Customer Service More Important than Ever – Even for HRO

Spherion recently released its new customer service survey results conducted by Monster.  Results show that nearly three quarters of consumers make a purchasing decision based on customer service, second only to quality and price.  That’s huge!  As a former quality trainer and college adjunct, I’ve been studying customer service for quite some time.  According to prior research by TARP, Technical Assistance Research Program, the figure was close to two-thirds, which indicates that the demand for better customer service has gotten even stronger.

Consumers are fed up with the lack of good customer service and thanks to more service provider competition, buyers don’t have to put up with bad service.  Consumers can simply go elsewhere.  Granted when it comes to HRO, the switch is not as easy, since it cannot be done by each individual client employee, but collectively, they can make their voices heard through internal communications that the provider may not be aware of immediately (which is why SLA’s alone don’t always tell the whole story).  Here are just a few things HRO service providers should do to keep clients happy at the individual participant level; otherwise this would be a white paper, not a blog!

• Ensure polite, courteous, and responsive service representatives in everything you do, e.g. Are you as responsive with a tier 2 inquiry or problem that needs the help of an SME as you are tier 1?
• Be easily accessible, e.g. when providing an 800 number for clients for particular service questions, if there are several prompts that must be selected, why not include the prompts to select in the original communication.  Test your own IVR as a user.
• Have user-friendly technology.  For websites that may be infrequently used, e.g. checking pension cash balance or 401(k), is there an easy way to check and reset passwords for users that can’t remember?  Are you providing simple instructions for infrequent transactions, e.g. annual enrollment?  Also, web information changes over time, so periodically check for broken links and user friendliness.

In my current RPO market research study, a track record of delivering quality customer service, including obtaining client references, is one of the top vendor selection criteria, as it was in my recently published learning BPO study.  The Spherion survey is a reminder that customers will not be shy about sharing bad experiences.  It’s best to be certain you know how your client’s employees really feel.

The good news is that HRO providers are, for the most part, providing a high level of service.  For example, SourceRight Solutions, SFN Group’s RPO unit, was the top enterprise RPO provider in HRO Today’s 2010 RPO Bakers Dozen and it was rated number one in quality of services by provider clients.  SourceRight Solutions was also only one of four companies to increase the satisfaction of existing customers while growing its customer base (the others included Kenexa, Pinstripe and AMS).  I tip my hat to SFN Group for conducting the survey and for walking the talk!

Gary Bragar, Lead HRO Analyst, NelsonHall

Employee Satisfaction is Tanking…Can HRO Help?

Per the results of the most recent Spherion Staffing Services Snapshot survey, released yesterday, employee satisfaction in the U.S. is bleak. In fact, the subhead of the press release stated only five percent of those surveyed – a sample of 896 full-time and part-time working adults aged 20 and older – enjoy what they’re doing and wouldn’t consider another job. More sobering survey stats:

• 62 percent feel less secure about their job compared to a year ago

• 56 percent did not take a vacation in the past year, and of the 44 percent who did, one-third indicated they did not completely disconnect from their job responsibilities

• 30 percent worked from home the last time they called in sick

• 57 percent said their company does not help/support their effort to have a good work/life balance

• 95 percent would consider looking for a new job in the future or are actively looking, regardless of whether or not they enjoy their job

• 53 percent have had to assume additional responsibilities or workload during the recession due to co-worker layoffs, and 93 percent of those who had to assume additional responsibilities did not receive additional compensation

• 57 percent who have taken on additional responsibilities feel burdened and overworked, and another 53 percent said their job or workload affects their health in a negative manner

With this, borrowing the famous and oh-so understated line, “Houston, we have a problem” from the movie Apollo 13, seems appropriate. In this case, “Houston” is employers, senior managers and first line supervisors. And the problem – as I’ve written about and as we all know – is that lacking an engaged, committed, compensated, rewarded, respected and energized workforce, morale decreases, productivity plummets and highly talented employees jump ship. This is all too obviously a losing proposition for companies.

So what should employers do, and how can outsourcing help? While there are many process areas to cite, I’ll touch on just two here.

First, I’m currently working on a learning BPO study, and was pleased to hear from several companies I’ve interviewed thus far that they are providing performance management training to managers and senior leaders to develop, reward and retain employees.

Second, the results of a Mercer study released yesterday found that 30 percent of the respondents – headquarters representatives of 114 multinational organizations from a wide range of industries – are increasing employee involvement in design of their organizations’ benefits plans. It’s a big move in the right direction – even though only 30 percent of respondents are currently doing so – to include employees in benefits-related decisions and options, whether for health insurance, health-related assistance options, defined benefits plans, defined contribution plans, etc.

Benefits outsourcing providers are not only able to help senior leaders determine the most advantageous benefits plans for their company and their employees, with eyes on both cost-effective options and employee retention, but also evaluate and administer the decided-upon plans.

My call to senior HR executives? Don’t wait…engage your employees! And if you’re outsourcing or considering doing so, engage your provider in helping make the right decisions for your employees. I still believe that employee satisfaction = customer satisfaction = profitability.

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall

HRO Provider Acquisitions on the Rise

Just five weeks into 2010 and seven HRO provider acquisitions have already been announced or closed! Two were in staffing services, two in payroll, two in learning and one in relocation, so a nice mix across HRO processes. But at a rate that comes out to more than one per week thus far in 2010, why are we seeing this level of acquisition activity? I attribute it to any combination of five things HRO providers are trying to achieve:

• Strengthen their service offerings

• Enter/expand into new industries, market sizes and geographies

• Improve their technology/technological platforms and capabilities

• Obtain new clients

• Improve their financial results through revenue growth and cost savings due to synergies

Let’s take a quick look at three acquisition announcements/closings that happened just this week which support my above assertions:

Manpower is acquiring COMSYS to strengthen its IT staffing capablities, which is COMSYS’ predominant business and will bring Manpower $650 million in revenue. Additionally, COMSYS’ RPO division, TAPFIN, which focuses on the mid-market, will help strengthen Manpower’s RPO business in the U.S.

NorthgateArinso acquired Neller Payroll in Australia to support its growth strategy in Australasia. The acquisition includes Neller’s Preceda OnDemand SaaS payroll solution and the Neller Employer Services (NES) subsidiary which provides outsourced payroll services. Neller’s more than 1,000 clients will also add significantly to NorthgateArinso’s existing Asia Pacific client base.

Spherion acquired Tatum to strengthen CFO executive staffing services, increasing Spherion’s higher margin professional services business. Spherion anticipates approximately $6 million cost savings in synergies.

So what does this level of acquisition activity signal for the HRO industry and the remainder of 2010?  You got it…more acquisitions driven by:

• Increased demand for multi-country/global payroll, RPO and other services as buyer organizations continue to seek to reduce the number of vendors they work with and standardize procesess and technology

• The need to better service exisiting clients and obtain new clients, with the end result of better financial performance

Even when the economy recovers, I belive M&A activity will continue to occur, as it did before the recession, as that is the nature of all business – to continually try and better service customers and improve financial performance.

Gary Bragar, Lead HRO Analyst, NelsonHall

Tired of Reading the HRO Tea Leaves? Then Let’s Go Back to School

Everywhere we turn the analysts, advisors and outsourcing media are trying to read the tea leaves of the 2Q and 1H09 results on anything and everything. What are the annual contract values of new and renewal HRO deals signed? Who is entering, exiting and partnering? NelsonHall’s July 2009 HRO Confidence Index showed markedly more confidence in the prospects for HR outsourcing for the coming year in Q2 2009 than in Q1 2009. Can we believe – and we all do want to believe! – the uptick in perception survey trends in provider pipelines and anticipated buyer readiness to expand hiring/training/add-your-service here areas? Less bad is good, right?

The “when” of the recovery is, of course, critical to all of us in the HR outsourcing community, as well to all in the larger global economy. The “what” and “how” are also important.

In its July 20 blog, IT services company Levi9 commented, “In striving to cut costs and derive more value from outsourcing contracts companies may forget all the important lessons they have learned rushing into ambiguous arrangements chasing short-term, and sometimes elusive benefits.” While Levi9 was talking IT, its statement is universal and reflective of the first generations of large scale HRO. How will we approach the opportunity for launching third generation HRO?

As it is almost return to school time, we should all be checking what lessons we have learned and what changes we have made. How will the HR outsourcing community be ready for expansion when it occurs? By using the three HRO R’s: Reviewing, Revising and Relaunching!

Reviewing

Every aspect of the HRO value proposition needs to have been vetted, strategically analyzed and selective investment (and divestment?) decisions made to put growth on a flexible, scalable, sustainable footing that is easier and less expense to buy, implement and operate while offering greater differentiated competitive advantage, and, let us not forget, margins.

Revising

I can offer one piece of advice that requires no tea leaves, but does take a lot of homework. Once you have developed your strategy, rigorously conduct your due diligence, run the numbers, map out all elements of your service delivery and technology infrastructure, and stringently assess capabilities, risks and trade-offs. In the SAP white paper, “Strategic Levers to Optimize Your HR Processes,” the recommended HR client assessments could be readily adapted and applied to other portfolios, including HR service providers.

Relaunching

We have recently seen RPO partnerships expand geographic and service footprints for each partner, and changes in direction by Fidelity and Hewitt, away from certain large scale multi-process HRO business. And Spherion’s RPO division, newly branded as SourceRight, is an example of taking something that is working well and leveraging it even more strongly as a single process option. All this indicates that back to school basic analyses are being played out.

How are you doing with the three HRO R’s?

Linda Merritt, Research Director, HRO, NelsonHall

RPO – A Surfboard for the Next Hiring Wave

Today’s corporations are facing a good news/bad news scenario. On the upside, the devastating economic rip currents of the past year and a half appear to be retreating a bit, which is driving employers to plan for at least minimal hiring growth. On the downside, many in-house recruiting departments have been nearly annihilated by the tsunami-force recession, leaving them unprepared to handle the anticipated hiring upturn, albeit likely selective, slow and sporadic.

With this gap in talent acquisition resources, rebuilding lost internal resources or excessive use of head hunters will not be timely or cost effective. But I believe RPO can help companies avoid getting stuck in the hiring undertow:

•  RPO providers can scale up quickly to meet demand and scale down when hiring softens

•  While our May 2009 RPO market analysis predicts only a 3.5 percent growth rate in 2009, we forecast an uptick to 12 percent from 2010 through 2013 due to increases in the health of the economy

•  As presented in my July 1 blog, RPO can reduce recruiting/hiring costs by 24 percent on average, and time-to-hire by an average of 43 percent

•  There are hundreds, even thousands, of candidates today for every single open position, and skimmed internal recruiting departments likely don’t have the resources or technology to vet and respond to every applicant in a timely manner. Vetting is self-obvious, and as noted in my June 24 blog, responding to all applicants is a critical component of solid employment branding

Some HRO vendors are carefully positioning themselves to be ready for the next wave, wherever the surf rises. And my conversations with RPO providers, supported by our recently published Outsourcing Confidence Index, show an increase in RPO provider pipelines for new prospective clients.

On Thursday August 6 at 12 noon eastern time, I’ll be presenting my recent RPO market analysis findings, honing in on the key question, “Is now the time for RPO?”  Afterward, Rebecca Callahan, Senior Vice President of Spherion’s RPO division, SourceRight Solutions, Frank Casale, CEO of the Outsourcing Institute and I will engage in a panel discussion to address this top-of-mind topic for buy- and sell-side HR executives. To register for this free webinar, please go to:

https://www2.gotomeeting.com/register/

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