The recent passing of long-term U.S. Senator Frank Lautenberg reminds us of his early role in the formation of what became ADP, a founding member of HR outsourcing. In the early 1950s he was engaged in selling insurance and sold a policy to two young New Jersey businessmen, Henry and Joseph Taub. The Taub’s were pioneering a then new concept; payroll outsourcing. The brothers knew payroll processing and Lautenberg knew sales and marketing. Lautenberg took a risk and joined the Taub brothers and together they created a new industry.
Establish Operating Principles
By the time the company incorporated in 1961 the three leaders established principles that still guide the company some 60 years later. Following are a few of the principles they put in place.
Focus on Business Markets that Offer Significant Growth Opportunities
ADP has always pursued growth through new market opportunities, both by expanding it service lines and by entering new geographies. Much of the early growth was through acquisitions, as well as organic growth. Lautenberg retired as CEO from ADP in 1982 having made over 100 acquisitions!
Over time, ADP became a global player. An early acquisition was GSI, a large payroll and HR services company in Europe. The latest 2013 acquisition is Payroll S.A. to expand LATAM payroll capabilities to Chile, Argentina, and Peru. In the last few years major acquisitions included Workscape (benefits), The RightThing (RPO) and SHPS (benefits).
Embrace Technological Change to Enhance Product and Service Offerings
By the early 1960s ADP had moved from manual operations to the pre-computer punch cards and on to leasing its first computer: an IBM 1401 mainframe. That willingness to continue to embrace the new is seen in ADP’s successful launch of a series of cloud-based SaaS HR technology and BPO service platforms, including Workforce Now (1k-20K employees), Vantage HCM (50-3k employees), and GlobalView for multi-nationals. Together, the three services support more than 40k clients.
The company has also launched extensive mobility options, including RUN powered by ADP for small business mobile payroll and ADP Mobile Solutions for access to a broad range of information and transactions spanning time and attendance to benefits and pay cards.
Attract and Retain Motivated and Talented People
ADP has grown into a $10bn global outsourcing business with one of only four remaining AAA credit ratings in the U.S. With ~570k clients across 125 countries, we know customers support its line-up of services and proprietary developed technologies. What about people? A few recent awards tell the story:
Ranked second on Fortune’s 2012 list of America’s Most Admired Companies in Financial Data Service
Ranked in the Top 50 on IDG’s Computerworld 2012 list of the 100 Best Places to Work in Information Technology (IT)
Named to the 2012 Working Mother 100 Best Companies, for the third time.
We therefore need to ask the question of prospective purchasers: does your prospective or current HRO service provider have long-term guiding principles and can you see evidence of them in action? Because ADP does.
Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by clicking here.
This week I attended Mercer’s always well managed and informative analyst forum in Boston, MA. The meeting was focused on the talent consulting line of business.
Talent Management on the Rise
Mercer research indicates that human capital issues are a top CEO concern and managing talent is becoming a board of directors’ issue, moving beyond the traditional CEO succession planning and compensation to overall talent and workforce planning. The new Mercer Talent Barometer Survey, which was introduced at the 2013 World Economic Forum, reports that 60% of the 1,200 global companies surveyed are investing more in talent, but only 30% feel that their workforce plans are highly effective.
The business of talent has become both exciting and disruptive, with possible new entrants, globalization, media, innovations, and opportunities. (Talk about new entrants, eHarmony is considering getting into the talent matching game!)
With a possibility of double-digit growth, the talent group looked at how to grow across the talent value chain by expanding its services, tools and technology offerings for talent, rewards, and communications to increase growth and leverage Mercer’s depth of experience and capabilities.
The answer will become apparent over the next few months as more packaged solutions are launched that combine consulting, information, and technology to meet the needs of clients that want a less-customized consulting approach with “off-the-shelf” packaged and reusable services and tools.
Workforce Planning Versus HR Analytics
Some elements that will be leveraged are already mature and solid revenue producers. Surveys, benchmarks, and analytics for compensation/total rewards and job structures are a more than $200m line of business. Globalization of the revenues is already well on its way, with about equal distribution from North America, Europe, and emerging markets across 57 countries.
Instead of focusing on HR analytics, Mercer is emphasizing data acquisition and integration, data modeling, as well as data visualization as it applies to a wide range of workforce and data that drives business results. This may mean a consulting and outsourcing services engagement, it may mean workshops and training, or self-service use of integrated SaaS technology platforms with one or more Mercer products.
Think Big, Start Small, Move Fast
There are a lot of moving parts in Mercer’s strategy to create an integrated talent solutions portfolio.
It is brought together under the go-to-market Talent Impact label that includes new and existing products and services to forecast, engage, mobilize, reward and assess talent. Behind the scenes Mercer will be streamlining its own architecture into fewer and more integrated technology platforms to support the new offerings.
There is a lot to be done in a short time, but that is in alignment with the “think big, start small, and move fast” philosophy of Orlando Ashford, senior partner and president of Mercer’s talent business. Mercer is on the move!
Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by clicking here.
I attended Pinstripe’s analyst day on May 15, 2013. It was combined with its Client Talent Forward Summit, with the theme “Commitment to Innovation”. Highlights of the day included:
Client Panel
Pinstripe discussed 10 recent innovations, of which a panel of four Pinstripe clients then discussed a few Pinstripe innovations that have benefitted their business, including:
Email campaigning: A proactive approach to creating candidate pools with active and passive candidates. This enables messaging a high number of candidates with relevant information – such as familiarizing candidates with potential hiring company announcements; e.g. “Did you happen to know we were named one of the best places to work 4 years in a row” or “We were rated as the safest operating room to work in St. Louis”. Email Campaigning has resulted in a two-to-three times increase in passive candidate responses
Video interviewing: Both live and prerecorded interviews of candidate presentations. Managers feel more informed of when to take candidates to the next step. Team interviewing is also conducted
Employment branding and social recruiting: All about making a connection with the candidate to “get them in the door”. Includes training and education on how to properly use social media to send out positive messages.
Client Tour
We toured the Brookfield facility where ~60% of employees work. The tour included:
Understanding how employees are recognized
How virtual employees are connected and communicated with as though they were onsite in Brookfield
Demos of some of the innovations, including email campaigns to build talent pipelines
A visit to the Impression Center.
The Impression Center, which receives 250k calls per year, is staffed by customer service experts who are imperative to potential candidates’ first impression of the company. Applicants and candidates can call the center with questions throughout the job offer, and live chat is also offered. First call resolution is 96% with 97% customer satisfaction. Over 63k interviews have been scheduled by the Impression Center. Candidates may still contact the recruiter if needed; however, by using the Impression Center there has been a 97% reduction of calls to recruiters, allowing them to focus on their primary concern – recruiting.
Pinstripe Analyst Briefing
Pinstripe has grown from ~450 employees and ~73,000 hires in 2011 to ~575 employees today and nearly 100,000 hires in 2012. Most recruitment contracts at Pinstripe are end-to-end, full service RPO as opposed to projects. Several of the more recent contracts have been second- and third-generation RPO clients. Pinstripe’s partnership with Ochre House, formed in 2009 to deliver RPO in EMEA and Asia-Pacific, has been awarded several contracts to fill multi-regional hiring needs. Both companies attribute their success to sharing similar values. Honeywell is an example of a second-generation client now expanding beyond North America to Europe that Ochre House will serve. Combined with Ochre House, RPO is provided to ~85 clients in 45 countries in 23 languages.
Summary
One of the key messages taken from this summit is that Pinstripe is keenly focused on the candidate experience and a positive work environment for its employees to excel at satisfying client needs. It is therefore of no surprise that Pinstripe recruiters have an average of >9 years’ experience.
Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by clicking here.
Benefits administration is producing a bountiful crop of new and expanding services. Recent contract award announcements included ADP, Aon Hewitt, Ceridian, Equiniti, Fidelity, Mass Mutual and Merrill Lynch. A wide range of industry segments were represented: banking; food; education; non-profits; hi-tech; pharmaceuticals; and travel. This week, I have taken a look at some of the newer benefit outsourcing “crops” that are starting to grow nicely.
Managed Retirement Accounts
Fidelity’s relatively new managed retirement account offering – Fidelity Portfolio Advisory Service at Work – was designed to address the low rate of adequate preparation for retirement by many employees by combining Fidelity Investments plan sponsor customized portfolio active management services with auto enrollment and available advisory services to help bridge the gap in achieving retirement goals from a defined contribution plan. The service grew in both participants and assets by 50% in 2012. Already in 2013, another 135 new clients have been added, bringing the total to more than 1,800 plan sponsors.
Fidelity awarded a contract for Portfolio Advisory Service at Work by ADM.
Health and Wellness
ADP’s Vitality wellness solution supports employers with between 50 and 1,000 employees manage rising healthcare costs and also reduce employee absenteeism. Vitality’s incentive-based program includes an interactive wellness portal, health risk assessments, biometric screenings and personalized wellness plans with recommended goals and activities. It integrates with social networking sites, mobile applications and fitness technologies; and when employees achieve planned goals, they earn points towards lowering their health plan contributions. The service is also integrated with ADP’s payroll services.
ADP awarded a contract by Jackson Companies for ADP Vitality services.
Benefits Bouquet Bundles
HRO buyers want multiple related services from one vendor under one contract; and health and wellness lends itself to packaging separate services into bundles. Ceridian’s LifeWorks.com combines EAP, work-life, and wellness services into one program with its own portal and mobile access. Also available is Health Coaching– a program for high-risk employees that provides access to comprehensive health assessments and personalized guidance programs – and Client Value Dashboard – included for employers to monitor reports usage data and ROI information.
Ball State University chooses Ceridian’s LifeWorks.com
Private Employer Exchanges
Mercer’s Marketplace allows employers to improve management of their benefits spending and administrative responsibilities for active employees. Employers determine how much to contribute toward the cost of their benefits program and can select from a range of insured and self-funded products and providers. The platform includes full benefits outsourcing and provides employees with call center and online decision support.
Mercer recently announced names of 10 of its 20 national, regional and state carriers that have joined Mercer Marketplace for providing core medical and voluntary benefits.
A good garden has a variety of plants. Some base crops are evergreen like benefits enrollment and management services, while others are changed out to meet growing market demand. Benefits HRO: how does your garden grow? Very well thank you.
Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by clicking here.
Even when the U.S. unemployment rate was over 10%, we’ve heard that the unemployment of skilled workers with college degrees remained low at ~4-5%, and we’ve read data on just how bad the skill shortage is, including ManpowerGroup’s findings that 52% of U.S. companies are struggling to fill key jobs. We’ve also heard from me as an analyst (and former HRO buy-side client), pointing to the fact that development and retention of talent are more paramount than ever. But not as much has been written about what are the top global skill shortages. Well not until last week when U.K.-based global recruitment and RPO provider Hays issued a good concise summary of the top ten global skill shortages.
The list divides the skills by soft skills and hard skills that are in shortage globally.
Soft Skills
Languages
People and communication
Team management and leadership
Organization.
Hard Skills
Financial and budgetary
IT
Green skills
Procurement and negotiation
Research and development
Healthcare.
Beyond being good for job candidates and employees to know the skills they need to focus on; employers need to do a better job of investing in their workforce to develop and retain the talent that they already have. In fact, employees are looking for that. Mercer’s newly released eBook, “What’s Working Around the World”, points to the fact that career advancement and training opportunities are among the top priorities of the employee value proposition in many countries and are needed to address low levels of employee engagement.
As I get ready to publish my next global learning BPO report, I am optimistic to hear that talent management focus is no longer just a desired priority but is now a business imperative. Clients are increasingly focused on learning linked to talent management, including the linkage of learning to performance management and developmental plans. To meet client needs to attract, develop, and retain talent, vendors have been developing their talent management capability. This includes MPHRO vendors such as Xerox, Aon Hewitt, Talent2, IBM, and Accenture, whose talent management offering includes workforce forecasting and analytics, recruitment, performance management, succession planning, and learning.
In the report, I also wrote about the advent of social learning. For now, I’ll just say that speed to competence, followed by how the new generation of employees that are entering the workforce wants to learn, as well as the need for improved talent management, are what’s driving the acceleration of social learning.
If you are not already following me on Twitter, please do so at @GaryB_NH as I will tweet when the LBPO report is published. I’m targeting the 30th of April, in time for my presentation at the HRO Today Forum on May 1st titled State of the Learning BPO Marketplace and the Emergence of Social Learning.
Gary Bragar, HRO Research Director, NelsonHall.
Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.
This week, we look into the world of benefits from the 10th Annual MetLife Study of Benefits Trends. The long-running employee benefits research highlights the changes in trends due to the changes in the economy and their impact on the generations of employees.
Employer goals and objectives for benefits remain the same: control costs, attract and retain employees, and increase productivity. It is what employees, especially younger employees, value now that has been changing. And that may call for a change in strategies and approaches to maximize the dollars that employers spend on benefits.
Traditionally, younger employees were not very focused on long-term financial planning and retirement; now, 52% of those 21- to 30-year-olds are concerned about long-term financial security. Even though employees know that they must accept greater individual responsibility (63%) and are likely to face additional cost shifting in the future, nearly half (49%) of those surveyed say that because of the economy, they are looking to their employer to help them achieve financial protection through a range of employee benefits. The Generation Y percentage looking to the employer for help is even higher at 66%. Today’s employees of all ages are more aware than ever of the value of employer benefits, both traditional – like medical and dental – and voluntary benefits, where the employee may pay more or all of the cost. Take advantage of this awareness to increase communication, education, decision support tools, and even branding of the benefits you are providing.
Seventy percent of surveyed employers are planning to retain current benefit levels and only 10% may cut benefits, but 30% may need to continue cost shifting to employees. Few employers are planning to spend more overall on benefits, but employers are open to shifting priorities. For example, there are plans to increase the number of wellness programs and voluntary benefits offerings like long-term care, critical illness coverage, optional life coverage, and optional disability coverage.
Another reason why I wanted to bring this study to your attention is that it separates the employer data into progressive and standard. Progressive employers more attuned to changing employee needs – such as wanting more choices and life stage options – and likely to make adjustments to achieve cost control, attract and retain employees and increase productivity. This split is similar to other areas of HRO where one client wants the latest in transformation to optimize value and achieve business results and another wants improved technology and processes to lower costs and increase efficiency.
Employee benefits needs are growing, changing and challenged by uncertain economic conditions. All benefits HRO clients should expect to have a partner in adapting to changing conditions. Whether that means access to full-scale consulting for a revamp of benefits spend, policy, and offerings, or basic access to vendor research and client networking opportunities, what matters is the match of client expectations and the service provider’s ability to deliver.
Linda Merritt, Research Analyst, HRO, NelsonHall
Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.
HRO buyers want service providers that meet today’s needs. Sophisticated buyers also want partners who can help manage changes over time as new service needs and technologies emerge. In a rapidly changing industry, it is not enough to know what customers are buying and what their competitors are currently doing today, each vendor must also invest in the future.
Here are three different ways service providers are focusing on the future:
Kelly Services recently opened an Office of Innovation and appointed a Senior Vice President and Chief Innovation Officer to define the next generation of workforce solutions for its global customer base. To meet the rapid rate of workplace changes, Kelly intends to accelerate the process of creating and launching new services. Kelly Services was one of the founders of the temporary services market and has evolved into providing a full suite of services including outsourcing and consulting. Given the company’s history of innovation, it makes sense for Kelly Services to see added strategic focus and investment in order to continue as a market-leading innovator of HRO services.
Infosys opened a new ‘Alternative Delivery Model’ HR-shared service center in a Tier 4 town in India. The company considers this as an important strategic move to differentiate its services and benefit clients by providing additional flexibility and competitiveness. Infosys is partnering with local suppliers, like Desicrew, to set up centers in Tier 3 and Tier 4 communities, creating a more sustainable model to access talent and provide long-term career opportunities in other areas of India. My NelsonHall HRO colleague, Gary Bragar, commented that by opening up a center in a Tier 4 city, Infosys can offer clients a reduced offshore price point, with the added promise of greater staff loyalty and lower attrition rates.
Lumesse, a provider of integrated talent management applications and services, completed its acquisition of SaaS-based learning provider Edvantage Group last October to add a full suite of learning services including learning management, content development and management, online content delivery, and custom course development. The combined business will have over 1,900 customers in 70 countries worldwide and around 2 million active users of its technology.
Just like buyers and vendors, in following news of the HRO community, we tend to focus more on the current activities and news of the day. Stopping periodically to review HRO business news over a several month period reveals trends and provides clues on service provider strategies for growth and the future.
Lumesse made a big acquisition to quickly add a major new service line. Infosys is adding cost-competitive capabilities for clients and the company should benefit from the reduced operating costs due to lower turnover in the outlying centers. Kelly Services is continuing its heritage of innovation to internally develop and speed to market new capabilities.
There is no single approach to preparing for the future, there are many ways to buy, build, or partner your way forward in HRO.
Linda Merritt, Research Analyst, HRO, NelsonHall
Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.
In the USA Today last week, there was a feature with President Obama giving a talk to the business community, where he gave recognition to them for keeping jobs in the U.S.
The President said the economy has changed, and the transformation has been painful for many American workers who used to work in factories where they thought they would retire from, but those factories relocated overseas where the cost of labor has been cheaper. The President recognized that we live in a global economy and other countries want to develop their companies internationally and will therefore want to employ workers all over the world. But right now, the U.S. is in a unique moment in time where it has the opportunity to bring jobs back as the U.S. has people available and ready to work now. The President wants companies to invest in America, and he is set to introduce a tax proposal that would reward companies who bring jobs back to America and eliminate tax breaks for companies that are moving jobs overseas. The President has set a goal of doubling the export of goods and services by 2014.
So the big question is, will this scheme work and what does it mean to offshoring HRO? As one data point, let’s look at the percentage of HRO contract value by location according to NelsonHall’s latest quarterly HRO Confidence Index released in December 2011:
72% Onshore
16% Nearshore
12% Offshore (the 12% is consistent with April 2010 when tracking of this data point began).
Although some American companies have brought back previously offshored jobs, I believe it will come down to a combination of cost and service. First, pending what the actual tax breaks are that the President will be able to provide, CFOs will evaluate the outsourcing cost savings vs. the tax benefits of bringing jobs back. If HRO service provider jobs are brought back, vendor clients are not going to want to pay more. If the tax breaks don’t cover the labor cost savings, will vendors be willing to eat the extra cost? I don’t think so. Much will also depend on the current level of client satisfaction with outsourced services.
Depending on job type, it is easier said than done. As an example, let’s take moving outsourced call center jobs back to the U.S. Part of the reason call centers are offshored are due to multi-lingual call center support, including for MNCs, that can be provided from HR service centers such as in Manila. Then there is offshoring of non-client facing jobs, often referred to as back-office administration. For example, sourcing of jobs can be done when U.S. offices are closed overnight and candidates can be delivered next morning.
In sum, once the specific tax breaks are known, CFOs will commence cost savings analysis, followed by vendor and client discussions on where and how to best provide HRO services.
Gary Bragar, HRO Research Director, NelsonHall
Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.
HRO Insights 
Recent Comments