Posted tagged ‘HRO change management’

The Forgotten HRO Capabilities

September 14, 2010

It is no longer enough to just talk about HRO lowering administrative costs and burdens.  The lead focus is now on how HRO and a particular vendor’s services will help make the buyer’s business better and HR more effective.

As soon as a business grows in size, it grows in complexity. And HR services are, in and of themselves, unexpectedly complex and dynamic – a lesson learned the hard and costly way by many a client and HRO provider. Thus, in addition to defining the service solutions and holding the pricing discussions, it is important to bring to light both the provider’s and the buyer’s capabilities to manage complexity. These deeper capabilities can make or break long-term results achievements, and make the partnership a binding one or a bonding one.

Most HR organizations are networks of services, some that cross internal support services organizational lines and others that involve multiple suppliers and start and end in the business units. Even with a new multi-process HR outsourcing (MPHRO) engagement, it is unlikely that all existing suppliers and technologies will be displaced. And a best-of-breed approach can actually enlarge the network, requiring the client to manage the services integration and vendors, or separately pay one provider for the integration and vendor management.

Complexity management capabilities such as governance, program management, project management, change management and supply chain management become critical enablers. No matter how latest and greatest the technology, or how compelling the pricing, it must all work in the ever changing world of HR and for businesses still facing uncertainty.

Let’s focus on one of the sometimes forgotten HRP capabilities – supply chain management. Vendor management is often listed somewhere in the benefits statements or addressed briefly in the RFP. The level of integration and coordination needed across a complex network of internal and external suppliers is major and can be a real bottleneck. Every interface is a service break point; every vendor requires communications, coordination and contracts. Just ask Boeing, which for years has been struggling with delays and burdened by hundreds of millions of dollars in cost overruns due to a complex and uncontrolled supply chain for its largest new planes.

What happens when changes, expected or unexpected, that cross boundaries of the HR network occur? For example, a change to the benefits plans requires changes to multiple systems including payroll, IT, the network of benefits providers, knowledge databases, etc. Who will handle what? What tools and governance systems will be used? Does the provider’s approach sound reactive, or proactive?

When I was with AT&T as contract manager for a large MPHRO deal, I remember the unexpected benefit of our vendor actually managing other vendors and suppliers, and coordinating with our internal IT, treasury and security departments. AT&T HR and my group were deeply involved as well, and together we were able to successfully implement more projects and changes on time and within our budget than ever before.

Buyers, really dig for complexity management proof points. Providers, showcase your competitive advantages!

Linda Merritt, Research Director, HRO, NelsonHall

Knowing the HR Dance and your HRO Dance Partner

October 20, 2009

As an analyst, as I conduct my market analysis of multi-process HRO – which will be completed in November – one of the questions I am asking service providers is how buyer expectations are changing.

And we should all be asking how HR as a profession is changing.

HR is under pressure on every front. It is struggling with reassessment and repositioning of its role within the corporation. It is scrambling to address rapidly changing business needs in an increasingly global environment amid shifting corporate structures and a heightened surround of regulatory complexity. At the same time, it has had to reduce its own operating costs and impact overall spend and business results.

How do you meet the needs of an organization driven to address short-term issues while it faces dramatic transformation challenges that do and will impact the future of the enterprise’s capability to compete? How does HR perceive its own issues, and how does that align with realistic expectations for outsourcing?

Check out Hewitt’s Managing HR on a Global Scale. This 2009 HR survey of 85 global organizations highlights several key challenges facing HR which also impact outsourcing opportunities.  

For example, as an advisor or provider I would want to note how HR is sorting itself out to be more global. HR is organizationally balancing when to be local (by country), regional and global. Per the Hewitt survey:

•  30 percent described their HR model as global with CoEs and HR operation groups that address policies, designs and delivery on a global level

•  43 percent indicated they are two-tier, with some accountabilities at corporate and others at the divisional or regional level

•  27 percent were still in some other form, including in traditional functional models with duplication by division or region

Getting buy-in from the key decision makers inside and outside of HR has always been key. It is also important to understand the organization’s capability to manage its portion of the transition.

Think about what services are being considered and where are they managed today. If this is going to be an organization’s first major effort to move key HR services from local control and many legacy systems/vendors to a global control and an outsourced platform in a company that is still largely managed by division and region, service providers and advisors alike know what they are getting themselves into! But the potential client may not be as aware of the level of change management for which it will be responsible. If an advisor is involved in the deal, it can be very helpful in educating new buyers on realistic expectations for outsourcing and in building an understanding of their role in success. No advisor? Be ready to lead some basic HRO dancing lessons.

Know the HR profession, its issues and pressures – know the dance. Know the specific client and their issues and pressures – know the dancer. Assessment of potential client readiness is of increasing importance in determining which HR prospects to pursue; it is also key to structuring deals that deliver and meet the goals of both parties.

Linda Merritt, Research Director, HRO, NelsonHall