New software from SuccessFactors can make the difference in managing your personnel.
Success has its benefits, but it also creates new challenges. Nowhere is this fact more evident than it is in the financial advisory business. Veteran advisors, taken as a group, are prospering. Many firms that started out as sole proprietorships have expanded. Large financial planning firms, a rarity ten years ago, are becoming increasingly common.
The profession's growth, however, is posing new challenges. Historically, at small firms, business management has been performed on an ad hoc basis. Today, the owner of a financial advisory firm cannot afford to be so cavalier. The new environment requires advisors to hone their business skills as they continue to stay current on core wealth management topics.
Specifically, setting firms' goals, managing human resources and succession planning are increasingly on the minds of owners these days. Previously, most financial planning periodicals and conferences focused primarily on core financial planning topics. Today, every conference and periodical devotes significant resources to the business side of financial advisory. The fact that there is demand for this sort of information demonstrates that many advisor/owners are hungry for business management help.
Thankfully, help is available. A number of organizations offer benchmark studies to help advisors gauge where they are when compared to their peers. Broker-dealers and custodians also are beginning to offer programs to help advisors meet various business challenges. Third-party consulting firms such as Moss Adams, Tiburon Strategic Advisors, CEG Worldwide Consulting and Quantuvis Consulting, to name just a few, offer services that help advisors better manage their businesses.
Among the advice offered by these management gurus:
Management must set goals and communicate those goals to employees.
Goals should be tied to compensation, so employees are rewarded for furthering the corporate goals.
In order to retain good talent, you need to provide employees with a career path.
Succession planning protects not just the owners, but the employees, who will feel more secure knowing that there is a plan in place to perpetuate and grow the firm.
This list is of necessity abbreviated, but all, in one way or another, are a subset of human capital management (HCM). All advisors with employees know they have to do it, and if they follow the advice of the experts, they can do it more effectively. Often, however, even those who know what they should be doing have trouble with execution.
In fact, in a recent article ("Prevailing Winds," Investment Advisor Magazine, August 2007) Mark Tibergien noted that many advisory firms have problems following the advice that he and his colleagues dispense. In the article, Mark speculates about why some have trouble following his advice. While he puts it more diplomatically than I'm about to, Mark suggests that some owners are stubborn and resistant to change. In other cases, he says, "Advisors just have too many things to do and not enough time to do them all."
I've got my own theory: Quality HCM is hard work, and many advisors are not properly equipped to do the job. In much the same way financial planning is difficult without the right tools, so is managing human capital. According to a 2006 survey by Bersin & Associates, almost 60% of large organizations use a paper-based approach to employee performance management. That is not very efficient. It's fair to assume that at least as many financial advisory firms are using paper, or some other sub-optimal set of tools, to manage their human capital. Without the proper tools, human capital management is more difficult than it has to be.
So what are the proper tools? Since I concentrate most of my efforts on technological solutions, it should come as no surprise to readers that I believe technology can play a role in HCM. When I ran my theory by Tibergien, he told me that the firms most successful at implementing the changes he suggests are those that have a specific manager accountable for implementing the changes. "If you don't have such a person in your firm," he says, "technology presents the best way to leverage up." I'd add that even if you do have a manager charged with implementation, that person can leverage up as well by using the proper tools, thereby freeing up some time for other mission-critical tasks.
There are numerous integrated performance and compensation solutions available, but one of the best, according to Forrester Research Inc. in its report The Forrester Wave: Integrated Performance and Compensation Solutions, Q3, 2007, is SuccessFactors.
The professional edition of SuccessFactors is an online application. It is designed for the small business sector, which SuccessFactors defines as business with between 100 and 300 employees. Other editions are available for larger organizations.
The application can do many things, but at its core, it is designed to help supervisors align, measure, manage and inspire employees. As part of the process, it helps create benchmarks and better links pay to performance. It also allows employees an opportunity to rate themselves, thus providing further useful feedback in the management process.
When you first log on to the program, you are taken to the home page. This area is the control center and serves as a gateway to all of the application's functionality. On the left side of the home page is a message board. This is where the human resources department can post firmwide messages. For example, if there is a pending change to the group health insurance policy or if there is a new investment option added to the firm's 401(k), this is where the HR manager might post it. Below that is the Quick Link section, which offers immediate access to key areas such as forms, notes, "My Goal Plan" and "My Profile." Most of the screen is occupied by the Inbox. This can be thought of as the user's to-do list. Here, all forms the user is responsible for are listed in spreadsheet format, along with the employee linked to the form, the nature of the action required, a due date and the person who sent the form. The list can be sorted by any of the column headings, so if you wanted to sort the Inbox by due date you'd just click on the column heading to re-sort.
At the very top right of the page are some additional links. Included here is an employee directory, an options section to set your preferences, a "My Profile" section that lists your employee information and a suggestion box. Directly below that are the main navigation tabs that move you from one section of the program to the other. In addition to the home tab, the other major areas are: "My Forms," "Analytics" and "Admin Tools."
The forms section is in many ways the core of the whole system. The system can use all sorts of forms, but I'll use an annual review form to illustrate how SuccessFactors works.
Before you can perform an annual review, you'll probably want to set goals for yourself and your employees so that the review can be linked to those goals. Once that is done, we can begin creating a review form (or select one from the template provided).
In this case, I decide to use an annual review form comprising seven sections: employee information, core values, role-specific competencies, goals, an individual development plan, a summary section and year-end signatures. Within each section, I can create subsections for review and analysis. For example, under core values, my sample form includes: customer focus, integrity/ethics, results focus and sense of urgency. I can add subsections as needed.
Within each subsection, there is a description of the value. For customer focus, the description reads: "Builds customer confidence, is committed to increasing customer satisfaction, sets achievable customer expectations, assumes responsibility for solving customer problems, ensures commitments to customers are met, solicits opinions and ideas from customers, responds to internal customers." Space is provided for two ratings and two comments. If I wish, before I complete the form, I can send it to the employee, so the person has an opportunity to critique himself.
Allowing employees to review themselves is useful for a number of reasons. It can help you spot inconsistencies between the employee's perception and the manager's. It can uncover areas or potential that the manager might not be aware of. It can also help uncover team-related issues that require intervention. For example, a manager may believe that an employee is interacting well with the rest of the team, but the individual may have a different perception. If this is the case, it is better to uncover the issue and address it sooner rather than later.
As for the tools available to the manager conducting the review, they are extensive. The default rating system is a five-point system accessed from a drop-down menu, with one being "unsatisfactory" and five being "substantially exceeds expectations." The drop-down menus promote speed and accuracy. Underneath the rating is a space for comments.
Since not every manager is an expert review writer, the program offers help for those who are not. When you click on the writing assistant, a matrix of context-sensitive phrases appears. The phrases are sorted by ranking. For example, if an employee meets expectations with regard to customer service, the manager can select a short phrase such as "considers customer's perspectives." The application will then display a more lengthy description such as, "Jim includes customer perspective in projects and meetings. He makes a conscious effort to ask himself what the customer wants."
Let's say that this phrasing is a little more positive than you want it to be. You can automatically make the phrasing a notch more positive or more negative by clicking a plus or minus button. If I choose to take it down a notch, the application will modify the phrase to read, "Jim usually includes the customer's perspective when working on projects that affect them." Need the text in the first or second person for a self review or a group review? No problem; just click the appropriate button and the phrase is edited accordingly.
Just to be clear, users are not limited to the automated text. It is there for speed and efficiency. You can use it as is, edit it or write your own comments. If you edit the supplied text, or if you write your own, there is a built-in spelling checker to help correct your errors.
The program also includes a "legal scan." This applet reads through your comments and highlights any words or phrases that might lead to trouble. For example, if you mention an HR no-no, such as the employee's age, race or sex, the program will suggest that you modify the offensive terminology. Once the review is completed, it can be signed by the employee and the supervisor.
The more you use the system, the more useful the analytics and reports become. Over time, your firm will have a comprehensive list of forms, competencies, goals and employees. From that data, you will be able to uncover firmwide areas of competency as well as overall gaps. You will easily be able to view whether your organizations, or individuals, are performing in alignment with goals. You also will be able to compare employees using a wide range of metrics. In addition, you will be able to run status reports, rating reports and much more.
Although we've only discussed the review process, SuccessFactors also can help with setting goals and clearly communicating those goals to employees. The review process, which can be ongoing, helps maintain performance levels, correct problems at an early stage and align performance with goals. This in turn allows the firm to align pay with performance. It also better enables the firm to provide career paths and to develop the next generation of managers from within.
Despite the benefits, SuccessFactors would not be compelling were it not for its intuitive interface. Because it is easy to use, SuccessFactors shortens the period of time required to conduct and document reviews, and it can improve the overall results of the reviews. In addition, it can compile firmwide data and report on it in multiple formats.
the benefits, SuccessFactors Professional is surprisingly affordable. Prices start at $8 per employee per month. That does not include a setup and training fee, which typically starts at $2,500. SuccessFactors offers a "goals library" as an option. One of the application's capabilities is that it allows you to build a comprehensive goals outline, with main goals and subgoals, just as you would build an outline or a directory tree. The goals library provides a comprehensive library of preformatted, role-sensitive goals. This means that if you supply a person's position within the firm, the goal library will suggest goals for you. This add-on costs an additional $2,000 plus $10 per employee per year. At these prices, firms with more than 15 employees should be able to realize an excellent return on their investment.
As is the case with financial planning, software alone will not solve an organization's human capital management needs. However, it can help facilitate, track, document and report on the process. If you create a good plan, either on your own or with the help of consultants, and you use SuccessFactors for implementation, you will almost assuredly improve your firm's overall success in the field of human capital management.