Employment Branding: Business, Culture, and HRO

Yesterday, I participated in a very lively online Twitter discussion about employment branding. Branding is a common topic for businesses, particularly for corporate, product, and service identities. Employment branding is important to ensure the attraction and retention of employees that can deliver the business brand experience. Meghan M. Biro’s brand humanization concept is that it is all connected: the business brand, its culture, and its ability to attract and retain talent. That connectivity is a business opportunity for HRO, think RPO and employment branding services, and it is also an issue for HRO service providers as employers.

In an earlier blog this year, I concluded that HRO will not hinder and may even help clients achieve human capital leadership, using leadership and best place to work awards as evidence. Diversity award lists from DiversityInc.com and Diversity MBA magazine have just come out for 2012 and again we see recognition of HRO service providers including Accenture, ADP, and IBM, as well as many companies that use HRO. Here are examples from the world of RPO:

• Alexander Mann Solutions: Citi and Deloitte
• Futurestep: General Mills and Kaiser Permanente
• KellyOCG: GE
• Kenexa: Verizon and U.S. Navy
• ManpowerGroup Solutions: Wells Fargo
• Randstad SourceRight: AT&T and Capital One
• The RightThing, an ADP Company: Kellogg and WellPoint.

As part of my long running theme on talent management, I believe strongly that HRO vendors can and should be leaders in creating the agile workforces of the future. Part of being a leader is practicing what you preach, which is largely what corporate and employment branding is about.

In HRO service providers often need to scale up and scale down quickly, while still ensuring a full slate of experienced subject matter experts. On top of that, many HRO service providers base client care centers and processing centers in talent competitive markets, which often stimulates high turnover and brings together workforces from very different cultures. This is the second challenge of employment branding for HRO, as employers, each service provide needs to build a differentiated employment brand and corporate culture to attract and retain the talent needed to fulfill its business brand.

Part of developing an employment brand is determining what attributes make a particular employer a good place to work and developing programs to ensure those elements are in the workplace and recognized by current and prospective employees and are aligned with business outcomes. Sounds simple, but it surely isn’t.

Buyers, ask your HRO service providers about their workforce practices to see if they practice what they sell. Service providers, in addition to client testimonials, engage and leverage your own employees as brand ambassadors.

Linda Merritt, HRO Research Analyst, NelsonHall

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Where the Action is At in HRO

As a follow-up to my colleague Linda Merritt’s blog last week titled “HRO is Settling in for a Good 2011,” I thought I’d write about where the most action is at thus far. If you were thinking recruitment, good guess, but it is actually benefits administration leading the way in the number of announced contracts in 2011.

In addition to Mercer being awarded a pensions administration contract by Loomis UK Ltd., which Linda also wrote about Mercer in her February 23rd blog, a number of providers have announced important contract awards, including:

Fidelity Investments, after two big five-year contract awards in Q4 2010 by AT&T and Office Depot, in January Fidelity was awarded a five-year contract renewal for total retirement outsourcing (TRO) services by BP America, Inc., a subsidiary of BP. Fidelity will continue to provide administration and recordkeeping for BP America’s 95,000 DB and 48,000 DC and nonqualified deferred compensation plans for U.S. employees. Later in the same month, Fidelity was awarded another five-year contract renewal for TRO services by HP in North America. Under this deal, Fidelity will service all of HP’s retirement plan participants, adding 162,500 participants from EDS who were previously serviced by other providers. In total, Fidelity will serve more than 135,000 DC participants and more than 192,000 DB participants for HP.

Aon Hewitt, in February announced it had gone live with eight new benefits administration clients since the beginning of the year. Across these clients, Aon Hewitt has implemented 12 services including DB, DC, and H&W and has added more than 325,000 participants and retirees to its base of 22 million participants.

Capita, in February was appointed as a preferred supplier for the administration of the Teachers’ Pension Scheme (TPS) by the U.K. Department of Education. This is a seven-year, £80m contract renewal that starts in October 2011 and includes an additional three-year option. A week later, on a smaller scale, Capita won a three-year occupational health services contract by Technip. Capita will provide its Wellness Assessment Surveillance Portal, which gives centralized visibility of health surveillance records to Technip’s 3,000 personnel in Aberdeen and offshore locations.

So will benefits administration continue to be hot this year? I believe it will, though it might be hard-pressed to exceed RPO for the full year in terms of number of contract awards.  As evidenced in the examples above, there are huge volumes of benefit plan participants that are serviced and in today’s economy, clients cannot afford internal resources to manage these programs, nor do they have the expertise and most up-to-date technology. Handling benefits administration is vitally important to employees and retirees, whether it’s the ease of an annual online enrollment or the knowledge of a service center professional in answering DB and DC questions. And it’s not just large companies that need this expertise.  As I wrote in my February 25th blog, mid-market HRO is rapidly growing as well.

A final thought about what will continue to drive contract awards in benefits administration is that buyers are increasingly looking to consolidate their outsourcing services under one provider, as evidenced by Fidelity’s contract with Office Depot. This is a trend I believe will continue and from an employee and retiree perspective is a good thing. I was fortunate enough to leave my long-term employer four years ago with H&W benefits, DB & DC plans, and voluntary benefits, of which all four were provided by four different vendors. Sounds like I should play the number four!

Gary Bragar, Lead HRO Analyst, NelsonHall

Q4 2010 HRO Ends on an Up Note

While we wait to see 2010’s full year HRO financial results, we can review activities in the fourth quarter.  HRO growth is occurring across most industry segments, with the public sector lagging.  The fastest growth rates are still outside of the mature economies in North America, U.K., and Europe for the global providers, although the U.S. is starting to rebound.

Benefits administration showed a nice level of new business activity, even in the mature areas.  Congratulations to Fidelity for the competitive wins of AT&T for both defined contributions and defined benefits and Office Depot for broad benefits administration services.  There were also notable benefits wins by Mercer, Aon Hewitt, Ceridian and Xafinity.  Meanwhile, we are still waiting for a major jump start in learning and multi-process HRO contracts.

The volume of new business and growth with existing clients will continue to rise in 2011, but the pricing environment will not likely ease much in 2011 as buyers remain price sensitive.  Maintaining efficiency will be critical in order to win with both clients and investors.  For example, The Right Thing recently introduced dedicated Solution Teams to manage the transition from sales and implementation into operations. Managing implementation was a costly problem for service providers and customers in multi-process HRO for years, so it is good to see the lessons learned extending to other areas of HRO.

Preparing for further growth also continues in partnerships, mergers, and acquisitions.  Aon Hewitt is expanding its benefits capabilities in Scotland via a pension services partnership with Babcock International Group.  Towers Watson is jumping back into the benefits fray with a partnership with Wage Works and the acquisition of Aliquant, a mid-range benefits service provider.

Fourth quarter good news stories continued with revenues up in most areas of HRO.  Several HR service providers reported a 4% to 6% increase in revenues including ADP Employer Services up 6%, Aon Consulting up 4%, and Mercer up 6%. RPO and staffing companies continued recovering at a rapid pace, leading the way out of the downturn just as they led the way into it.  Revenues for Manpower were up 19% and The Right Thing’s revenues were up 30%.  GP Strategies, Kelly, and Kenexa all had increased revenues in the mid-20% range.

Operating margins are remaining consistent as the HRO industry adds back employees indicating they will be able to manage growth while keeping an eye on hard-won profitability.  Investments in technology and global service delivery capabilities will now be bearing fruit and should also support margin growth.

Happy New Year – may 2011 be a great year for us all in the HRO community in every way!

Linda Merritt, Research Director, HRO, NelsonHall

Take Care to Show You Care – of Humanity and HRO

If you are in the business of caring for people, you have to show you care about people.

In the HRO community we all are in the business of caring for people, as employees, as managers and as retirees. We provide products and services that help people at every stage of working life and beyond. Much of that care is administrative, automated and drives to self-service and efficiency, as well it should. Sometimes we get to show employee care in a more direct manner, such as calls with live agents to understand the variety of benefit actions and options needed to wend through a major life event, or use of a caring tone when helping process an unexpected leave of absence during a personal or family crisis.

There are other ways to show you care in this professional space we have chosen to serve, such as corporate social responsibility activities and philanthropic initiatives.

HRO service provider examples include: 

• ACS Government Healthcare Solutions has a dental outreach program for disadvantaged children which has expanded from one to ten states

• Convergys highlights its Social Responsibility Community focus with examples of worldwide projects, including many teacher training and education programs

• Accenture uses its consulting and IT expertise in its Skills to Succeed effort to build skills that will enable people all over the world to participate in and contribute to the economy

• IBM, befitting its size and global reach, sponsors many varieties of programs. One that caught my eye is Kid Smart for early learning development that has reached 60 countries and has won IBM accolades from the highest levels in some countries

Then there are the times of crisis like a hurricane, a tsunami and now the earthquake in Haiti. How do we in the HRO community lend our skills and capabilities when natural disasters strike?

Many companies, which also happen to be HRO clients, excel in business-aligned philanthropy. For example, as it relates to the catastrophic earthquake in Haiti last week, GlaxoSmithKline donated cash and medicine worth $1.8 million, mostly urgently needed oral and topical antibiotics, and has promised further commitments as local infrastructure is repaired. AT&T immediately gave $50,000 to help bring emergency telecommunications to Haiti, supports the American Red Cross’ text donation program (in the U.S. text the word Haiti to 90999 and a one time charge of $10 will be added to your cell phone bill), and has pledged $200,000 to the Red Cross this year alone for disaster relief. And the State of Florida called upon its citizens to donate money to its “Neighbors to the Rescue” program through the Florida Disaster Recovery Fund.

Ceridian is making sure its Life Works customers know that services are available for employees concerned about friends and family in Haiti, and it has also listed some contact and resource information for the general public on its website, including several in Creole.

Hewitt posted a Red Cross press release for Thursday’s CHICAGO HELPS HAITI telethon in which 1,500 employees will volunteer their time staffing the phone banks from its Lincolnshire headquarters and three other centers.  The press release also mentions, “The last time the Red Cross partnered with Chicago media and Hewitt was in 2004 for a one-day telethon to aid victims of the Asian tsunami. The result of that effort was extraordinary.” This is a very good example of using the skills and caring of the company and its employee during a crisis, as well as getting positive media coverage for the significant contribution.

The human impact of major disasters lasts for years, long after the media leaves. That will be the time to consider using ongoing corporate responsibility programs in both nearby communities and markets in which it is most needed. How are you showing you care?

Linda Merritt, Research Director, HRO, NelsonHall