Archive for the ‘recruitment process outsourcing’ category

HRO and Innovation – a Changing Dynamic

May 14, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Last week the Human Resources Outsourcing Association’s (HROA) Publications & Practices Committee held a webinar on collaborative innovation in HRO with industry experts Lisa Johnson, director of recruiting, North America at Gate Gourmet, Rolf Kleiner, senior vice president and chief innovation officer at Kelly Services, Inc. and Dr. Greg McLaughlin, senior vice president of research & development for Global Targeting, Inc.

Understanding Innovation

Innovation has been a conundrum for years for HRO buyers and suppliers. There are many ways to define the word ‘innovation’ and that makes it hard to be sure each party is speaking the same language. All three experts agreed that open discussions between clients and service providers are needed to develop a mutual understanding of what innovation means in the context of the relationship and contract.

Greg walked us through aspects of innovation range from the conceptual “innovation is an experience”, to the practical “innovation begins with a need and ends with an outcome that creates a competitive advantage.”

Lisa looks for HRO suppliers with the spirit of innovation – backed by experience. Rolf looks for employees who “rise above the white noise” to work on special innovation projects that also support talent management.

Innovation and Continuous Improvement

The HROA Buyers Group’s survey on innovation and continuous improvement showed there is a commonality in basic definition and understanding developing across the community of buyers, service providers, and advisors. From the words of HRO community members:

  • Continuous improvement is an enhancement of a product, service or process that already exists:
    • Increased operational efficiency, improved user experience, ongoing, incremental, and step changes
    • Efficiency and effectiveness gains that “keep pace with the market”
  • Innovation is something new and different:
    • Cutting edge, transformational, precedent setting, competitive advantage, disruptive, and dramatic
    • A significant and often transformational change that, once introduced, “you wonder how you ever lived without it.”

The HRO community is in agreement that continuous improvement and innovation should be a collaborative effort between the HRO service provider and the client:

  • 92% of respondents agree that this collaborative effort is what should be happening between service provider and client, but only 59% see that as true now, with 40% of buyers and only 22% of providers agreeing that collaboration is actually happening in the marketplace right now
  • 77% agreed that innovation should be a collaborative effort among the parties, with agreement from 100% of advisors, 60% of HR practitioners, and 83% of providers.

 The Innovation Gaps

Significant gaps – and therefore opportunities – remain:

  • 75% of respondents said that continuous improvement is in the HRO contract
  • Only 42% agreed that innovation is included in the HRO contract.

In the next blog I will be getting practical about innovation in HRO.

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RPO Generation 2.0 is Ready to Go

March 28, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Recruitment Process Outsourcing (RPO) is one of the younger HRO service lines and it is both growing and maturing quickly. The March issue of HRO Today recognizes the emergence of RPO 2.0.  NelsonHall’s RPO specialist, Gary Bragar, would certainly agree. Gary’s October 2012 Targeting Recruitment Process Outsourcing market analysis highlighted many of the same developments in this rapidly growing HRO segment.

What is New in RPO 2.0?

The rapid growth and incorporation of social media for recruiting is a big part RPO 2.0, one that keeps pushing RPO to the leading edge of innovation in the HRO space.

RPO services are rapidly moving up the value chain, and changing client expectations is the key. While reducing the cost of service provision is always on the table, it is no longer the number one issue. Flexibility and scalability will always remain important as well, given how quickly hiring needs can change.

Today’s RPO 2.0 clients are looking for more value:

  • Improved quality of hires
  • The latest tools and technologies for social and mobile
  • Expertise in accessing talent pools and passive hires
  • Greater focus on candidate experience
  • Analytics and insights, in addition to metrics and reports
  • Improved retention
  • Access to advanced services including employment branding, talent management, talent engagement, and integration with workforce planning.

Clients Simply No Longer Want To Do It

In the last few years, many buyers reduced internal recruiting staff in line with the reduced volume of hires, and they do not want to rebuild and reinvest in the rapidly evolving technologies and advanced skill sets it takes to succeed in today’s competitive, social, mobile, and global recruitment process market.

Buyer Choice is Broad

For every large staffing company that does RPO including Adecco, Kelly, Manpower, and Randstad, there are smaller vendors that specialize in RPO such as Ochre House and Pinstripe.   Most leading RPO vendors of all sizes can offer services in most of the regions of the world as they have partnered and made acquisitions to make their footprints global.

Not long ago, major multi-process HRO (MPHRO) providers either did not provide end-to-end RPO or saw it taken out of contracts. Now, more MPHRO providers have full RPO services strong enough to be offered as standalone services including ADP, Aon Hewitt, Infosys, and IBM.

With RPO 2.0 You Can Have It All

While having it all may still be a bit aspirational for most of us, we are finding evidence that successful client / provider RPO partnerships can improve process efficiencies (e.g., reduce time to hire 20% to 50%), reduce the total cost of hire (often 20% to 30% or more), along with increasing hiring manager and candidate satisfaction.

Imagine what we can achieve with RPO 2.0!

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Kenexa’s Analyst Day and 7th World Conference – A Winner: Part 2

October 24, 2012

Gary Bragar, HRO Research Director, NelsonHall

For the last couple of years, Kenexa has been rapidly growing its RPO client base globally and 2012 has been no exception.

Recent RPO wins include BOSCH, FMC, and BT, all of which have been multi-country awards. It also has two additional RPO contracts pending. Reasons cited by the clients for selecting Kenexa for the new contracts include:

  • Quality of hire
  • RPO experience including engineering and technical recruiting
  • Cultural fit with Kenexa
  • Global capability
  • Flexibility of solution design.

Further information on the pending contracts will be released soon on NelsonHall’s website.

The customer panel at the analyst event included United Healthcare (UHC), AMD, and Fluor.

AMD:

  • Issue: AMD’s global salesforce and internal formal training were not meeting its needs.
  • Solution: Kenexa implemented its social LMS, which helped employees gain access to experts quickly.
  • Result: AMD went from 39 separate websites of products and training to one LMS with Kenexa that is hosted to eliminate IT and technical issues.

UHC:

  • Issue: UHC had a decentralized team, poor technology, low hiring manager satisfaction, and other metrics did not exist. It was hiring ~11,000 employees per year and wanted to standardize services and deploy a consistent system, starting with non-exempt hiring for a call center and extending into some exempt level recruitment.
  • Solution: Kenexa is using a hybrid delivery model of service center and onsite employees. Monthly and quarterly business reviews are conducted that include reviewing metrics such as on-time delivery within 26 days, acceptance rates, class fill rates, and candidate and hiring manager satisfaction.
  • Result: UHC is expanding the contract from the U.S. to include Europe (U.K., Ireland) and APAC (Philippines).

Other developments at Kenexa include:

  • A new RPO COE in Raleigh, NC (others are in Shanghai, Dubai, Buenos Aires, Krakow, Vizag (India), and Frisco (TX))
  • Fit Compass, which includes an interview guide that the hiring manager receives with custom questions tailored to each candidate based on the outcomes of the Fit Compass Assessment and an onboarding tool, Personal Fit Planner, to ease the transition from candidate to employee. It can also be used for development, career planning, and team building.

With each RPO engagement, Kenexa begins with an analysis of the client’s culture; it then trains its recruiters on educating the candidates and what it’s like to work for the employer. Some clients also include additional services. For example, Whirlpool’s contract also included a career site, social media, employment branding, and marketing.

At the Kenexa World Conference on October 17th, I attended two sessions:

  • Improving Quality of Hire at the Entry Level: A Strategic Application of Assessment, by Home Depot: Home Depot screens hundreds of thousands of candidates each year for hourly in-store positions and needed a more strategic method. It implemented Kenexa’s large library of assessments and Kenexa’s 2x BrassRing to improve the quality of hire and efficiency.
  • RPO 2.0: Creating the Hybrid Model, by PAREXEL: PAREXEL’s original five year contract with Kenexa was to end in 2011, but it renewed and implemented a hybrid model. Kenexa’s services include sourcing, screening, and candidate interview management; PAREXEL retained strategy, candidate relationship, job offers, and reference checks. The two companies work effectively side-by-side meeting with hiring managers to understand their needs; outsourcing is transparent to the client and SLAs have mutual accountability.

In sum, it was a fulfilling analyst day and World Conference. I look forward to the next IBM Kenexa Analyst Day, which will include a smarter workforce track.

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HR Tech Another Success: Part I

October 16, 2012

Gary Bragar, HRO Research Director, NelsonHall

HR Tech was again a very worthwhile investment of my time. Here are some highlights of the new Outsourcing Track presentations I attended:

  • Cisco Uses RPO to Help Hire Up to 15,000 a Year:Using a hybrid co-ownership model, the Randstad Sourceright recruitment team works alongside the Cisco recruitment team to provide services including sourcing, recruiting, and onboarding. Services provided are primarily in the Americas, but may expand into EMEA and possibly Asia where Randstad Sourceright has a presence. Using the hybrid model, Cisco has been able to cut its $120m talent acquisition spend in half.
    • Mark Hamberlin, VP HR Global Staffing, Cisco
    • Rebecca Callahan, President RPO, Randstad Sourceright
  • Ericsson Outsources Global Payroll in Manila:Ericsson issued a RFI to 25 vendors, then created a short-list of 5, and ultimately selected Talent2. Managed payroll services provided by Talent2 for Ericsson in Southeast Asia and Oceania include 4,500 employees in 12 countries, which prior to outsourcing had 12 different payroll processes. Manila is the shared service center. Major benefits obtained by Ericsson thus far include: reduced risk management, minimized complexity of dealing with local tax laws, and ease of expanding into new countries.
    • Mark Howes, HR Director Asia Pacific, Ericsson
    • Mary Sue Rogers, Global Managing Director, HR Managed Services, Talent2
  • Whirlpool Leverages RPO to Transform Talent Acquisition:Pre-RPO recruitment was decentralized and lacked consistency and methodology in its sourcing approach. Business partners were also spending a lot of time doing transactional work including screening and reviewing resumes. Kenexa’s RPO services include: sourcing, screening, administration, candidate management, creation of employment value proposition, and management of the candidate experience primarily in North America with some testing in Europe. KPI’s include: time to fill, quality of the candidate slate, diversity slate, and end-user satisfaction.
    • Lynanne Kunkel, VP of HR, Whirlpool North America
    • Rudy Karsan, CEO, Kenexa

Here are highlights from my RPO meetings:

  • Pinstripe and Ochre House: Pinstripe has won 12 new RPO contracts YTD and its partner Ochre House continues to win new contracts in EMEA including North Africa and the Middle East as a result of its acquisitions of TAAHEED and Carmichael Fisher in early 2012.
  • ManpowerGroup Solutions: New contract wins YTD include 40+ RPO deals globally in 20 countries. It has also expanded existing clients into new geographies including a U.S.-headquartered firm that expanded into China and Southeast Asia and a Spanish-headquartered firm that expanded throughout Europe and Latin America.
  • Randstad Sourceright: Currently with ~100 RPO clients, it won 18 new contracts YTD. Four of its new wins are global deals as a result of the merger of Randstad and SFN Group, which was completed in September 2011. Its fastest growth has been in the mid-market.
  • The RightThing, an ADP Company: Total RPO client count is at 80+. YTD wins include several enterprise and mid-market clients with ~50% as new clients and ~50% as existing ADP clients that added RPO services.
  • WilsonHCG: Primarily serving large and mid-size clients, WilsonHCG also has small clients with <500 employees. The company has a 94% satisfaction rating with candidates and hiring managers across clients.

Stay tuned for my next blog where I will discuss additional meetings I had with Patersons, IBM, Hogan Assessments, SHL Assessments, Secova, ADP, Equifax Workforce Solutions, HireVue, and JobVite.

In the meantime, NelsonHall just published its fourth global RPO market analysis.

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The Parable of IBM and Kenexa: Part I

September 13, 2012

Linda Merritt, HRO Research Analyst, NelsonHall

I have not seen such a range of varied opinions from members of the HRO and HR tech communities as those about IBM’s acquisition of Kenexa. The commentary showed that many were taken a bit by surprise and weren’t sure how to analyze the news that IBM was acquiring Kenexa for $1.3bn.

IBM Bought Kenexa?

The surprise was not the purchase of Kenexa, which was foreshadowed by the acquisition of Taleo by Oracle and SuccessFactors by SAP. It was more about the fact that IBM was doing the purchasing.

A few  thought that ADP might make such an acquisition since it had already expanded its benefits capabilities with Workscape and SHPS and its RPO capabilities with The RightThing, so wouldn’t talent management make sense? Speculation continued, perhaps Mercer, Ceridian, or even ADP would be the target of an acquisition or merger.

IBM itself was considered likely to continue its acquisitive ways with something more in the talent management / HCM space. Likely targets mentioned included Cornerstone OnDemand, SilkRoad, SumTotal, Saba, with a few suggesting Halogen, Peoplefluent, and others. In short, someone is going to buy something else.

The Meaning of the Deal?

What does this mean we all asked, much like the tale of the Blind Men and the Elephant as was suggested by the leading light Naomi Bloom. Early viewpoints on the acquisition included:

  • Continuing IBM’s move into social media and analytics
  • Continuing IBM’s move into professional services including strengthening RPO
  • Disrupting the HCM market and becoming a talent management player
  • Delivering value to the HR executive
  • Delivering value to the C-suite and bypassing HR
  • Primarily being a HRO deal with some software attached
  • Primarily being a software deal with some HRO attached
  • Upping competition with SAP, Oracle, Salesforce.com, and even Workday
  • Selling into Kenexa’s IBM-like customer base of Fortune 500 clients.

IBM’s news crossed many markets including HRO, HCM, HR tech (software, platform, cloud, etc.), BPO, social media, talent management, and financial and market analysts. Each commenter viewed the same information through the lens of their personal perspective and professional interest, much like the blind men touching different parts of the elephant.

With so many options before it, including IBM’s own announced intentions for the addition of Kenexa, the opportunities are new and exciting. Given the inherent complexities, IBM will face many risks as well. Look for more on The Parable of IBM and Kenexa coming in Part II.

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RPO, A Bright Future on the Path to Business Impact

September 7, 2012

Linda Merritt, HRO Research Analyst, NelsonHall

The future of RPO is bright with growth opportunities in every area of the world. According to NelsonHall’s “HRO Market Forecast 2012 – 2013,” RPO will remain the fastest growing area within HRO.

RPO is still evolving as a service line, moving from back-office paperwork administration to the front lines of recruiting, predictive assessment, and employer brand management. Contract renewals and extensions are now a regular part of the RPO news stream. Among those with announcements of renewals and extensions are:

  • Alexander Mann Services
  • Capita
  • Manpower Group
  • Novotus
  • Pinstripe.

RPO is not for the faint of heart

With great opportunity comes increased risk. Growth is seldom in a straight path upwards and RPO is also on the leading edge of any business downturn that impacts hiring. It is not uncommon to see up and down swings in revenues of 20% or more between good and bad years. RPO providers need to be ready to rock and roll incredibly fast and be flexible in responding to changes in demand while balancing its own core of subject matter expertise.

RPO is the trail blazer

It is hard for any business including HRO service lines to keep up with new technologies, global service delivery networks, social media, and open device access. To recruit highly skilled multi-generational talent anywhere on the planet, RPO needs the latest tools and technologies to bring capabilities to employers they could not easily and affordably duplicate.

RPO has a direct path to business impact

Dr. John Sullivan, a respected HR thought leader, recently said that RPO has the greatest business impact of any HR function. Dr. Sullivan is referring to The Boston Consulting Group’s (BCG) “Realizing the Value of People Management from Capability to Profitability” research that rates the relative business impact of different HR functions on growth and profitability.

This was a major study of over 4,000 respondents across 102 countries, comparing the difference in revenue growth and profit margins at firms with “very high capability” individual HR functions to the business impacts of “low capability” HR functions. The firms studied had been named to Fortune’s “100 Best Places to Work For” list at least three times in the last ten years; their stock price growth was then compared to the stock price growth of the S&P 500. The “best companies” with great HR saw their stock price increase an average of 109% when the S&P 500 rose only 10% over the last 10 years, up to 10 times higher. Wow!

BCG found that the top ten performing HR functions in rank order were:

  • Recruiting
  • Onboarding and retention
  • Managing talent
  • Employer branding
  • Performance management and rewards
  • Leadership development
  • Mastering HR process
  • Global people management and global expansion
  • Enhancing employee engagement
  • Providing HR shared services and outsourcing.

In addition to the good news for RPO, the broader picture is the need for integrated talent management and the boost for HR outsourcing. Great HR can and does directly support great business results, and great RPO and HRO can be a part of that success story.

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