Love Work Again
Lars Dalgaard says happy employees are a company’s No. 1 competitive advantage — and SuccessFactors has the software to make them content.
EDITOR’S NOTE: In early December 2011, following the publication of this story, SAP AG (NYSE: SAP) announced it had entered a definitive merger agreement to acquire SuccessFactors.
“I believe that every human being can be happy at work and do amazing things if their company takes time to connect with them.” So says Lars Dalgaard, founder and CEO of SuccessFactors Inc. (NYSE, NYSE Euronext: SFSF), the Web-based talent-management software company. What’s more, he says, “the corporate world is concluding that happy employees are productive employees.” Noting that SuccessFactors’ slogan is “It’s time to love work again,” Dalgaard says his San Mateo, Calif.-based firm can help businesses attract the best employees — then get the best out of them once they’re onboard — by tracking performance against measurable goals.
To Dalgaard, feeling the love begins with managers sitting down with subordinates regularly and explaining things clearly. Then (and this is the key, he believes) they really listen to how each employee sees the challenges of the job and provide the resources and freedom to get it done. “If managers did that,” he says in a booming voice still tinged with his native Danish accent, “employees could do not two times more, but 50 times more than they ever dreamed possible.”
MORE ABOUT SUCCESSFACTORSA Rousing M&A Strategy
The six-foot-four Dalgaard, 44, is a self-professed “hyperaggressive” businessman who started SuccessFactors in 2001 after holding senior positions at Unilever NV (NYSE: UN; NYSE Euronext: UNA, UNIA) and Novartis AG (NYSE: NVS). His experiences with his bosses and the people he managed at both companies proved to him that unmotivated employees are toxic to productivity, but happy workers are a company’s most potent competitive advantage. He believes that organizations are starting to realize they need to shore up employees at every level. “A bank wants its tellers to do a very strong job every day,” Dalgaard says. “But it wants the head of its investment banking operations to really outperform.”
Today more than 3,500 customers, including The Coca-Cola Co. (NYSE: KO), FedEx Corp. (NYSE: FDX) and Toyota Motor Corp. (NYSE: TM), in 168 countries have signed on to use SuccessFactors software products as a way to unlock employee potential. Fiscal 2010 revenue of $206 million rose 35 percent above the previous year’s, and analysts estimate 2011 sales of nearly $314 million, a 52 percent increase.
IN MY OWN WORDS:
Lars Dalgaard, CEO, SuccessFactors
If I could meet my 20-year-old self, I would say... Be humble. Be honest. Don’t be afraid of making mistakes. Don’t do anything you don’t feel is “wow!”
My perfect day outside work involves... Reading, discovering, art, my family, my friends and surprising moments.
The best advice I could give a young employee is... Don’t spend a second on anything you don’t feel strongly about.
My biggest pet peeve in the office is... People who have a meeting in the meeting. Have it after the meeting.
Robust investments in sales and marketing, R&D and five acquisitions over the past 18 months (see “A Rousing M&A Strategy”) have helped Success-Factors lay the right foundation for a bright future, Dalgaard says. “SuccessFactors is aggressive — its approach to working with the HR function is ‘we’re going to the CEO or CFO and you’re coming with us,’” says Josh Bersin, CEO at Bersin & Associates, a human resources research and consulting firm based in Oakland, Calif. “It’s a good strategy.” Indeed, Deloitte LLP recently named SuccessFactors the fastest-growing public software-as-a-service (or SAAS) company in North America.
A New World of Talent
For decades companies depended on HR software, installed on-site by giants such as SAP AG (NYSE: SAP), to keep tabs on the basics of employee life. Beginning about 10 years ago, talent-management applications began to replace the legacy systems. Accessed inexpensively through the Internet, or cloud, such on-demand, Web-based software allows managers to be more precise and proactive about hiring, training, promoting and educating their workforce. Bersin, who estimates the talent-management software market now hovers around $3 billion, expects annual growth of up to 15 percent in each of the next several years.
Doug Dennerline, who joined SuccessFactors as president late last year following careers at Cisco Systems Inc. and Salesforce.com Inc. (NYSE: CRM), expects growth regardless of macroeconomic conditions. “In a nonhiring environment like we have now, companies want to get the most out of the workers they have,” he says. “When hiring picks up, our recruiting applications will become more popular.” Indeed, SuccessFactors comes out with new HR applications every three months or so, based on constant conversations it has with customers and the issues they are facing.
For instance, a discussion with a customer revolved around how to make performance reviews less subjective and more uniform throughout the organization. “If a manager gives out all 5s on a scale of 1 to 5 and another manager awards only 4s, does that mean her people are inferior performers, or is it just easier to get a 5 with the other manager?” asks Dennerline. Thus was born the Calibration software application, one of SuccessFactors’ fastest-growing products.
Dalgaard admits to some failed products but doesn’t agonize over them. “You’re not going to change anything on the planet if you don’t make mistakes and learn from them,” he says.The more important point, he says, is that in good times or bad, “managers need to give employees clarity and purpose, a sense of what needs to be done today and the career path to take them to the next level. If you motivate people properly, not just with money but also with a sense of purpose, they will execute for you and take your company way ahead of competitors.”