Definitive Guide to Strategic Human Capital Management


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The Definitive Guide to Strategic Human Capital Management” provides insight into:

The visibility and information needed to proactively manage your business and your talent
Keys to recruiting and hiring the best talent
Ways to nurture and optimize your existing talent, including best practices in assessing and developing employees
Mitigating risks and lost productivity due to employee absence
Benefits of developing a high-level view of the health of the company using HCM data and KPIs

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Definitive Guide to Strategic Human Capital Management

  1. 1. Whitepaper Definitive Guide to Strategic Human Capital Management Consolidating Strategic HCM Functionality to Optimize Your Workforce In the realm of human capital management, there’s a new wave of thinking about what it means to be strategic and drive workforce effectiveness. Riding the leading edge of this wave are the savvy human resources executives, driving their organizations with a forward-thinking, strategic and integrated approach to human capital management. This new wave is commonly known as Strategic Human Capital Management (HCM). At its core, Strategic HCM enables a whole set of so-called “cross-process” workflows, such as integrating recruiting and onboarding or pay-for-performance. SumTotal’s end- They are cross process because they span the classic silos of HR to provide a to-end Strategic more efficient, effective approach to human capital management. Below are a HCM solution classic set of these cross-process flows enabled by a Strategic HCM solution enables businesses and industry examples to which they can apply. to track their Talent Learning Workforce Payroll workforces across All Industries Management Management Management Management • Talent development for key strategic competency the needs of the entire organization, focus for company Learning development suggestions and assignments based on competency gaps Services Industry increasing the Incentive compensation based on • Managing variable pay based on contract assignments visibility of budding Performance and schedule adherence problems and the Demand driven talent succession, hiring, Retail Industry efficiency of the initiatives used to • Demand driven hiring of employees and contingent and development plans based on gaps labor based on optimized schedules Schedule based on employee compliance, solve them. certifications and/or performance Healthcare / Manufacturing Industries • Validating certification to operate a machinery before assigning resource to schedule Training schedules aligned with work schedules Healthcare Industry • Managing performance based on time spend with patients and critical shifts Typical cross-process flows for Industry needs for Strategic HCM Strategic HCM cross-process 1
  2. 2. Definitive Guide to Strategic Human Capital Management At the highest level, Strategic HCM enables human resources to effectively work with executive management to help create and execute the organization’s strategic goals by providing a single source of truth for all workforce-related questions. By providing one, unified employee profile across all HCM processes and making that information easily available for analysis and further correlation with business data, Strategic HCM solutions provide HR and management a true strategic planning tool. More importantly, this planning tool is integrated with all the cross-process HR systems that are needed to tactically execute all HR functions. Strategic HCM Processes Transformation Workforce Strategy & Planning Perform to Assess to Plan & Schedule Acquire to Reward Develop to Pay Onboard (Performance (Learning (Workforce (Recruitment) Mgmt) Mgmt) Mgmt) Enablement Profile & Compliance Core HR Skills & Social (Expense, Record Competencies Connections Payroll, etc) Infrastructure Basic Record HR Transaction ERP Finance & Keeping Management Project linkage Tactical HCM The diagram above demonstrates the relationship between the Strategic HCM and tactical functions that HR classically executes. This paper focuses on the on the main transformative solutions that Strategic HCM can provide: ■ A Single Source of Truth ■ Acquire to Optimize ■ Perform to Reward ■ Assess to Develop ■ Plan and Schedule to Pay ■ Closing the 2
  3. 3. Definitive Guide to Strategic Human Capital Management A Single Source of Truth – Centralized HR Information Oftentimes, as an organization grows, the various aspects of human capital management become the responsibility of disparate systems or groups. One consequence is that, over time, organizations develop silos of employee information, with each profile containing only the information required for the specific function. This can lead to inefficiencies and inconsistencies as changes fail to propagate completely throughout the company. Recruiting Profile Mary Smith HR Profile SumTotal’s Integrated Strategic Human Employee Profile Capital removes the inefficiencies and Mary Smith inconsistencies of siloed functions and creates a clean profile with end-to-end, Payroll Profile real-time capabilities. Mary Smith Mary Smith Scheduling Profile Mary Smith By centralizing these functions in one integrated Strategic HCM solution, organizations are able to automate and connect all of the HR information. SumTotal empowers HR managers with the ability to maintain consistency, ensuring that all necessary parties have access to the same up-to-date information by managing one central profile for each employee. A centralized employee profile provides a single source of information on your talent pool’s information, skills and competencies. The result: providing HR and executives a closed-loop relationship between business and workforce planning and strategy. Acquire to Optimize Hiring a candidate to fill an open role is not the end of the process for a business. The onboarding process for a new employee is only complete when that person is satisfactorily productive in a new role. Accomplishing this in a timeframe that meets business needs often requires this candidate to be appropriately skilled and motivated, with a solid understanding how his or her actions affect company 3
  4. 4. Definitive Guide to Strategic Human Capital Management An essential feature of any complete Strategic Human Capital Management system is that it must allow HR managers to manage their talent pools proactively. Instead of only solving problems as they arise, a successful organization must be able to predict its own needs and act to promote priorities and actions that maximize the chances of success. With SumTotal Talent Management, managers can keep a finger on the pulse of their workforces, know an employee’s abilities to achieve optimal output, and understand employee weaknesses to guide training and hiring. Bring in the Best - Making changes to your workforce can be risky and expensive, especially when hiring new employees. Having a complete set of information Nati Com onal Se available allows HR managers to quickly and easily identify the best possible pan rvice Seas y Ramps candidates for hire or promotion among all those available. ona Up Case lH Stu ires dy >> SumTotal Talent Management can help managers identify gaps in their workforce and guide them toward candidates who are skilled, trained, motivated and aware of how their performance drives the entire organization’s success. Combined with SumTotal Learning Management, organizations can get the best employee for the Knowing that its most prolific position on the job quickly and efficiently. time of business comes in the last quarter of the year, a national Optimize your Talents - Even given the appropriate information, it’s often far more service company expands its workforce annually from a core of efficient to optimize your talent pool than to increase it. Consider a situation in which 4,000 to a peak of 20,000 in a few an existing resource is dissatisfied with his or her employment and is considering months and then back down. The company needed a solution to leaving the company. Meanwhile, in another part of the organization, managers are both find and manage this amount of talent, particularly because the struggling to fill a vacant position, and the delay is costly. temporary employees seemed to keep losing track of their goals and Without the visibility provided by a fully integrated Strategic HCM solution, the core employees were not effectively managers may never know that a potential candidate already exists within the able to transfer their knowledge. These problems not only made the organization, the source of the employee’s dissatisfaction or that the employee is new hire experience in learning how things worked extremely dissatisfied at all. The company stands to lose a valuable resource and is still left arduous and time consuming, but with the task of bringing on a fully new team member to fill both vacant positions. also tended to create a system of positional power for those who did hold that knowledge, which An integrated Strategic HCM system helps managers approach such issues multi- could diminish the company’s dimensionally. The visibility into the current workforce ensures that potential internal representatives’ overall ability to work cohesively toward a goal. candidates are considered, and the individualized talent profile helps organizations Using SumTotal Talent Management, prepare employees for advancement. the company was able to develop and disseminate requisitions for With SumTotal Strategic HCM, companies can nurture talent and maintain candidates with specific skills. After the HR department sourced and morale to limit attrition and prepare for future needs with an actionable leadership filtered these candidates using guidelines set out by the company development plan outlined below. and held in SumTotal software, the company’s priority was to onboard the new workforce quickly so that Define Career Goals Develop personalized Perform Gap Analysis the employees were prepared to • Integrated goal mgmt. training paths • Integrated performance mgmt. meet business needs in a specific • Integrated employee profile • Integrated learning mgmt. • Integrated competencies timeframe. Instead of having an • Integrated development HR department that had to invest planning too many resources in managing the bureaucracy that can come with quintupling the workforce seasonally, the department is able to use SumTotal to find and develop the necessary candidates to have a Track potential Keep workers Form and enact detailed profitable year. • Integrated succession planning compensated in line succession plans • Integrated analytics with performance • Integrated succession planning • Integrated pay for performance • Integrated 4
  5. 5. Definitive Guide to Strategic Human Capital Management2009 State of Global Talent Management Perform to Reward Perhaps the greatest measurable benefit in Strategic HCM comes from the relationship between performance management and compensation management. These two processes encompass the management, tracking and execution of the organization’s strategic and tactical business goals, as well as the management of the organization’s largest controllable expense and best resource – employees. The result of successfully linking these processes can drive real results across the business. In fact, SumTotal’s own external study of over 300 senior-level HR practitioners from around the globe showed that the integration of performance and compensation management processes correlated to a measurable reduction in voluntary turnover across their organizations. Today, performance management has one the highest rates of automation of any HR process in organizations across North America and is becoming more common in other parts of the world as well. The prevalence of automation has also helped bring about agreed upon standards for goal and competency management and measurement. As a result, the move from simple “process enablement” to the more valuable “HR transformation” is in process at many SumTotal’s own external study of over 300 senior-level HR organizations today. practitioners from around the globe showed that the integration Still, organizations lose the efficacy of perform to reward when their methods of performance and compensation of planning and executing compensation management are extremely complex management processes correlated to a measurable and customized – often done with desktop tools such as spreadsheets and reduction in voluntary turnover documents. Without centralized management of the process, including a across their organizations. workflow and business rules engine, compensation management is often riddled with gaps and inconsistencies. The cost of these issues is high for the organization – both in financial terms and on employee morale and turnover. Organizations frequently try to link compensation to performance ratings to enable a cultural transformation into a high performing organization. This “pay- for-performance” process often fails when organizations do not provide enough differentiation in merit and bonus amounts to effect the behavioral changes required to enable this transformation. When an organization only awards high performers a percent or two more than low performers, it does not provide the incentive for low performers to change their behavior or motivate high performers to continue performing at the highest levels. Best-in-class organizations implement an integrated performance and compensation management system, which uses performance ratings to drive pay guidelines. This ensures that high performers receive a larger share of the merit pool while increases for low performers are kept to minimum to maintain an appropriate budget. Assess to Develop Whether an employee is newly hired or promoted, an effective training program is essential to minimize the time to productivity. Even existing employees benefit from continued training on new processes or 5
  6. 6. Definitive Guide to Strategic Human Capital Management2009 State of Global Talent Management With a learning management system like the one integrated into SumTotal’s Strategic HCM solution, organizations can streamline on-boarding and employ- ee development. Assessment Results - A company can assess an employee using a competency gap analysis for the current or future position, self-assessment, 360-degree assessment or a comparison of actual to expected or targeted results. Using one or a combination of assessment results provides a full scope of employee efficacy in current tasks or readiness for a promotion. Knowing a workforce’s capabilities provides a variety of benefits. A company can plan to: ■■ Develop the workforce further ■■ Ensure compliance on training ■■ Keep employees updated on newest product or service offerings ■■ Measure the efficacy of learning initiatives ■■ Make scheduling decisions according to position success ■■ Determine if and when new hires are necessary to fill gaps Development Plans - Employees are an investment, and the faster they become productive, the faster the organization sees returns. However, constantly reinventing the training process for each new resource, or occupying experienced employees with training tasks and the associated evaluation, increases the initial investment. Balancing these dynamic expenses can be difficult. Therefore, an effective training program must be repeatable, systematic, targeted and measurable to appropriately address the issue. Whether an employee is in the onboarding process, maintaining compliance or is being developed into a leadership role, knowledge of their competency gaps, track records and company best policies are the first step in generating a plan. Integration of assessment and learning solutions allows for closed-loop development planning, where training plans are prescribed to leverage the learning catalog to fill identified knowledge gaps. This enables managers to create plans more quickly 6
  7. 7. Definitive Guide to Strategic Human Capital Management2009 State of Global Talent Management increases employee engagement. Giving employees the chance to learn new skills is a large component in keeping an engaged and motivated workforce that is working toward career development, so taking advantage of a solution that help a company plan learning milestones will benefit the workforce and the bottom line. How den its E Deve lo Plan and Schedule to Pay Case mployees ps St udy Without visibility into its workforce, an organization cannot optimize its processes >> and schedules. In order to make the best possible decisions regarding employee scheduling, a manager must be able to easily access each employee’s details One of Europe’s most successful while building the schedule itself. manufacturing companies, Howden set an aggressive business goal With intelligent scheduling, the combined power of SumTotal Learning Management to double revenues. To support this goal, HR determined the and Workforce Management allows managers to do just that; while creating or company needed to retain and editing a schedule, managers can quickly pull the centralized employee profile grow its engineering staff. The HR team presented a business to find the most appropriate match. By cross-checking employees’ certifications case to executives to show that an integrated talent management against the positions being scheduled, the application can prevent employees solution could enable them to from being assigned to a role they’re not prepared for. These safeguards can be reduce turnover and achieve a strong return on investment. The applied to the clock as well, preventing anyone without the proper certifications plan focused on creating a single solution that would unify employee from punching in to an inappropriate position. information in one place, creating a new hire training program and For example, consider the manufacturing organization that experienced repeated creating a career path program to instances of employees assigned to jobs they were not certified to complete; help with succession efforts. The implementation of SumTotal an inefficient and potentially unsafe situation. The advanced clock technology Performance, Career Development, provided by SumTotal helped this organization ensure that unqualified employees HRMS and Learning helped to improve time to competency are unable to punch into positions they can’t complete, and SumTotal’s intelligent for employees and reduced turnover costs for Howden. “The scheduling functionality prevents the employees from being scheduled to such SumTotal solution’s ability to link tasks to begin with. together all the components of this program into one system, from Knowing your Workforce - Whether planned or unplanned, workers are going to new-hire information to scheduling, e-learning and diverse content be absent. Employees may need time off for illness, vacation, family care or even management, really helped us execute this program across the to pursue their studies on an extended leave. In the past, organizations with a high globe successfully,” said Global HR population of shift workers may have felt the impact of absences sooner and more Operations Manager David Tough. directly than organizations with salaried workers, but in today’s environment, where few resources are tasked with the work of many, worker productivity and business objectives have leveled that playing field. When employees are absent from work, organizations face increased risks related to regulatory compliance, workplace safety, staffing guidelines and business performance objects. Also, organizations that need to use overtime or temporary Fast Facts workers to maintain the same output will feel the effects of diminished margins. Industry: Manufacturing From a payroll perspective, there are costs associated with employee absence. For Countries: 17 Countries example, time entry adjustments may be necessary when an employee takes time Users: 3,800 off, and unless you have an automated solution, adjustments can lead to costly errors. SumTotal Product: Talent Portal With SumTotal Workforce Management, organizations can track employee Performance Management schedules, work times and leave for accurate record keeping. Additionally, the HR Management (HRMS) Learning Management system will track deviations from planned attendance, including such activities as late arrivals, early departures or not working on a scheduled day. These features will grant managers the time and information they need to keep their workforce running and help solve issues by clarifying 7
  8. 8. Definitive Guide to Strategic Human Capital Management2009 State of Global Talent Management Closing the Loop Analyst Reviews: A company that plans to succeed in its goals must focus on activities and initiatives that support growth and promote the bottom line. While the thought is simple, knowing what these activities are is another matter, and being able to track correlation and show hard data on them is harder still. Using a Strategic Workforce …the broadest and most Analytics solution to overlay the components that make up Strategic HCM allows a mature application suite company to roll up the data into a high-level view of the health of the company, all in strategic HCM the way down to a granular examination of initiatives or employees. specialist space. In addition to seeing what is working well in a company, executives and managers using Strategic Workforce Analytics can pinpoint problems and discover low- impact competencies using a combination of internally generated key performance indicators and external data. Being able to compare common data on a single dimension instead of piecing the information together across siloed modules means information is more accurate and accessible for actionable decisions. Strategic SumTotal has established Workforce Analytics also allows organizations to combine business performance itself as the market share metrics, like sales and customer satisfaction data, with human capital management and mind share leader… data on a single dashboard. This combination demonstrates the impact of human capital management initiatives on business performance data. The closed loop analytics capability of Strategic HCM enables transformation from tactical progress reporting to a focus on more strategic initiatives and impacts. Using a Strategic HCM solution like SumTotal’s means that a company has access It seems clear to me that to best-in-class products that create a clear picture of business health and an the company certainly has easy roadmap to follow when selecting, developing, motivating and managing a a strong leadership team workforce. With penetration into more than 50 percent of Fortune 500 companies, and a clear roadmap for SumTotal has the depth and breadth of expertise to help your company apply the going forward. benefits of Strategic HCM. “Most impressive was the continuity of roles across each of its applications – it’s no easy feat to maintain such consistency. SumTotal is positioned to keep growing its portfolio and gain more customers thanks to its common application platform and architecture, which provide integration of applications, processes and information…In fact only a few providers have this breadth and depth” 8
  9. 9. Definitive Guide to Strategic Human Capital Management More Information For additional information, send an email to About SumTotal SumTotal Systems, Inc. is the global leader in strategic Human Capital Management (HCM) solutions that provide organizations with a new level of visibility to help make more informed business decisions and accelerate growth. Recognized by industry analysts as the most complete solution, SumTotal provides full employee lifecycle management, including a core system of record, from a single provider for improved business intelligence. The company offers customers of all sizes and industries the most flexibility and choice with multiple purchase, configuration, and deployment options. We have increased the performance of the world’s largest organizations including Sony Electronics (NYSE: SNE), AstraZeneca (NYSE: AZN [ADR]; London: AZN), Amway (KUL:AMWAY), Seagate (NYSE: STX), Dell (NASDAQ:DELL), and Google (NASDAQ:GOOG). For more information, or to request a demo, please call +1 (866) 768-6825 (US / Canada), +1 (352) 264-2800 (international) or visit www.sumtotalsystems.comCorporate Headquarters EMEA APACSumTotal Systems, Inc. SumTotal Systems, UK SumTotal Systems India Pvt. Ltd. © 2012 SumTotal Systems, Inc. All rights reserved. SumTotal, and the SumTotal2850 NW 43rd Street 3rd Floor, 100 Longwater Ave. 7th Floor Maximus Towers logo, are registered trademarks or trademarks of SumTotal Systems, Inc. and/orSuite #150 Green Park, Reading Building 2B, Mind Space its affiliates in the United States and/or other countries. Other names may beGainesville, FL 32606 USA Berkshire, RG2 6GP, UK Raheja IT Park, Cyberabad trademarks of their respective owners. 12_0210LS 12_0414LSPhone: +1 352 264 2800 Phone: +44 (0) 1753 211 900 Hyderabad, AP-500081, IndiaFax: +1 352 264 2801 Fax: +44 (0) 1753 211 901 Phone: +91 (0) 40 6695 0000 Fax: +91 (0) 40 2311 9