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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The Only Certainty is Uncertainty: Managing the Impact of Health Care Reform on HRO

A now perennial concern for U.S. employers is the cost of providing health care to employees. It is number one on the list of the “2011 Top Five Total Rewards Priorities,” a study sponsored jointly by Deloitte and the International Society of Certified Employee Benefit Specialists (ISCEBS).  Here are the top five for this year:

1. The cost of providing healthcare benefits to active employees
2. The willingness of employees to pay for an increasing portion of benefit plan coverage and to manage their own reward budget
3. The ability of reward programs to attract, motivate and retain talented employees
4. The ability to adjust to and comply with current and future provisions of Health Reform legislation
5. Clear alignment of Total Rewards strategy with business strategy and brand.

Employer uncertainty on the requirements and cost of compliance with U.S. health care reform continues to the point where “the only certainty is uncertainty,” according to the study. In the meantime, 65% of 242 respondents said they had no plans to change employee-sponsored coverage. Only 9% of employers indicated that they plan to drop employer-sponsored coverage and pay the penalties with the expectation of further legislation and required changes. Lastly, about 20% of employers said they would consider converting to a defined contribution plan for health care and encourage employees to join an exchange.

Eight-five percent of employers are highly certain that an impact of health care reform will be higher costs for both the employer and employees. Seventeen percent are also concerned they will fall in competitiveness with peers in other countries.

If most employers are planning to change health care benefits at this time, what are they doing? They are closely monitoring the situation with 73% reporting they will re-evaluate benefits due to health care reform in the next 12 months.

Uncertainty is also an opportunity. Besides the obvious opportunity for continued benefits consulting, there are other opportunities for HRO. For example, total rewards statements are more than nice fluff. With effective communications, employers can help employees appreciate the full value of their wages and benefits, support the case for understanding cost shifts to employees, and even help with the attraction and retention of talent. Also, dependent audits have been a good foot-in-the door technique the last couple of years, ensuring value benefits go to only covered employees. Finally, absence management is another growing HRO service line with great potential to assist employees in difficult times and impact the bottom line when well-managed.

In core benefits administration, highlighting expertise in monitoring, understanding, and implementing regulatory benefits changes shows clients they will have a capable partner in their corner, no matter the changes ahead. Being the knowledgeable resource of choice in the midst of health care reform uncertainty and rising costs can be a leverageable factor in attracting new clients and deepening the relationship with current clients.

Is your HRO provider the rock you can rely on in times of uncertainty?

Linda Merritt, Research Analyst, HRO, NelsonHall

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HRO, Shared Services Centers and the HR COO

Oh the things you can find when you wander the Web. One link leads to another and you can find shiny new ideas that catch your eye. Wandering may be a sign of a short attention span, I prefer to considerate it part of having an open mind searching for relevance. My latest Web find is Deloitte’s Human Capital Trends 2011 study.

HR is challenged to meet a myriad of needs and provide ever more value within constrained resources. Cost remains a top priority and business leaders also want HR to be less tactical and more strategic. The HR tactical work must get done to keep the organization running and HR regulatory compliance issues grow ever more complex, necessitating even more tactical tracking and reporting requirements.

In response, HR shared service centers (HRSSC) have emerged in larger organizations, especially multinationals, driven by the need for cost reduction and the efficiency and compliance benefits of better integrated systems and consistent processes.  Outsourcing some of the shared service processes and/or technology support is also a typical part of HRSSCs.

The HRO community touts the benefits of cost optimization, improved processes, improved compliance and reporting, meeting SLAs, and high user satisfaction. By role and nature, vendors focus on the performance of the areas of their own accountability. Therefore, if only a portion of the HRSSC’s processes are outsourced and multiple vendors are involved, it is a challenge to ensure that overall HR delivery services are effective, efficient, and cost-controlled.

One “revolutionary” trend for HR from the Deloitte study is the need for a HR Chief Operating Officer (COO) to focus on the design, development, implementation, and delivery of HR services. This leader needs to be a great organizational, process, and systems designer and manager. I would also add the HR COO needs to be able to determine from a capability and cost perspective where outsourcing is the most viable option and how to integrate HRO into the overall operation.

It is important to not get lost in the tactical aspects of shared services. The HR COO should be a strategic leader, well-versed in both HR and the business. Adding in the art of building and selling business cases, including capabilities in communications, networking, and even marketing would add value.

Tracking cost and process efficiency are necessary parts of managing an HRSSC. So is collaborating with HR generalists and business leaders to create results and provide data-based information for workforce decision making. Promoting HR and the value of the HRSSC is also important – deliver, create awareness, and buy-in for the next cycle of improvement!

Buyers – the HRSSC leader can be a key partner in both operations and strategic HR transformation, invest and select wisely.

HRO vendors – the state of HRSSC leadership, capabilities, vision, and current operation is a component of the HRO Maturity Continuum.

Linda Merritt, Research Director, HRO, NelsonHall