Posted tagged ‘Kelly Services’

HRO and Innovation – a Changing Dynamic

May 14, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Last week the Human Resources Outsourcing Association’s (HROA) Publications & Practices Committee held a webinar on collaborative innovation in HRO with industry experts Lisa Johnson, director of recruiting, North America at Gate Gourmet, Rolf Kleiner, senior vice president and chief innovation officer at Kelly Services, Inc. and Dr. Greg McLaughlin, senior vice president of research & development for Global Targeting, Inc.

Understanding Innovation

Innovation has been a conundrum for years for HRO buyers and suppliers. There are many ways to define the word ‘innovation’ and that makes it hard to be sure each party is speaking the same language. All three experts agreed that open discussions between clients and service providers are needed to develop a mutual understanding of what innovation means in the context of the relationship and contract.

Greg walked us through aspects of innovation range from the conceptual “innovation is an experience”, to the practical “innovation begins with a need and ends with an outcome that creates a competitive advantage.”

Lisa looks for HRO suppliers with the spirit of innovation – backed by experience. Rolf looks for employees who “rise above the white noise” to work on special innovation projects that also support talent management.

Innovation and Continuous Improvement

The HROA Buyers Group’s survey on innovation and continuous improvement showed there is a commonality in basic definition and understanding developing across the community of buyers, service providers, and advisors. From the words of HRO community members:

  • Continuous improvement is an enhancement of a product, service or process that already exists:
    • Increased operational efficiency, improved user experience, ongoing, incremental, and step changes
    • Efficiency and effectiveness gains that “keep pace with the market”
  • Innovation is something new and different:
    • Cutting edge, transformational, precedent setting, competitive advantage, disruptive, and dramatic
    • A significant and often transformational change that, once introduced, “you wonder how you ever lived without it.”

The HRO community is in agreement that continuous improvement and innovation should be a collaborative effort between the HRO service provider and the client:

  • 92% of respondents agree that this collaborative effort is what should be happening between service provider and client, but only 59% see that as true now, with 40% of buyers and only 22% of providers agreeing that collaboration is actually happening in the marketplace right now
  • 77% agreed that innovation should be a collaborative effort among the parties, with agreement from 100% of advisors, 60% of HR practitioners, and 83% of providers.

 The Innovation Gaps

Significant gaps – and therefore opportunities – remain:

  • 75% of respondents said that continuous improvement is in the HRO contract
  • Only 42% agreed that innovation is included in the HRO contract.

In the next blog I will be getting practical about innovation in HRO.

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The Fertile Ground of HRO Innovation

February 9, 2012

Kelly Services’ recent announcement of its new Office of Innovation was fascinating as the company has long been a leader and innovator in the staffing services field. Go global, check. Provide MSP, check. Add RPO, check. Add consulting, check. Launch mobile access applications, check. Supply chain management, check. Its success shows in the results, with 2011 revenues totaling $5.6 billion, a 12% increase over 2010.

To find out more, I had a lively discussion with Kelly Services’ Senior Vice President and Chief Innovation Officer Rolf Kleiner. Basically, Kelly Services has already done so much that it is focusing on new solutions and capabilities to remain ahead of the competition and keep up with its many Fortune 500 clients.

According to Kleiner, the company has always done well with the “little I” incremental innovations that improve and enhance its current services and capabilities. Kelly Services is also looking for new “big I” innovations, those that can move the needle on results and set precedents within the company and in the marketplace. It was felt that by adding more visibility and vetting larger scale opportunities, the Office of Innovation will be able to identify, develop, and bring new innovations to market faster.

Kleiner plans to set up a “pull” process for ideas that includes many stakeholder groups including employees, clients, suppliers, and other industry experts. He likened the process to farming. It will take working with the communities of interest on an on-going collaborative basis to develop a harvest of ideas.

There were several items I found especially interesting. One is using this effort as an opportunity for talent management. Some proof of concept and development projects will be managed by the Office of Innovation and will provide highly visible opportunities for those assigned. When projects are managed outside of the normal lines of business, integration and communications will be maintained which brings reality to planning and brings market needs and innovation participation deep into the infrastructure and culture of Kelly Services.

Also, there is a very crisp vision for the strategic initiative and clear criteria for the kind of innovation opportunities that are being sought. There is solid alignment with the goals of the company, scale for sizing market opportunities, and an openness to solutions that could include internal developments, partnerships, supplier networks, etc.

Finally, the selection of Kleiner as head of the Office of Innovation is a strong indication of Kelly Services’ seriousness with this endeavor. He reports directly to the CEO and his previous assignment was as Senior Vice President and General Manager for the KellyOCG group, which provides consulting and outsourcing services. The pulse of the market, the voice of the customer, and the operational beat of the business are all fresh and fertile ground for Kleiner’s new challenge.

Our NelsonHall HRO team always advises clients to look for service providers that can meet today’s needs as well as offer partnership for meeting the needs of tomorrow. How is your HRO vendor focusing on the future?

Linda Merritt, Research Analyst, HRO, NelsonHall

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.

HRO Focuses on the Future

February 1, 2012

HRO buyers want service providers that meet today’s needs. Sophisticated buyers also want partners who can help manage changes over time as new service needs and technologies emerge. In a rapidly changing industry, it is not enough to know what customers are buying and what their competitors are currently doing today, each vendor must also invest in the future.

Here are three different ways service providers are focusing on the future:

  • Ÿ   Kelly Services recently opened an Office of Innovation and appointed a Senior Vice President and Chief Innovation Officer to define the next generation of workforce solutions for its global customer base. To meet the rapid rate of workplace changes, Kelly intends to accelerate the process of creating and launching new services. Kelly Services was one of the founders of the temporary services market and has evolved into providing a full suite of services including outsourcing and consulting. Given the company’s history of innovation, it makes sense for Kelly Services to see added strategic focus and investment in order to continue as a market-leading innovator of HRO services.
  • Ÿ   Infosys opened a new ‘Alternative Delivery Model’ HR-shared service center in a Tier 4 town in India. The company considers this as an important strategic move to differentiate its services and benefit clients by providing additional flexibility and competitiveness. Infosys is partnering with local suppliers, like Desicrew, to set up centers in Tier 3 and Tier 4 communities, creating a more sustainable model to access talent and provide long-term career opportunities in other areas of India. My NelsonHall HRO colleague, Gary Bragar, commented that by opening up a center in a Tier 4 city, Infosys can offer clients a reduced offshore price point, with the added promise of greater staff loyalty and lower attrition rates.
  • Ÿ   Lumesse, a provider of integrated talent management applications and services, completed its acquisition of SaaS-based learning provider Edvantage Group last October to add a full suite of learning services including learning management, content development and management, online content delivery, and custom course development. The combined business will have over 1,900 customers in 70 countries worldwide and around 2 million active users of its technology.

Just like buyers and vendors, in following news of the HRO community, we tend to focus more on the current activities and news of the day. Stopping periodically to review HRO business news over a several month period reveals trends and provides clues on service provider strategies for growth and the future.

Lumesse made a big acquisition to quickly add a major new service line. Infosys is adding cost-competitive capabilities for clients and the company should benefit from the reduced operating costs due to lower turnover in the outlying centers. Kelly Services is continuing its heritage of innovation to internally develop and speed to market new capabilities.

There is no single approach to preparing for the future, there are many ways to buy, build, or partner your way forward in HRO.

Linda Merritt, Research Analyst, HRO, NelsonHall

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.

RPO Continues Its Stride in Q2 2011

August 16, 2011

If you didn’t pay attention to the news and only looked at the recent financial results reported by staffing and RPO providers, you’d think that everything is fine with the global economy.  Let’s take a look at a few of the highlights including year-over-year revenue growth in Q2 2011 compared to Q2 2010 and some numbers of contracts awarded:

  • Talent2 (fiscal year 2011 for period ending June 30) +26%, RPO +57%
  • Kelly Services +16%, KellyOCG + 22.5%, and RPO ~+50%
  • Kenexa +59%, RPO + 45%
  • Manpower + 24%, ManpowerGroup Solutions +21% with 37 RPO deals closed in Q1 and 31 new RPO contracts awarded in Q2
  • Pinstripe won or extended 15 RPO contracts in H1 (revenue not reported)
  • SeatonCorp +20%, PeopleScout +95% with 9 new RPO contracts signed.

Why was growth and the number of contracts awarded so high when the sad reality of the news headlines is that there are debt problems, slowdown in GDP growth, and a continually high unemployment rate?   Well, that is precisely why!  There are several reasons including:

  • Organizations who have had to downsize are turning to RPO because they don’t want to invest in hiring recruiters and associated staff only to potentially downsize again (i.e., it’s better to outsource recruitment to a vendor that can provide variable pricing and who can scale up or down quicker than the client)
  • Obtaining  better quality of candidates and quality of hire from an outsourcing specialist
  • Allowing HR to work as a strategic partner and in-conjunction with the RPO vendor to engage employees and retain talent (instead of focusing on hiring)
  • Wanting to get out of the technology management business, which isn’t usually a client’s core competency
  • Reducing time to hire, improving hiring manager satisfaction, etc.

In addition to revenue growth from new contracts and renewals, growth comes from existing clients that have increased their hiring volumes. Other sources of growth are from contracts won in prior quarters that take several months before fully ramping up.

RPO does not look like it is going to slow down anytime soon.  In NelsonHall’s HR Outsourcing Confidence Index, published in June, pipeline growth reported in the prior quarter was higher for RPO than all of the other HRO services.

At NelsonHall, we’ve seen an increase from buyers wanting to know who we see as the leading RPO providers by country and region. Buyers, are you evaluating outsourcing recruitment, if you haven’t done so already?

Gary Bragar,  HR Outsourcing Research Director, NelsonHall

RPO Growth Confirmed and Back on Track

February 14, 2011

Since my January 12 blog, All Signs a Go for RPO to Grow, I think it’s safe to say we are back on track with many providers stating that volumes are back to pre-recession levels.  Vendors including Kelly, SFN, Manpower, SeatonCorp, Kenexa, and Hays all reported double-digit total company revenues for the quarter ending December 31, 2010 (Talent2 were for the six months ending December 31, 2010).  RPO revenues were not reported separately, but several vendors were able to share that RPO revenues grew 50% – 70%.

That’s certainly terrific evidence that hiring volumes from existing clients has increased and that many new RPO clients were added in 2010 by all the vendors.  In Q4 announced RPO contracts included:

  • Manpower’s global contract with Rio Tinto
  • Hays’ contract with American Express in Europe
  • Futurestep’s global contract by Cummins, Inc.
  • The Talent2 and Allegis Services Group Alliance global contract with an unnamed financial services company
  • PeopleScout’s contract extension by Waste Management in the U.S.
  • Alexander Mann Solutions’ contract with Santander in the U.K.

For evidence of an increase in demand for job movement and hiring, I point to SFN’s Employee Confidence Index, which showed the highest employee confidence in nearly a year.  Also, four in ten workers stated that they are likely to look for a new job in the next 12 months.

What do I think?  Having recently completed twenty-seven interviews for my next global RPO market analysis (to be released within the next few weeks), I can say that 2011 will be another strong year of growth for the RPO industry.  It will be tough, but not impossible, to outdo 2010.  The report will include a revenue forecast by geography among numerous other data.

I’m bullish for several reasons including the need for scalability, and I also think a new phenomenon, expected a few years ago, will finally begin to occur in the latter part of 2011 and will ramp up over the next few years.  Baby boomers will finally begin to retire as 401(k) plans have been nicely recovering to pre-recession levels, which will increase their confidence and financial security.  This will create a huge shortage of talent in the workforce.  Employers should be wise to make sure they are doing succession planning and preparing for how they will do knowledge transfer before employees leave. This provides a great opening for staffing assistance and for all the ancillary services around workforce planning and talent management. The opportunity is coming for RPO to move up the value chain from an operational resource for staffing and recruiting to a strategic consulting partner in global talent management.

Gary Bragar, Lead HRO Analyst, NelsonHall

Q4 2010 HRO Ends on an Up Note

January 5, 2011

While we wait to see 2010’s full year HRO financial results, we can review activities in the fourth quarter.  HRO growth is occurring across most industry segments, with the public sector lagging.  The fastest growth rates are still outside of the mature economies in North America, U.K., and Europe for the global providers, although the U.S. is starting to rebound.

Benefits administration showed a nice level of new business activity, even in the mature areas.  Congratulations to Fidelity for the competitive wins of AT&T for both defined contributions and defined benefits and Office Depot for broad benefits administration services.  There were also notable benefits wins by Mercer, Aon Hewitt, Ceridian and Xafinity.  Meanwhile, we are still waiting for a major jump start in learning and multi-process HRO contracts.

The volume of new business and growth with existing clients will continue to rise in 2011, but the pricing environment will not likely ease much in 2011 as buyers remain price sensitive.  Maintaining efficiency will be critical in order to win with both clients and investors.  For example, The Right Thing recently introduced dedicated Solution Teams to manage the transition from sales and implementation into operations. Managing implementation was a costly problem for service providers and customers in multi-process HRO for years, so it is good to see the lessons learned extending to other areas of HRO.

Preparing for further growth also continues in partnerships, mergers, and acquisitions.  Aon Hewitt is expanding its benefits capabilities in Scotland via a pension services partnership with Babcock International Group.  Towers Watson is jumping back into the benefits fray with a partnership with Wage Works and the acquisition of Aliquant, a mid-range benefits service provider.

Fourth quarter good news stories continued with revenues up in most areas of HRO.  Several HR service providers reported a 4% to 6% increase in revenues including ADP Employer Services up 6%, Aon Consulting up 4%, and Mercer up 6%. RPO and staffing companies continued recovering at a rapid pace, leading the way out of the downturn just as they led the way into it.  Revenues for Manpower were up 19% and The Right Thing’s revenues were up 30%.  GP Strategies, Kelly, and Kenexa all had increased revenues in the mid-20% range.

Operating margins are remaining consistent as the HRO industry adds back employees indicating they will be able to manage growth while keeping an eye on hard-won profitability.  Investments in technology and global service delivery capabilities will now be bearing fruit and should also support margin growth.

Happy New Year – may 2011 be a great year for us all in the HRO community in every way!

Linda Merritt, Research Director, HRO, NelsonHall

HRO is Never Static or Still

October 12, 2010

During every stage of the economic lifecycle, HRO service providers are doing something to either anticipate or react to changes in the marketplace and client needs while simultaneously striving to achieve strategic goals. This week I wrap-up NelsonHall’s review of 3Q 2010 HRO activity with a look at what’s new in offerings, partnerships and acquisitions.

One way to quickly expand a service line or fill-in gaps is to partner with a provider that is already offering the service or operating in the target geography. Last quarter was most active for RPO. Those announcing new RPO-related partnerships included Alexander Mann Solutions (AMS), Kelly Services, Kenexa, Pinstripe and The RightThing. Notably, two of the partnerships were to continue to expand RPO services internationally in the Asia Pacific region, with AMS adding reach into India and Kelly in Vietnam.

A more committed path to rounding out or adding new services is to buy it. Making small to large acquisitions is another constant in the world of HRO as players define and redefine their portfolios. In addition to the close of the three game changing major acquisitions in the benefits community (ADP/Workscape, ACS/ExcellerateHRO, and Aon/Hewitt), other folks were also making deals. For example, Mercer acquired IPA and ORC, and Xafinity bought PwC’s pension consulting and administration business in the U.K. Further, Randstad continued its acquisitive ways, this time outside of Europe, with its planned acquisition of FujiStaff in Japan.

Health and welfare (H&W) outsourcing used to be limited to the U.S., and that will remain the major market. But no matter how health insurance and care is funded, H&W concerns are growing globally. In the U.S., Fidelity is partnering with RedBrick Health to offer its clients wellness services, and in the U.K., Capita is acquiring FirstAssist Services to add to its health service offerings.

Finally, if you cannot find what you want in the marketplace, you can build or expand it yourself. Ceridian wants to truly offer a new line of BPO services and has announced it is ready to consult, build and manage the health insurance exchanges that some states will need in a couple of years as part of the U.S. health care reform program. 

Most announcements of “new offerings” are incremental additions. For example, Hewitt is adding Micromedex medical reference information to its advocacy service offering. You can also simply package what you have and call it new. Aditro has done that with a standardized set of payroll services that include preset services levels and implementation process to make a lower cost bundled option.

Yet another variation blends supply chain partnerships with building it yourself to make a new service offering. Take a SaaS HR service from Oracle or Sap and wrap in value added enhancements and services additions and, voila, you have a new HRO service platform. Mercer introduced its Human Capital Direct that uses PeopleClick Authoria’s talent management suite as the core, surrounded by Mercer’s consulting, tools and methodologies such as decision support, competency models and analytics.

In HRO, somebody is always doing something. What have you done lately?

Linda Merritt, Research Director, HRO, NelsonHall