Employee Engagement: Outsourcing Providers Get It

I finally listened to my first two Bill Kutik radio shows and I’m glad I did (replays are available online).  Two weeks ago, Bill interviewed Mary Sue Rogers, General Manager of Global HR, Learning and Recruiting for IBM, who shared her perspectives on HRO.

More recently, Bill interviewed Rudy Karsan, CEO of Kenexa, for his views on balancing work and life and the nature of how jobs are changing with insights from his recently co-authored book titled “We: How to Increase Performance and Profits through Full Engagement.”  Research findings cited from global employee surveys and company case studies revealed three essential elements that keep employees engaged and productive: pay, purpose and passion.  During the interview with Bill, Rudy noted a January 2010 study which indicated that 45% of employees were disengaged.  That figure is now a staggering 84% (Ouch!).  Just think of the productivity that would occur if companies could make that 84% engaged.

To measure employee engagement, Rudy states that companies must first measure employee engagement though employee surveys.  Once those results are compiled and analyzed, conversations on how to improve need to occur with employees.  Having managed employee programs including employee satisfaction for a global telecom for a few years in my prior life, I can attest to all the amazing things that happen when employees become engaged!

Another important element in employee engagement is to analyze employee actions and anticipate trends before they become major problems.  In her discussion with Bill, Mary Sue emphasized the wealth of workforce information that is already inherent in HR data warehouses and systems.  An experienced HRO vendor can help connect the systems, provide the HR analytic tools, and even assist in building an engaged employee base, which is critical for success in an ever-changing global business environment.

An example of another HRO provider walking the talk is HCL.  Vice Chairman and CEO Vineet Nayar penned his management philosophy in his 2010 book titled “Employees First, Customers Second,” which says it all.

So, why aren’t more companies actively trying to ascertain employee satisfaction?  I could write my own mini novel on all of the excuses organizations give, but rather I’ll simply say just do it.  If you have the resources and the commitment, employee engagement can be managed internally.  But, if you don’t have the bandwidth, talent management providers such as Kenexa and OchreHouse have the capability to help.  In either case, companies must be committed to the process, from senior leaders down to first line supervisors.  If you don’t have the commitment to doing anything with the results, then my advice is don’t bother measuring to begin with as you risk disengaging employees more.  As an organizational leader, which side of the 84% do you want to be on?

Gary Bragar, Lead HRO Analyst, NelsonHall

An HRO Provider on the “100 Best Companies to Work For” List… Now That’s Walking the Talk

I was very pleased to see an HRO provider, Accenture, named on Fortune’s “100 Best Companies to Work For” list for the third year in a row.  Last week I wrote about customer service being important to customer retention, so I thought this was an appropriate blog to write about this week, particularly when you are a true believer in the adage that employee satisfaction = customer satisfaction = increased profitability.

Accenture was cited for initiatives including its “Future Leave” program, which is a three-month, self-funded, sabbatical with continued benefits and assurance to be able to return to work when the leave is over.  Accenture also has a number of other programs for employees including:

• Learning and development: A global online learning portal with 20,000 courses available.  All Accenture employees are assigned a career counselor to help them manage their careers
• Flexible work arrangements: Options of how and where employees perform their work to help achieve a better work-life balance

Another HRO provider walking the talk is Kenexa.  Its CEO, Rudy Karsan, recently co-authored a book titled “We: How to Increase Performance and Profits Through Full Engagement.” The book highlights three common factors that drive engagement that I completely agree with:

1. “Growth: We need to feel that we are advancing in our careers or are learning new things.
2. Recognition: We need to feel appreciated and believe that our ideas count.
3. Trust: We need to trust our senior leaders and feel confident about the future.”

More HRO providers are offering talent management services and can help clients improve employee engagement.  For example, Kenexa was recently awarded a contract by Unilever to survey 140,000 employees globally in 2010 and again in 2012 to assess employee engagement.  Kenexa will also help Unilever with action planning for any issues identified to improve employee engagement.

Manpower is another example of an HRO provider, helping companies in Asia to develop effective workforce strategies to improve their competitiveness.

As I’ve written before, as the economy improves and more jobs become available, it will be even harder to retain talent.  HRO providers can help and where needed, implement new employee programs or strengthen existing ones that are not achieving the desired results.  In assessing which HRO vendor to work with on tools and services designed to increase employee retention and engagement consider the vendor’s own human capital management practices. Who better to work with than an HRO partner that walks their own talk!

Gary Bragar, Lead HRO Analyst, NelsonHall

Holiday Cheer for Employees (HR and HRO Helping…Thumbs Up, HR!)

At this joy-filled time of year, it’s always nice to share some cheer. So, first up, my thanks to all our loyal blog followers for their interest and positive feedback…it keeps me and my colleague Linda motivated each week!

Now, some cheer for and from employees around the world. Although over the past year I’ve written several times about studies demonstrating high levels of employee dissatisfaction, Randstad’s Workmonitor‘s just-released results show somewhat of a turning tide heading into 2011.

Via an online survey distributed during November 3-17, 2010 to more than 400 participants per country, Randstad found:

• Employees expect their benefits and base salary to increase in 2011. (However, the bah humbug side to this finding is that most don’t expect a financial bonus at the end of 2010.)
• Job satisfaction has remained steady (although in Turkey it has increased.) I’ll take holding steady as a positive sign that perhaps the downward trend has stopped and job satisfaction will increase in 2011. By the way, the Netherlands has the highest number of very satisfied employees (I’m not going to touch this as to why, but I can say from my recent visit to the HRO Europe conference, people there are indeed very nice and friendly.)
• My favorite finding? Many employees have a New Year’s resolution of improving work-life balance. Yes, those throughout the U.S. and Europe want it, but those who want it the most are in Mexico, Chile and Argentina!

I really do think employee satisfaction will improve next year, albeit in baby steps. Why? In conducting my Learning BPO and RPO research this year, I’m told that many clients are now focused on talent management, and HRO service providers are helping them from consultative, training, implementation and ongoing feedback perspectives.

In 2011 we can revisit compensation and benefits to see what the average salary increases were and what benefits were improved. And let’s hope that the global economy recovers to help our 401(k) savings plans continue their resurgence back from 101 – 301 (k) levels to 401 and, better yet, 501 levels and beyond.

Wishing everyone a happy and safe holiday, and looking forward to your continued readership in 2011.

Gary Bragar, Lead HRO Analyst, NelsonHall

Smart HRO Buyers and Providers Strengthening Focus on Employee Engagement

In my April 29 and August 26 blogs I talked about grim levels of employee satisfaction and engagement, and a couple of ways in which HRO providers can help employers raise these levels.

Well folks, sadly, recent analyses show that employee sat and engagement are still exceptionally low in most world geos, and continue to drop. Hewitt  last month announced that approximately half of all companies around the world showed a significant drop in employee engagement as of the end of 2Q10, the largest decline it has seen in the 15 years it has been conducting employee engagement research. And Kenexa Research Institute’s 2010 WorkTrends Annual Report, released earlier this week, cited that India ranked highest in employee engagement at 71 percent, Japan the lowest at 38 percent, but that when employees report they follow effective leaders, the average employee engagement index score is 91 percent. Bleak numbers, and dangerous for employers as they try to recover from the economic downturn and emerge in a position of strength.

But some forward-thinking companies are taking steps to increase their employee engagement levels, and they serve as models for the types of things other organizations may want to consider doing. For example, Unilever contracted with Kenexa to conduct in 2010 and 2012 an employee engagement survey with 140,000 employees around the world, and also to help with action planning to address issues identified per the surveys. MphasiS India awarded Kenexa a contract to provide a 360-degree survey program. And Vodafone’s operating company in Qatar engaged Kenexa to deliver a leadership program to help 65 senior managers more effectively lead by minimizing misunderstandings and cultural conflict.

Further, a variety of providers are improving their talent management capability, including Mercer, which launched Human Capital Connect (powered by Peopleclick Authoria), a rewards and talent management consulting and technology solution, and ADP’s acquisition of Workscape is strengthening its performance management capability.

And speaking of strengthening performance management, in recent interviews for my upcoming learning market analysis, several vendors around the world have cited increased demand for leadership and performance management training. For example, Australia-based provider The Learning Factor stated that companies are trying to reinvent themselves and are investing in management programs, including performance management, across all countries and regions. One of its clients recently implemented a new performance management system, processes and required training for all managers. The training includes how to set goals and objectives, and how to provide feedback.

During the recessionary crisis of the past two years, organizations have been functioning in survival mode, focusing on cost cutting and downsizing rather than being proactive in practicing what they preach – “people are our most important asset.” Yet top leaders and companies are starting again to walk the talk. What are you walking and talking?

Gary Bragar, Lead HRO Analyst, NelsonHall

Employee Satisfaction is Tanking…Can HRO Help?

Per the results of the most recent Spherion Staffing Services Snapshot survey, released yesterday, employee satisfaction in the U.S. is bleak. In fact, the subhead of the press release stated only five percent of those surveyed – a sample of 896 full-time and part-time working adults aged 20 and older – enjoy what they’re doing and wouldn’t consider another job. More sobering survey stats:

• 62 percent feel less secure about their job compared to a year ago

• 56 percent did not take a vacation in the past year, and of the 44 percent who did, one-third indicated they did not completely disconnect from their job responsibilities

• 30 percent worked from home the last time they called in sick

• 57 percent said their company does not help/support their effort to have a good work/life balance

• 95 percent would consider looking for a new job in the future or are actively looking, regardless of whether or not they enjoy their job

• 53 percent have had to assume additional responsibilities or workload during the recession due to co-worker layoffs, and 93 percent of those who had to assume additional responsibilities did not receive additional compensation

• 57 percent who have taken on additional responsibilities feel burdened and overworked, and another 53 percent said their job or workload affects their health in a negative manner

With this, borrowing the famous and oh-so understated line, “Houston, we have a problem” from the movie Apollo 13, seems appropriate. In this case, “Houston” is employers, senior managers and first line supervisors. And the problem – as I’ve written about and as we all know – is that lacking an engaged, committed, compensated, rewarded, respected and energized workforce, morale decreases, productivity plummets and highly talented employees jump ship. This is all too obviously a losing proposition for companies.

So what should employers do, and how can outsourcing help? While there are many process areas to cite, I’ll touch on just two here.

First, I’m currently working on a learning BPO study, and was pleased to hear from several companies I’ve interviewed thus far that they are providing performance management training to managers and senior leaders to develop, reward and retain employees.

Second, the results of a Mercer study released yesterday found that 30 percent of the respondents – headquarters representatives of 114 multinational organizations from a wide range of industries – are increasing employee involvement in design of their organizations’ benefits plans. It’s a big move in the right direction – even though only 30 percent of respondents are currently doing so – to include employees in benefits-related decisions and options, whether for health insurance, health-related assistance options, defined benefits plans, defined contribution plans, etc.

Benefits outsourcing providers are not only able to help senior leaders determine the most advantageous benefits plans for their company and their employees, with eyes on both cost-effective options and employee retention, but also evaluate and administer the decided-upon plans.

My call to senior HR executives? Don’t wait…engage your employees! And if you’re outsourcing or considering doing so, engage your provider in helping make the right decisions for your employees. I still believe that employee satisfaction = customer satisfaction = profitability.

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall

Customer Satisfaction is People Interaction – Back to HRO Basics Part I

What creates and sustains HRO client satisfaction?

The more services are automated, the more the remaining direct person-to-person interactions assume greater importance in shaping satisfaction. Granted, technology is very important in creating competitively priced HRO services, benefiting both the client and the service provider. And yet, meeting basic services levels does not create longer term satisfaction, and effective low-cost transactions are quickly considered simply part of the expected services. Competitive prices and compelling technology-driven quality services are necessary but not sufficient. Long-term end-customer satisfaction – whether the customer is internal or external – is sustained by people interacting with people.

For example, recent research by Convergys shows that 68 percent of customers still prefer to speak with a live service representative. And what they want most is knowledgeable CSRs who address their needs on first contact and treat them as valued customers. A strong second choice is live chat with an agent, followed by use of the corporate website. And acceptance of self-service options is also gaining in popularity, with 25 percent of consumers preferring to use the Internet to contact a company, up from 18 percent per a 2004 Convergys study. And as you would expect, the younger generations are more likely to actually prefer automated, self-service channels.

The relationship with the HRO service provider is critical in achieving and sustaining the depth of customer satisfaction that builds a loyal client, which in turn results in contract extensions of scale and scope, renewals and strong client references that help win new business. For HRO customer satisfaction is segmented into key client stakeholder groups including employees and other end users of the services, and key HR and business leaders including the outsourcing governance team.

Convergys’ president and CEO, David Dougherty said, “Being able to manage the customer experience depends heavily on being able to manage the employee experience. There is a clear link between satisfied, well-equipped and well-trained employees and the ability to provide a good customer experience.”

Watson Wyatt’s August 2009 survey of U.S.-based HR leaders found that more than half (52 percent) of employers are now more concerned about retaining top performers and critical-skill employees than they were before the economic downturn.

The survey showed that the top employee engagement activity (as cited by 83 percent of respondents) was increased communications. Much less cited were expanded use of recognition programs at 27 percent and special compensation programs for high performers and/or at-risk employees at 18 percent.

Watson Wyatt agrees that effectively using communication is critical to keeping employees engaged, but it advises that companies should also be using the HR programs they would normally use, such as employee recognition, development opportunities, and targeted compensation programs, to help employees remain focused and engaged throughout the downturn and recovery.

As the increased effectiveness of self-service transactions reduces the number of live agent interactions, each interaction assumes greater importance, as does the capabilities and attitude of the agents.

While the above-cited surveys were U.S.- and Canada-based, the economic downturn reduced voluntary turnover around the world. HRO provider employee contact centers are located around the world, onshore, nearshore and offshore, creating a global workforce that varies in language, culture and employee engagement needs. One prominent India-based BPO provider recently told me their turnover is now under 10 percent. Great news, but what happens when increased opportunity arises? 

Want to build customer satisfaction? Have a full internal program of employee development and engagement to ensure live customer interactions are handled by knowledgeable, caring agents enabled to solve as many problems as possible on first contact.

Linda Merritt, Research Director, HRO, NelsonHall

Employee Dissatisfaction = Boon to the HRO Industry?

While this headline sounds counter-intuitive, let’s look at several news pieces published in just the last week.

An August 26 article by Hudson (a recruitment and talent management services provider) stated, “The global financial crisis has had a severe and divisive impact on the sentiment of the workforce in Australia and New Zealand.” “Employees’ feelings of disaffection are already playing out in the market, more employees are now seeking new roles (jobs) compared to before the downturn, almost half of the workforce is seeking a new role (47 percent) and 56 percent said they would consider roles they previously would not have looked at. If employees are disgruntled or unhappy with their current roles, the moment a better opportunity presents itself they will leave.”

Also on August 26, Jobfox, an Internet-based job site reported, “A recent study concluded that 54 percent of employed Americans plan to look for new opportunities once the economy begins to turn around”.

According to an August 31 USA Today article, “More than eight in 10 employers feel that their workers are just happy to have a job, but just 53 percent of employees feel this way, according to Monster.com.”

17 percent of workers are thinking of changing jobs in the next 12 months, per a survey employment website SnagAJob.com released on August 27.

And in a nationwide telephone survey of 500 hiring managers and 500 workers from various sized businesses – conducted by Robert Half International and CareerBuilder between April 30 and May 31, 2009 – more than half of employees plan to make a career change or go back to school.

Now, think of the impact this employee churn will have. Many are using the term “the jobless recovery” and talk of how the return to job creation will likely lag other evidence of recovery. This could lull in-house HR departments and HRO service providers into thinking the need to gear up for greater volumes will not be needed until later in 2010. While I agree, some churn may well pick up earlier. And churn triggers so many HR transactions – in virtually all aspects of HR including administration, payroll, learning, benefits hiring and staffing – that even if jobs aren’t growing, just replacing current positions will cause HRO activity to pick-up, as in-house HR departments have been cut to the bone.

I believe the economic downturn will be an economic upturn for the HRO industry. What do you think?

Gary Bragar, Lead HRO Analyst, NelsonHall