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Now available from Ventana Research is our Value Index on Total Compensation Management for 2014.  Total compensation management directly addresses one of an organization’s largest investments – employee pay. As such it is a critical activity for supporting other human capital management and talent management processes.

VR_TCM_VI_2014Our Value Indexes are informed by more than a decade of analysis of how well technology suppliers and their products satisfy specific business and IT needs. For each we perform a detailed evaluation of product functionality and suitability to task in five categories as well as of the effectiveness of vendor support for the buying process and customer assurance. In this case the resulting index gauges the value offered by each vendor and its products in supporting total compensation management, which is necessary for running an organization efficiently and managing its largest controllable expense.

Total compensation management has evolved significantly over the four plus years in which we have published a Value Index on the topic. From both conversations with reference customers for this report and analysis from our benchmark research on this topic we conclude that it is still evolving as practice in organizations today. The research shows that spreadsheets are still the primary tool for compensation planning in one out of four (26%) organizations and used often by an additional one-third (35%). But it also shows that others use stand-alone compensation management products and still others have integrated the process and technology within a human capital management application suite. Regarding the latter our benchmark research shows that three in four (76%) participating organizations said that it is important or very important to have compensation management and talent management systems integrated; in addition lack of integration to talent management is the most widespread impediment to successful compensation management, selected by two-third (66%) of participants.

For compensation management to be fully effective in today’s organizations it also must include several next-generation technologies in use in other parts of human capital management. The most important of these is analytics that help managers make better compensation decisions. The increasing importance of compensation analytics is evident in our human capital analytics benchmark research, which reveals that the metric most often used by executives (75%) today is compensation.

Mobility and collaboration are becoming important to total compensation management.  Mobile capabilities are found in six of the compensation management products we reviewed for the Value Index; our human capital analytics research reveals growing adoption: one-third  of companies are using mobile technology for these analytics today, and more than half (52%) intend to use it. Collaboration, though less widely adopted, is important in larger organizations to enable managers in various roles to comment on the correct total compensation for their employees.

The 2014 edition of the Total Compensation Management Value Index evaluated both products that are part of a larger suite of talent management products, which was the most common type, and others that stand alone. In general, we find several benefits to a suite. Among them are analytics integrated with other talent management applications, a common user experience and centralized administration, which make ownership and adoption somewhat easier for the customer.

TCM_2014_Weighted_OverallAmong the compensation management products we evaluated, all cover core compensation management of salaries or hourly wages as well as merit pay, bonus pay and some kinds of incentive pay. Functionally, the differences among the nine products appear in areas such as support for complex plan rules, the number of geographies covered and the ability to support various types of compensation plans (for example, focal vs. anniversary plans) as well as the implementation of next-generation technologies. Some products offer more effective application management tools and better product documentation for support and business case development. While we recognize that some organizations may need only basic salary or hourly wage capabilities, we believe that many organizations with 1,000 or more employees will require more advanced functionality.  Therefore we based our overall assessment partly on the array of capabilities that comprise total compensation management.

Based on these evaluation criteria, the top vendor in our 2014 Total Compensation Management Value Index is SAP SuccessFactors, followed closely by PeopleFluent. This finish mirrored the ratings in the 2012 Total Compensation Value Index. Eight of the nine vendors in this year’s Value Index we rated Hot; this close grouping indicates the general maturity of this market. In this year’s Value Index following the two leaders are those also rated Hot who are: Oracle, Towers Watson, beqom, IBM, Decusoft and SumTotal Systems, and then ADP who was rated Warm. Two new vendors to this Value Index are Decusoft and Towers Watson, and then beqom who was previously known as Excentive.

In today’s competitive business and employment environment, more companies see compensation as a differentiator for their employer brand and want technology that can help them advance their compensation programs to attract and retain top talent. Next-generation technologies such as mobility and analytics enable employees to understand the total value of their compensation packages. As compensation plans become more complex, the need for capabilities like integrated budgeting and modeling become greater so finance departments can ensure that plans adhere to budgets. Furthermore, integrating compensation and performance management, as well as other key talent management applications, helps businesses judge and motivate their top performers. If these critical issues affect the performance of your own business, I urge you to utilize our 2014 Total Compensation Management Value Index for insights on how to address them most effectively.

Regards,

Stephan Millard

VP & Research Director


2013 was a big year for the annual HR Technology conference, as its well-known co-founder and leader for the past 16 years, Bill Kutik, stepped down, passing leadership of the event to Steve Boese, another familiar name in the community. Beyond the change in leadership, at this year’s show were a large number of vendors that have invested in new technology to advance human capital management (HCM). Overall I noted several interesting trends, some that were similar to those I written about earlier in the year and others that reflect the evolution of innovations seen at last year’s show, specifically expanding the use of mobile access within applications and further extending business collaboration into HCM platforms. In addition, there were other advances driven by market factors such as growth in new recruiting technologies.

There were many newer vendors at the show, and updates to existing products focused on helping companies better manage different parts of the employee recruitment process, a growth spurt that likely corresponds to the ongoing economic recovery. These vendors included Jibe, which showed new recruiting analytics that can help organizations gain visibility into their recruiting activities via features such as improved location analytics and recruiting stage analytics showing where candidates are coming from and where they are dropping off in the process. Another vendor was Zao, which created technology using social media to make the referral management process a more effective part of the recruitment funnel for candidate sourcing. In addition, several others small and large made announcements, such as Ultimate Software, which announced a redesigned recruiting offering; Oracle, which announced several recruitment-related products at OpenWorld; and Talemetry, which partners with many of the larger vendors in the market and continues to invest in its market-leading recruitment product. All of these vendors and others in the recruitment market are making products that have changed what’s possible with recruiting software. It used to be largely about applicant-tracking automation and streamlining, but now it is includes effective recruitment marketing and analytics, as well as more effective matching through big data.

Another significant highlight at this year’s show was how mobile access has become table stakes in most human capital applications. While mobility was an important trend at last year’s show, this year it is not a secondary application but a core part of the application design of many leading systems across HCM segments. Hunite presented an extreme example of how far a vendor can go with mobility in human capital at HR Tech’s Awesome New Technologies session. Its mobile technology helps users gain unified read/write access to all of their HR systems, regardless of vendor, on their mobile phones. And with the fall 2013 release of its system, SumTotal centers on the mobile user, making its entire system fully mobile and optimized for touch screens, and has deepened the platform’s social capabilities to extend across multiple parts of its product line. Cornerstone OnDemand, as I discussed earlier this year and again in the September 2013 release, built core mobile capabilities that are becoming the foundation of its application. Also, Workday has made strong investments in its mobile applications in releases 18 and 19, which I wrote about.

It is worth noting that not just the smaller or best-of-breed vr_nextgenworkforce_mobile_device_deployments_increasingvendors have reached this tipping point. Large ERP vendors Infor, Oracle and SAP have also successfully released mobile capabilities within their HCM applications. Oracle has completely mobility-enabled its current release of Oracle Human Capital Management Cloud with HTML5 and released a full-featured version of Oracle Tap, its native mobile device application. SAP SuccessFactors also has mobility-enabled most parts of its HCM application, giving managers and end users easy-to-use tools. Infor has started to release mobile applications that are integrated with different parts of its HCM offering. The trend toward mobility in human capital applications has been reflected several times in our benchmark research, which shows that in the workforce management segment more than half of organizations have already deployed smartphones and tablets. And this is a growing priority, with approximately one-third presently using these devices and 18 percent planning to deploy more of them.

Another trend that is approaching a tipping point is business collaboration functionality embedded in HCM applications, a topic we discussed last year as well. While not as mature as the evolution of mobility within HCM, business collaboration is powerful. In past years business collaboration has existed mostly in the recruiting and learning segments of HCM products. However, vendors have now extended it into other processes within HCM, and deeper within those products. In the best-of-breed category Peoplefluent, which received this year’s Ventana Research Technology Innovation Award for Business Collaboration, has embedded business collaboration capabilities and real-time communication capabilities across its product suite. SumTotal Systems and Cornerstone OnDemand also extended business collaboration outside learning and recruiting, though both historically are learning system vendors embedding business collaboration capabilities in performance management, core HR management and other application areas. TribeHR, which is being acquired by NetSuite, provides core business collaboration capabilities that span its suite of HCM products for small and midsize businesses. Vendors including Oracle, SAP and Infor similarly have started to embed business collaboration in core processes of their HCM suites. SAP is using the SAP Jam product to build business collaboration across most of its HR processes such as performance, learning, onboarding and HR management. Similarly, Oracle uses its Oracle Social Cloud infrastructure to provide business collaboration capabilities across its HCM applications. Also, Infor has created Infor Ming.le, a business collaboration product that embeds business collaboration capabilities directly into the company’s HCM suite. Other and not as well known providers like Newsgator provide a social collaboration platform that can integrate to other HCM offerings like Oracle and SAP and can be used as an employee portal and also accessed via mobile technology. Another great example is RoundPegg that takes the context of culture and uses collaboration to engage employees on the mission, values and goals of an organization.

vr_nextgenworkforce_which_collaboration_technology_capabilitiesAlso new this year are more extensive business collaboration capabilities in workforce management systems. Several vendors, including market leaders ADP, Ceridian, Infor, and Kronos have increased workforce scheduling efficiencies with Twitter-like broadcast capabilities and Facebook-like wall posting to help workers find shifts they want and help managers fill them more effectively. According to our benchmark research on next-generation workforce management, these are in the top five most popular business collaboration capabilities. Our upcoming Next-Generation Workforce Management Value Index will evaluate leading vendors in this area of business collaboration.

The growth and evolution of recruiting, mobile access and business collaboration in HCM are trends that benefit HR leaders by helping them meet their ultimate business goals more effectively. Such investments by vendors are also making the user experience more compelling and will therefore improve usability, which our benchmark research shows is the most important factor in evaluating technology products. So take a look at these new and updated products if your business is going to be conducting an evaluation in the coming months. Used correctly this next generation of products can improve the way your processes flow, the quality of your information and the way your people interact.

Regards,

Stephan Millard

VP & Research Director

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