BUYER CASE STUDY The Integration of Performance and Learning at Wachovia

Lisa Rowan Peter McStravick

IDC OPINION
In February 2006, Wachovia Corp. rolled out its newly integrated learning and performance capabilities in the first phase of what will eventually be an enterprisewide implementation. As IDC has reported previously, the integration of these two processes can provide organizations with improved visibility into the talent pool, deliver more targeted learning and development, and improve the overall quality of manager/employee interactions around performance. IDC believes that the Wachovia story exemplifies the effort that is required by organizations to successfully integrate the processes and technologies around learning and performance. Key findings from this case study include: ! Integrated learning and performance management (PM) can save an organization a significant amount of time and improve an employee's level of engagement in the process. ! Amid the war for talent, integrated learning and performance gives employees more control over their own career development and can thus serve as an integral part of a company's retention strategy. ! Integrating learning and performance creates a climate for more meaningful discussions between managers and employees around career development. ! An integrated system helps more accurately demonstrate and quantify the impact of learning. ! Companies that focus on standardizing their learning and performance processes first will find the adoption of new and integrated platforms easier. ! Companies should incorporate change management strategies into their rollout.

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IN THIS BUYER CASE STUDY

This IDC Buyer Case Study examines Wachovia Corp.'s efforts to integrate learning and performance management. It observes the company's evolution from being a decentralized organization to being a company with standardized processes and platforms for learning and performance. This study is based on phone interviews and product demonstrations with Dean Williams, Wachovia's chief learning officer; Eleanor Reali, organizational effectiveness consultant with the leadership practices group; and Michelle Gasiorowski, learning services manager.

Filing Information: October 2006, IDC #204157, Volume: 1 Corporate Learning and Performance: Buyer Case Study

SITUATION OVERVIEW
Organization Overview
Wachovia Corp. is one of the nation's largest diversified financial services companies, providing a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services. Including the Golden West merger, which closed on October 1, 2006, Wachovia has retail and commercial banking operations in 21 states, with 3,400 retail banking offices from Connecticut to Florida and west to Texas and California. In addition, two core businesses operate under the Wachovia Securities brand name: retail brokerage with 737 offices in 49 states and in Latin America, and corporate and investment banking in selected industries nationwide. Other nationwide businesses include mortgage lending in 39 states and auto finance covering 46 states. Globally, Wachovia serves clients through more than 40 international offices. As of September 30, 2006, Wachovia had assets of $559.9 billion and market capitalization of $88.2 billion. Not unlike most financial institutions, Wachovia evolved from a number of mergers with other banks, the most significant being when First Union and Wachovia merged in 2001, officially becoming the entity it is today. This merger in particular served as a catalyst for Wachovia because it was at this time when the company's leadership began to realize that to become better equipped to manage its projected growth, the company needed to begin to standardize some of its key processes. Two in particular, which until this time had remained largely disparate and decentralized, were learning and performance management. The learning environment, for instance, within both Wachovia and the legacy First Union bank, were quite different. While neither company had standardized on any one learning management platform, First Union had operated with a corporate universitybased model that was centralized, while Wachovia was more decentralized, with the bulk of its training functions embedded within the individual lines of business as well as the Wachovia Center for Learning that focused on leadership, creativity, and other programs with organizational reach and relevance. Equally dissimilar were the performance management processes in place across the company. While some general guidelines had been established by First Union around PM, each line of business controlled its own performance management system and determined how it was created, operated, and maintained. A companywide performance management process, including core competencies and support by a new technology tool, had been rolled out in legacy Wachovia but was not scalable to the larger merged organization. From an enterprise perspective, not only did this prevent visibility into individual and organizational performance across and into the different lines of business, but as the new Wachovia continued to grow and as people moved between business units, it became increasingly apparent that the inconsistencies that existed in these processes could no longer be ignored. Wachovia CEO Ken Thompson recognized that to move his company forward in how it performed as an enterprise, Wachovia would need to eliminate the use of multiple disparate systems. Different types of employee performance, compensation, and

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learning information were being stored in different systems, each with its own interface, creating a confusing experience for Wachovia employees. Thompson and Shannon McFayden, Wachovia's head of human resources (HR) and corporate relations, made the decision to centralize the core HR processes and make them more accessible and user friendly. Specifically within the learning function, Williams, Wachovia's chief learning officer, picked up the charge by adopting a new five-word mantra for his team: "Make Learning Easy and Effective." To achieve this, Wachovia's HR group set several goals: ! Improve the overall quality, efficiency, and consistency of Wachovia's learning and performance management systems ! Better integrate the two processes and systems ! Standardize on a single learning platform and integrate it with a single performance management system ! Provide employees with easier access to the performance and development tools they need to be successful in their jobs ! Provide training to Wachovia employees while keeping them engaged in their jobs and interfering as little as possible with their daily responsibilities ! Remove frustration from the system and replace it with fluidity ! Reduce the need to toggle in and out of different applications ! Improve tracking and reporting capabilities ! Take an employee-centric view embed the processes around learning and performance into the employees' workflow as best as possible The HR group recognized also that a move in this direction for the company was going to be a challenge from a cultural standpoint. In many cases, the integration of technology is easier than the integration of long-established processes and workflows. To maximize the odds for success, Wachovia made the important decision to first reengineer and standardize on the processes the company used around learning and performance management before selecting specific technology solutions. Once the work on processes was completed, the organization agreed to a phased approach for implementation. First the company would roll out its learning management system (LMS) and then it would select and implement a performance management tool. A critical requirement for selection of a PM tool was the ability to integrate seamlessly with the LMS.

Business Case for Integrating Learning and Performance in the Context of the War for Talent
While the primary driver for Wachovia to integrate its learning and performance technologies was the need to create a more consistent model for its employees across all business lines, there were other forces driving this decision as well. In

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particular was the current talent shortage affecting the financial services industry. Like many financial institutions, Wachovia has found that despite its offshoring and outsourcing strategies, it was still facing a skills shortage. With the company looking to grow its business further and establish itself as a national franchise, talent development and retention became key initiatives. Today, Wachovia is shifting its strategy to grooming its own talent rather than acquiring it from outside the organization. This shift required that Wachovia reexamine the ways in which it measured and tracked internal competencies and performance. It also meant that the bank consider ways in which it could ensure that it remain an employer of choice a place where people want to work and more importantly want to stay. Williams, Wachovia's CLO, believes that the integration of learning and performance played a key role in a couple of ways and standardization made for a much stronger business case. For example: ! With consistent processes for learning and performance management, enabled by robust technology, Wachovia would gain greater visibility into its talent pool across the company and be able to develop and retain top performers more effectively. These tools, and the leadership behaviors they support, would have a positive impact on the manager/employee relationship as well as the potential to lift performance at the individual, team, and organizational levels. ! Similarly, happy employees tend to stay with their companies and so when feedback from employee surveys told Wachovia that its workers wanted more control over their careers, the company set out to provide that. The integration of learning and performance systems not only made the development and performance functions easier for management, but it empowered Wachovia employees to be more involved and take greater ownership over their career plans. The integration of the two functions gives employees greater visibility into their performance and development goals.

Challenges and Solution

Hybrid-Solution (Centralized/Decentralized)
While Wachovia's leadership agreed that it made business sense to standardize on one platform each for learning and performance, the company did not want to lose the flexibility and freedom the individual business lines had to customize each process to their own specific needs. As a result, Wachovia chose to apply a hybrid model to the two functions. Centralization of the learning and performance processes would create a more consistent and efficient experience across the company and give Wachovia better tracking and reporting capabilities as well as an ability to address enterprisewide training needs. However, to address the unique learning needs of each business line, Wachovia created learning teams embedded within each line of business whose responsibility it was to identify the specific development goals for their particular clients, whether the general bank, a retail securities group, a corporate investment bank, the wealth management group, and so forth.

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Vendor Selection Process and Implementation Timeline

Wachovia issued its request for proposal (RFP) for a learning management system in 2001 at which point it began evaluating vendors. Having come up with the functional requirements it was looking for in a platform, Wachovia's selection committee narrowed the list down to three vendors and then invited each of those vendors in for a demonstration. To make comparisons between vendors as accurate as possible, Wachovia used a scripted scenario that it had each vendor perform. In addition to the demonstration, Wachovia had a number of key criteria that influenced its decision: ! Product usability. Wachovia performed a number of usability tests with the final three LMS products with different stakeholders to gain "hands-on" experience with each product and assess its ease of use. ! Scalability. It was important that the LMS product be able to scale to meet the demands of Wachovia's growing company as well as be able to provide unique learning environments for each of the companies' individual business units. ! Reporting capability. Wachovia needed an LMS product that would allow it to run detailed tracking reports across the entire organization and within each line of business. In what is a highly regulated industry, it is critical for Wachovia to be able to quickly determine what training is being delivered as well as who has taken it and who has not and how much of it has been taken. ! Strategic direction. Wachovia's leadership met with the leadership of each LMS vendor to ascertain that the two companies were strategically aligned and were essentially headed in the same direction. ! Financial stability. Wachovia wanted to ensure that it partnered with a learning company that was financially stable and would be around for the long term. After completing its evaluation of LMS vendors, Wachovia chose the Docent learning management platform and began implementing the system throughout its enterprise in March 2003. Although the LMS platform came with basic performance management modules, Wachovia chose to leave these turned off and commenced its search for a best-of-breed performance management system. During this time also, as part of the company's drive to standardize key processes, Wachovia began developing and then using a set competency model. Competencies were defined for the company's three primary job roles: individual contributor, leader, and executive leader. These competencies were integrated into the company's existing performance management and learning processes. Reali, Wachovia's organizational effectiveness consultant, was part of the team that implemented the core competency strategy and served as the competency lead as part of the performance management project team. In addition to working on PM design that integrated learning with effective PM, Reali kept focus on the way competencies could be used to support employee performance and development as supported by the two platforms. Joining Reali and the performance management project team was Gasiorowski, from Wachovia's learning services group, who would help ensure that the performance management product integrated well with the LMS platform.

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In 2003, Wachovia began the vendor selection process; the first step was to hold a requirements meeting with key stakeholders. This generated a list of some 800 requirements that Wachovia then put into its RFP. One set of requirements addressed the integration of PM with learning in detail, including functionality, user experience, and technology integration. At the end of the evaluation process, the SuccessFactors performance management platform was chosen by the selection committee. One thing the committee in particular liked was the platform's configurability such that it could be tailored to address the unique performance management needs of Wachovia's different lines of business. In 2004, Docent and Click2Learn merged to form SumTotal Systems. The design of the Docent 6.5 LMS gave Wachovia an integration path to link SumTotal's and SuccessFactors' tools. In February 2006, Wachovia rolled out its integrated performance and learning management system to first-phase participants, which included the human resources and corporate relations division and parts of the operations, IT, and ecommerce groups. Wachovia recently purchased SumTotal's newest LMS platform, Total LMS Version 7, which also includes a path for integration to SuccessFactors' PM tool. The company plans to roll out the integrated systems to the rest of the company in November 2006.

What Integration Looks Like

Today, the integration of SumTotal and SuccessFactors at Wachovia has changed the way managers and employees engage around learning and performance. Prior to the integration of these two platforms, managers typically wrote performance reviews for each of their direct reports from scratch at the end of the year, using the forms and tools that were in place for their business area. This meant having to recall employees' goals and accomplishments for the past year and assign ratings accordingly. Individual development plans were typically created and managed separately. Conversations around performance and development typically happened once a year because managers simply didn't have the time or the tools to do otherwise. With the new system in place, managers and employees can access an integrated performance and development plan (PDP) any time from Wachovia's HR portal. A single sign-on gives prepopulated access to an employee's current plan, which includes the employee's goals for the year, the appropriate competencies and behaviors, and a detailed development plan that can include formal and nonformal development activities. From within the development plan, learning activities housed in the company's LMS can be searched by competency and added to the plan as needed by either the manager or the employee at any time. The development plans keep an up-to-date record of the status of each learning activity, showing when the employee enrolled and tracking his or her progress and logging when the learning was completed.

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In this way, the performance and development plan has become a dynamic document used continuously throughout out the year, initially as an ongoing performance journal and eventually as the final appraisal document. Its accessibility gives managers and employees: ! A simple means of discussing performance goal and competency expectations, either in person or virtually at the beginning of the performance cycle ! A way of aligning individual goals to the company's organizational goals ! A method for assessing the employee's current state of proficiency by competency ! The capability to assign development strategies as needed throughout the year Figure 1 shows Wachovia's learning and development portal. From this page, Wachovia employees can access both the SumTotal LMS (rebranded as My Learning Connection) and the SuccessFactors performance management system.

FIGURE 1
Wachovia's Learning and Development Portal

Access to Learning Management System

Access to Performance Management System

Source: IDC, 2006

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Figure 2 shows Wachovia's My Learning Connection with the navigation link to the performance management tool. Clicking on this link gives Wachovia employees access to the performance management tool without the need for a second log-in. Similarly, employees can navigate seamlessly back to the learning management platform from within the SuccessFactors platform by clicking on a similar link shown in Figure 3. Figure 4 shows how the integration between the learning and performance systems allows Wachovia employees to search for learning content by competency.

FIGURE 2
Wachovia's My Learning Connection with Navigational Link

Source: IDC, 2006

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FIGURE 3
Wachovia's Navigational Link

Navigational link back to learning platform

Source: IDC, 2006

FIGURE 4
Wachovia's My Learning Connection Search Page

Ability to search by competency

Source: IDC, 2006

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Results
While the rollout of the integrated system is still in its first phase, Wachovia does expect a number of benefits once the system is implemented across the entire enterprise. These include: ! Time savings for managers. Previously, managers may have taken as much as two weeks of their work time at the end of each year reviewing files and employee goals, writing development plans, and delivering appraisals. The integrated system reduces the amount of time needed to complete the performance appraisal process, allows for some of the onus for the process to be pushed down to the employee, and spreads the time required to keep the system up to date over the entire year. Wachovia CLO Williams estimates that the automated components of the system alone will save Wachovia management over 500,000 hours per year. ! Improved quality of engagement between manager and employee. Because historically many performance reviews occurred during the final weeks before they were due, this gave managers little time to have quality discussions around performance and development with their team members and still get the required materials submitted on time. The automation and integration of their learning and performance systems now encourages managers and employees to engage more frequently, allowing for more meaningful discussions throughout the year regarding individual performance and development. ! Greater visibility into the Wachovia talent pool. Wachovia's executives have a better ability to identify their top performers so they can support and develop them for leadership roles within the bank. The integrated approach will help identify who those people are and enable the learning to take them to the next level of their careers, within their current business area or as "corporate talent" that can be leveraged effectively across the company. ! Improved ability to assimilate merging workforces. Typical of many companies within the financial service industry, Wachovia Corp. has evolved through a series of mergers and acquisitions. An integrated performance management and learning system will play an important role in potential future merger and acquisition activity by assisting the company in more seamlessly assimilating newly acquired talent into the incumbent talent pool. Because Wachovia is a public company, this may also have a positive effect on Wall Street, where financial analysts often weigh a company's reputation around merger integration in its evaluation. ! Improved career development capability. Management will not be the only group to benefit from the increased visibility that the integrated learning and performance management systems will bring to Wachovia. Employees interested in career advancement will have a better sense of their overall strengths and weaknesses and be able to benchmark themselves against the competency levels required for more senior positions within the company. Where development opportunities exist, employees will be able to access Wachovia's learning catalogue and incorporate learning into their individual development plans.

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! Better measurement of learning's impact. With the two functions linked together, Wachovia will now be able to better measure the impact learning has had on an employee's performance. Ratings given prior to the completion of training can be compared with those that follow, indicating whether there were improvements.

ESSENTIAL GUIDANCE
Wachovia's experience in the redesign and implementation of integrated learning and performance management hold important lessons to buyers and vendors of these platforms: ! Start with the end in mind. Wachovia CLO Williams believes that companies should begin the process by envisioning and then articulating the end state or environment they are trying to create before speaking to vendors about a potential solution. Ignoring this important step can allow an organization to become enamored with a technology and its capabilities even though it doesn't fulfill the necessary business requirements. ! Focus on the processes first. Similarly, Wachovia spent a lot of time standardizing upon and reengineering its performance management process up front such that it had a clear idea of what it needed its technological solution to do. The investment Wachovia made in evaluating and reworking its processes facilitated the adoption of the integrated system since stakeholders were involved in the process throughout. The best technology cannot excel around badly designed processes, so this is a vital step. ! Use business metrics to gain sponsorship. While sponsorship wasn't a significant challenge at Wachovia because the project had the support of CEO Thompson, HR used business metrics to build a case for the initiative. Rather than highlighting the number of employees that would have access to the new system, HR used metrics such as the number of hours management would save per year and the impact this kind of system would have on the company's ability to retain, develop, and attract employees amid the shortage for talent. ! Consider change management issues. Given that Wachovia had largely been a decentralized organization, the conversion to centralized learning and performance was a big step for the company. As a result, the Wachovia project team decided to roll out the integrated system in stages to give itself an opportunity to address any early issues before the system went full scale. Similarly, to help managers and employees get used to the practice of linking learning content to organizational competencies, the system was set up initially so that employees could retrofit courses that had already been completed with a development goal. The aim going forward, however, is to have that linkage done up front before a course is completed.

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LE ARN MORE
Related Research
! 2006 Talent Survey: Candidate Shortages Still Prevalent (IDC #202442, July 2006) ! Plateau Systems: Integrating Learning and Performance (IDC #201774, June 2006) ! Worldwide and U.S. Corporate eLearning 20062010 Forecast (IDC #35032, March 2006) ! Worldwide Workforce Performance Management 20062010 Forecast (IDC #34907, February 2006)

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Published Under Services: Corporate Learning and Performance; HR and Talent Management Services

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