Does HRO Help or Hurt in Achieving Human Capital Leadership?

Can employers be recognized as leadership development advocates and a great place to work and still take advantage of HRO services? Yes—and recent “best companies” announcements provide plenty of examples.

Fortune’s annual 100 Best Companies to Work For list includes a number of companies known to use HRO services. RPO examples include: American Express (Hays RPO), Edward Jones and Intuit (Manpower Group), Microsoft and Novartis (Alexander Mann Solutions), and SAS and Telefonica (Ochre House). Accenture, which provides HRO services, is on the list as an employer.

HRO clients are also among the recognized companies in the 2011 Top Companies for Leaders, another recent Fortune study in association with Aon Hewitt. PepsiCo (Aon Hewitt) and Unilever (Accenture, IBM) are among the multinationals taking the lead in developing leaders. Again we see RPO as a common talent management service selection; Eli Lily and Novartis AG (The Right Thing, An ADP Company), GE and Siemens AG (KellyOCG), and Whirlpool (Kenexa). IBM, another major HRO player, is recognized, as is Wipro. Accenture is noted on the U.S. list and Infosys is on the Asia Pacific list. ADP is included in the 2012 list of 10 Best  Companies for Leaders rankings by the Chief Executive.

Business Today has just released its 11th annual “Best Companies to Work for” in India and top companies include HRO providers such as Accenture, IBM, Infosys, Wipro, and TCS. Honeywell International (SourceRight Solutions) also made the list and is on the U.S. list for Leaders as well.

The lists go on and on and you will find companies that use HRO as well as HRO providers among the best of the best. You can be a pioneer in leadership development and use HRO in critical talent management areas. You can achieve greatness in any region of the world. You can even look to some of the HRO providers to share their own expertise as a “best company” in the human capital leadership arena.

Will HRO automatically make you the best company? No. However, HRO will not slow you down and may even provide a committed partner in accelerating your success.

Linda Merritt, Research Analyst, HRO, NelsonHall

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Does HRO Stifle Innovation?

A question since the earliest days of HRO has been, what about innovation? We all want cake and want to eat it too, and that’s what buyers have always wanted: lower costs, improved performance, and innovation in HR business process management. Even when a deal was structured for the lowest cost pricing and standard SLA performance, clients soon asked “where’s the innovation?”

Knowing if a service provider is a market leader in HRO innovation is important to some clients, especially those companies that use innovation as a competitive advantage. Perhaps an equally important question is can an innovative company risk using HRO and will it help or hurt?

The Forbes List of The World’s Most Innovative Companies may help us determine if HRO providers can be innovative and if HRO is being used by innovative companies. The list is based on an “innovation premium” which is defined as “the premium the stock market gives a company because investors expect it to launch new offerings and enter new markets that will generate even bigger income streams.”

First, can HRO providers be innovative? Well, ADP (#87) is on the list of the top 100 that includes the likes of Apple, Google, Amazon, and Starbucks. Infosys (#15) is on the list and it also offers HRO services. Congratulations to both ADP and Infosys!

Next, can innovative companies risk using HRO? Yes, they can and they do. Here are some of the top 100 companies on the list known to use HRO and their vendor partners. Notable is IBM HRO with at least three clients on the list: P&G, Kraft, and Avon Products. IBM HRO focuses on large market HRO and clearly can be a valued partner in HR transformation with leading innovators.  Other partnerships include Unilever with Accenture; KAO with ADP; Kellogg and PepsiCo with Aon Hewitt; and Agilent with NorthgateArinso. RPO providers are also represented with the triple threat of The RightThing providing RPO support for Amazon, Campbell Soup, and Praxair. I am sure there are many more connections to HRO among the top 100. Congratulations to all, let’s have a piece of cake in their honor!

According to the newly published “The Innovator’s DNA,” the 3P framework for innovation is people, processes, and philosophies that foster innovation as everyone’s job and there are key leadership skills and behaviors than can be developed to weave innovation DNA into the company. Of course HRO, even at its most innovative, cannot make a client an innovator. That must come from within. HRO can support each element of the framework for innovation and become an enabling partner to clients that are innovative or those that are striving to be.

Do you have an innovation premium? Is your HRO service provider capable of enhancing your journey of innovation?

Linda Merritt, Research Analyst, HRO, NelsonHall