As with other new vendors in the HCM software market, SuccessFactors offers its products as a full suite or as individual applications via the software-as-a-service model, in which it hosts the software in its own data centers and prices it on a per-employee basis. That lets customers start small and build, and avoid large, up-front capital outlays. “We’re like an ATM,” says Lars Dalgaard, SuccessFactors’ CEO. “People walk up to us with various needs and we respond instantly.” More important than the delivery model, Dalgaard says, is the intent behind the software. “We change people’s lives,” he says. “Think about how much time you spend at work. Don’t you want clarity into what you’re doing and why, and where you’re going?”
“Every employee needs a clear line of sight between what they do each day and how it relates to our global business plan,” Buthman says. “That’s how they understand the contribution they make. That’s part of what makes them feel engaged by their jobs.” And engagement, Buthman and others say, is critical to productivity, even if it can be hard to quantify. “You can get in trouble attempting to apply generalized metrics to all knowledge workers,” says Tom Davenport, who holds the president’s chair in information technology and management at Babson College and is the author of the newly published Thinking for a Living: How to Get Better Performance and Results from Knowledge Workers (Harvard Business School Press). “Companies often embark on these projects because of a pain point. And while they might measure the effect on that pain point — such as a health-care company that reduces errors thanks to a new training initiative — translating that to an ROI is difficult.”
Buthman agrees, although he says that Kimberly-Clark is now developing an index to measure employee engagement, and he does expect verifiable improvements in productivity over time. David Ulrich, author of Human Resource Champions and a professor at the Ross School of Business at the University of Michigan, says, “When people are engaged, they give their ‘discretionary energy’ to the company, their best-quality work, and companies benefit enormously from that, even if they can’t quantify it.”
The connection between employee engagement and productivity may be opaque, but the link between performance and pay is much clearer — or could be. One problem with performance reviews, many experts say, is that managers often lack visibility into an employee’s achievements throughout the year and instead tend to make decisions based largely on what the employee has (or hasn’t) done lately. Many HCM software companies cite this as a reason to buy a full suite of products that can address everything from hiring and performance management to compensation and career planning. As Buthman says, “The ability to differentiate among performers and match those differences to pay really completes the loop.”
Greater visibility into the workforce can pay off in other ways as well. IBM’s Workforce Management Initiative, which was launched last year, involves building a profile of the skills and background of every employee so that, as one example, consultants in its Business Consulting Services unit can be deployed more efficiently. “We wanted smarter utilization of our labor,” says Harold Blake, IBM’s director of workforce optimization. “We wanted to minimize the time consultants spend ‘on the bench’ and get them on the engagements they’re best suited for. At the same time, we wanted to see who has been to London and Tokyo and Los Angeles in the past month and maybe needs a break and shouldn’t be shuttled off to Paris.” One goal, he says, is to enhance the profitability of each engagement by staffing it optimally.