Category Archives: outsourcing

Stop Buying Into Boring HR-Tech Hype; Focus More on Trust

I was so struck by the simplicity of a recent post on the Horses for Sources website, run by IT and outsourcing expert Phil Fersht and his 477607425 -- boredteam of global-sourcing analysts, that I was compelled to share it here.

The title of the post, “Why we need to stop boring ourselves to death and focus on what really matters: building TRUST,” kind of says it all.

The gist of it is that buyers of technology services want little more than to turn a whole lot more control over to their service providers; this, it points out, is their No. 1 choice for a course of action to “reset these stale services relationships to drive more value beyond labor arbitrage and standard operational delivery.”

And this is what’s top-of-mind for services buyers, the post says, despite what you and I keep hearing about all the other hyped-up tech trends it cites: “how robotic automation, digital technology … big data and outcome-based pricing are going to be the biggest game changers to disrupt the business world since the invention of the desk.”

I love what follows, I guess to depict where all this excitable tech thinking is going to take us:

“Suddenly, there’s going to be minimal need for human labor … so we’ll just sit at home all day running our lives from our mobile devices sequencing our own genomes using some cool analytics app that we only need to pay for once we’ve added 10 years to our life expectancy. Somebody please shoot me now … let’s dial this dialog back to reality for a few minutes.”

Indeed, as reality would have it, when Horses for Sources asked attendees of its recent gathering of enterprise buy-side operations leaders in Chicago to choose among six actions that would best “improve the quality and outcome of your current sourcing initiative,” the winner, by far, was “the buyer letting go and giving more responsibility and value processes to [the] provider.”

Here’s the HfS response to that:

“Oh my god.  After all the whining about things like, ‘All they do is sell to us,’ and ‘All that cool stuff they promised us during the sales process and never delivered’ … the real reason behind this stagnation is the simple fact that most buyers are just struggling to let go!”

In order to do that, though, they need to — you got it — trust that their providers can take on higher-value work from them. And to earn that trust, providers need to prove they can do that. In the words of HfS:

“This means many need to change behavior … the [oh-so-boring] overselling needs to stop and the demonstration of real value needs to start. … Service buyers do not ‘let go’ until they know they have a safe pair of hands to trust with their beloved processes …  .”

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Are Drones Targeting Your Job?

This morning, I came across an interesting piece on the ABC News website titled “How Drones Will Replace Humans in the Workplace.”

462430535True, this probably isn’t the most burning issue facing HR leaders today, but the commercial use of drones is certainly a topic we’re starting to see a lot more of in the news lately. If there’s been a tipping point here, it probably was Amazon CEO Jeff Bezo’s revelation on 60 Minutes last December that the world’s largest online retailer was exploring the use of drones to deliver packages to its customers.

Since then, drones have left the war zone and have started to appear in our backyards. As a story appearing in The Des Moines Register pointed out last month, real-estate is a natural, with agents “increasingly taking their work to the skies, using remote-controlled aircraft to film bird’s-eye-view video tours of homes, land and commercial properties.”

Asking what jobs might be at risk if and when drones are given clearance by the Federal Aviation Administration to take off commercially, the author of the ABC News piece quotes Mary Cummings, a drone expert who teaches at MIT and Duke University. Cummings suggests delivery jobs, such as UPS and FedEx, are likely candidates, along with police jobs. “Crop dusters might also find their risky work outsourced,” she adds.

(As you might expect, there was no mention of HR jobs. No speculation that, one day, drones might be delivering pink slips to remote workers included in a reduction-in-force.)

A number of obstacles, of course, lie in the way of this becoming a reality, including the need for the FAA to ease up on regulations. But experts expect it’s just a matter of time for that to happen.

In the ABC News piece, Cummings also suggests workers, in general, don’t really need to sweat the commercial use of drones catching on.

‘Ultimately,’ she says, ‘drones will create more jobs than they replace, they will save lives and they will give us capabilities we only dream about—like everyone owning our own flying cars.’ ”


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Revisiting RPO

I’ve attended HR People & Strategy’s annual spring conference on a number of occasions in the past (when the group’s acronym stood for the Human Resource Planning Society), but never the group’s Fall Forum. Until this week, that is.

HRPS is in a rebuilding mode, with a membership now reportedly around 1,200. About 150 people attended the group’s fall meeting, which featured a good line-up of sessions and speakers, including HREOnline ’s Talent Management columnist Peter Cappelli.

Incidentally, this year’s event was held at the Westin Arlington Gateway just up the road from the Society for Human Resource Management’s headquarters in Alexandria,Va.

I wasn’t able to catch the first full day’s opening keynote by Healthy Companies Inc. CEO Bob Rosen this morning, but did sit in on a later panel titled “Moderated Panel Discussion on Outsourcing.” Not the sexiest of session titles, but the discussion had some lively moments and included some good pointers for anyone considering or reconsidering recruitment process outsourcing. (A show of hands suggested that most of those in audience had yet to embrace RPO.)

As might be expected, all of panelists have used outsourcing to some extent. But not all were necessarily fans.

One panelist, Mike Brown, senior director of talent acquisition at Siemens, led off the discussion saying he believes that “good professional recruiters … can do a better job in-house.”

When Brown first joined Siemens, much of the recruiting was “decentralized and outsourced.” But not anymore. Today, Brown’s team makes a case to bring on a new recruiter for every 35 requisitions. That recruiter, he said, is expected to fill between 120 and 130 positions every year.

Brown pointed out that the focus at Siemens—which averages about 40 to 50 hires a day—is on time to fill, not cost per hire. “It’s a little brazen,” he said, “but we ask them for the money and tell them to hold us accountable [in shrinking time to fill]. If the results aren’t there, then we’ll pay the price.”

On the list of challenges for those going the RPO route, several of the panelists emphasized the importance of getting a provider who understands your organization’s culture. Figuring out during the RFP process how well it grasps the culture is difficult to do, explained panelist Aziz Chowdhury, a former talent-management executive who founded careerSHOUT!, a provider of career-management solutions. “But it’s a big driver of success.”

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Revisiting the Value of Farming Out Work

Pretty much everyone agrees the nation needs to do something about getting the federal-deficit under control. There seems to be little agreement, however, when the discussion turns to what that something is.

Well, if you think part of the answer lies in using more contractors to do federal work, a just released study by the not-for-profit Project on Government Oversight (POGO) suggests maybe you should think again.

Among other things, this first-of-its-kind study found the federal government, on average, paid contractors 1.83 times more than the government pays federal employees in total compensation, and more than two times the total compensation paid in the private sector for comparable services.

Of the 35 job classifications POGO looked at, 33 had contractor billing rates that were significantly steeper than the average compensation for federal employees (with benefits factored in). (The two exceptions: groundskeeper and medical records technician.)

So how does HR management work, in particular, fare? POGO reports that HR contractors received nearly twice the amount it would have cost were it done in-house—$228,488 versus $111,711.

In a story appearing in yesterday’s New York Times about the study, James Sherk, a policy analyst with the Heritage Foundation, said he was skeptical of the findings “because it’s not a real apples to apples comparison.”

But despite some obvious flaws—including some noted by POGO in the report’s methodology—the study should, at the very least, give federal entities reason to pause and reconsider the pros and cons of farming out certain work, as well as what they’re paying.

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What’s New at the Expo

To be sure, the number of new product announcements at SHRM doesn’t come close to approaching those made our own HR Technology® Conference, to be held this October 3 through 5.  But for whatever reason, there seemed to be a bunch more launches this year than we’ve grown accustomed to.

Not surprisingly, two of the announcements involved mobile solutions. I say not surprisingly because we’ve seen a wave of vendors that have made this a top priority in recent months.

Yesterday, I was briefed on a mobile solution from LexisNexis Risk Solutions, a supplier of employment-screening solutions. The app provides recruiters and prospects access to the process via remote devices in an effort to speed up the background-screening process.

Meanwhile, the former Peopleclick Authoria, which unveiled its new name, Peoplefluent, at the conference yesterday, announced this morning Fluency on the Move, its mobile product line that’s intended to give managers remote “access to relevant and correlated data about their people.”  Initially, four mobile products were released, including Workforce Explorer, Manager Compensation Assistant, Manager Guidebook and Candidate Explorer.

I also was briefed this morning on two other new recruiting products.

Halogen Software announced its anticipated recruitment entry, eRecruitment, an applicant tracking system that integrates with the firm’s other talent-management modules. Like other Halogen products, eRecruitment was “organically built,” points out Donna Ronayne, the company’s vice president of marketing. General availability is slated for August.

And the RPO provider The RightThing launched RightThingRecruit, a recruitment technology platform, for prospects just looking for a technology solution, that addresses sourcing, recruiting, contact relationship management, applicant tracking, onboarding and reporting. CEO Terry Terhart, who says business has been strong for the company, cites flexibility and speed of implementation as two key differentiators.

Granted, jobs may be slow to come back. But suppliers haven’t slowed down their efforts to build out their offerings.

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The Changing Nature of Work

Gary Kushner offered lots of data about the future nature of work so that HR leaders could begin questioning the way their organizations are designed, the composition of their total rewards and the purpose underlying their HR strategies — but he didn’t provide any answers during his session at SHRM on Monday afternoon.

Kushner, president and CEO of Kushner & Co., a consultancy focusing on employee benefits and strategic HR, outlined five global trends affecting strategic HR: technological advancement, outsourcing, changes in demographics and diversity, changing worker attitudes and values, and globalization.

He also noted that, while business success was based on manufacturing processes 40 years ago and on technology 20 years ago — that it is people who “are our competitive advantage” today.

Kushner talked about the adjustments that would have to be made with four generations — and soon, five — in the workplace, especially the way it would impact upward advancement. And that the ever-growing segment of older workers would impact total rewards and benefits.

He talked about the challenges that the combination of employees, temps, independent contractors and outsourcing have on creating a shared vision and facilitating teamwork. And he talked about how individuals have changed their attitude from living to work to working to live.

“How do we leverage the way we think about all of these trends?” he asked. “The way work has been done is not the way it is going to continue to be done.”

But it will be up to individual CHROs to take it to the next step — and figure out what the answers are.

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Thoughts on the HR Function

There were lots of thoughts to absorb from the Cornell University HR Executive Summit, held as part of the HR in Hospitality® Conference at the Marriott Wardman Park in Washington this morning.

It was a huge roundtable discussion, with 16 panelists, but moderator Bruce Tracey, associate professor of management at Cornell’s School of Hotel Administration did a good job of engaging the entire group and keeping the conversations pithy.

Some food for thought:

*HR Hit Hard: At the Four Seasons, the HR department “took a disparate hit” of a 20-percent reduction in headcount, said Debbie Brown, its VP of HR for the Americas. Overall, the organization lost 4 percent of its workforce.

HR was hit even harder at Hilton Worldwide, where there was a 40-percent global cut, said Barbara Holkamp, senior vice president of HR consulting, who said the HR function focused on providing simple, automated toolkits and models related to people practices and focused on “top grading,” meaning talent development.

She noted that the reductions did not affect hotel-based HR directors – and that guest-service satisfaction scores remained “very high.”

Brown said the organization looked at outsourcing transactional work, “anything that is not mission critical” and that “learning took a real hit.”

*Doing More with Less: In a survey result taken by attendees, 100 percent said their organizations are doing more with fewer resources. In another question, asking for important HR issues for 2011, retention (23 percent) came in first (if you don’t include other, which received 28 percent of the votes); followed by recruitment (21 percent); productivity (18 percent); and compensation (10 percent).

* Adding Instead of Cutting Training: At the Fairmont Hotels & Resorts, the recession actually prompted “the most comprehensive service training program than we ever had in our company’s history at a time when many of our competitors were cutting back or cutting training all together,” said Carolyn Clark, SVP of HR.

But the difference was the program was led by operations, she said, not HR.

“We were really looking for behavioral change to drive business results,” Clark said. The workers completed a self-audit at the end of the training program and created an action plan that was integrated into future performance reviews.

This year, she said, a refresher course will use 30 actual case studies drawn from guest survey results.

* Finding Talent: Recruiting “actually got harder for us” during the downturn, said Greg Smith, executive vice president of HR for Denihan Hospitality Group. “Yes, there were more people looking for work but the people we needed were harder to find.”

So, he shifted the recruiting function down to individual properties and further down, to individual functions, so room attendants were involved in looking for room attendants; front desk managers looked for front desk managers, and so on.

“We have had some pretty good results,” he said.

* Salary Grumbling on the Rise: Don’t expect workers to accept doing more with less forever, the panelists said, especially if their pay is not seeing an increase.

“Their patience is wearing thin,” said Laura FitzRandolph, SVP and assistant general counsel at Interstate Hotels & Resorts. “You have to manage expectations,” but noted that, for the hospitality industry, “the climb back is going to be longer than the fall into the basement.”

* Just-in-Time Staffing: John Longstreet, president and CEO of Quaker Steak and Lube, said he remembers when one major brand laid off 130 managers in a single day – and he wondered how an organization could be so overstaffed.

“I am trying to do more with the same,” he said, noting that he would prefer to under-staff and over-pay. He also has invested in technology to make it easier for his restaurant managers to access the information they need and therefore be able to spend more time with team members.

* Preparing for Retirement: Want to engage your workers? Ask them when they will retire. That’s the advice of Alan Momeyer, VP of HR at Loews Corp.

“There’s nothing wrong with that question,” he said. Plus, it will require them to think about designating successors and then making sure those successors are qualified to step in when necessary.

Those conversations will cascade through the organization — and that’s what results in engagement, he said.

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The Vendors’ Viewpoint

My HRE colleagues and I spend a lot of time during the show meeting with vendors, and while some of them seem to want to spend all of our limited time hawking their products (boring!) others are genuinely interested in talking about the state of the HCM market (and yeah, I know human capital management is a tiresome and annoying buzzword to some, but I digress).

Anyway, Charles Coy, director of product marketing at Cornerstone OnDemand, said product differentiation is getting tougher and tougher every year for talent-management vendors like his firm. “Look around the show floor,” he told me, gesturing at the crowded booths covering the exhibit floor at this year’s HR Technology®  Conference.

“So many of us are selling what are essentially the same products, delivered the same way [via SaaS]–how do you stand out from the crowd?” Cornerstone’s strategy will be to distinguish itself from others by pointing out to prospective clients that its suite of tools were developed “organically” (in-house), unlike other vendors, who are assembling suites by going out and purchasing other vendors and integrating their products. “Our products run on the same data platform,” said Coy. “I may be wrong, but I do think that’s a differentiator.”

Coy also chatted at length about the Cornerstone Foundation, a nonprofit foundation created by his firm which — among other things — donates free Cornerstone software to outfits like Teach for America and various charities. “Nonprofits are really underserved in this area,” he said. Interesting …

Michael Custers and Brad Everett of Northgate Arinso chatted about their firm, which recently completed its purchase of Convergys Corp.’s HR business-process outsourcing operations, which makes them one of the largest such vendors in North America, putting them in direct competition with the folks at Hewitt, IBM and Accenture. “We’re a global firm, not US-centric, and we think that will differentiate us,” said Everett.

Over at Saba, they’re feeling pretty confident that collaboration as an actual, workable reality (as opposed to a topic that no one but industry analysts is talking about) is finally taking off, said Yvette Cameron, vice president and general manager. 

“HR people are really starting to drive collaboration and networking within their organizations, and we think that’s great–we want to see them get out in front of this, not hang back and let other departments take the lead,” she told me. Yvette has some self-interest at stake, of course: Saba’s just  introduced Saba People Systems, a suite of collaboration, learning and performance applications that’s designed to “power up the individuals in the organization.” Hmmmmm …  

Meanwhile, Successfactors and Workday are vigorously going after the core HR systems market, with Successfactors asserting that the market is eager for core HR products from best-of-breed vendors. Successfactors can indeed boast of winning over giant technology firm EMC, which is replacing its PeopleSoft enterprise system with SuccessFactors’ EmployeeCentral product for core HR.

And Workday is continuing to go after the large-enterprise market, having used the show to demonstrate how Flextronics (which itself is practially the size of a small country) is one of the small-but-growing cadre of big corporations that are moving away from ERP to SaaS-based enterprise systems.

And what about the regular stream of software updates that SaaS customers receive–which, if you’re a large and complex organization like Flextronics, can wreak havoc on your internal processes?

 “We’re getting much more proactive at communication, letting our customers know ahead of time what these updates will do so they can make sure nothing gets messed up,” said Workday’s Andy McCarthy. Interesting times. We’ll see how things look next year in Las Vegas, where the 2011 HR Technology®  Conference will be held at the Mandalay Bay resort.

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Face-off on HR Outsourcing

No blood was spilled during the Great Service Delivery Debate, as Phil Fersht and Lowell Williams faced off during a Wed. afternoon session at the HR Technology® Conference. But the two experts didn’t pull their punches either when it came to discussing whether or not HR outsourcing has lived up to its promise.

The benefits of HRO haven’t materialized, suggested Phil Fersht, founder and CEO of consultancy Horses for Sources in Boston.

Consequently, he said, a number of deals have ended up going sour.

Fersht cited Convergys as an example. “Convergys had a great run with HR outsourcing, but in the end couldn’t [make a go of it] and ended up selling the business to Northgate Arinso,” Fersht said. “The whole [first] generation of HRO didn’t work and Wall Street didn’t like it. So people started talking about single process.”

Fersht suggested that the industry is basically back to where it was 10 years ago.

Williams, however, was a bit more upbeat about the model, showing a slide listing 23 HR processes that are being outsourced today.

“The fundamental premise that we could take administrative, repetitive steps out of HR and move them into a service center is a very valid one,” said Williams, executive director of global HR services for EquaTerra, a Houston-based advisory firm.

To be sure, Williams said, HR outsourcing hasn’t fully lived up to its promise. But the benefits of HR outsourcing are equally clear.

If there’s an area employers in need to get better at, Williams added, it’s figuring out “how to repurpose the people in the company once administrative tasks have been outsourced.”

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Outsourcing Hits the Big Time!

A new workplace sitcom called Outsourced premiers on NBC tomorrow night at 9:30 p.m./8:30 central. Here’s the NBC website where you can read about it and catch the preview video. Considering this is the first I’m hearing about it (which doesn’t necessarily mean anything), I figured there might be one or two of you out there who haven’t heard about it either.

Looks like the premise (or goal, rather) is to put a “fresh and funny spotlight on the challenges that come with managing employees overseas,” says Brian Abrams from the New York-based PKPR public relations firm.

One of his clients, workplace behavior expert Aubrey Daniels, says the biggest mistake managers (and HR leaders) make is thinking people are different in other countries.

“The principles that cause people to do their best are the same in India, China, Russia and the rest of the world,” says Daniels, author of OOPS! 13 Management Practices that Waste Time and Money (and what to do instead. “When managers export techniques that they have learned in the United States to other cultures without an understanding of the science of behavior, they are bound to have problems, as I am sure that this series will exploit.”

Daniels talks about the show in more detail on his blog. Happy reading and TV viewing!

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