Earlier this week we addressed a growing concern surrounding sustainability of HR vendors.  Issues such as financial solvency, management turnover, ongoing investment into product portfolios, backwards compatibility and support, legal action, and acquisitions (among others) can cause significant disruptions to both near and long term value propositions.  So how should one address these concerns, and does a system exist that can quantify the risk portfolio of an HR vendor prior to purchase?

The short answer is no.  Inflexion has yet to find an appropriate single source mechanism or formulaic that combines risk mitigation and sustainability with deep functional domain expertise.  That being said, we believe there is tremendous opportunity in the development and deployment of an impartial decision support tool to aid HR buyers in assessing these and other risk factors.  Several existing assets, if properly leveraged and supplemented, could help to solve some portion of this significant industry problem:

• Dun & Bradstreet:  This is perhaps the most obvious, as most large procurement departments will require a DUNS review prior to contract execution.  D&B will provide visibility into the credit risk of the provider, locations, ownership structure and financial solvency.  One can also get a sense of fraud, supplier codependency (i.e., does the contemplated contract mean you would represent a disproportionate share of ongoing revenues) and other helpful metrics.  However, it really addresses risk with no domain expertise, thus a great tool for procurement but less so for HR executives.
• CERT’s V-RATE:  The Vendor Risk Assessment and Threat Evaluation taxonomy was developed by the good people at CERT, the federally funded R&D center of Carnegie Mellon University.  CERT is widely known for being five to ten years ahead of the market (as was the case with now-renowned CMM model), and V-RATE is no exception.  This early-stage tool provides an important framework for not only assessing the “survivability” of your vendors solutions, but also helps to assess your organizations preparedness in dealing with anticipated and unanticipated vendor risk.  The goal is not to attain a single overriding score, but instead to capture all internal and external factors which may contribute to ones sustainability and likelihood of mission critical application.  If configured for the unique circumstances of HR, one could see great promise in this instrument.
• LexisNexis:  The Accurint line of products offers an interesting supplement for bankruptcy filings, liens, civil judgments, individual background checks on specific executives, licensing and Better Business Bureau reports.  It also can incorporate much of the DUNS data from D&B.  Again, a great toolkit for looking at that information which is publicly documented on a potential vendor.
• Analyst Reports:  Many industry analysts do some limited due diligence on sustainability, but most of their value comes from the ability to assess one’s position in the marketplace relative to competition, feature functionality, market penetration, globalization and likelihood of successful implementation on time and within budget.  These are all critical factors in your choice of providers, but still leaves a gap to be filled.

So what’s the answer?  For the time being, leverage all the market intelligence you can capture.  Assess whether vendors in your domain of interest are being acquired, if venture firms are backing them, if IPOs are occurring, if lawsuits are flying or impropriety is dominating the space.  Leverage the tools we’ve listed and most importantly, talk to your peers and subject matter experts.  Until someone derives a more transparent mechanism of applying these instruments to the specific needs of our HR community, we must do the best we can with what we have.

Let’s keep the conversation going. 

Each year, Inflexion likes to take a moment to acknowledge the beginning of 16 business days of lost productivity. In 2007, we posted that an estimated $3.7 billion was lost due to the annual NCAA tourney, an amount that nearly every firm struggling in today’s challenging economy would love to recover.

Once again, we look to our friends at Challenger, Gray & Christmas for their estimate…..(imaginary drum roll please)……

 “With as many as 37.3 million workers participating in March Madness office pools and up to 1.5 million watching games online from their desks, it is a wonder that any meaningful work is actually completed during the last two weeks of March… (and) the annual distraction could cost employers as much as $1.7 billion in wasted work time.” - Challenger, Gray & Christmas 

Big numbers indeed, and the justification for this sum (found here) is somewhat complex but well documented.  I suspect this number may be conservative, especially given that CBSSports.com reported 1.4 million users watching 2.6 million hours of live action on their free streaming service in 2007.  Given that most of the early rounds take place during business hours, one can imagine extremely slow network speeds as your colleagues quietly cheer from the cubicle next door.  In an acknowledgment to at-work viewing, the site boasts a now infamous “Boss” button that triggers a fake spreadsheet so that one can appear to be diligently pouring over complex data.  Genius….

So what should employers do?  Most organizations do try to convey some official policy on the matter, but in my opinion, this is one time of year when stoking the fun fire can really help with low morale.  Every day workers are bombarded with news of layoffs, a failing economy, high gas prices and an unpredictable stock market, so why not focus on the fact the employees are adults who some levity while recognizing their corporate accountability.  Focus on getting the work done, not how or when it gets done.  It worked for Best Buy.

Good luck everyone, and let’s keep the conversation (and brackets) going.  

Several months ago, my partners and I were solicited by an HR firm who intended to sell their company.  The founding partners had built value over their ten years in the market, largely leveraging their personal credentials as a means of entry into very large public and private entities.  These relationships had bloomed and the client base was solid.  However, the leaders were ready to retire and wanted someone else to take the helm and run with what they had started.  In our market, this happens more often than you might imagine, although the catalyst for transition is not always so benign.  

They are well over 2,000 firms in the US alone that offer some form of HR service provisioning, and measuring the sustainability and risk portfolio of those firms has been an oft-neglected part of the due diligence process.  By our calculations, over 175 HR vendors “left” the market in 2007.  Why such a dramatic number of exits?

• Acquisitions: HR departments are attempting to limit the number of vendors with whom they contract directly, creating a Darwinian opportunity for those in prime position to gobble up niche providers via acquisition or subcontracted relationships.    
• Management Churn: One of the most amusing activities is to walk the floor of an HR conference and see where your old vendors and colleagues are currently employed.  Expectations for performance - especially among publicly traded HR vendors - have driven boards and investors to switch CxOs at a surprisingly high rate.  A dramatic example is the HR Outsourcers, with Keith Strodtman of Ceridian as the longest tenured president among his HRO peers.  
• Financing: With such broad competition, it takes a significant capital investment to sustain parity in feature functionality, geographic coverage, sales, marketing, support and thought leadership.  Many cannot afford to compete, and short of securing significant investment, are forced to either hunker down or enter a fire sale.
• Lawsuits: An issue that is top of mind given recent events with SuccessFactors and Softscape, lawsuits can lead to financial ruin in the HR market.  Buyers are risk adverse and do not want to bet on a losing vendors, especially in market with such tight budgetary constraints and limited room for failure.  These distractions can often paralyze sales efforts and create a self-fulfilling prophecy of loss, regardless of who wins or loses.
• Timing: We have the good fortune of seeing a great number of emerging vendors who have a tremendous amount of value to offer their HR buyers.  However, gaining access in such a noisy environment can be quite difficult, and often times the value proposition is lost in light of a senior HR executive’s need to fight an immediate set of priorities that distract from potentially longer term ROI.  

Inevitably, a vendor with whom you associate will fall victim to one or more of these issues.  The potential disruption to HR service delivery is significant, and later this week we’ll talk about what can be done to measure vendor sustainability preemptively.

Let’s keep the conversation going. 

For the next several weeks, we will be taking a hard look at the litany of industry and member-based HR associations and consortiums.  This will include:

• SHRM (The Society for Human Resource Management);
• IHRIM (The International Association for Human Resources Information Management);
• CLC (The Corporate Leadership Council);
• HCI (The Human Capital Institute);
• HR.com;
  
• HROA (The Human Resources Outsourcing Association); and
• i4cp (The Institute for Corporate Productivity)

Our intent is to highlight the strengths and weaknesses of each as we consistently receive requests on the relative merits of these and other industry bodies.  Perhaps as important is an understanding of the role vendors play in shaping the agenda, positioning, sustainability and governance of these groups, an issue often overlooked in our industry as either necessity or design.  There are over 200 HR-based associations in the world, so if you would like us to add to our list, please feel free to let us know by either posting here or emailing to blog@inflexionadvisors.com.

Please accept our apologies for the time gap between posts. Inflexion intends to return to a more frequent blogging schedule effective immediately. We’d love to blame it on the election, daylight savings, gas prices or the weather, but since our client phone has been ringing at 3 o’clock in the morning, it’s Inflexion that picks it up!

Let’s keep the conversation going.

It is estimated that the 79 million US Baby Boomers have over $8.5 trillion dollars in investable assets today.  Add to that number an estimated $12 trillion in inheritance over the next 20 years, and one can understand the frantic race to bring products, services, annuities, recreation and thousands of other goods to this fragmented market.  One cannot turn on a TV or radio, open a magazine or newspaper, or surf the web without stumbling upon creative and sometimes frantic attempts to break through the noise and secure a portion of this generation’s spend. The McKinsey Global Institute projects that by 2015, the total market share of age 50+ households will represent:

• 83% of prescription drugs;
• 74% of medical fees and services;
• 60% of health/beauty aids and over the counter items; and
• 58% of housewares.

To pay for these items, Boomers anticipate working anywhere from 11 to 15 years longer than prior generations.  However, reality is quite different, with one McKinsey survey showing that 40 percent of current retirees were forced to retire early (average age = 59), citing reasons ranging from poor health (47%), job loss and downsizing (44%) or care for a loved one or spouse (9%).

A handful of extremely innovative firms have emerged to help older workers plan for longevity, ensure mental agility and remain viably employable over the long haul.  Here are three:

1. Longevity Alliance - Founded by the former leaders of AARP and AARP Services, Longevity is focused on helping both pre and post retirees plan for a long, fruitful and sustainable life.  With the lines between financial and health concerns blurring, Longevity has created an advisory service that helps individuals and groups secure best-in-class long term care, healthcare, life and financial products from some of the industries top providers.
2. Posit Science -  Posit has created very innovative “brain fitness programs” which materially enhance one’s mental processing speed and accuracy, thereby leading to enhanced productivity and longevity.  This is based on the scientific principal of neuroplasticity (very interesting stuff - read their research), and their studies have shown to so effectively improve cognitive agility that one’s mental age can be reduced by 10 to 30 years.
3. YourEncore - If the highly skilled knowledge worker is king, YourEncore holds the keys to the castle.  They have created an innovative offering to leverage a huge network of retired and veteran scientists and engineers to help corporations innovate much faster without the burden of full-time employment.  The retirees also have the flexibility to choose the projects that are most interesting and aligned to their extensive skill sets.

I’m sure other innovative organizations are out there as well, but their collective challenge is to differentiate themselves enough as to garner a minute percentage of this massive generational wallet.  Employers should take notice of these firms as the bell-weather of things to come.  Embrace these offerings as a demonstrable commitment to your older workers and do not simply cast them into the night.  Your success will depend upon it.

Let’s keep the conversation going. 

(posted by Inflexion’s Shannon Flumerfelt)

It is somewhat unpredictable how and where one makes sense of things within a moment of consideration, especially in the midst of doing something else. 

For instance, as I was running this morning, my MP3 player kicked out a song.  As the song drew me in (and with the help of exercise-induced endorphins), I started to think about the future of the workforce.  According to modern folk singer, Jewel, “There is a difference between dreaming and pretending.”   As I listened to Jewel, I thought about a recent American Society for Training and Development (ASTD) event where I participated as panelist.  Through the panel discussion, ASTD members were working hard to make sense of the training issues of workforce of the future.   They were not interested in “pretending” or maintaining irrelevant approaches to employee learning and development.  Rather, they wanted to proactively understand best practice, identify emerging trends and internalize the predictions of futurists to strategically position their organizations for a distinct advantage.  In other words, they wanted to engage in “dreaming”.

For the dreamers, the picture of the future workforce is clearly described in the Rand Labor and Population Report (prepared for the US Department of Labor), entitled, The 21^st Century at Work:  Forces Shaping the Future Workforce and Workplace in the United States.  In short, the concerns expressed in this report attacks this so-called “pretending” as the precursor to economic turmoil and the demise of the workforce in the United States.  To understand what should be done, Rand describes that there are significant emerging differences between the present and future workforce.   Among others, two areas requiring critical change include: 

-The Key Characteristics of the Workforce: 

There will be a need for increasing skill, higher educational attainment and more minority representation in the workforce driven by the rapid pace of technological change and related market growth.

-The Employee/Employer Relationship: 

The nature of work and the structure of jobs will change.  Employees will be more self-directed, accountable and autonomous.  Organizational structures will be more participative and less vertically integrated, more focused on emerging best organizational practices.  In turn, because specialization will be valued, new reward systems will enforce those competencies so that structural productivity boosts occur and improved business practices are maintained.

For those of us who wish say “goodbye to Alice in Wonderland” in workforce development, the Rand Report calls for a radical change in the content, methods and pedagogy of training: 

Increasingly, the system (the education and training system) is less relevant for the 21^st century workforce. . . .The new model for workforce education and training is predicated on the need for continuous learning throughout the working life, a process of lifelong learning involving training and retraining that continues well past initial entry into the labor market.  

To change this system is possible, as long as we understand there is a difference between dreaming and pretending.

Let’s keep the conversation (and dreaming) going.

Monster released the results of its 2007 Work/Life Balance Survey late last week and the findings were…well…somewhat out of balance. In surveying 506 HR professionals and 803 workers, Monster found that:

- 89 percent of employees polled believe work/life balance programs, such as flextime and telecommuting, are important when evaluating a new job, yet only about half of HR professionals polled consider work/life balance to be an important initiative for their companies
- Only 29 percent of workers view their employer’ s work/life balance initiatives as good or excellent
- 61 percent of HR pros believe there will be more employer-provided work/life balance initiatives in five years, and only 56 percent believe that general work/life balance will improve in the future
- 60 percent of employees say they spend too much time working – with about one-third (35 percent) blaming their boss’ expectations and one-fourth (26 percent) saying they overwork to fit in with corporate culture
- 91 percent of workers have worked directly with someone they would classify as a “workaholic.”

Not surprisingly, increased utilization of technology only makes the situation worse, with 64 percent expecting to work more because of PDAs and 72 percent because of laptops. And the use PDAs effects their interactions outside of work too, say one third of respondents. I can vouch for that if you read my posting on “Pearl of Wisdom”.

So what’s a poor unbalanced soul to do? Advice ranges wildly, from “mirroring your boss” to “saying enough is enough” (sources left out to protect the innocent).

In my experience, having a casual conversation with your superiors is helpful, provided you have a concrete example of something you are trying to impact that can be presented. This can range from improving your backstroke, running time or cooking skills to spending more quality time with your pet, significant other, parents, children or volunteer organization. These items create a more tactile impression and appeal to one’s human nature, even among the most inhuman of bosses.

Let’s keep the conversation (and balance) going.

You are highly engaged and committed to organizational objectives. But you feel held back, like your company’s ecosystem is somehow working against you. You also wonder if your job fit and opportunities for growth are appropriately matched to your high level of personal and professional motivation.

According to a new study released by Hay Group’s Insight Research arm, this type of employee - “the frustrated employee” - represents 20% or more of the total workforce. They even captured the voice of this frustrated employee through a quote from a survey respondent:

“I need support, and my manager and his boss are not doing their best to provide it. I am inundated with work, and I end up staying here late each night. I root for the company and I think we are one of the good guys in the industry. I like my job despite this situation and I think things will change for the better eventually. But waiting for that time to come is very challenging. I’m almost ready to throw in the towel.” Hay Group Insight Employee Survey Respondent

Hay added that the finger often needs to be pointed right at the organization for their lack of support for these highly engaged but increasingly demotivated employees. They added that this is symptomatic of broader issues, including the fact that 40% of employees surveyed felt that “the amount of work expected of them is unreasonable and that stress levels in their jobs are a real problem”.

This issue may best be summed up with a quote from Thomas Britt’s 2003 Harvard Business Review Article, entitled “Black Hawk Down at Work”. In his piece, Britt explored frustration among one of the US Army’s most elite units, the Rangers.

“For these high performers, factors they can’t control—role ambiguity, inadequate resources, and overwork itself—can hinder their best work and drive them to seek jobs elsewhere. The ones who stay behind may well be the ones who just don’t care.”

Let’s keep the conversation going.

This past Saturday, the Substance Abuse and Mental Health Services Administration (SAMHSA) released a report entitled, Depression Among Adults Employed Full-time by Occupancy Category. According to the study, 7% of full-time workers in the US had a “major depressive episode (MDE)” in the past year, with part-time workers at 9.3 % and unemployed at a whopping 12.7%.

SAMHSA examined 21 major occupational categories among workers ages 18 to 64. The rankings in the table below show a percentage of those experiencing a MDE in the past twelve months:

Women were found to be more than twice as likely as men to experience a MDE, and those aged 18 to 25 were at a higher percentage than their older counterparts.

SAMHSA concluded that these challenges can significantly impact a person’s ability to perform routine activities at work, costing an estimated $30 to $44 billion dollars per year in lost productivity, employee absenteeism and low morale.

Let’s keep the conversation going.

When RSM McGladrey embarked on their 2007 Survey of Women Business Owners, they elected to expand their scope in order to capture more compelling and holistic results. In partnership with the University of Chicago’s Graduate School of Business, as well as the Committee of 200 and the National Association of Women Business Owners, over 650 respondents were surveyed across 35 states.

The findings are fascinating. For example, more than two-thirds of those surveyed are married, and a similar percentage have children. Forty percent had a post-graduate education (compared to 9% of the entire female labor force) and nearly forty percent of those businesses in the top revenue category started their organizations between the ages of 20 and 29.

These women started young, are well educated and willing to take risks (often applying their personal home as collateral and using up the majority of their savings). They tend to favor logic over intuition and believe they are more optimistic and confident than others. Their biggest business challenge ahead? The economy, say forty eight percent of those surveyed.

So what made them take the leap of faith? Over two-thirds wanted to be their own boss and have more flexibility, and nearly half simply wanted to make an idea succeed. And their primary long-term goal? To generate enough income to provide for a comfortable life, which is really all that most of us are trying to achieve.

Let’s keep the conversation going.