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"SAP and leading-edge partners in the
high-tech industry are collaborating to deliver innovative solutions and new, extended integration scenarios that address the key challenges in the high-tech industry"
Source : SAP
Winning the War for Talent in the High-Tech Industry
High-Tech Industry is also known as :
High Technology Industry,
Hightech Activities,
HI-Tech Industry Development,
Hightech Industry Leads,
Booming High-Tech Industry,
Hightech Industry,
High-Tech Leader,
High Technology Industrialization,
Promoting High-Tech Industry,
High-Tech Industry Business,
HI-Tech Industry Vigorous,
HI-Tech Industry Strategic,
High Tech Industry Booms,
Boost HI-Tech Industry,
Organizing High Tech Industry,
High-Tech Industry Software,
High-Tech Industry Solutions,
Role High-Tech Industry,
High Technology Industry Cluster,
Quality High-Tech Industry,
High-Tech Professionals,
Tech Industry,
Tech Industry's Cradle,
High-Tech Industry Outlook,
High-Tech Industry Executives,
Needs High Tech Industry.
Executive Agenda
High-tech companies face a range of complex business
challenges due to global expansion, shifting demographics,
and continuous competitive pressures. Within this industry
context, the human resources (HR) organization finds itself
at the forefront of many of these challenges, while facing
unparalleled pressure to deliver.
Increasingly, human capital management
(HCM) is becoming a priority for
high-tech senior executives. The workforce,
they realize, is not only a source
of competitive differentiation, but also
the key to accomplishing a number
of strategic goals, such as product
and service innovation and process
improvements as well as new channel
development.
This SAP Executive Insight addresses
the following questions:
- What specific challenges do HR
organizations in high-tech companies
face today?
- What is the impact of these challenges
on HR operations?
- What do best-run HR organizations
do differently to achieve leading
performance?
SAP Executive Insight
Winning the War for Talent in the
High-Tech Industry
Key Challenges
High-tech companies operate within an
increasingly competitive and complex
industry in which many segments are
experiencing significant single- and
even double-digit growth. Merger and
acquisition activity is also high, driven
by competition and segment consolidation
or the need to expand product
lines. In this environment, the industry
faces the following three main
challenges:
- Product excellence: Develop the
right product; minimize time to market
- Customer excellence: Retain existing
customers; present one face to the
customer
- Service excellence: Align service
portfolio with product offering; use
services as a sales channel
Strategic Role of HR
heart of any strategy to master the
business challenges of high-tech
companies.
This requires the HR organization
to transform from the role of
service provider to that of strategic
business partner to help deliver
business
results, which include:
- Improving employee productivity
- Reducing time to market
- Delivering higher customer
satisfaction
This transformation requires a shift
both in mind-set and in approach and
tools as HR is asked to integrate with
research and development, sales and
marketing, and production activities to
drive optimal results on a global basis.
At the same time, however, fierce
competition
in the industry extends
into an equally determined battle for
the most talented employees.
Blueprint for Success
A successful HR organization must
address four imperatives if it is to
win the war for talent. According to a
recent benchmarking study conducted
by the Americas’ SAP Users’ Group
(ASUG) and SAP, leading HR organizations
in high-tech companies
accomplish
the following objectives:
- Focus on “results” rather than
“effort” – by linking HR programs
to specific business outcomes
- Build a performance culture – by
integrating
the talent management
process with the rest of the company’s
operational processes
- Develop a global people strategy – by
sharing best practices, through rapid
learning, and through collaboration
- Establish a process for planning
careers – by encouraging employees
to grow within the company and
maximize
their value for the organization
at each career stage
Study results are clear: HR organizations
in high-tech-companies must adopt
best practices for their technology,
business processes, and organizational
operation. Automating and integrating
HR operations with business activities,
supported by interdependent business
processes, reduce the cost of delivering
basic HR services. Additionally, this
approach frees up resources to support
an integrated talent management
process and eliminates information
and communication barriers.
The People Challenge
In this industry, HR’s struggle against
high employee turnover, long recruiting
cycle times, and extensive employee
development efforts is reflected in
the following exceptional operational
metrics, as compared to other, less
competitive, industries:
- 20% higher HR costs
- 20% more HR staff dedicated to
talent management
- Almost twice the investment in
HR technology
Nevertheless, within the high-tech
industry, leading HR organizations
manage
not only to control operational
costs and establish effective HR processes,
but also to drive 16% higher
employee productivity, a metric that
directly impacts the bottom line.
The Talent Gap
During the past 15 years, the United
States has developed the most intensively
high-tech economy among major
nations (see Figure 1). An increasingly
competitive and global environment, as
well as aggressive growth and productivity
targets, puts significant pressure
on U.S. high-tech companies to shorten
time to market, increase customer
satisfaction,
and deliver innovative
services. And more and more high-tech
companies are putting people at the
center of their strategies to tackle
these market demands.
However, that strategy can be problematic
when viewed in the context of population
trends. U.S. population growth –
a 3% annual growth rate for science
and engineering staff (see Figure 2)
versus a 6% annual industry growth
rate (see Figure 1) – is not keeping
pace with industry growth. Moreover,
it is clear there is only a limited group
of individuals worldwide with all the
desired attributes – an advanced
degree in engineering or sciences,
strong communication skills, collaboration
and customer relationship skills,
the willingness to go the extra mile,
and the passion to innovate – who
can contribute to and succeed in the
high-tech sector. In response, U.S.
high-tech companies are beginning
to seek out talent on a global scale.
Figure 1: High-Tech Output Worldwide
Figure 2: Lag in Science and Engineering
Growth Rates
Talent Acquisition and Retention
These HR organizations are unleashing
sophisticated, aggressive hiring tactics
to acquire the most desirable personnel
wherever they may be, while at the
same time putting highest emphasis on
retaining and developing internal
talent.
This is not easy. Developing an
in-house talent pool demands more
than a simple program for employee
development or an infrequently updated
succession plan. Establishing a strong,
predictable internal talent pipeline
requires:
- Clarity of role and expected
performance
- Management of employees at every
level
- Guided training, education, and
career planning
- Assignment of eligible staff to the
most exciting projects to motivate
them and ensure a satisfying work
experience
Strategic Role of HR
Investing in HR
To find and retain significant talent,
high-tech companies invest more in
HR staff, processes, and technology
than the average company in other
industries. Many industry key performance
indicators reflect this enhanced
investment. At the most basic level,
SAP benchmarking studies indicate
20% higher staffing levels and costs
for a high-tech business compared
to the average company (see Figure 3),
as well as almost twice the investment
in HR technology (see Figure 4).
Recruiting, managing, and retaining
talent
result in a distinct staffing and
cost profile for the typical high-tech
company. This includes an above-average
percentage of resources
dedicated
to talent management,
comprised of recruiting and staffing,
training and development, employee
relations, and compensation
planning.
Figure 3: Investment in HR for High-Tech
Companies
Figure 4: Investment in HR Technology for
High-Tech Companies
Improving HR’s Operational
Performance
Given the scarcity of talent, it comes
as no surprise that high-tech organizations
have above-average turnover
rates – 14% for high-tech companies
versus 12% for the average company
in other industries. However, the leading
high-tech businesses are able to
limit voluntary turnover and thereby
reduce turnover rates to 5%. These
organizations improve retention by
providing:
- Excellent reward systems
- Competitive benefits and pension plans
- Continuous learning management
systems
- Pride of association from working
with a high-profile company
The leading businesses also encourage
continuous learning and achieve almost
100% participation in training and development
programs (95% training participation
for first-quartile organizations
versus 63% for average high-tech organizations).
At the same time, they are
able to add new talent to the organization
effectively and efficiently, reducing
cycle times from 60 days on average to
44 days for first-quartile organizations
and reducing employee turnover from
14% to 5%.
All of this raises the question: Are
higher
costs and increased resource
allocation a sign of greater investment
– with the expectation of a greater
return – or a necessary reaction to the
high-tech industry’s intense need for
talent? The answer to both is “Yes.”
While, on average, higher costs and
resource allocation indicate that the
industry is struggling to respond to its
particular challenges, leading businesses
within the high-tech industry do
manage to differentiate themselves.
Road Map to a Best-Run HR Organization
While managing overall costs, the top
businesses adopt best practices for
their technology and business processes
that automate and streamline transactional
activities. This allows them to
invest the freed-up resources in talent
management and support for strategic
decisions. These leading HR organizations
not only run more effective processes,
but also have a bigger impact
on business results, as measured by
employee productivity or operating
income per employee (see Figure 5).
Figure 5: Investment in Talent Management
"We wanted a software provider
committed to being the ‘best of
the best’ and taking the product
to the next wave."
Don Brown, Senior Vice President of Human
Resources, Intervoice Inc.
The top-performing HR organizations
achieve success through:
- Standardizing and automating transaction
processing to reduce the
cost of delivering basic HR services
- Using freed-up resources to support
an integrated talent management
process
- Integrating HR and relevant non-HR
systems to eliminate information
barriers
and help other areas of the
business reduce time to market
- Giving every manager access to
decision-
support tools and required
data on employees
- Delivering relevant business metrics
to front-line managers, linking
people processes to operational
performance
- Benchmarking HR’s performance
against industry metrics and best
practices
Intervoice Inc
Industry: High tech
Revenue: US$168 million (2005)
Employees: 850
Summary
Intervoice Inc.’s inflexible, outdated
systems were unable to support
future growth. Lack of real-time,
accurate information and complex
data administration led to higher
costs for internal and outsourced
processes.
A recent acquisition
required an easy and effective rollout.
Results with SAP® Software
- 3% to 5% increase in operating
income with a 65% return on
investment
- Support for increased headcount
after acquisition, with no additional
HR FTEs
- Reduced manual intervention
thanks to a 100% self-service
model that allows personnel to
devote less time to administrative
tasks
Impact of Technology
Early HR technology, which focused on
enhancing specific HR functions, will
not suffice in today’s integrated environment.
The time is past when HR and
senior management looked at HR processes
as distinct from the rest of the
business. Even integration of the HR
business processes alone will not
do the trick today.
Rather, integrated HR technology is
a key enabler for the HR organization
to deliver strategic business value. For
example, by linking research and development
processes with HR processes
and enabling rapid identification of
the best engineer for a project based
on skill requirements, availability, and
career goals, the HR organization helps
accelerate time to market while encouraging
retention of highly skilled engineers.
Another example is the integration of
manufacturing and training data, which
supports improvements in training
effectiveness and, ultimately, establishes
a safer workplace in compliance
with applicable regulations.
By managing workers as a strategic
asset and helping them plan and develop
careers that are consistent with
anticipated corporate needs, high-tech
HR organizations can substantially
improve retention and strengthen their
companies’ competitive stance in the
face of declining talent availability. The
critical steps discussed here are fundamental
to developing the top talent
high-tech companies need to thrive
in today’s economy.
Further Reading
- “Human Capital Management:
How Top Organizations Drive
Company
Profit Efficiently,” 2007
ASUG and SAP benchmarking
study
- “Human Capital Management:
How Top Organizations Drive
Company
Profit Efficiently,” 2007
ASUG and SAP benchmarking
study
- Adobe Systems
- Alpine Electronics
- Intervoice
- MEI
- SUMCO
About This Insight
The ASUG and SAP benchmarking
and best practices program holds a
forum for SAP customers to track
trends, share best practices, and
measure
value based upon key performance
drivers. To date, more than
200 companies have participated in
the study – including more than 30 from
the high-tech industry – with revenues
of between less than US$1 billion to
more than US$10 billion. The study
covers the full scope of HR business
processes segmented into subprocesses
such as recruiting and staffing,
learning and development, and payroll
administration.
In addition to HCM, ASUG and SAP
benchmarking programs exist for
other operational areas, including
finance; governance, risk, and compliance
(GRC); supplier relationship
management
and procurement;
supply chain and manufacturing; new
product development
and introduction;
customer contact centers; total cost
of ownership; and business intelligence.
For more information about
the ASUG and SAP benchmarking
and best practices program, visit
www.asug.com/benchmarking
or contact benchmarking@asug.com.
About the Authors
Grant Bodley
is a senior principal in the
SAP Industry Solution Group and leads
the high-tech practice for SAP North
America.
Zeev Gur
is an SAP senior solution
principal
focused on HCM and is responsible
for helping clients understand and
leverage industry trends to optimize
people-
related business processes.
Ashish Morzaria
is an associate in
the SAP Value Engineering (VE) organization
and leads the HCM practice for
VE India, where he works with strategic
SAP customers and prospects on
benchmarking engagements and
business case studies.
Katharina Müllers-Patel,
PhD, is
a senior principal in the SAP VE orga-
nization
and is responsible for the
ASUG and SAP benchmarking and
best practices
program.
50 088 274 (08/02)
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