Beyond the Top & Bottom Line - People Performance

Beyond the Top & Bottom Line- People Performance Chris Lozaga Principle Analyst, SuccessFactors Global Research Erik Berggren Director of SuccessFactors Global Research

Agenda Who we are Why smart HCM Matters People Challenges in the Public Sector Getting Results

Revolutionizing the World of Work Mission Increase Worldwide Productivity by 50% We work with recognized thought leaders that share our vision of productivity improvement, all while creating a better place for people to work. successfactors.com/research/thought-leaders

650+ Years of Research Dr. Laurie Bassi Dr. Peter Cappelli Dr. R.J. Heckman Josh Bersin Dr. Jac Fitz-enz Dr. Jesse Harriot Dr. Jim Ware Lexy Martin Karen Beaman Charles Grantham Paul Falcone Amy Lyman Jason Corsello Rob Bernshteyn Dr. Kirk Hallowell Dr. David Sirota Ken Greer Charles Coonradt Tom Olivo Catharine Larkin Dr. Kim Ruyle Doug Klein Bob Paladino Nov Omana Nick Bontis CEO of Workforce Intelligence Inc. CEO of McBassi & Company and Chair of Bassi Investment Inc. Professor of Management at the Wharton School of UPENN President and founder of Bersin & Associates Co-founder of the Work Design Collaborative Vice President of the Center of Excellence at Knowledge Infusion VP and general manager of PDI's Leadership Assessment Products Founder of the Sirota Survey Intelligence Vice President of Research for Monster Worldwide Co-founder and Editor-in-Chief of the IHRIM Journal Chairman and CEO of The Game of Work and accredited author Co-founder of the Work Design Collaborative President of MICA Consulting Partners Lead author and manager of the CedarCrestone HCM Survey President of Success Profiles Inc. Director of the Institute for Intellectual Capital Research Vice President of Product for Lominger International Leader of Greer & Associates, Inc. Founder and Managing Partner of Paladino & Associates Sirota's President of Consulting Co-founder and Chair of Board of Directors of Great Place to Work Institute Senior Consultant for Personal Decisions International VP of HR of a Fortune 500 firm and accredited author Board member and Former Chairman of IHRIM VP of Global Marketing and Management of SuccessFactors

SuccessFactors Primary Research 1(2) succes Smart HCM investment drives financial results How investment in people drives top and bottom line results Transparency is key to driving strategy execution successfactors.com/research 5

SuccessFactors Primary Research 2(2) Predictive HCM helps companies manage tomorrow today Changes in attitude and environment drive changes in HCM Competencies matter for growth & profit and varies across industries successfactors.com/research 6

Talent Is A Global Issue 40% Source: The Economist, Society of Human Resource Management, SF Research & Monster webinar Jan-08, SF Research Analysis

Shortage – Education plus baby boomer retirement enforces predictions of a skills shortage SKILLED JOBS Projected gap in skilled workers by 2020 = 14 Million UNSKILLED JOBS WORK FORCE Numbers of jobs and workers, in millions (adjusted for multiple job holding) Huge Shortage of Skilled Workers Looming Source: Hudson Institute, Educational Testing Service, Kaplan, BLS, American Demographics, SF Research & monster webinar Jan-08

Organizations are not getting the most from their employees Employee potential is not being recognized FACT: 84% of large organizations say they are not using their workforce to its full potential Saratoga Institute Study

These Trends Add Up The 500 largest companies will lose 50% of their senior management in 5 years. The average same employer tenure for U.S. employees is 3 years. For 18-24 year-olds it is 18 months. Training departments see 1) aligning with HR 2) allocating budget based on business impact 3) accurate measurement …as areas where they are least effective. 70% of companies report moderate to severe leadership shortages. Replacement costs for management level positions can exceed 150% of annual salary. The U.S. will face a 10 million worker shortage in 2010. Unemployment for U.S. workers with a graduate degree is under 2%. 60% of internal recruiters plan to “significantly increase” use of social networking technology in ‘06 to target passive candidates Source: Bersin and Associates & SuccessFactors Research, The Role of Competencies in Financial Performance, Webinar 2007, www.bersin.com

So HCM Matters… No skills Talent is a scarce resource around the world Mobile & disloyal People are unaligned, unproductive, underutilized and disengaged Only difference Talent is the greatest and sometimes only competitive differentiator remaining

Not Just a Problem for Private Business Talent Shortage Affects the PublicSector Too

People Challenges in the Public Sector

Employees don’t know how they can best help their organization Motivation: Employees don’t get it FACT: 95% of employees don’t understand their organization’s strategy “The Balanced Scorecard: Translating Strategy into Action” - David P. Norton, Robert Kaplan

Half of all employee time is wasted Motivation: Employees wasting time, money FACT: 50% of the average employee’s time is spent on non-productive work Corporate Strategy Board research; Measures That Matter

Motivation: Getting Employees Engaged Employee engagement is a heightenedemotional and intellectual connection that an employee has for his or her job, organization, manager, or co-workers that, in turn, influences him or her to apply additional discretionary effort to his or her work.

Motivation: Getting Employees Engaged Bottom Line: Pay is not the issue, many other opportunities for increasing engagement *Gibbons, J. (2006), Employee Engagement: A Review of Current Research and Its Implications, The Conference Board, New York, NY.

Motivation: Technology Helps Capture these opportunities to engage employees Increased Transparency – no surprises Integrated Career Planning – right direction Goal Alignment and Skill Development – link goals to company goals Open Collaboration – bring people together *Gibbons, J. (2006), Employee Engagement: A Review of Current Research and Its Implications, The Conference Board, New York, NY.

Over 50% are not completely satisfied with their jobs 71% are “poised” for another opportunity if it comes along 56% regularly look at new job opportunities Attrition Source: SF Research & monster webinar Jan-08, Monster Intelligence

Average employee tenure is down to 3.6 years for younger workers Demographics predict accelerated retirement rates as the population ages 3.6 Years on the Job Source: Manpower Professional

Attrition: Tackle Engagement First and they will stay 59% of highly-engaged employees have no plans to leave. 35% of the moderately-engaged employees have no plans to leave. 65% are looking for new employment. 24% of unengaged employees have no plans to leave. 76% are looking for new employment. 25

Attrition: Use technology to Bring the Team Together 49% of employees agreed with the statement “I feel like part of a team” before implementing their HCM solution at a major SF deployment. David Sirota, PhD. found a high .36 correlation between employee satisfaction and camaraderie. This is universal factor among all tenure groups, races, genders, and management levels. 81% of employees agreed with the statement “I feel like part of a team” after implementing their HCM solution a major SF deployment. 7% reduction of turnover of employees after implementing their HCM solution a major SF deployment.

Attrition: Be Ready for Retirement withSuccession Planning • Value: • Improve talent review with consolidated employee profiles • Continuity as successors are ready to step up and perform when required • Knowledge doesn’t walk out of the door because skills and competencies are inventoried and any loss is planned for • Reduce the search time you need to find replacements, and the associated costly hiring costs

Agenda Who we are Why smart HCM Matters People Challenges in the Public Sector Real Results

Results “SuccessFactors enabled Pep Boys to have our succession planning initiative up and running quickly while the technology is proving to be instrumental in identifying and developing the talent pool necessary to effectively fill business critical positions within our organization” – Liviu Dedes Success at Pep Boys Pep Boys’ Triumph Liviu DedesDirector, Org. Development and Training • Strong visibility into high potentials across the organization leading to $150,000 savings through internal employee placement • Improvement allocation of compensation funds, overall reduced spend • 95% compliance with performance evaluations In the beginning… • New Chairman and CEO • Shallow talent pool for services business • Minimal visibility to individual performance • Difficult to reward employees equitably • Struggled to effectively manage a highly dispersed workforce

Public Sector Success • Research conducted by thought leader partner Dr. Laurie Bassi proves that HCM matters in the public sector • What drives performance in schools? Socioeconomics? • No, actually how the school was managed, the maturity of their human capital management mattered more http://www.successfactors.com/research/hcm-non-profit/

Massive Impact on Organizational Performance Increase Workforce Engagement & Productivity Increase in Operating Results Revenue & Productivity Growth Retain High Performers & Improve Bench Strength Reduce Turnover Substantial Operating Cost Reduction Cost Reduction Automate Manager & Administrator Processes

Thank You!

Beyond the Top & Bottom Line - People Performance