Global Clients Join Analysts at Futurestep Showcase

Gary Bragar, HRO Research Director, NelsonHall

Congratulations to Futurestep on a job well done! The company brought several clients to the entire analyst event as well as Futurestep leaders from EMEA, APAC, including China and New Zealand, North America, LATAM, and all functional leaders.

Korn/Ferry

Parent company Korn/Ferry CEO Gary Burnison shared his perspectives on leadership including how employees want to be part of something where they can grow and be stimulated and what Korn/Ferry can do to better work with clients and help them make their business successful; it all boils down to its people! Korn/Ferry understands that companies focused on people outperform the market in terms of growth by linking its business strategy to its talent strategy.

Futurestep Offerings / Capability

Continuing its people focus, Futurestep CEO Byrne Mulrooney talked about a new career development tool called Forte. Career development is a top reason why employees stay with a company. Forte will be deployed throughout Futurestep starting with the top 100 people. Futurestep has also begun to market Forte globally to complement (but not replace) talent management platforms.

Regional and practice RPO leaders talked about how Futurestep makes a difference including its focus on:

• Understanding customer needs: per a recent OI RPO client satisfaction survey, Futurestep achieved top ranking in understanding client needs; I believe a leading factor is that a high percentage of Futurestep employees sit on site with clients
• Sourcing, assessments, talent communications/employer branding, contract management, technology, the recruitment process, vendor management, and metrics
• Its ~800 professionals in 20 countries organized by industry sectors with specialists including:
  • Life sciences
  • Financial services
  • Consumer/retail
  • Technology
  • Industrial
  • Government/public sector
• Building talent communities in all RPO contracts at no extra charge
• Using analytics with a dashboard to look across all RPO clients for benchmarking purposes.

Futurestep’s analytics, included for all new clients and to be added for existing clients by Q3, allow users to:

• View detailed data and trends including productivity, job placements by job type and gender, the top seven markets for the top seven functions, etc.
• Perform predictive analysis, e.g., top sources of hires.

Futurestep Clients

Of all analyst events I’ve been to this had the highest number of client attendees and case studies combined with presentations and dialogue around the table. Clients talked about why they outsourced, why Futurestep was chosen, benefits received to date, and what they would like to receive in the future. For example:

• An APAC client is going to use Futurestep for internal candidate hiring next
• Another client is looking to enhance its employment branding
• A North America client plans to expand globally with Futurestep including in EMEA
• A MNC client changed providers because it found Futurestep to be more of a consultant and partner.

Case studies provided examples of documented benefits obtained by clients including:

• Reduced agency hiring
• Cost savings
• Reduced time to hire, including time to deliver a short list of candidates
• Hiring manager satisfaction, etc.

Summary

I was impressed by the ability to speak directly with clients and Futurestep leaders across all regions and to learn about Futurestep’s capabilities.

From Public to Private – RPO Can Help – Part 1

According to data from the Office for National Statistics in the U.K., in 2010, public sector employment fell by 132,000 jobs with local government accounting for the largest proportion at 66,000.  In Q4 2010 alone, 45,000 public sector jobs were lost, including 24,000 in local government, 9,000 in central government, and 8,000 in Civil Service.

It is estimated that an additional 330,000 jobs will be lost in the public sector over the next four years.  While this is, of course, not good news, especially for those workers directly impacted, employment in the private sector increased by 77,000 jobs in Q4 2010.  Thus, the article last week by Hays is timely in that more needs to be done to support workers who are transitioning from the public sector to the private sector.

Hays and the London Chamber of Commerce and Industry (LCCI) partnered to publish a report called “The challenges of transition: from public to private.” Public and private sector employers were interviewed and in the report the LCCI and Hays identified six important steps to ensure successful transition including:

1. Encourage better understanding – Coaching, mentoring, and peer-support schemes for public sector workers prior to, during, and after transition to the private sector should be encouraged. These would increase the retention of new employees and also enable the private sector to identify the skills available in the public sector.
2. Incentivize the private sector – The government should subsidize recruitment and training costs for private sector employers who hire public sector employees. One option would be to adapt the Redundancy Action Scheme in Wales, which gives employers a contribution to salaries and training if they hire someone who has been made redundant.
3. Identify regional skill gaps – Local enterprise partnerships and recruiters should work with trade associations and professional membership bodies to identify the skill shortages that will be created by future job vacancies and look at how former public employees can fill those gaps.
4. Review on-boarding procedures – Private sector employers should review their onboarding (induction programs for new employees) in anticipation of recruiting people from the public sector to ensure successful transitions.
5. Enhance existing support programs – Public sector employers should be more proactive in their support for workers facing the prospect of redundancy with practical job-seeking and career planning programs specifically designed to equip them for the private sector.
6. Promote self-reliance and resourcefulness – Public sector workers should be encouraged to work with recruiting experts who understand both the private and public sector and can provide free advice on CVs, job applications, and interviews.

Public sector employees have many skills that are needed in the private sector.  However, to shift such a large proportion of workers will require specialist help.  That is where RPO providers come in. Although the loss of jobs in the public sector is more of a current U.K. phenomenon, RPO providers can help in several ways in all regions.  In NelsonHall’s recently published RPO market analysis report, the following trends are occurring:

• Clients are seeking vendors that can help with their talent strategy and workforce planning. For example, vendors such as Hays provide workforce planning as part of their service offering and have seen an increase in the use of this service during the economic recovery.  Other vendors in the U.K. providing this are Ochre House in its contract with SAS and Carlisle Managed Solutions in its contract with Luton Borough Council.  In the U.S., Adecco’s recent RPO contract with SI includes employment branding, research, and talent market mapping.
• Clients are looking for vendors that can provide consulting services around workforce planning, such as Fosters did in its contract with Futurestep, which includes hiring for positions in the U.K.  Part of the vendor selection criteria included the ability to provide value-added services beyond recruitment, including workforce planning.

But, there’s more to the story than just identifying skill gaps.  Take the weekend to think about it and we’ll pick this up again.

To be continued.

Gary Bragar, Lead HRO Analyst, NelsonHall

HRO Staffing – A Balancing Act

Fast and flexible scaling is one of the major benefits of HRO. Scaling up is a lot more fun than scaling down, but both are important, take time, and consume resources. One of the toughest challenges in HRO is maintaining staffing and margins at the same time through the ups and downs of client demand and the overall economy.

Recent times required painful and expensive downscaling as HRO client demand and employment levels dropped, reducing volumes and overall spend. Significant expenses were allocated for staff severance and consolidation of real estate. Even in periods of growth, merger and acquisition “savings” targets are based largely on staff downsizing to reduce overlap, followed by real estate consolidation. Whether a service provider is growing organically or via acquisition, or responding to reduced demand, maintaining appropriate staffing capability, capacity, and expense is critical.

HRO is slowly recovering with RPO leading the way while some areas are still waiting for their upturn including learning and MPHRO. New deals are occurring, renewals are going well, and existing clients are once again increasing scale and scope, at least at a modest level. All good and welcome news!

HRO service providers are confident enough to prepare for a return to growth and make select expansions. At the same time, they know they need to add client load with a minimum of new hiring as pricing pressure is still intense. And this is not even mentioning the need for maintaining an experienced and qualified staff to satisfy client employees and other end-users in the ever changing world of HR.

On the upside, clients are growing in sophistication and understanding of HR outsourcing options. While onshore delivery still leads, especially for voice, acceptance of offshoring has reached the expectation that HRO vendors should offer multi-shore delivery options. Nearshore options and the use of non-voice channels like chat allow leveraging more work to selected centers, increasing the need for and the value of a truly global service delivery network.

Recent HRO service provider expansions include:

• TriNet – Added three new U.S. offices
• CPH – Opened a new office in Sydney
• Futurestep – Added a global recruitment operations center in Houston
• NorthgateArinso – Invested in a new global HR delivery center in Hyderabad, India; opened offices in Russia, the Czech Republic, and Istanbul; partnering with ICAP Group in Greece
• Edvantage Group – New e-learning production center in Denmark.

Expanding the coverage of service locations helps avoid the war for talent and damaging attrition rates in the hottest spots as well as providing increased options for clients.

Buyers, do more than look for an SLA on turnover. Ask about the vendor’s current and future plans for managing staffing and service flexible coverage. Does your service provider show that they are at least as, or more, sophisticated as you are in workforce planning and management? They should be.

Linda Merritt, Research Director, HRO, NelsonHall

Top Topics at Last Week’s HRO Europe Summit

Although a working trip for me – as a learning session co-presenter with Raytheon, and on two panels, one on learning and one on RPO – I can easily say last week’s HRO Summit Europe got great marks in my book. About 40 percent of participants were buyers – a rare occurrence at conferences these days – with the balance being presenters, providers, analysts, press, researchers, staff and others. Discussions were lively and engaging, and…need I say anything about the beauty of Amsterdam, especially its architecture and canals?

My co-presentation with Raytheon, a learning outsourcing session called, “Bridging the Customer-Provider Divide,” was immediately followed by the learning panel, and witnessed buyer questions including: 1) What role does the retained HR learning organization play, including the role of the retained learning director, HR business partners and governance team?; 2) What lessons learned should a buyer that has just implemented a learning BPO contract incorporate?; 3) Why we are seeing more selective LBPO contracts and less full LBPO contracts?; and 4) What role does LBPO play in retaining knowledge as more employees will inevitably begin to retire? 

While tracks and presentations covered the HRO gamut, two of the major focuses were talent issues and RPO. Dr. Peter Cappelli, Director of the Center for Human Resources at the Wharton School of Business, opened the conference with a keynote entitled, “A Question of Talent.” He began by discussing that, in the 1950’s and 1960’s, 24 years of service with just one company was the average tenure per employee. At the time, companies invested heavily in continuous training, and believed in lateral and upward mobility. He then moved to the sobering stats of today’s workforce. Companies of course still want loyal employees, yet very few do little to give their employees in-turn loyalty, and only one in four of succession plans are utilized. The result is organizations spending thousands of dollars in employee development, only to lose them to competitors.

It almost feels as if organizations accept this as a looming cloud norm in today’s workforce environment. But I vehemently oppose that viewpoint. If you look at the pure financials alone, conservative estimates are that it costs one and a half times as much of an employee’s salary to replace that individual due to the cost of recruitment, development, learning curve, etc. How can that possibly be perceived as good business? I am feeling like an evangelist as I’ve written about it so many times in my blogs, but employee satisfaction and robust initiatives focused on talent retention are vital to competitive advantage and business growth.

One of the largest and most well attended tracks at the conference was on RPO. I was also a member of an RPO panel discussion entitled, “Deep Dive: Driving the Future State of RPO,” along with Alexander Mann Solutions, SourceRight Solutions and a professor from Lancaster University. One question posed by a buyer member in the audience was how RPO has evolved. Each panelist, of course, had its own answer. Mine, not surprisingly as an industry analyst, is that by providing what I call “value-added services” or what I consider to be the “richer RPO services,” you are a true end-to-end RPO provider. This means: 1) services on the front end in workforce planning, talent strategy and employment branding to ensure the right employees with staying power are hired; 2) services in the middle to manage internal recruiting/mobility; and 3) services on the back end, including robust onboarding and ongoing, bi-directional employee engagement.

There are other shifts occurring, including interest in global RPO, and I will cover more on that and learning outsourcing issues discussed at the conference in upcoming blogs!

Gary Bragar, Lead HRO Analyst, NelsonHall