Is it a layoff? Or a purging of the untalented, unmotivated and/or those with a poor fit for their role?
If you're a fan of performance management and wish you could do more in your company to drive a performance culture, you've got to love SuccessFactors. They produce on-demand software that allows you to have a dashboard of what's going on in your shop, regarding performance management. Beyond simply tracking due dates, the solution allows you to see cascading goals, see the rating distribution across the enterprise, and throws a little succession planning flavor your way as well.
There are lots of reasons to love SuccessFactors and others who provide similar stuff, including Taleo, Halogen Software and hopefully in a little bit, the TalentedApps team at Oracle.
Here's another reason to love SuccessFactors. They apparently eat the dog food they make. They may even drink the Kool-Aid. From Ed Frauenheim at Workforce's Global Work Watch:
"SuccessFactors lowered its headcount from 736 at the end of 2007 to 694 at the end of March. The drop was a bit puzzling, because SuccessFactors has been one of the fastest-growing software firms around, selling tools that help manage employee performance reviews and other human resources tasks. Revenue nearly doubled last year, to $63.4 million.
The headcount issue prompted a question by a financial analyst during an earnings call earlier this year. SuccessFactors founder and chief executive Lars Dalgaard explained the situation as axing employees who didn’t belong.
“So we hired a lot of people in [the first quarter], but we just fired more,” Dalgaard said on the call. “We’ve been on a very aggressive hiring spree for a long time, and we’ve used our own products to find out the people that weren’t going to be part of the future.”
When I asked a company spokesman about the headcount change, he offered this explanation: “We get rid of low performers and/or cut our losses if some initiative is not working out, and that’s what happened.”
Pressed once more on the topic, the company said this in a statement: “The headcount reduction was not a layoff. We eliminated low performers and we eliminated a group associated with a vertical focused area that did not produce results (we will not provide specific, further info). “This is consistent with our pay for performance philosophy and aggressively managing our business for performance.”
If you read Ed's whole piece, he's locked in on the fact that it's a layoff. To Ed's point, if the reduction is actually a layoff, SuccessFactors may have some issues here.
Work with me on this one. Let's say for the sake of argument that SF hired no one during the three month period, which would mean they termed 42 people for the quarter in question. If you went to the turnover report and the coding showed "Involuntarily Term - Poor Performance", then what SF is saying is true. And that means the reduction was driven by them using their own solution, which is cool.
However, since a poorly performing department is cited as part of the numbers, some red flags go up. Let's say they shuttered a department of 30 in these numbers. If that's the case, they just splattered all who were impacted by that with the specter of being a bad performer. That's bad form, and from a practical standpoint, not true. In any universe with 30 people (my example), you'll have good, bad and average performers as part of the mix.
The truth is in the numbers. If the shuttered department only accounts for 10% or so of those termed in the quarter, then the company is drinking the Kool-Aid. If it accounts for a sizable chunk of those termed, it's classically inaccurate to throw the specter of performance on everyone in the department.
Still, I love the fact that SuccessFactors would try to spin the headcount reduction as their culture being hardcore for performance management. That means they're passionate about the space, even if they're being a little reckless in sharing performance data on those impacted.
Welcome to the wonderful world of being publicly traded, SuccessFactors!