When Does Talent Management Technology Competition Cross a Line?

Competition between talent management providers has always been fierce, especially during times of economic uncertainty, market consolidation and globalization.

It’s no surprise, then, that controversy comes up every now and again, especially as providers try to tread close to the line between gaining a competitive edge and cheating.

One of those situations is unfolding right now in the talent management solutions market. This time, it’s between Halogen and SuccessFactors, two leading talent management providers with a heritage in performance management. SuccessFactors is accusing Halogen of using fraudulent activities to obtain very sensitive competitive information.

Indeed, the accusations will raise an eyebrow or two. They include inventing a false company, complete with a false website and false procurement team and then going undercover as a false prospect customer — all in order to find out what SuccessFactors was offering its prospects in terms of pricing and implementation. Is all of this true? If so, is it creative? Is it cheating? Or both?

Similar to the Patriots’ “Videogate?”

If you’re a sports fan in my part of the world (Boston), the infamous New England Patriots “Videogate” scandal comes to mind. Were the Patriots being unfair in recording the signals from the sidelines of their competitors?

Well, yes, kind of. But there are those who will say that everybody does it, or it’s just smart competition, or if you don’t like it, don’t give away your signals. These observations are not inaccurate, but does that make them right? Typically it’s not a cut and dried argument.

As we all know, in the case of the NFL, the accusers won out and New England was penalized for its actions (though no rings or Lombardi trophies changed hands). How will it turn out between Halogen and SuccessFactors? That remains to be seen, but there are some similar questions here.

Depending on the outcome of this case, we could be entering an era where this type of competition becomes the standard in talent management. Furthermore, do the benefits outweigh the risks? For Halogen, only time will tell. SuccessFactors has filed for an injunction on using the information and several punitive damages, and Halogen has filed a motion to dismiss the case.

What are some Best Practices for healthy competition?

This type of competition might sound familiar to anyone who remembers the scandal from 2008 involving the competitive document Softscape created on SuccessFactors. Bill Kutik covers this story in an HR Executive article.

Here are some thoughts on lessons learned. There is plenty to chew on here, from either the accuser’s perspective or from the accused. No, the unfolding scenario is not a pretty picture, but it is instructive.

Consider your impact on the buyers’ perception. Despite the activities that vendors engage in, what matters is how this impacts the customer selection process. Below is a sample list of some of the most important factors companies consider in vendor selection:

* Price

* Functionality

* Integration

* Deep domain expertise

* Global reach

* Customer support

* Product architecture

• Security

* Delivery model

* Cultural fit

As you can see, price is usually at the top of the list. This was Halogen’s goal – to win customers over on pricing transparency. Yet, the consequences affect another important component of vendor selection — cultural fit. So, when customers are looking for a provider with values similar to their own, that controversy may affect their perception of cultural fit. That could be just as much of a deal killer as the wrong pricing, so treading the line is a risky affair.

Including confidentiality disclaimers. If you are a provider and you do not include necessary disclaimers until very late in the process, you may get burned. With the rise of social media and information overload, solution providers need to protect their information.
Enhancing research and product development. Innovation is a key theme in today’s market. Solution providers can continue to stay ahead by investing in research and product development, understanding key trends and gaining insights from industry thought leaders.
Improving efficiency in the sales cycle process. This goes without saying, but having a strong sales process can make or break a deal.
Identifying and attracting the right team. Above all, solution providers need to have the right team in place. A strong team can help to differentiate providers. It is no surprise that many providers recruit from competitors.
Leveraging social media. Everyone is using it. Solution providers need to create a LinkedIn group, Facebook page, and Twitter account and establish a fan base.
One last note: If you are in fact going to take your competitive tactics to the next level, make sure your IP addresses don’t originate from the company you are pretending not to be.

What will happen in the case between these two providers? No one knows for sure, but as competition heats up in the talent solutions space, it’s likely that companies will continue to push the envelope as far as possible to get ahead. That line between smart competition and unfair tactics will always be with us, much to the peril of the accuser.