ADP’s Meeting of the Minds, not just an Ordinary Event

I attended ADP’s Meeting of the Minds (ADP MOTM) that happened last week March 11 to 14 in Dallas. This was my first time attending, and I didn’t quite know what to expect until I arrived—well, how about ~900 enthusiastic ADP clients. This is an annual event of which ~30% of attendees were first timers.

Sure, there were a few ADP presentations and demonstrations on ADP’s latest products and services, but many of the sessions were not conducted by ADP and were instead facilitated by HR practitioners and clients. Professional development would be a good way to summarize it. As they say, everything is bigger in Texas—how about ~170 sessions that you could attend to learn about everything from Healthcare Reform to Payroll taxes, to RPO, to best practices across a number of services, and functions including shared services, recruiting, change management, etc. There were also hands-on training sessions, of which I attended Learning, part of ADP’s Talent Management.

I could write my entire blog talking about the keynote speaker, Emmitt Smith, and the fun social events, but I’ll shift gears to talk about HRO to keep with our blog focus.

To begin, it’s important to share ADP’s three priorities, as stated by CEO Carlos Rodriguez, that are important to advance ADP as a:

• Technical leader
• Service leader
• Global leader.

Regina Lee, president of ADP’s national and major accounts, GlobalView, and ADP Canada, spoke about four key areas of investments that were made by ADP:

• Integrated Human Capital Management: including Vantage HCM and Workforce Now
• Talent Management: including the integration of performance management, succession planning, and learning. ADP’s talent management platform has over 100 clients
• Benefits Administration and Healthcare Management: having acquired Workscape in 2010 to strengthen ADP’s benefits administration capability, in addition to Workscape’s talent management and compensation capability. On March 8, ADP announced it has entered into an agreement to acquire SHPS Human Resource Solutions (rationale is below)
• HR BPO, including the acquitisition of The RightThing in October 2011 (further details below).

I’ll finish my blog focusing on Benefits Administration and RPO.

The Workscape acquisition has proven to be a success, with ADP adding ~100 additional benefits clients annually. SHPS will further strengthen ADP’s benefits administration offering with capabilities including:

• Eligibility and enrollment
• Spending accounts administration
• COBRA administration
• Absence management
• Benefits advocacy.

SHPS will strengthen ADP’s leave administration and reimbursement account administration capabilities, including HSAs and HRAs, which have become increasingly important as more employers offer high deductible benefits plans to their employees. You can read about this in my recent blog.

The RightThing – coming off its best year in 2011 – was ranked by NelsonHall in its 2011 RPO report as the top U.S. RPO provider in terms of North American revenue, bringing in ~80 clients. Prior to the acquisition, ADP provided recruitment administration and technology, but it is now a full end-to-end RPO services provider. Expect an RPO contract announcement soon and much more to come as RPO will continue to be provided as a standalone service and now also in combination with ADP’s multi-process HRO services.

Gary Bragar, HRO Research Director, NelsonHall

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Uncertainty as a Competitive Advantage for Benefits Administration Outsourcing

This week let’s explore how benefits administration (BA) can create a competitive advantage from uncertainty.  A new Institute for Corporate Productivity (i4cp) study, The State of Employee Health Care Benefits, indicates that many organizations are still in wait-and-see mode due to health care reform uncertainty and are delaying any major overhauls of health care benefits into 2012. In the meantime, high-performance organizations are differentiating themselves in the talent marketplace by:

• Emphasizing literacy in health, health care terminology, and health care plans (75%) relative to low-performing organizations (45%)
• Using incentives more than low performing organizations, especially for biometric screenings and health assessments
• Using a broader range of cost-sharing strategies than low performing organizations.

An interesting data point: more high performing organizations report that they target offering competitive benefits (64%), while many low performers target “better than” competitive benefits to effectively compete for talent (43%). High performance companies offer a wider range of common benefits like medical, vision and dental, and provide benefits for part-time employees at almost twice the rate of lower performers. All surveyed organizations continue to increase approaches for employee cost-sharing.

Benefits administration is a win-win HRO opportunity zone for client-vendor partnerships that offer great service at competitive prices while working together to optimize total benefit spend. Mercer just issued a summary of new business for 1H 2011. A significant portion of the 15 new BA contracts, including 10 large market clients, are for added service lines with existing clients. Mercer’s HRO revenues are also up 20% year-over-year, based on a similar volume of new business in 1H 2010.

Buyers, look for a BA service provider that also offers multi-channel employee communication excellence beyond the annual enrollment window. According to the i4cp, “quality of communication will likely be the arbiter of whether or not a new approach to employee health care is embraced by employees.”

Equally important is finding a BA vendor with the capability to gather and analyze evidence-based data that will help you manage the dynamic balance between employer cost, talent management, and employee benefit. Finding a strategy that balances costs with effectiveness is a moving target. Gaining employee cooperation in containing health care costs is extremely difficult for all companies, high performing or not. For example, a poorly designed and communicated incentive can disincent the desired behavior.

Providers, there will always be clients looking for low cost commodity-level BA. There will also be high-performance companies, and those who want to be, willing to lead the way with the right vendor partner in actively managing benefits programs way beyond basic administration. Do you take into account prospect and client market position, strategy, and culture when shaping offers? Do you vary service packages to create pricing offers based on client segments? How effectively are you leveraging your competitive advantages in employee communications that increase desired behaviors and do you have the empirical evidence to prove it?

Linda Merritt, Research Analyst, HRO, NelsonHall