1. The ROI of Talent Management You can listen to todays webinar using your computers speakers or you may dial into the teleconference. If you would like to join the teleconference,please dial 1.650.479.3208 and enter access code: 926 601 308 #. You will be on hold until the seminar begins. #TMwebinar

2. The ROI of Talent Management Speaker: Stephan MillardSenior HCM StrategistSumTotal Systems Moderator: Mike ProkopeakVice President, Editorial DirectorTalent Management magazine #TMwebinar 3. Tools You Can Use Q&A Click on the Q&A icon on your floating toolbar in the top of your screen. Type in your question in the space at the bottom. Click on Send. #TMwebinar 4. Tools You Can Use Polling Polling question willappear in thePolling panel. Select yourresponse and clickon Submit.#TMwebinar 5. Frequently Asked Questions1. Will I receive a copy of the slides after the webinar? YES2. Will I receive a copy of the recording after the webinar?YES Please allow up to 2 business days to receive these materials. #TMwebinar 6. The ROI of Talent ManagementMike ProkopeakVice President, Editorial DirectorTalent Management magazine#TMwebinar 7. The ROI of Talent ManagementStephan MillardSenior HCM StrategistSumTotal Systems#TMwebinar 8. Talent Management Return onInvestment (ROI)Calculating the Cost & Benefit for Your ProjectStephan MillardTalent Management Strategist 9. Agenda What is ROI, Why is it Important? Components of ROI Preview of Typical Benefits of Talent Management Evidence on Talent Management ROIPage 8 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 10. Show of Hands Please! YES!NO!Page 9 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 11. Agenda What is ROI, Why is it Important? How to use talent analytics to drive better leadership assessments How Successful Companies Assess Their future leaders Quick Tips for Using Talent Management TechnologyPage 10 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 12. What is Return on Investment (ROI)?Return on Investment Quantifies the QualitativeBenefits of Your Talent Management ProjectPage 11 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 13. Why ROI is Important? Provides executive management a calculation of hard benefits on your project It can correctly set expectations for the projects return ROI evaluation can help drive higher project prioritization by executive managementPage 12 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 14. Agenda How Integrated Talent Management can power success Components of an ROI Study How Successful Companies Assess Their future leaders Quick Tips for Using Talent Management TechnologyPage 13 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 15. Key Components of ROI StudiesROI: This is the return ratio of yourproject Divides the total expected benefit by the totalPayback Period: shows how quicklyproject costs your project investment is paid back Always expressed as a percentage (e.g. 200%return) Return on Investment StudyNet Present Value (NPV): This Yearly Calculations: This shows yearlycalculation shows the time value of cash flows that the project generates money for the talent management usually with a three or five year time-project horizon Often used by CFOs to rank a projects value thehigher the number the higher priority the project isgivenPage 14 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 16. Basic Formulation of ROI StudyEnter Project Costs This always includes direct costs (e.g. software &hardware) Also includes indirect costs (e.g. employee training)Enter Projected Project Benefits Generally broken up to cost savings, productivity andrevenue benefits Initially these are estimates many times and are refinedCalculate ROI Outputs These are the factors described on the last slide (NPV,Payback period, annualized results, etc.)Page 15 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 17. The ROI Inputs: Project CostsLabor orIndirect laborSoftware costs:Relatedheadcount or headcount Calculates the systems costs:costs:costs:license or SaaS This cost shows thecosts of softwaretotal costs of Total costs of labor This is the cost of over the life of thein setting up and training employees hardware, hostingprojectdata-center, internaladministering the on the new systemtalent management and any relatedand vendor supportsystemcosts to thiscosts. Often broken down to compare SaaS, Hosted and On- premise deployment optionsPage 16 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 18. The ROI Inputs: Project Benefits Cost Avoidance benefits: This calculates the benefit of not having to incur some costs as a result of the Talent Management project Example: Not needing to pay for maintenance or hardware associated with an old system that is being replaced Productivity benefits: This is the benefit of employees being able to be more productive as a result of the Talent Management project Example: Cycle time for performance or compensation drops by 2X, so employees and managers can be more productive Revenue benefits: This is top-line revenue gained directly from having a talent management system. These are often the most challenging to show / attribute Example: Faster time-to-market for the companys products because employees are hired and productive quickerPage 17 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 19. Agenda How Integrated Talent Management can power success How to use talent analytics to drive better leadership assessments A Preview of Typical Talent Management Benefits Quick Tips for Using Talent Management TechnologyPage 18 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 20. Recruiting & Hiring BenefitsReducing employee turnover Pain Benefit Metric Hiring the wrong Better selection Reduction incandidate caninformation turnover costsmean needing tomeans improving (e.g. advertising,re-hire again andquality of hire lost productivity)incur all costs Improved compliance with federal / state regulations Pain BenefitMetric Time and money Automated Reduction in timespent on manuallycandidate selection spent manuallymanaging and reporting torunning reports andcompliance reports comply with costs spent onor paying finesregulations finesPage 19 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 21. Performance Management BenefitsAdministering the performance process Pain Benefit Metric Time dealing with Improve the Reduction in timeadministering theproductivity of the spent on processperformanceperformancemanagement groupprocess Time spent calibrating performance ratings Pain Benefit Metric Manually ensuring Reduce time Reduction in timeperformancespent calibrating spent onratings areperformance calibrationobjectively ratedratingsPage 20 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 22. Performance Management BenefitsManually writing performance reviews PainBenefitMetric Having managers Reduce time Reduced time perand employeesspent writing review, permanually write / reviews and employee onevaluate reviews having managers writing write comments Value of better goal alignment across organization PainBenefitMetric Goals are not Improve the link Better alignmentaligned to overall performance goals drives betterorganizational and corporate business results onobjectives objectivesspecific corporate objectivePage 21 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 23. Compensation Planning BenefitsImproved budget compliance PainBenefitMetric Manual Automated Reduced spendcompensation process ensures and time byplanning often has that manageradmin. dealingmanagers going cannot exceed with exceptionsover budgettheir budgets Reduced Turnover of high-performers PainBenefitMetric Goals are not Improve the link Better alignmentaligned to overall performance goals drives betterorganizational and corporate business results onobjectives objectivesspecific corporate objectivePage 22 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 24. Succession Planning BenefitsReduced management time going from manual to automated PainBenefitMetric Manual succession Automating the Reduced executiveplanning is a very process lets it betime, reducedinefficient, timedone year-round byadministrative timeconsuming processall involved and is much more efficient Reduced Turnover of high-performers PainBenefit Metric Higher performers Improve Reduced turnoverleave because they identification andamong high-do not see retention of future performersopportunities to growleaders with betterin the company and more timely informationPage 23 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 25. Other ROI Factors to Understand This refers to how long a given benefit takes to Rampstart to show quantified benefits Usually this is why year 1 many talent management projects do not show strong resultsRisk This refers to risk of each input (cost or benefit) coming in as expected. This is the percent of a given benefit that can be Attribution attributed to the project Good to try and track the results as closely as feasible so you have evidencePage 24 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 26. Principles of Successful ROI on a Project Do not commit to ROI on every front forall employees Do not boil the ocean Focus on one or two benefit areas andon a definable audience While it is nice to see big numbers, theyDo not commit to an add significant risk of project failureROI that is too large Too large an ROI often endangerscredibilityNegotiate attribution It is good if benefit calculations have up-front agreed upon attribution calculationsDiscuss key ROI Understand what ROI metrics yourfinance department uses metrics with financePage 25 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 27. Agenda How Integrated Talent Management can power success How to use talent analytics to drive better leadership assessments How Successful Companies Assess Their future leaders Evidence on Talent Management ROIPage 26 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 28. Human Resources Maturity Model Level 4: Business-Integrated HRHR strategy part of the business strategy. HR helps to drive business decisions through people, data and insights.Business and HR systems integrated and advanced. Level 3: Strategic HR Department HR aligned with business strategy. HR functions supporting business needs. Initiatives split between HR process improvements and talent needs.Level 2: Fundamental HR ServicesHR strategy partially or fully defined. Siloed HR functions.Some standardized processes and policies; core services managed well.Some automated talent systems, but little integration of data.Level1: Compliance-Driven HR Services No HR strategy.Personnel function, mostly separate from business and talent needs. Line managers perform HR activities as they see best.Bersin & Associates, 2010Page 27 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 29. Integrated Talent Management Direct Impact on BusinessHRs Relationship to Business Strategy40%30%20%10%0%HR is a full partner in developing andimplementing the businessstrategy Low Market Performers High Market PerformersPage 28 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 30. Why Integrate Talent Management? Analyst research shows direct correlation to business performance Bersin 2011 HR Factbook shows organizations that have reached maturity (Level 4) by having business-integrated HR functions rather than compliance drive (Level 1) HR show significantly higher performance in the following metricsPage 29 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 31. More Mature HCM Practice = Greater ROI HBR Article in 2007 Effective talentmanagement drivesbetter sales & greaterstock return Same correlationshown in many articles& studiesMaximizing Your Return on People, March 2007, Harvard Business ReviewPage 30 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 32. SumTotal Strategic HCM Solution Empowering Customers to Become Stronger Strategic Business Partners Providing Actionable Insight Enabling End-to-End Integrated Business Processes Driving Productive, Pervasive Access Improving Time-to-Value and Reducing Cost of Ownership Enabling collaborative solution development communityPage 31 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 33. Long Lasting Customer Relationships Broader Offerings, Improved Operations, High Customer RetentionSumTotalWorldwide Leaderin Strategic HCMMarket Share (users)3,500+ Customers Over 45+ Million End-Users Leader in SMB,Mid-Market & Enterprise Solutions Global Scalability Page 32 - October 16, 2012 PROPRIETARY AND CONFIDENTIALMarch 5th, 2012 34. Most Advanced - Recognized as Leader by Analysts 6+ Years in the Leaders Quadrant (Gartner CLS MQ)SumTotal has established itself as the market share and mind share leader 2+ Years Rated Visionary (Gartner EPM MQ)well suited for global organizations seeking best-in-class functionality Global Market Share Leader for Learning (Bersin 2011 LMS Systems)Highly configurable Market leading Learning Management best-suited tolarge, global organizations. 3+ Years Rated Hot (Ventana Total Compensation)The top ranked supplier based on the weighted factoring of five product and twocustomer assurance categories 4 + Years in the Leaders Section (Forrester Wave LM) Forrester Wave for Enterprise Learning Suites Leader in Every Section of Forrester Wave (2011 Forrester TM) ...among the leaders for integrated performance & compensation solutions Highest Rated Overall (AMR Strategic HCM)...the broadest and most mature application suite in the strategic HCM specialistspacePage 33 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 35. Questions & Answers Visit us at www.sumtotalsystems.com and through thesesocial channels:@SumtotalSystemshttp://www.linkedin.com/groups?home=&gid=45382http://www.facebook.com/SumTotal.SystemsPage 34 - October 16, 2012 PROPRIETARY AND CONFIDENTIAL 36. Questions and Answers Stephan Millard Senior HCM Strategist SumTotal Systems #TMwebinar 37. Join Our Next TM WebinarFast and Agile HR: Leveraging Talent Management to Guide the JourneyTuesday, November 6, 2012 TM Webinars start at 2 p.m. Eastern / 11 a.m. Pacific Register for upcoming TM Webinars atwww.talentmgt.com/eventsJoin the Talent Management magazine Networkhttp://network.talentmgt.com/#TMwebinar