High 45.6% 331 5 Very high 27.7% 201

Total Respondents 726(skipped this question) 0

0 10 20 30 40 50

5 - Very high

4 - High

3 - Neutral

2 - Slightly

1 - Not at all

5 - Very high

4 - High

3 - Neutral

2 - Slightly

1 - Not at all

27.7% 45.6% 16.3% 9.2% 1.2%

Fig.1 On a scale of 1 to 5, to what degree is talent management a strategic priority in your organization?

“ Talent management has become a greater strategic priority in our organization. We’re trying to look at people from all sides of the equation, and assess bench strengths. Filling key positions that go beyond the typical talent pool is important to us.

- Tim Toterhi, Director, Global L&D Strategies and Solutions at Quintiles Transnational

“

27.7%Very high

45.6%High



0 10 20 30 40 50 60 70 80

Management leadership

Technical knowledge

People skills

Organizational and project management skills

Operational ability

Market and industry knowledge

Sales efectiveness

Intelligence

Creativity

Other

4. What types of competencies are most valued in your organization? (Select top three) Response Percent Response Total Sales effectiveness 29.9% 217 Operational ability 41% 297 Management leadership 62.2% 451 People skills 43.2% 313 Organizational and project management skills 41.1% 298 Creativity 16.1% 117 Market and industry knowledge 36.1% 262 Intelligence 19.7% 143 Technical knowledge 44.8% 325 Other (please specify) 6.9% 50Total Respondents 725(skipped this question) 1

KEY FINDINGSCritical Talent Competencies Changing Dramatically

Intelligence and Creativity of Little ValueOrganizations across the board are realizing that there has been a seismic shift in the skills and talents required to run their business and remain competitive. This is adding significant challenges to companies in high growth mode that must adapt to the changing talent landscape. 88 percent of respondents stated that critical competencies are changing or evolving in their organization. And nearly half of participants said this change is to a high or very high degree. When we look at the competencies that are most valued, we see that management leadership (62 percent) is the highest valued, with technical knowledge (45 percent) and people skills (43 percent) also important. Interesting to note that creativity and intelligence ranked at the bottom of the value scale at 16 percent and 19.6 percent respectively. Even sales effectiveness, traditionally a critical competency for the health of a business, ranked under 30 percent.

The overarching message is clear: these companies must employ better ways to find and cultivate a new set of skills required in today’s dynamic global environment.

Very high degree High degree

Somewhat Slightly Not at all

Very high degree

High degree

Somewhat

Slightly

Not at all

5. To what degree are the critical competencies in your organization changing or evolving? Response Percent Response Total

1 Not at all 2.2% 16 2 Slightly 9.5% 68 3 Somewhat 40.9% 294 4 High degree 42.1% 303 5 Very high degree 5.3% 38


5.3%

42.1%40.9%

9.5%

2.2%

To what degree are the critical competencies in your organization changing or evolving?

Fig.2


Technical knowledge

People skills

Organizational & project management skills

Operational ability

Market industry knowledge

Sales effectiveness

Morale

Intelligence

Creativity

Other

62.2%

44.8%

43.2%

41.1%

41.0%

36.1%

29.9%

19.7%

16.1%

6.9%

Fig.3 What types of competencies are most valued in your organization?


Technicalknowledge

People skills

62.2%

44.8%

43.2%



KEY FINDINGSTalent War Intensifying

Companies See Need to Find, Develop, Engage, Measure, Keep Strong Staff in 2007 Poll participants cited a wide range of talent management hurdles on the horizon for the new year. Top among them was the need to develop internal talent (63 percent), followed closely by talent retention and turnover (60 percent) and talent acquisition (49 percent). Employee engagement and performance evaluation ranked highly as well, underscoring the need to measure the internal workforce and keep them connected. This is consistent with executive dialogs and other survey data that point to an exacerbated struggle to find new employees and managers combined with a need to better develop existing workforces. Apparently, a growing and more global work environment is creating more opportunities for exiting talent while at the same time driving a need to nurture talent from within.

“We know there is a war for talent going on right now. The demographics we’re faced with, that everybody’s dealing with as well, are driving a need for the right talent management processes and leadership talent in place when certain individuals retire.

- Kevin Tarrant, Vice President of Global Organizational Effectiveness at Arrow Electronics

“

0 10 20 30 40 50 60 70 80

Talent development

Talent retention and turnover

Talent acquisition

Employee engagement

Performance evaluation

Morale

Compensation

Productivity

Identifying/integrating talent as a result of merger

Other (please specify)

7. What are the top talent management challenges you face for 2007? (Select up to three) Response Percent Response Total Talent retention and turnover 60% 435 Talent acquisition 49.4% 358 Talent development 63.3% 459 Morale 21.7% 157 Employee engagement 41.2% 299 Productivity 17.5% 127 Compensation 19.6% 142 Performance evaluation 27.7% 201 Identifying/integrating talent as a result of merger 7.3% 53 Other (please specify) 2.3% 17Total Respondents 725 Talent development

Talent retention and turnover

Talent acquisition

Employee engagement

Performance evaluation

Morale

Compensation

Productivity

Identifying/integrating talent as a result of merger

Other

63.3%

60.0%

49.4%

41.2%

27.7%

21.7%

19.6%

17.5%

7.3%

2.3%

Fig.4 What are the top talent management challenges you face for 2007?

Talent development

Talent retention and

turnover

Talent acquisition

Employeeengagement

Performanceevaluation

63.3%

60.0%

49.4%

41.2%

27.7%



KEY FINDINGSTalent Battle Takes Its Toll on Corporate America

Nearly everybody (98 percent) notes that competition for talent is heating up to some degree. And 65 percent say that it’s increasing at a high or very high level. This talent struggle is having a marked impact on the number of organizations that need to pay higher salaries (55 percent), search longer for staff (78%), and implement better internal talent development (68 percent). Many say that they need to settle for inferior employees, less flexible business models, and poor customer satisfaction. 95 percent say the cost of acquiring and keeping talent has risen this year. And there is no sign of relief in the coming year.

Takes longer to find talent

Increasing the need for internal talent development

Increasing salaries

Increasing need for recruitment services

Creating competitive adv due to better talent mgmt practices

Limiting business flexibility and expansion

Sales effectiveness

Intelligence

Creativity

Other

Very high degree

High degree

Somewhat

Slightly

Not at all

5. To what degree are the critical competencies in your organization changing or evolving? Response Percent Response Total

1 Not at all 2.2% 16 2 Slightly 9.5% 68 3 Somewhat 40.9% 294 4 High degree 42.1% 303 5 Very high degree 5.3% 38


Very high degree

High degree

Somewhat

Slightly

Not at all

9. To what degree is competition for talent increasing in your industry? Response Percent Response Total

1 Not at all 1.8% 13 2 Slightly 6.5% 47 3 Somewhat 27% 194 4 High degree 46.6% 335 5 Very high degree 18.1% 130


6.5%

18.1%

46.6%

27.0%

1.8%

0 10 20 30 40 50 60 70 80


Increasing the need for internal talent development

Increasing salaries

Increasing need for recruitment services

Creating competitive advantage due to better talent management practices

Limiting business flexibility and expansion

Settling for lower quiality talent

Negatively affecting customer satisfaction

Slowing growth


10. How is increased competition for talent impacting your business? (Select all that apply) Response Percent Response Total Takes longer to find talent 77.5% 554

Increasing salaries 54.8% 392

Increasing need for recruitment services 32.2% 230

Settling for lower quality talent 18.9% 135

Slowing growth 8.8% 63

Increasing the need for internal talent development 67.8% 485

Limiting business flexibility and expansion 19.9% 142

Negatively affecting customer satisfaction 11.2% 80

Creating competitive advantage due to better talent management practices 21% 150

Other (please specify) 2.8% 20Total Respondents 715(skipped this question) 11

77.5%

67.8%

54.8%

32.2%

21.0%

19.9%

18.9%

11.2%

8.8%

2.8%

Very high degree

High degree

Somewhat

Slightly

Not at all

Significantly

Somewhat

Slightly

Not at all

Decreased

Significantly

Somewhat

Slighly

Not at all

Decreased

Significantly 21.9% 158

Somewhat 52.9% 381

Slightly 19.4% 140

Not at all 5% 36

Decreased 0.7% 5

(skipped this question) 6

5.0%

21.9%

52.9%

19.4%

0.7%

Fig.6 How much has the cost of acquiring and keeping talent changed in the last year?Fig.5 To what degree is competition for talent

increasing in your industry?

Fig.7 How is increased competition for talent impacting your business?


Increasing the need for

internal talent development

Increasing salaries

77.5%

67.8%

54.8%



KEY FINDINGSRapid Corporate Growth and Change Driving Talent Acquisition Needs

Surprisingly, traditional reasons for acquiring talent have succumbed to a new set of drivers. Things like company growth (50 percent), evolving internal cultures (40 percent) and changing market demands (33 percent) topped the list. Much less prominent were things like employee retirement (24 percent), lagging loyalty (19.6 percent), and poor employee performance (17 percent).

“We need to expand our talent pools, and we know our competitors will as well at accelerated paces.

- Kevin Tarrant, Vice President of Global Organizational Effectiveness

at Arrow Electronics

Fig.8 What is driving your company’s need for new talent acquisition in 2007?

0 10 20 30 40 50 60

Company growth

Evolving internal culture

Changing market demands

Employee departures due to hot job market

Employee retirement

Less loyal, more change-oriented workers

New business lines

New requirements due to geographic expansion

Underperforming employee


Not applicable

8. What is driving your company's need for new talent acquisition in 2007? (Select up to three) Response Percent Response Total Employee departures due to hot job market 29.1% 211

Less loyal, more change-oriented workers 19.6% 142

Employee retirement 23.8% 172

New requirements due to geographic expansion 17.3% 125

New business lines 17.7% 128

Company growth 50.3% 364

Underperforming employees 17.1% 124

Evolving internal culture 39.6% 287

Changing market demands 32.5% 235

Not applicable 2.6% 19

Other (please specify) 6.9% 50


50.3%

39.6%

32.5%

29.1%

23.8%

19.6%

17.7%

1 17.3%

17.1%

6.9%

2.6%

Company growth

Evolving company culture

Changing market demands

Employee departures due to hot job market

Employee retirement

Less loyal, more change-oriented workers

New business lines

New requirements due to geographic expansion

Underperforming employees

Other

Not applicable

Company growth

Evolving company

culture

Changing market

demands

50.3%

39.6%

32.5%

“

© 2007 Copyright BPM Forum and SuccessFactors. 1 0


KEY FINDINGSWorkforces Gone Global

Big Business Feels the EffectsThe rapid globalization of business and the expanding role of an international workforce are having a significant impact on how companies acquire and manage talent. 77 percent of all survey participants say that global factors are making a difference in their talent management and acquisition strategies, while over a quarter say that it’s to a high or very high degree. As organizations look for new people and foster new skill sets, they need to take into account the challenges and opportunities posed by a more global outlook.

When we look at small businesses, however, the story is different. Nearly a third of these companies said globalization does not have any impact on securing and nurturing talent. And only 47 percent of small businesses said that globalization made at least somewhat of a difference compared to over two thirds of large companies.

Very high degree

High degree

Somewhat

Slightly

Not at all

3. On a scale of 1 to 5, how is globalization impacting how you acquire and manage talent? Response Percent Response Total 1 Not at all 22.9% 165 2 Slightly 21.1% 152 3 Somewhat 29.2% 211

4 High degree 20.2% 146

5 Very high degree 6.6% 48


6.6%

20.2%

21.1%

22.9%

29.2%

Fig.9 On a scale of 1 to 5, how is globalization impacting how you acquire and manage talent?

All Companies

Small Businesses Large Businesses

5 - Very high degree

4 - High degree

3 - Somewhat

2 - Slightly

1 - Not at all

Very high degree

High degree

Somewhat

Slightly

Not at all

3. On a scale of 1 to 5, how is globalization impacting how you acquire and manage talent? (small buz) Response Percent Response Total 1 Not at all 32.6% 57 2 Slightly 23.4% 41 3 Somewhat 26.3% 46 4 High degree 16% 28 5 Very high degree 1.7% 3

Total Respondents 175(filtered out) 547(skipped this question) 4

16.0%32.6%

1.7%

26.3%

23.4%

Very high degree

High degree

Somewhat

Slightly

Not at all

3. On a scale of 1 to 5, how is globalization impacting how you acquire and manage talent? Response Percent Response Total 1 Not at all 16.1% 59 2 Slightly 21.3% 78 3 Somewhat 29.2% 107 4 High degree 22.9% 84 5 Very high degree 10.6% 39


10.6%

22.9%21.3%

16.1%

29.2%

Fig.10 Fig.11

5 - Very high degree

4 - High degree

3 - Somewhat

2 - Slightly

1 - Not at all

77%Global factors are making a difference in their talent mgmt and acquisition strategies



1 1

Small BusinessesFig.12

Is there a formal talent scorecard in place at your organization?

All CompaniesYes

No

Not sure

Not sure 8.4% 61

25.7%

65.8%

8.4%Yes

No

Not sure

Not sure 5.2% 9

13.8%

81.0%

5.2%

Despite the need for better talent development, acquisition strategies and talent management processes, two out of three organizations don’t have a talent scorecard in place. Over 70 percent either don’t or aren’t sure how they measure staff performance and productivity in terms of business value creation. For small business, the situation is even worse, where 81 percent lack a talent management scorecard. These figures paint a frightening picture of companies ill-prepared to manage a more complex talent market. The old phrase “What gets measured gets done” is appropriate here, as effective talent optimization relies heavily on the ability to measure success.

KEY FINDINGSMost Don’t Even Measure, Much Less Manage, Talent Effectively

Yes

No

Not sure28.6%22.6%

48.7%

Fig.14Does your organization know how to measure talent performance and productivity in terms of business value creation?

Yes

No

Not sure

Yes

No

Not sure

Fig.13



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KEY FINDINGSBest Plans Aren’t Laid Yet

Small Business ExposedNot only do most companies not have talent management metrics in place, but a significant number (43 percent) don’t have formal plans in place to identify, grow, and retain talent. For small businesses, that ratio jumps to nearly 60 percent – a shocking number when you consider that nearly all of the small businesses polled are in service-related industries where people are critical to the success of the business.

Small BusinessesFig.15

Does your company have formal plans in place to identify, grow and retain talent?

All CompaniesYes

No

Not sure

6. Does your company have formal plans in place to identify, grow and retain talent? Response Percent Response Total Yes 56.7% 409 No 36.2% 261 Not sure 7.1% 51Total Respondents 721(skipped this question) 5

56.7%36.2%

7.1% Yes

No

Not sure

6. Does your company have formal plans in place to identify, grow and retain talent? (filtered small bus) Response Percent Response Total Yes 40.9% 72 No 50.6% 89 Not sure 8.5% 15


40.9%

50.6%

8.5%

“ Most organizations are terribly unsophisticated in managing and measuring talent against business needs. Multi-billion dollar firms know this is an issue they need to deal with. The assessment of human beings managing people was never really seen as important, but now it is.

– Paul Tiffany, Global Consultant and Senior Lecturer in Management - Haas School of Business at UC Berkeley, BPM Forum Advisory Board Member

“

Yes

No

Not sure

Fig.16



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EXCERPTS FROM THE EXPERTS

As an additional method of research, the BPMForum and SuccessFactors conducted a seriesof executive dialogs with human resourcesand talent and organizational development management executives to obtain additional perspectives on top talent management issues. Through a set of consistent questions, we’ve gathered valuable additional insights regarding the priorities, challenges, and progress in talent acquisition and management. The results from the executive dialogs revealed that due to an intensifying competition for talent, there are huge benefits to implementing effective performance and talent management solutions. In particular, executives pointed to the following common trends.



1 �


Globalization is clearly an issue that is changing the talent management landscape

The war for talent has intensified dramatically over the last year2

“ Now that customers and suppliers are demanding more global services and distribution of products, we need people with the right set of skills and capabilities to be able to manage a global organization.

- Kevin Tarrant, Vice President of Global Organizational Effectiveness at

Arrow Electronics

The current workforce has been fairly narrowly trained in the past. Project managers now have to learn to work in a global environment because finding talent is now being driven by globalization.

- Paul Tiffany, Global Consultant and Senior Lecturer in Management - Haas School

of Business at UC Berkeley, BPM Forum Advisory Board Member

We know there is a war for talent going on right now. The demographics we’re faced with, that everybody’s dealing with as well, are having the right talent management processes and leadership talent in place when certain individuals retire.

- Kevin Tarrant, Vice President of GlobalOrganizational Effectiveness at

Arrow Electronics

“

There is definitely an increase in competition for talent. The impact is felt across the board at the executive level.

- Laura Polas, Vice President of Marketing at the Human Capital

Institute (HCI)

“

1

“



1 �


Talent management measurement and scorecarding is critical and on the rise

We have a global performance management and competency model in place to measure both performance and skill competencies. We have regular talent reviews and processes in place where we can identify high performance people for certain jobs. We have developments in place now for executives and above focused on their growth. And we also have stay interviews where in the past our HR folks would conduct sessions with all of our directors and vice presidents and discuss issues such as retention, growth, etc. We just developed a scorecard this week and will be making recommendations to the executive committee. We’re looking at turnover, especially at the level of director and above, as well as turnover for individuals who are high retention risks.


“3

“ For talent management, there are some tools we use. We have a balanced scorecard in place for the company. We work on a number of factors such as work history, prior relevant experience, education, certification, retention risk, and mobility. We also have strategic priorities, about 4-5 that everone in the organization is aware of. It works at the higher levels and then gets filtered down to everyone else. We try and make sure that every employee is aware of the strategic goals of the company. Our goal is to drive results and have impact.

- Barbara Arneklev, Director of Human Resources at Pacific Sunwear

Yes, we currently have a talent management scorecard, what we call our organizational dashboard that measures six areas: growth, financials, community benefits, people, quality, and service.We’re always looking for new marketplaces for our hospital to compete in and adding new services and offerings.

- Thomas Brockbank, HRIS Director, Sutter Health “

“



1 �

Goal alignment is a key benefit that companies are realizing with improved talent management

Effective on-boarding and succession planning are creating a competitive edge 5

“ Our talent and organization’s needs are aligned pretty well. We try to focus on a few key areas, look at key customer-facing segments, as well as assess what our employees do and how well they perform.


We just had a conversation about aligning talent and organizational goals this week. We’re taking action now to identify the gaps in our organization we need to fill, as well as looking at the future state of where our organization needs to go and insuring we have the right talent in place to get us there.


Leadership standards are essential, which help us to create career maps as well. It basically helps a person get from point a to point b. The data and information we have on people, combined with SuccessFactors’ use of it in the Performance Succession Development Process (PSDP), is very helpful. Letting someone know how they’ve developed along the way is essential too.

- Thomas Brockbank, HRIS Director, Sutter Health

“

Our customers are getting more strategic and metric based in their on boarding efforts. They’re doing their best to develop leaders, better handle cross cultural boundaries, and better assess and identify talent.

- Laura Polas, Vice President of Marketing at the Human

CapitalInstitute (HCI)

“

4

“




1 �

The costs for acquiring talent are rising dramatically

Challenges in finding good staff are leading to additional emphasis on internal development7

“ The cost of acquiring and keeping talent is growing. We’re probably at a 20-25 percent increase since last year. We’ve already had to revamp our salary grades twice this year.

- Barbara Arneklev, Director of Human

Resources at Pacific Sunwear

The cost of acquiring talent is increasing... Companies need to get more creative. People aren’t as willing to move for ‘senior roles’ anymore. The whole relocation idea doesn’t sit well with a lot of folks when it comes to moving their families, but they still want to feel challenged and have career advancement opportunities. Companies need to be a lot more flexible about where people are based and how best to utilize certain skill sets. These are challenges we’re faced with now.


We have succession planning annually to identify high potentials at that time. We’re also developing development plans for these folks. We also make sure everything is cross-functional so that all of the executives are informed. And we’re currently working on retention strategies now.


“

We are tying our systems [compensation, learning management, performance management] together to make them more effective. We are also setting clear performance goals for our employees and helping them to understand how their actions affect the big picture. Having the right tools in place to have those kinds of conversations is critical.

- Tim Toterhi, Director of Global L&D Strategies and Solutions, Quintiles Transnational

“

6

“




1 �

CONCLUSION

A clear and compelling picture emerges from The 2007 Performance and Talent Management Trend Survey. Without a doubt, the global war for talent is intensifying, and those companies that are effectively competing by acquiring and developing top talent ultimately will be the winners.

Competition for Talent Growing Even More RapidlyIn 2006, companies represented in our survey overwhelmingly experienced increasedcompetition and difficulty in their quest for talent. As a result, compensation for top talentrose. It took more time to fill vacancies and new positions, and more often those positionswere ultimately filled with less qualified personnel. The talent gap impacted businessflexibility, expansion and growth. And our respondents expect more of the same in 2007.A common tendency may be to blame this talent shortage on a strong global economy.Indeed, business growth was a primary factor – both raising internal demand for new people and increasing employee departures due to a hot job market. But more fundamentalchanges in the economy and business landscape were also major contributors. Evolvingcorporate cultures and changing market demands were both cited frequently as majorcauses of the need for new talent. International business models and growth also playeda major role. Some 56 percent of respondents said globalization was impacting how theircompanies managed and acquired talent.

Progressive Companies Getting Ahead in the Global GameBut wherever there is a challenge, there is also an opportunity. Better companies willfurther distance themselves from the pack by out-performing the competition in attracting,retaining and developing their talent. Indeed, 21 percent of our respondents said theyviewed the increase of competition for talent as an opportunity to create competitiveadvantage through better talent management practices. As mentioned earlier in thisreport, that belief is supported by other recent research by SuccessFactors and human capital expert Dr. Jac Fitz-enz which reveals that smarter human capital management leads to better financial performance.



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CONCLUSION

Organizations Putting More Emphasis on Effective Talent Management, And it’s Paying OffIt’s no wonder that two-thirds of the executives participating in this study said theirorganizations consider talent management to be a high or very high strategic priority. Innovative organizations—in particular large companies—are catching on to the talent management wave. With more advanced and sophisticated technology, tools and processes at their disposal and the nagging need to improve talent management practices, these leaders will not remain idle. Those that have already engaged in strategic talent management are reaping the rewards even in the early going. With growth and globalization expected to continue in 2007, these pioneers will lead the way to a more productive overall international workforce and better ways to seek and sustain the available talent in the marketplace.

“ It’s all about people and talent in our business. We’re known for our world class training and

are making use of various blended learning technologies to make it even more effective.

We provide a variety of programs to ensure our employees are ramped up quickly and work

to ensure they have the skills, resources and tools required to provide excellent customer

service. Leveraging the right balance of technology and face-to-face interaction allows us to

provide our employees with the skills they need today and the development opportunities

tomorrow’s challenges demand.

- Tim Toterhi, Director of Global L&D Strategies and Solutions, Quintiles Transnational

“



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SUCCESS STORIESWinning the War for Talent

A number of organizations are leading the way in implementing successful talent management solutions and processes that are making a huge difference in areas such as goal alignment, succession planning, pay for performance, employee acquisition, retention, morale, and engagement, and staff training and development.

Below is a snapshot of a few companies that have made the appropriate strategic moves to get an edge in the talent war. By implementing organization-wide change in a short period of time, these companies have taken a proactive approach and seen remarkable results.

All of these companies have recently implemented solutions from the Performance and Talent Management Suite from SuccessFactors, the leader in on-demand performance and talent management solutions.

$



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SUCCESS STORIESQuintiles Transnational

Quintiles Transnational

1Industry: Pharmaceutical servicesNumber of Employees: 17,000Revenue: $2.3 billionwww.quintiles.com

Quintiles Transnational is powering the next generation of healthcare by providing a broad range of professional services in drug development, information, financial partnering and commercialization for the pharmaceutical and biotechnology industries. With 16,000 employees and offices in more than 50 countries, it is focused on providing customer-centric solutions that are the gold standard of the industry.

“The simple change of using SuccessFactors’ Performance and Talent Management Suite is helping Quintiles transform our organization. We’ve made devotion to customer satisfaction a core, measurable part of the company and leveraged the Performance and Talent Management Suite as a major tool in helping us do that by aligning all of our employees on achieving similar goals. We have reduced employee turnover throughout our organization and simplified our employee review process, freeing up a significant portion of our managements time to concentrate on better serving our customers.

- Mike Mortimor, Senior Vice President of Human Resources

“

BuSINESS DRIVERS

Quintiles looked at implementing talent management solutions to:

▶ Help its sales and support force to improve service management for its customers by aligning customer service goals across the entire company

▶ Automate its performance review process with an objective, effective system

▶ Increase employee retention and improve employee satisfaction

▶ Refocus its employee training and development program away from just attending courses and seminars to driving improved performance

BuSINESS RESuLTS / GOALS

Quintiles was able to implement a new solution in two and a half months to automate its performance review system, increasing employee efficiency and reducing turnover. Quintiles was also able to better align its employees’ goals:

▶ In about a year, Quintiles increased its performance review completion rate from a low of 40 percent to 97 percent compliance

▶ The company dramatically reduced the rate of attrition among its employees, reducing turnover from 23 percent to 16 percent

▶ Customer loyalty in four crucial areas, including timeliness, accuracy and willingness to refer Quintiles, all increased after implementing talent management solutions



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SUCCESS STORIESKimberly-Clark

Kimberly-Clark

2Industry: HealthcareNumber of Employees: 57,000Revenue: US $16 billionwww.kimberly-clark.com

As the manufacturer of personal care and hygiene brands such as Huggies, Kotex and Kleenex, Kimberly-Clark’s products are sold in more than 150 countries, reaching one billion people every day. The company posted sales of more than $16 billion in 2005, a record in its 134-year history.

BuSINESS DRIVERS

Kimberly-Clark decided to adopt a Workforce Performance Management process and system to:

▶ Develop a new corporate culture based on pay-for-performance

▶ Modernize its 20-year-old performance management process that had become decentralized, outmoded and cumbersome

▶ Develop an effective compensation plan to establishes a direct link between performance

and compensation

▶ Establish clear goals across the company and provide clarity and alignment of objectives with overall business goals

BuSINESS RESuLTS / GOALS

With a new talent management solution in place, Kimberly-Clark gained a clear picture of its talent and performance across its organization and was able to initiate a pay-for-performance culture in the company:

▶ The peformance review system has been automated across the company

▶ Employee compensation is now better linked to performance

▶ The system helps the company to align goals across the organization

▶ More than 20,000 workers in 65 countries in 16 different languages use the company’s new talent and performance management system

▶ A new leadership competency model was put into place to ensure that the cultural changes were clear, consistent and aligned with the new business model

“Our goal is to improve the company’s overall effectiveness so that every business, every function, every region and every person has maximum impact. It’s one of the key focus areas of our global business plan to drive the company and get us to our goal to be the top global leader in the health and personal hygiene market. We rely on SuccessFactors as the technology backbone and fuel for our performance and talent management process.

- Liz Gottung, Senior Vice President and Chief Human Resources Officer

“



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SUCCESS STORIESProxicom

Proxicom

3Industry: TechnologyNumber of Employees: 1,000+www.proxicom.com

Proxicom is a leading interactive services firm building enterprise-level Web sites for clients in the automotive, financial services and healthcare industries. It provides front-end and back-end Internet application, architecture, design and development with service-oriented architecture and Web services.

BuSINESS DRIVERS

Proxicom decided to adopt a Workforce Performance Management process and system to:

▶ Get a clear picture of the skills and competencies of its workforce and be able to rapidly identify underperforming employees

▶ Streamline goals and provide clear objectives for the matrix-based and geographically dispersed company

▶ Modernize its performance review system, which consisted of an ineffective, slow process of Word documents being e-mailed back and forth between employees

BuSINESS RESuLTS/GOALS

With a new talent management solution in place, Proxicom gained a clear picture of its talent and performance, aligned goals and expectations across the company, and established a clear, efficient compensation and review system:

▶ Companywide implementation across its eight offices was easy and took only 4 weeks

▶ The company streamlined its performance review process, reducing the time spent on reviews by 33 percent, saving about $60,000 in the first year of use

▶ Under-performing workers were identified and thinned out

▶ Eight offices around the country were better integrated by creating a common corporate culture

“SuccessFactors gave us valuable insight into our workforce that we never fully had before and we were able to completely reshape the performance and culture of our workforce, streamline our business and get rid of inconsistencies we had between our business plan and the way we do business.

“



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As the 2007 Performance and Talent Management Trend Survey confirms, organizations overall have a long way to go in order to match talent effectiveness with the challenges and requirements ahead.

The SuccessFactors Maturity Model©

In order to further outline the various stages companies find themselves in and some of the best practices that are acheivable, the following is a brief discussion of the SuccessFactors Maturity Model©.

Using SuccessFactors software can improve efficiency as well as the talent management culture within organizations. We use a standardized framework to measure improvements. This tool the Maturity Model© serves as a vehicle and a catalyst to put focus on important internal parameters that can be managed in a SuccessFactors deployment.

The SuccessFactors Mature Model© enables the business effectiveness via time savings it delivers through the efficiency gains enabled by technology:

▶ VisibilityWhat if you could see what everyone’s goals are and get a solid understanding of who is performing and who is not?

▶ ScalabilityWhat if you could use this not only in one division but in all divisions, or even when you merge with another company?

▶ ResilienceWhat if all data on performance and people is pulled from drawers and dispersed hard drives, and placed in a single place [or: on a single platform?] that stays when your people move?

▶ ConsistencyWhat if you could create a consistent performance culture that transcends language, geographical and cultural differences?

▶ PredictabilityWhat if you could see early warnings on your Key Performance Indicators (KPIs)? Are you driving with your eyes on your rearview mirror? You need to see issues early to address them.

Increased efficiency means more time to focus on strategic business impact.

APPENDIXTalent Management Maturity and Efficiencies



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APPENDIX

- Perception of Talent and Performance Mgmt value to the business is great

- Inconsistent and manual processes

- usage and time spent on developing talent is high

Mature & Incapable

- Great processes in place- Consistent and high user

adoption- Majority of time spent on

strategic talent management

Leaders

- Great processes in place- Low adoption of usage- Low leverage to strategic

benefits from efficiency gain potential

- Value perception from business is low

Process Savvy

- Inconsistent and manual processes

- Value perception from business is low

- Little time spent on developing talent

Leggards

Technology

Cultu

re a

nd L

eade

rshi

p

The SuccessFactors Maturity Model©

Busi

ness

Pro

cess

Effectiveness• Accountability• Strategic issues• 1:1 conversations

• Scalability• Resilience• Consistency• Visibility• Predictability

Efficiency

Best Practice

Technology

Efficiency is the Key to Drive Effectiveness

Cultu

re a

nd L

eade

rshi

p

Technology does not solve business issues; it enables change. Sticky change is culture. Culture can only change with strong leadership and clear visibility and accountability for

the individuals that create the culture. When best practice business processes are built into software, you have the unique opportunity to leverage the software to drive change. In other words, smart technology can facilitate change.



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APPENDIX

To test the model, we worked with select customers that have used SuccessFactors’ software for an average of 2 years and 3 months. Our research found that, on average, an improvement from 30 to 60 as measured by the SuccessFactors Efficiency Index© was a fairly consistent shift. Further, on average we found that the culture and the attitude towards talent management as measured by the SuccessFactors Talent Management Index© also improved, but to a much lesser degree: it grew from 42 to 48, representing a 15 percent improvement.

Though we cannot claim causation of these improvements or the financial impact, on average we have seen an increase of 80 percent in net income per employee in parallel with internal improvements made.

SuccessFactors Research offers consulting services to assess your organization and to work with you to define a prioritized and timed change agenda to drive and manage the value from your change. This Maturity Assessment offers you the opportunity to learn from others about what potential areas you should focus on to drive a successful deployment of the Performance & Talent Management process within your organization.

SuccessFactors Efficiency Index© is a weighted index that measures efficiency gains from using SuccessFactors within an organization. It consists of seven distinct questions.

SuccessFactors Talent Management Index© is a weighted index that consists of 10 distinct questions. The index includes questions such as:

▶ Is time allocated for setting goals and managing the performance of individual employees?

▶ Are managers accountable for developing the talent that they are responsible for managing?

To learn more please contact us at [email protected]



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SuccessFactors delivers performance and talent excellence, on demand. The company’s software promotes visibility, accountability, and results, enabling organizations to eliminate the politics that destroy motivation and impede performance. Fueled by the industry’s highest renewal rate, SuccessFactors has grown from 300 customers and 1 million users at the end of 2005 to close to 1,000 customers and close to 2 million users in 139 countries, across 40 industries, in 18 languages—all while becoming easier to use everyday. The company has almost doubled the employee base, currently employing close to 400 talented people in 2006. Carefully designed and executed internal growth has allowed the company to provide the same caliber of absolute excellence in execution for customers that catapulted SuccessFactors into the product, customer and revenue leader in the performance an talent management market space. Customers include MasterCard Worldwide, British Telecom, Textron, Salesforce.com, Cooper Tire & Rubber Company, Volkswagen of North America, Reebok, Pep Boys, Lancaster General Hospital and Grant Thornton. The company continues to execute on a level of global excellence through the provision of an industry leading, scalable and secure global hosting operation. Founded in 2001, SuccessFactors has 15 worldwide offices collaborating for strong local support of customers. For more information, visit http://www.successfactors.com or call +1 800 809-9920.

The BPM Forum helps advance the understanding of business performance management techniques, technologies, and process in global enterprises. The Forum brings together influential business line managers and senior executives overseeing enterprise finance, operations, and technology functions. Nearly 1,000 companies are currently represented as members of the BPM Forum, accounting for well over $500 billion in aggregated annual revenues. For more information visit http://www.bpmforum.org.

The Human Capital Institute is a think tank, educator, and professional association dedicated to the advancement of talent management practices with individuals and organizations. HCI serves as a catalyst for innovative thinking in integrated talent strategy, acquisition, development, engagement, management, and measurement. Through research and collaboration, HCI programs collect original, creative ideas from a field of the brightest thought leaders in talent management. Those ideas are then transformed into measurable, real-world strategies that help its members attract and retain high-performing people, build a diverse, inclusive workplace, and leverage individual and team performance throughout the enterprise. HCI members represent a broad coalition of educators, talent managers and executives. For more information, please visit: http://www.humancapitalinstitute.org.

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