HRO – a Story in Numbers

I spent many of my career years dealing with data. From budgets to surveys to process performance to benchmarks, the subjective and the objective — I grew to love it all. Note that I am not a statistician. I am very right brained and data “talks” to me. It tells stories, gives glimpses and hints, albeit sometimes elusively. It can also obscure, mislead and provide false comfort. The fact is data on its own is inert. Its value as a decision support tool lies in what we make of it and how we use it.

Business process outsourcing (BPO) and HRO both lend themselves particularly well to analysis by the numbers; baseline performance and financial data, pricing units, discounts, service levels, satisfaction surveys and benchmarks. Plot them all on trend line charts, control charts, pie charts, radar webs and colorful dashboard with green, yellow and red indicators. Such fun!

Towers Perrin’s 2009 HRO Effectiveness Survey is one of my favorite studies. There is a lot in the study for buyers and providers, so let’s look at just one story today.

According to the survey results, there was a tie for the number one HRO goal: cost savings and removing the distraction of administrative and transactional HR work were both cited by 73 percent of the respondents.

So how well does today’s HRO deliver? Sixty four percent of respondents said their HRO vendor delivered cost savings. That’s pretty good. Fifty percent reported that HRO did eliminate the distraction of administrative and transactional HR work. Fifty percent felt they successfully obtained a higher level of service and support, but 50 percent said this was unsuccessful. That’s okay, but not good enough given the time, cost and effort needed to move into a multiple process HRO environment.

To get a deal done today, the financial issues are critically important and both the buyer and provider need to ensure the numbers work and there is a viable path through implementation into operations. 

The survey data says that those neutral or dissatisfied with their vendor underestimated during the selection process the importance of the vendor’s staff quality/expertise, technological capabilities, per employee costs and flexibility to meet specific needs. Yes, there’s no doubt that cost is important, but I remain convinced that cost savings alone does not create a satisfied client. At the same time we negotiate price, we need to look at what creates long-term satisfaction.  

HRO is very complex and no one measure or survey can fully tell its story. To help ensure HRO satisfaction, gather a rich set of various data types and listen closely. See and hear the story being told, then figure out what that story means to you and how you will translate its messages into actions in the real world.

Linda Merritt, Research Director, HRO, NelsonHall

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One Comment on “HRO – a Story in Numbers”

  1. Allen Hoon Says:

    Re: HRO a story in numbers.

    It does not surprise me that the survey numbers you studied reveal that the promise of HRO (cost savings & removing the distraction of administrative and transactional HR work) is not perceived by clients as being attained as expected.

    Digging into the numbers, as you suggest, will likely reveal what we see on the ground. The benefits are often not fully achieved because of lack of full execution of transition and transformation activities.

    The importance of well structured and executed transition and transformation plans cannot be understated. We often see clients (who are under pressure to cut costs where ever they can) take on more of the transformation activities than they can handle. As a result, clients often fail to fully implement and embrace the transformed processes and organization that were envisioned in the provider solution. This gap creates redundancies and inefficiencies that, no doubt, lead to the lack of full benefits realization.

    Of course, there are exceptions. There are many HRO relationships in place where benefits realization has been achieved. Understanding what the numbers say about success and disappointment would be an interesting exercise.


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