HR Transformer Blog
Will HR Outsourcing ride the Third Wave?
There’s a common belief that the third in a series of ocean waves is the biggest. If it’s true for waves of change in HRO too, this latest wave of transformation in the industry will have a considerable impact. According to Anthony Hesketh in HRO Today transformation is back on the Outsourcing agenda, if indeed it ever went away.
We all understood the logic of the first wave of HR Outsourcing in 1999 - freeing up HR to focus on strategic aspects of the job, introducing standardization, self-service technology and Global Service Centers. It was this desire for HR Transformation that created ground-breaking Global HR Outsourcing deals with Exult-BP and ePeopleserve.
Back then HR consultants from the Big Four, heading for the exit, process-map and SLA template in hand, myself included, could be heard muttering under their breaths ‘every last large organization will want an HR portal and centralized HR service’, (while they hungrily signed-up to their dot.com share-options). Of course they didn’t.Innovation is a tricky business. Potentially great ideas get ignored because markets are too small, or the change doesn’t fit other people’s business models or match existing values. Sounds familiar?
The second big wave of change in HRO contracts came around 2006, including Unilever-Accenture, Johnson & Johnson – Convergys. These didn’t quite deliver our dream of pre-configured, hosted and e-Enabled services either. Instead, the services they offered were bespoke, tailored to clients’ demands and the particular nuances of their HR Operating Models. Still they had some success, given the industry grew to be worth billions of dollars.
In response to the economic meltdown of the last few years, organizations began thinking again, developing new business strategies, and new operating models. The HRO industry consolidated. Outsourcing contracts lasting a decade were thin on the ground when organizations couldn’t see where they might be themselves. Out of this has come the third and potentially most significant wave of transformation for HRO.
The focus for HR has shifted to employee productivity and engagement, deploying the right skills at the right time, mergers and acquisitions, and developing staff. HR needs to transform itself and the way it operates in order to deliver, enabled by organizational structures and processes better aligned to the businesses it serves. A greater share of the HR responsibility needs to be carried by line managers too.
The question for HRO vendors and HR Executives is what role will HRO play in the move to new HR operating models?
One way will be through more standardized HR services. HR needs to demonstrate value for money. Can a business justify providing employees with a personalized HR service when competitors get good results for less money using self-service processes. If HRO vendors can provide standardized services with user-friendly tools then there will be a sea-change in HR Operating Models.
HRO providers can also offer web-based tools to enable improvements in collaboration, productivity and managing the workforce. Delivering these tools, allowing buyers to avoid large upfront costs and access to the best solutions is an attractive proposition. Those HRO vendors who provide tools and services that help address organizations’ key talent management issues will thrive. Watch out for innovative market entrants building rapid market share with a credible HRO/SaaS model.
Transforming HR is about changing how people work and behave, not merely changing systems and processes. Having worked on both sides of the HRO vendor/buyer fence, I have seen opportunities where skills gaps in managing change, managing vendors and transformation programmes could have been bridged. HRO vendors have been reluctant to share (or sell) their change management skills and can play a significant role in the move to new HR operating models by sharing their experience, knowledge and skills with organizations.
HRO will enable a leaner corporate function, by reducing central transactional HR work, pushing out more ‘people management’ to managers enabled with much better skills and tools. The onus is on HRO providers to be innovative and enable more self-service, for example by utilizing mobile devices for time-recording, checking schedules, benefits, vacancies.
HR Transformation is not back. It never went away. For HR executives to benefit from cost savings and to achieve their strategies, they will need to accept increasing standardization. Industry consolidation, technological innovation, economic pressures will all help to make this happen, and we could see HRO take off. All change is disruptive, outsourcing in the HR industry included. The early innovators of HRO had the right ideas at the wrong time. Now the conditions are right for it too.
This article was originally published in the Spring 2011 edition of HRO Today, by Andrew Spence.
HR Transformer Blog - Most Popular Posts of 2010
Here are the most popular HR Transformer Blog articles from 2010. Many thanks to all those who stopped by and provided ideas, links and comments.
1. Stop, Start & Continue - A Guide for HR Transformers
What will you Stop, Start & Continue in 2011? Includes a useful PDF worksheet.
2. HR Transformation Articles of the Month
Add this link to your Bookmarks and browse over 90 different articles. We trawl through the web to bring you a selection of the most interesting HR Transformation articles of the month.
3. Future Trends in HR Operating Models
If you enjoyed reading this, check out our longer articles on What the future holds for HR , on Evaluation Centre (free, easy registration required). Downloadable PDF article about the trends shaping future HR Operating Models.
4. HR Benchmarks - A Government Health Warning
Very topical subject, we did some analysis on UK Government HR benchmarks and attached the data in this article. The original statistics have disappeared from the Government website, so we have had quite a few hits from Whitehall. Also featured in the first online edition of HR Magazine.
11 Lists of great people to follow on Twitter, including consultants, HR practitioners, leaders, writers, analysts, techies and teachers.
6. Are you a HR Twitter Virgin?
Do you still know people in HR who have not used Twitter, surely not! Here is a useful guide to get them started....
7. Top 5 Reasons HR Projects Fail
A golden oldie, but are we still making the same mistakes ?
8. HR Outsourcing - The Challenge of Picking Winners
In choosing a HRO vendor, a key question is How do you know they will last the course?
9. Why England Lose - Talent Management Insights from Football
Inspired by the World Cup, what can we learn from studying the management of football?
10. HR Survey Highlights Skills Gaps in HR
Very useful annual survey from ADP/HROA, see also this years findings in HR Transformation Delivers solid Savings of 25%
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Top 10 HR Transformation Articles in November & December
We start 2011 with a bumper issue of HR Transformation blog articles from the last two months of 2010. In between meeting year end goals and wrapping presents, our HR bloggers, writers and thinkers are in a reflective mood with some thought provoking articles.
Out with the old and in with the new, we kick off with a couple of articles which aim to smash some of the myths surrounding ‘best practice’ in HR. Our HR Maverick presents the case on why we should dump the dreaded annual Performance Review, with some help from Mr. Deming.
The ‘love/hate’ relationship HR has with Social Media illuminates the dichotomy HR sometimes finds itself in - on the one hand in its traditional role as “enforcer” and on the other side as an “innovator”. We highlight a couple articles that will appeal to both sides, from Malcolm Gladwell to Mashable.
At Glass Bead Consulting we are embracing social media in HR. Jon Ingham and myself co-hosted a Connecting HR Twitter chat one foggy evening in Amsterdam, from the HRO Summit Europe Conference - read more about our discussion.
Do you know your “HR Cost per employee”? Is it $1000 or nearer to $3000 per employee or? Read up on some recent trends before the CFO taps you on the shoulder and asks you…
Talking of costs, cost cutting is in at the top of British Government’s agenda, as it looks for ways to allocate more resources to frontline services. We have three insightful articles on the case for HR Shared Services from a UK perspective.
Finally, we hope you enjoy our latest 10 of the best HR Transformation articles and a big thank you to all those that come back to us with ideas and suggestions to share with the HR community. Do keep in touch with any of your future Top 10 articles and suggestions - @AndySpence on Twitter.
1. In Search Of HR Tech Best Practices, by Naomi Bloom
In this article Naomi Bloom reflects on the quest for best practice in HR Technology and HR Transformation.
We have all seen the sales pitch of “this system will transform how you deliver HR Management.” However, in Naomi’s view this won’t happen unless you are willing to redesign your HR processes. She writes that “If you don’t have proven competency models for your key roles, you won’t get competency-centric HRM, no matter what the software does”.
Naomi outlines three types of practices that are amenable to process improvement through automation, outsourcing & process redesign. Read more about her big P processes, little p processes, and business rules in this excellent article.
Another person to tackle HR “Best Practices”, is Ron Ashkenas, in the Harvard Business Review. He answers the question “Why Best Practices Are Hard to Practice” and according to Ron, there are two main reasons.
Lack of Adaptation - companies are so different, it is rare that a practice developed in one place can be applied elsewhere without significant customisation.
Lack of Adoption – companies that utilize a borrowed process or tool without full leadership support and commitment, think that just having the tool itself will generate the desired results.
In our view, somewhere along the line someone in the organisation needs to think deeply about how to actually implement organisational strategy. This will nearly always involve the challenging task of asking people to work in a different way. If this change uses tools, theories or methods derived from Systems Thinking, Lean, 6-Sigma or ‘some Blu-Tack, Post-It notes and elastic bands’ then so be it. It doesn’t really matter which tools and methods are used as long as the change works.
2. The Future of Human Resources and Social Media, by Sharlyn Lauby, aka HR Bartender, on Mashable
The adoption of social media at home and work seems to pose some problems for HR. The challenge characterises HRs’ struggle to deliver true value in its role as Business Partner.
There is a balancing act; on the one hand HR needs to maintain one of its traditional roles of policing policies and keeping managers’ noses clean. On the other hand, HR is required to improve employee performance, engagement and be Technology Champions looking for new tools that can transform the workforce, help them to be more productive and ensure the ‘stars’ stay at your company.
For sensible tips on Social Media Policy, read The Future of Human Resources and Social Media, from Sharlyn Lauby, aka HR Bartender, via Mashable.
For the HR police…
If you are worried about your employees flippantly using Facebook all day, then imagine what the introduction of the telephone must have done to “Staffing Managers” or whatever our HR predecessors were called ! Humorous and thought provoking cartoon here from Competitive Futures,The Telephone - a disruptive technology.
For the social media revolutionaries…
Those that get a little carried away, with “vive de revolution” approach when it comes to Social Media will find this article interesting “Small Change - Why the revolution will not be tweeted", by Malcolm Gladwell in the New Yorker.
3. HR Costs Rebounding? from Michael O'Brien in HRE Online
Do you know your HR Cost per Employee?
A new report, from PricewaterhouseCoopers/Saratoga “2010-2011 US Human Capital Effectiveness Report”, finds that this key HR statistic is returning to pre-recession levels. The report finds that HR costs-per-employee rose in 2009, to $1,569, up from $1,462 per-employee in 2008 and close to the pre-recession average of $1,610 in 2007.
In our view, HR cost per employee is a very useful metric – much more useful than the traditional “HR:Employee Ratio”. It takes into account the amount of outsourcing, relative cost of the HR function and is easier to make comparisons.
4. Performance management: looking in the wrong place from Glyn Lumley, aka HR Maverick
Do you currently run an annual performance management process where line Managers sit down with their team members and discuss their performance, sometimes with a link to remuneration and improving contribution? The Systems Thinkers, such as Glyn Lumley, say that this process is not only a complete waste of time, but is also destructive to morale.
According to Glyn, Improvements to organisational performance does not happen one employee at a time. The problems are in organisational systems and processes - it’s here that we will find the real opportunities for improvement.
An article referring to System Thinking, is not complete without a quote from Dr. W Edwards Deming. “The supposition is prevalent … that there would be no problem in production or in service if only our workers would do their jobs in the way they were taught. Pleasant dreams. The workers are handicapped by the system, and the system belongs to management.”
If you don’t get improvement in performance, then why bother? Wouldn’t it be better to invest time and cash in initiatives that deliver better results?
5. Service Levels for HR Services Delivery – An Evolution, from Jim Koenig - Equaterra
So you have an SLA in place, however your managers say that “the service levels are all green but we are still frustrated”. Jim Koenig from Equaterra show the evolution of service levels along the continuum from tactical to measuring both tactical and strategic health.
On too many occasions we see SLAs as a bureaucratic step, rather than as a useful way to manage service relationships.
6. A systems thinking guide to outsourcing for the sceptical public sector leader, from the Systems Thinking Review
If you are a public sector leader (Chief Executive, politician, manager), your budget has been obliterated and you know you have to save money. Some of your peers are jumping headfirst into outsourcing and you are considering doing exactly the same. You hesitate. Who hasn’t heard of the outsourcing horror stories? This is a good article with some useful questions if you are thinking of outsourcing, with free PDF attachment.
7. Is HR too big to innovate?, from J.Keith Dunbar, from DNA of Human Capital blog
Keith Dunbar asks a good question: “is HR too big to innovate?”
The recent 2010 IBM Chief Human Resource Officer (CHRO) Study identified three key areas requiring attention.
1. Cultivating creative leaders
2. Mobilizing for speed and flexibility
3. Capitalizing on collective intelligence
All three of these focus areas will rely heavily on the ability of HR to innovate itself at a pace that keeps up with the global changes taking place.
A key question for HR is; are we too big to innovate?
8. Mobile Apps are Ringing up HRO, Linda Merritt from HRO Insights Blog
What are the killer apps for mobile devices in HR Services?
From mobile workers submitting an expense claim, commuters with access to their teams holiday schedule, approving a training request while waiting for the bus, Gary Bragar from Nelson Hall, outlines how Mobile Apps will stimulate the HRO Market.
For buyers using SaaS HRO platforms, providers will be developing mobile apps that meet the needs of multiple clients, as well as rolling out applications as they become available by the provider of the underlying HR system (usually Oracle or SAP.)
9. What Next for HR, Connecting HR at HRO Europe, from HR Transformer Blog
I enjoyed speaking on the expert panel at the HRO Summit Europe Conference in Amsterdam with Peter Cappelli, Jon Ingham, Nigel Perks, Jane Owen Jones. Jon and myself carried on the conversations from the Plenary Expert Panel and opened up online with a #HRChat - you can read the transcript here…..watch out for other HR Chats, at Connecting HR site.
10. Shared HR services the way forward for local authorities
Here are three different articles on the use of HR Shared Services in UK public sector.
Shared HR services the way forward for local authorities. Two East Midlands authorities in the UK, are to team up the HR services in an effort to cut costs and improve efficiencies. Leicestershire County Council and Nottingham City Council have signed a partnership deal to share HR and other administrative functions in a bid to save more than £2 million per year.
HR ‘must lead from front’ on MoD cuts. HR staff numbers in the Ministry of Defence will be reduced by half over the next two-and-a-half years but, at the same time, the austerity measures facing the public sector present the profession with a “phenomenal opportunity”, according to Jonathan Evans, director, civilian personnel.
Gus O’Donnell [head of the civil service] described the challenge we face as the leadership challenge of a generation. “I think it is not just a generation but a number of generations,” he said. “It is important that HR leads from the front. HR is uniquely placed to make a difference and we have got to make that difference now.”
There are 85,000 civilians in the MoD but, as announced in last month’s Strategic Defence and Security Review, over the next three to four years this will be reduced by 25,000 – nearly 30 per cent.
What Next for HR? Connecting HR at HRO Europe
From Rangoon to London to the canals of Amsterdam, the smell of transformational change is in the air.
I will be at the HR Outsourcing Europe Summit (Twitter hashtag #HROEurope or follow @HROEurope ) in Amsterdam this week discussing topics in HR Transformation and HR Outsourcing.
I will also be joining a distinguished Plenary Panel discussing, “What next for HR ? How HR leaders should be confronting the coming decade.” This will be hosted by Dirk Olin, Editor of HRO Today and HRO Europe
The panellists will include :-
- Peter Cappelli, Director of the Centre for Human Resources, The Wharton School
- Nigel Perks, Chief Human Resources Officer, BT Global Services
- Jane Owen Jones, Founder, Lloyds Masters
- Andrew Spence, Founder, Glass Bead Consulting
- Jon Ingham, Executive Consultant, Strategic HCM
One of themes of the discussion will probably be the impact of Social Media on HR. Rather than talk about how Social Media will change our workplaces, here is an opportunity to join in. I will be chairing (@AndySpence on Twitter) the 3rd Connecting HR Chat, #cHRChat, with Jon Ingham, @JonIngham, at the conference.
Connecting HR is an online community “getting more HR people involved in social media since 2010".
Here are the details, we look forward to continuing the discussion!
Date – Wednesday 17th November
Time – 4pm GMT, 5pm CET, 11am EST
Twitter HashTag - #cHRChat and for those at the conference #HROEurope
What to do – just join in and remember to use the hashtag #CHRChat with every Tweet!
Still not sure?
Here’s a couple of articles to get you go going :- Still a HR Twitter Virgin ? or still need some inspiration? HR Transformers on Twitter
Here are some questions to get the #cHRChat started :-
1. What are the current drivers for HR Transformation?
2. What role does outsourcing play in HR Transformation?
3. Will social media transform HR?
4. Also which will be more influential on transforming HR in the next 5 years (1) Social Media (2) Outsourcing (3) Oracle Fusion ?
Looking forward to some great transformational discussions on Wednesday!
