Alice in Wonderland 2010 – HRO Providers Help Clients Shrink and Grow

Many are scurrying at a furious pace to publish 2010 HR and outsourcing trends and predictions, including the NelsonHall HRO team. My 2010 HRO list will be published in the next issue of HRO Today magazine, and Gary is providing RPO insight to several publications.

One of my predictions is that we are facing a spendless recovery in the HRO industry. Given the persistent uncertainty of the strength of the recovery and continued high levels of unemployment in many areas, cost will remain the leading HRO decision criteria factor. More contracts will get signed in 2010, although most will be smaller in scale and scope, and face deep scrutiny by risk adverse buyers.

What is the recipe for doing business in such a cautious environment? One way is to learn from HR trends and predictions to see how we in the outsourcing community can support clients as their needs and pressures change.

Mercer’s Human Capital group has published its list of the top five human capital issues for 2010. While presented by Mercer Australia, the issues highlighted are common to businesses around the world:  

 1. Foster growth in a new workforce context

2. Be smarter with benefits as pay packets matter again

3. Restore equilibrium in Executive Remuneration

4. Mitigate turnover risk and restore employee engagement

5. Develop well-rounded leaders who can maintain momentum and/or pick up the pieces

I was reminded of Alice in Wonderland by a comment Ken Gilbert, head of Human Capital at Mercer, made about the first challenge noted above: “Success in 2010 will be defined by organizations’ ability to ‘shrink and grow’ – maintaining a focus on costs while growing talent, workforce productivity and the bottom line.”

Wow. Alice grew very large and shrank very small, but she was not asked to do both at the same time. As budgets remain constrained and business demand starts to increase for targeted talent, HR will be looking for assistance from its partners to recruit, train and retain new employees both effectively and cost efficiently.

The benefits of improved recruiting will be as ethereal as the Cheshire Cat’s grin if turnover increases too much. Employee engagement and leadership development will be important elements in capturing growth opportunities, and throwing money around like the Mad Hatter at a tea party is not an option.

For example, targeted analysis of workforce and performance data will be needed to help focus attention and limited resources in the most impactful areas. Also, learning opportunities are needed to develop specific workforce skill sets, and as effective tools for increasing engagement. Careful planning, collaboration and curriculum management can achieve both goals while still reducing overall expense.

Buyers, be sure to share 2010 workforce goals and challenges with your HRO providers so they better understand your needs. Providers, review the services you provide to your clients and identify how they support current and returning business needs. Where might a little bit of proactive consultation show how your current or new services will help the client organization shrink expenses and grow business results at the same time?

If you want to keep your head, this is not the time to pitch a grand transformation plan. Whether it is building a closer relationship through better utilization of current services, or growing the relationship through very precise projects and new services, it is time to help Alice find the wonder in Wonderland.

Linda Merritt, Research Director, HRO, NelsonHall

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