Erik Berggren (Part 2) - 4 strategies for successful talent management

Speaker

In the second of two podcasts with Erik Berggren, Head of Global Research at SuccessFactors, we learn some of his recommendations for how to manage talent effectively in an economic downturn.

Erik

What we have clearly seen is at least that there are four clear strategies or approaches that winning companies are taking and should take to come out long and winners in these uncertain times, and the first thing is definitely around clarity. More so now than ever is it important to make sure that, if you're setting a new strategy, a new direction, that the people that work for you on your payroll, or if they are contractors, what will you, make sure that they're aligned on what the new strategy is, so that they can help execute on this pretty quickly. You cannot afford to have any value leakage when people don't know what to do. That is the first thing, the clarity around that.

The other thing is the fact that, if you're overstaffed, if you just simply have too many people to actually serve the demand that you actually can either see or generate, you have to cut, and it's a hard thing, it's a horrible thing to do, and it's not pretty in any way, there could be personal tragedies behind it as well, but if you're going to do it, you're going to do it right, you're going to do it so that you keep the key assets, the strongest performers, the best people, and let go of the people that are less critical and less performing than others for your business survival.

The third thing is that, make sure that you invest smartly, and that you really differentiate what you're cutting on and not— you cannot just let go of everything in a business, there are maybe three, four, five core skills and competencies that are going to help you stay with black figures, and stay profitable, and keep your market share over this tougher time, and also those that can help, being the real strategic advantage to you moving ahead, and we call that a little bit of a carrot thing, think about this as where you really need to invest— what are the most critical skills and talents, and sometimes it's not what you think it is. For an airline carrier, Southwest Airlines, it's often used as a great example, it's the baggage handlers, because they can turn planes around and make sure that they reduce the cost; but, besides of that, and the whole philosophy and strategy of them being very profitable and can serve customers better that way, with lower costs than anyone else, to their advantage; also fuel buyers, people hedging future fuel, very very important, it's only maybe a handful of people that are actually helping doing that, but that has more impact on the real profit of the airlines than anything else in this turmoil, when you can see oil spike prices of $16 from one day to the other changing. So maybe it's not always the critical components of your business that you think they are, but it's very important that you quickly analyse what is key, what is differentiating you, to survive and stay in this business right now, and also to come out long and take strategic advantage and be a winner after that.

And the last thing, which is really a concept of transparency— make sure that you're absolutely metrics-driven, data-driven, if you have to let go of people, make sure you don't hide anything, no double-speak, no secrets and not a lot of gossiping going around, stating one thing publicly, then letting go of the people other than you said you're going to do and all that, that is really backfiring, and we know from some research that was done last time, there was this really hard times in early 2000. Those companies that created a much higher trust environment definitely had a much higher shareholder return looked upon over three years of time than those that have failed to create this kind of high trust environment.

This is going to be hard going, this is going to be tough for a lot of people, but if you do those four things, and you keep that right, I'm pretty sure that chances are that you're going to come out as one of the winning companies, or much higher than if you fail to do so and don't learn from what happened last time around.

So if you're thinking about, how do I go about this? Where do I start? What do I do? If you're in HR, think about who your real customers are, where are we actually going to drive some change? And I would say, of course you need some executive buy-in and sponsorship to go about and do this, but the key is really to drive change to middle management, and people that are accountable for actions and activities on a day-to-day basis that are really implementing this new strategy. What I suggest you do is really put some real power, make it easier for these managers to actually drive and figuring out, and set real performance standards, and coach and drive more performance from their people, and if you're in a business, you have to rely on some IT software and systems to do this, because it is impossible to drive this change and give the managers and drive all this consistency and systematic data generation and content without having a consistent system to support you with that, it's pretty much impossible if you don't take the opportunity to invest in a performance management system that can help you with, not just providing day-to-day life better for manager/employee interaction, but setting the goal alignment clear in organisations, and also to provide the real strategic data, so that executives can make decisions based on facts around, but typically 70% of the operating costs, which today is people.

We have also done some very interesting research where we have looked at the usage of SuccessFactors from our customers over time, and we clearly, without a shadow of a doubt, can see that the longer our customers are using our software solution, SuccessFactors' Performance and Talent Management suite, the better they're doing, they're relatively speaking outperforming their own competition, their industry norms, with some financial measures. When you look at this from using this three years or more, because it takes a while to actually get the effects kicking in, our customers are growing twice as fast as their competition, more than 20% annual growth rate, in comparison to ten, which is the average from their competition. Of course, not all of this could be attributed to the usage of SuccessFactors, but statistically-speaking, when we're rolling this back and looking at this, and start isolating the factors, it's been estimated at least two to three percent superior top line growth is achieved by those companies that are investing in their people and investing in SuccessFactors to drive their people's strategies home with us, and that is something that I feel so extremely passionate about, and am very very proud of being part of driving that change as well.

So with that, I'm really, just want to wish you good luck, and hope that you're doing the right things and really coming out long with this, going through these painful times, strong, learn from it, and come out long, so that you're an even better and stronger company, and that you can help drive that, and step up and take leadership for that.