Focus on bottom line means vendors must provide metrics

Panelist says companies are "tired of carrying HR as a cost center," and want numbers backing up efforts.

By Jessica Marquez

n the wake of a three-year bear market, CEOs—looking to tighten margins—are more involved than ever in the human resources initiatives of their companies.

Five years ago, employers could team up with HR vendors with the vague notion that someday the service would contribute to their companies' bottom lines. These days, however, the CEO and other top executives usually will sit in on vendor meetings and want to know what results they will see—and when.

"CEOs and CFOs are putting more pressure on the human resources executives to really align efforts with the bottom line," Don Payne, senior vice president of leadership solutions at Aon Consulting, said in an interview before the start of the SHRM conference. "They are tired of carrying HR as a cost center. They want to understand how their efforts measure up."

For vendors, this means they need to provide specific metrics and benchmarking tools so that human resources executives can show their CEOs how their recruiting, training, retention and other efforts are paying off.

"The ultimate goal for vendors is to be able to track the employee from cradle to deathbed," said Rick Fletcher, president of HRchitect, a Frisco, Texas-based human capital management systems consulting firm.

It's no longer enough for a recruiting program to bring in lots of people. The employer now wants to know what kinds of people are recruited and how they contribute to the bottom line. CEOs want to know how rewards programs and training affected an employee's productivity. "For every HR process, the CEO wants to know, 'What is our return on investment?' " Payne said.

Many vendors of human resources products are enhancing their services to provide metrics on an end-to-end basis. For example, Success- Factors, a performance management system provider in San Mateo, California, is enhancing its service to include succession planning and, eventually, recruiting. That would allow employers to bring in potential successors to executives from outside the company and keep track of their progress, said Randy Reynolds, the company's senior director for product management, in an interview ahead of the SHRM conference.

The need for this data has fueled a number of recent acquisitions among HR companies. For example, Jacksonville, Florida-based Recruitmax last year acquired KnowledgePoint, a performance management systems provider. Similarly, Authoria took over Advanced Information Management, and Workscape purchased Performaworks. The alliances answered client demands, said Mark Lifter, executive vice president of talent solutions consulting at Aon. "Companies are looking for more integrated performance management systems," he said an interview before the SHRM confab.

Will all of these deals result in a few one-stop shops that could meet all of a company's HR needs? It depends on whom you ask. Fletcher said his clients are increasingly looking to work with two or three vendors—rather than seven or eight—to service all of their needs. "The silver bullet would be one talent management system that does it all," he said. "That just doesn't exist yet."

But Jane Paradiso, national practice director for workforce planning at Watson Wyatt, argues that there will always be a need for niche providers. "Some companies would rather have specialized systems that cater to their specific employee bases," she said in an interview. "They are going to continue to want things that are built just for them."

SESSIONS: If you're not already focusing on the aging workforce, start today. Hear about the Supreme Court's recent age-discrimination ruling from Douglas Towns, a partner in the law firm Jones Day, at 10:45 a.m. Masochists can catch it Tuesday at 7 a.m. instead. ... Wal-Mart's lawsuit du jour, filed last month, centers on a sexual harassment allegation. At 10:45 a.m., Myrna Galligano of Holland & Knight will tell you how to keep your company from facing the same fate. ... At 4 p.m., skip the consultants' speeches and listen to Carolyn Shockey explain how her hospital, Norman Regional, sent employee morale skyrocketing. Not a typo: Her team implemented 600 employee suggestions in three months.

AFTER HOURS: Two of the big three job boards are hosting invite-only parties. HotJobs' happy hour features the Village People. CareerBuilder is going to the zoo, an event that spokesperson Jennifer Sullivan says is "sold out." ... The Padres love to beat Southern California's more famous National League baseball team. The Los Angeles Dodgers lead off at 7:10 p.m. today, tomorrow and Wednesday and 12:35 p.m. Thursday. We're raffling off a few tickets (Booth 3001).