SAP’s acquisition of SuccessFactors certainly reminded a lot of people up about the strategic value in human capital management. SuccessFactors went out for more than 10 times expected revenue for this year. (And if you haven’t seen the hilarious video of Lars telling Bloomberg TV about “frying the shorts,” check him out at minute 1:30.)
Getting less press, but more interesting to me, is Salesforce buying Rypple. Called “bold” by the Wall Street Journal, this purchase apparently “gives it an edge on rivals such as Taleo and SuccessFactors.”
Hold the horses! Salesforce.com is a rival with Taleo and SuccessFactors? You probably didn’t see that coming. After all, even though Salesforce made a lot of noise about their ATS at Dreamforce in 2006, they haven’t really taken off in that space.
Still, it raises the question of why Salesforce wants to be in performance management. One possible answer ties into a trend we’re seeing at Evolv.
Here’s the trend Salesforce might be betting on:
Historically, performance management tools have been owned and managed by the HR organization. Everyone else sees them once a year as part of annual reviews.
HR says performance management is everyone’s responsibility. But people outside HR have other priorities, like managing their teams. If there wasn’t a system built to enforce performance management, it wouldn’t get done. In fact, compliance and enforcement have been a big part of the pitch on these tools.
But if performance management tools actually delivered on the promise of improving performance, then wouldn’t people want to use them? Think about it. You’re a sales manager. Your income is determined by the performance of the people working for you. They sell more, you make more. If someone actually had a tool that would make you more money, you’d be all in.
Evidently Salesforce believes a performance management tool like Rypple can deliver. They’ll do very well if they can convince sales leaders of that.
Back to the trend we’re seeing. Evolv is seeing a similar thing with recruiting.
Historically, recruiting has been owned by HR. The key metric for high volume hiring has been fill rates. Quality of hire would be an important metric if it could just me measured. In call centers, quality of hire has tremendous implications. Hitting the fill rate with bad people is disastrous. Bad hires cause high attrition, poor customer service and low productivity. They cost thousands of dollars apiece.
Operational managers’ bonuses are based on quality and productivity targets, which are in turn extremely dependent on quality of hire. If only they could measure it, they’d be all over it.
Lately, we’ve noticed operational managers getting more and more interested in recruiting. Why the change? Because with the new analytics technology, like Evolv, they can actually see quality of hire and measure the recruiting process as an operational input. In other words, they can track the direct connection between recruiting and their bonuses. And just like that, recruiting has become as important to them as any other initiative they may be running.
So, we see operational managers getting interested in recruiting. Salesforce sees sales managers getting interested in performance management.
This is could be great news for HR. HR Executives claimed that HR really is strategic, and that HR should “have a seat at the table.” Now, we’re seeing our clients and prospects agreeing with this view. And Salesforce even wants to be a performance management company. The good news is that HR might finally get their seat at the table.
The bad news is that if HR leaders don’t take that seat and deliver, functions like performance management and recruiting may actually get moved into other departments. It will be interesting to see if Salesforce starts calling on HR managers to sell SuccessForce, or if they position the value to their current customers in the Sales, Marketing, and Customer Support functions.