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

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 17^th, 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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The Trajectory of Change for HR and HRO

Linda Merritt, HRO Research Analyst, NelsonHall

The 15^th Annual PwC Global CEO Survey of 1,258 CEOs in 60 countries shows what CEOs want now from HR that transcends country and industry. PwC summed it up as:

1. Protect the home market from uncertainty
2. Attack new and emerging markets for growth.

Hockey legend Wayne Gretsky said that he skated to where the puck would be, not to where it was, anticipating the trajectory of change. This is hard for HR, which often takes years to complete a major change and looks to HRO with a focus on price and improving operational efficiency. Skating to where we needed to be yesterday is hard enough; how do we skate to where we need to be tomorrow?

CEOs Top Concern: Talent

For the last two years, the number one concern of CEOs in the PwC survey is talent. CEOs are personally concerned with developing leaders and the talent pipeline. Why? Because CEOs see that talent constraints and mismatches are already limiting opportunities. CEO talent concerns include:

1. Talent-related expenses rising more than expected
2. Not being able to innovate effectively
3. Not being able to pursue a market opportunity
4. Cancelling or delaying key strategic initiatives
5. Not achieving growth forecasts in overseas markets.

Talent Gaps

Availability of key skills is a concern in every market outside of North America, especially for the Middle East, Africa, and Latin America. This matches well with the drive to increase the global coverage of RPO.

Talent gaps are greater in some areas. In addition to global talent concerns, it is harder for some industries such as technology and pharmaceuticals / life sciences to find needed skilled talent. Of heightened concern is middle management talent. Will RPO best fit at the level of volume and skilled talent hires? Or will RPO further encroach into middle management recruiting?

The future is also about talent management and proof of HR’s business impact. This supports the movement we are seeing to strengthen talent management (TM) capabilities through M&A. Examples include:

• SAP and SuccessFactors
• Oracle and Taleo
• IBM and Kenexa.

CEOs Want Proof

Proof of business impact is part of HR metrics and advanced analytics. Even what should be the basics in workforce information is not considered comprehensive enough by most CEOs; they would like more data including the return on human capital investments, the cost of turnover, and staff productivity. HRO is ready with HR analytics as one of the newest components of HRO offerings.

Today, most HRO remains pressured on price rather than on value delivered. In hockey, someone must put the puck into play. In HR and HRO, someone must pay to develop the capabilities CEOs say they want. In the meantime, HRO is doing a good job of getting ready to skate to where business needs are going.

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Kenexa and Aon Hewitt New Product Offerings Help Clients Hire, Engage, and Retain Talent

By Gary Bragar, HRO Research Director, NelsonHall

Kenexa’s RPO business has been growing, including globally as evidenced by its five year RPO contract with Eli Lilly to provide services in Asia Pacific, Europe, and the Americas.

Kenexa has been expanding its business with new service offerings including those focused on talent management. Two new product offerings that help clients hire, engage, and retain talent include:

• Fit Compass
• Career Bull’s Eye.

Kenexa calls these offerings Performance Accelerators.

Fit Compass: helps clients determine the quality of the hire by providing managers with an interview guide to help probe for candidate strengths, work styles, and challenges of how they would fit into the culture of the organization. Fit Compass can also be used for employee development and career planning, team building, and team effectiveness.

Career Bull’s Eye: determines an employee’s level of engagement by assessing their purpose, passion and pay. It then helps business leaders identify where in the organization they need to focus by finding out causes of disengagement so it can make improvements and reduce turnover. It can also be used when onboarding new hires to ensure that they are engaged to avoid turnover. Results are shared during quarterly business reviews with the client. Both products are available as standalone services or can be bundled with other RPO service offerings.

Aon Hewitt provides RPO as both a part of its HR BPO offering and as a standalone service. Aon Hewitt’s RPO business has been growing globally as well. Examples include its HR BPO contract with BP where it provides RPO in North America and EMEA, and its recent contract award with a professional services company to provide RPO as a standalone service in EMEA and North America. Aon Hewitt has two new products that help organizations transform their hiring process:

• SourceSprint
• Digital interviewing capabilities.

SourceSprint: keeps applicants in a talent community for possible placement with other opportunities. Often when an organization fills a job requisition, other applicants are lost after the new hire comes on board. While the applicants may not have gotten the job they applied for, they may be good candidates for other opportunities. But, finding them again is problematic. SourceSprint changes that by using social media, optimization of search engines, and mobile communications to keep these prospects in a talent community. It remembers how applicants were originally found and their preferred communication.

Digital interviewing capabilities: improves the efficiency and experience of the hiring process for both candidates and hiring managers. Through its partnership with HireVue, Aon Hewitt clients can use the HireVue Digital Interview Platform to ask candidates scientifically validated questions that will ensure consistency and objectivity across interviews. Candidates then use a webcam to record their answers. Since it is not a live interview, candidates can respond from anywhere at their convenience, and hiring managers can watch and share the recorded interviews with colleagues anywhere.

Given these types of continuous innovative offerings, it’s no surprise to me that RPO has been rapidly growing as clients seek to attract, engage, and retain talent, while improving the efficiency of the recruitment process at the same time!

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RPO Edging Toward Global

As a follow-on to my November 22 blog on the happenings at the recent HRO Europe Summit, a question posed by an audience member to me and my fellow RPO panelists Alexander Mann Solutions, SourceRight Solutions and a professor from Lancaster University deserves a deeper look. The question was, “We hear about RPO going global. How should global RPO be defined, as compared to how people are using this term, and is a shift occurring?”

NelsonHall defines global RPO as hiring in two or more continents. And in that context, on the panel I said very few global RPO contracts have been awarded to date. There have been some multi-country contracts awarded within a given region, and a few North American contracts that include some hires in Central, Latin and South America, but not much beyond that. But, in a “we’re getting there” moment, I was able to cite that just two days earlier: 1) FutureStep was awarded a truly global RPO contract by Cummins Inc. to provide RPO services in North America, Europe, Africa, Asia Pacific and South America; and 2) Allegis Group Services and Talent2, in partnership, were awarded a multi-continent RPO contract by an unnamed global financial services company to provide RPO in several locations in North America and Asia Pacific.

And just last week, Manpower was awarded a large global RPO contract by Rio Tinto to provide approximately 11,000 hires per year in North America (US, Canada), Asia Pacific (Australia, India), Europe (France, U.K.), Middle East, South Africa and South America. Granted, three is not a crowd when it comes to critical mass of contract type indicators, but I do think we’re finally beginning to see RPO edging toward global.

As I identified in my 2009 RPO report, one of RPO buyers’ top vendor selection criteria is the ability to provide global delivery, including in-region recruiters. Subsequently, my critical success factors recommendation was that if providers did not already have a global presence, it would be prudent to begin pursuing a global recruiting partnership with vendors that could provide recruiters in countries and regions where new hires are needed. Since then, we’ve seen a number of such partnerships emerge, including the December 3, 2010 announcement of Adecco and the Beijing Foreign Enterprise Human Resources Company (FESCO) establishing a joint venture to take advantage of the emerging markets growth potential in China, and provide global RPO to multi-national corporations based in China per Adecco’s presence in 60 countries.

I believe we will see continued demand by global clients to have one provider manage all of their recruitment needs, and that, in turn, we will see many more global RPO contracts signed in 2011. However, getting buy-in and cooperation from business leaders in local countries is a massive change management issue requiring significant attention, care and effort. Providers can help prospective clients during due diligence to quantify current costs, time to hire, hiring manager satisfaction, attrition and other metrics to help make the case. 

Buyers and providers will be watching the success of these new global deals; and if they are indeed successful, they will create the impetus for increased global RPO demand in 2011 and beyond.

Gary Bragar, Lead HRO Analyst, NelsonHall

Top Topics at Last Week’s HRO Europe Summit

Although a working trip for me – as a learning session co-presenter with Raytheon, and on two panels, one on learning and one on RPO – I can easily say last week’s HRO Summit Europe got great marks in my book. About 40 percent of participants were buyers – a rare occurrence at conferences these days – with the balance being presenters, providers, analysts, press, researchers, staff and others. Discussions were lively and engaging, and…need I say anything about the beauty of Amsterdam, especially its architecture and canals?

My co-presentation with Raytheon, a learning outsourcing session called, “Bridging the Customer-Provider Divide,” was immediately followed by the learning panel, and witnessed buyer questions including: 1) What role does the retained HR learning organization play, including the role of the retained learning director, HR business partners and governance team?; 2) What lessons learned should a buyer that has just implemented a learning BPO contract incorporate?; 3) Why we are seeing more selective LBPO contracts and less full LBPO contracts?; and 4) What role does LBPO play in retaining knowledge as more employees will inevitably begin to retire? 

While tracks and presentations covered the HRO gamut, two of the major focuses were talent issues and RPO. Dr. Peter Cappelli, Director of the Center for Human Resources at the Wharton School of Business, opened the conference with a keynote entitled, “A Question of Talent.” He began by discussing that, in the 1950’s and 1960’s, 24 years of service with just one company was the average tenure per employee. At the time, companies invested heavily in continuous training, and believed in lateral and upward mobility. He then moved to the sobering stats of today’s workforce. Companies of course still want loyal employees, yet very few do little to give their employees in-turn loyalty, and only one in four of succession plans are utilized. The result is organizations spending thousands of dollars in employee development, only to lose them to competitors.

It almost feels as if organizations accept this as a looming cloud norm in today’s workforce environment. But I vehemently oppose that viewpoint. If you look at the pure financials alone, conservative estimates are that it costs one and a half times as much of an employee’s salary to replace that individual due to the cost of recruitment, development, learning curve, etc. How can that possibly be perceived as good business? I am feeling like an evangelist as I’ve written about it so many times in my blogs, but employee satisfaction and robust initiatives focused on talent retention are vital to competitive advantage and business growth.

One of the largest and most well attended tracks at the conference was on RPO. I was also a member of an RPO panel discussion entitled, “Deep Dive: Driving the Future State of RPO,” along with Alexander Mann Solutions, SourceRight Solutions and a professor from Lancaster University. One question posed by a buyer member in the audience was how RPO has evolved. Each panelist, of course, had its own answer. Mine, not surprisingly as an industry analyst, is that by providing what I call “value-added services” or what I consider to be the “richer RPO services,” you are a true end-to-end RPO provider. This means: 1) services on the front end in workforce planning, talent strategy and employment branding to ensure the right employees with staying power are hired; 2) services in the middle to manage internal recruiting/mobility; and 3) services on the back end, including robust onboarding and ongoing, bi-directional employee engagement.

There are other shifts occurring, including interest in global RPO, and I will cover more on that and learning outsourcing issues discussed at the conference in upcoming blogs!

Gary Bragar, Lead HRO Analyst, NelsonHall

Partnering for Multi-Geo and Global RPO Capabilities

As we identified in our 2007 RPO market analysis and reaffirmed in our May 2009 RPO report, the ability to deliver RPO services on a global basis is a critical success factor for the provider community in order to serve the needs of buyers looking for recruiting support beyond domestic regions and to buoy their own revenue growth.

While some RPO providers have acquired others to expand their geographic delivery capability, we are also seeing a handful of partnerships forming among pure play RPO, and RPO and multi-process, providers. Examples include KellyOCG and IBM, Spherion’s RPO division and Spring Group’s RPO division – named hyphen – and Pinstripe and Ochre House.

The most recent announcement came from U.S-based The RightThing, which on July 14, 2009 announced it partnered with U.K-based Alexander Mann Solutions to enhance its global RPO delivery capability. The RightThing is immediately leveraging this new partnership by expanding its existing contract with Medlmmune, headquartered in the U.S., to provide hiring services for the company’s Cambridge and Liverpool (U.K.) and Netherlands locations.

As buyers look to reduce costs and the number of suppliers they work with, we’ll see an increasing number of global RPO RFPs. We’ll also see an expansion of existing domestic-only RPO contracts into more geographies, if buyers are happy with their existing provider and it can offer a multi-geo or global solution.

Therein lays the opportunity, and the rub, for RPO providers. To meet the increasing need for global RPO capabilities, domestic-only suppliers that want to expand will need to determine where and when to do so, and whether organically or via partnerships.

Would-be global RPO providers considering the partnership approach must carefully balance the benefits of lower start-up expenses, quickly obtaining the requisite knowledge on local laws and legislation, and insights into how to best source talent in the region with the inherent risks including how to ensure consistency and quality of services and technology integration into a virtual single platform.

We don’t anticipate seeing more than a few additional large partnerships forming in the next year. But perhaps there will be more niche partnerships, such as Kenexa’s partnering with R&J Management Consultants in April 2009 – forming Shanghai Kenexa – to extend its RPO presence in the Chinese market. In the meantime, global RPO by partnership should be explored and entered into cautiously by providers and buyers alike.

Gary Bragar, Lead HRO Analyst, NelsonHall