Human resourcesoutsourcingpresentation 000


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  • Definitions: In-sourcing: foreign companies establish jobs in the United States; the process of retaining a business function internally Off-shoring: the relocation of business processes to a lower cost location, usually outside the company’s home country Co-sourcing: a business function is shared by mutually dependent internal staff and external resources with specialized knowledge of business function. Based on a long-term relationship with an emphasis on values traditionally associated more with "partnering" Geo-sourcing: the process of seeking expert skills in the best geographical location – whether internal or external – for each business function
  • BPO expenditure likely to grow worldwide by 10% a year – from $140 billion in 2005 to $200 billion by 2010 Source: LogicaCMG, August 2005 HRO is fastest growing sement of the BPO industry. (SHRM 2005 Research Quarterly – HR Outsourcing: Reaping Strategic Value for Your Organization by Leslie Weatherly) ¾ of US companies outsourced some or all of their IT activities in 2004 – that number is likely to increase for 2005 Source: Global Outsourcing Report, March 2005 Going forward, it is projected that HR will be among fastest growing outsourced services. (SHRM 2005 Research Quarterly – HR Outsourcing: Reaping Strategic Value for Your Organization by Leslie Weatherly)
  • SHRM Human Resource Outsourcing Survey Report: Almost 6 out of 10 organizations practice HR Outsourcing BUT 1/3 of organizations did not outsource any function ½ of organizations partially outsource an HR function (organization co-manages function with vendor) 2/3 of HR professionals predicted that level of outsourcing would remain same over next 5 years 1/3 expected organizations to increase level of HR Outsourcing Outousrcing favored in large-staff sized organizations – almost twice as many indicated increase in next 5 years
  • Professional Employer Organizations (PEO’s) – offer “coemployment” services where employees are paid under a PEO’s FEIN and are placed under the PEO’s benefits and worker’s compensation packages Administrative Service Organizations (ASO’s) – similar to PEO’s but do not include coemployment relationship
  • HR service delivery costs high and cannot be managed down Continuing investment in technology no longer feasible Strong desire to end administration of transactions and focus on strategic work Desire to improve quality of HR services through process redesign and access to self-service platforms Strong business case can be built Other business reasons – example:geographic setup – centered vs. spread
  • Is this function a core competency? Is is the best in its class? If not, it should be considered for outsourcing. Nothing is sacred. You also must have a strategic vision going into outsourcing, specified metrics to measure progress toward the vision, and real business outcomes planned to justify the outsourcing costs with benefits.
  • Specialization – HRO buyers want a provider that considers them “special” and every provider has a “specialty” Globalization – global is the new trend, with even small firms having global HRO needs; global HRO providers will find a thriving market Standardization – Not all processes are unique and not all jobs are custom jobs. Standardized process and performance metrics are becoming more common and will consequently lead to better service, lower costs, and buyers that are free to focus on core competencies Regionalization – aka “Hubbing Up”; creation of corporate hubs which are the center of all activity (ex: FedEx hubs is Nashville and all packages travel through Nashville on their way to final destination) Consortia Buying – buying groups are banding together to buy BPO services; as high volume groups, they receive highly standardized services which drives continuous cost reductions Mid-market Mania – The 500-1500 employee market will continue to grow more rapidly than the Fortune 500 (20%+ annually in North America and around world) Utility model Evolution – BPO provider use will become as common as utility (gas, water, electric) use. Just as most individuals do not drill own gas or water wells, so will companies look to BPO providers to manage their utilities. Consolidation and Partnering – Extremely large trend toward provider partnering (Ex: Aon HRO’s deal with CSC for IT and Ultimate Software for mid-market payroll)
  • Trends that are expected to gain momentum within next 2-5 years. Continued growth-maturation of HR Outsourcing – organizations increasingly use outsourcing as strategic business model in order to remain competitive Increasing weight of noncost factors as decision drivers – reasons behind outsourcing are strategic; companies outsource in order to gain expertise not simply to save money Continued “commodization” of many HR functions – HR services are “commoditized” and susceptible to marketplace competition s; companies engage in HRO in order lower costs/remain competitive Development of new roles for internal HR departments – HRO has changed amount and types of activities handled internally; opportunity for HR to become strategic participant within executive suite Emphasis on new career opportunities for HR professionals – more opportunities for HR to play strategic role and there are increased external HR career opportunities
  • 6. Expansion of small/mid-sized HR outsourcing markets – as outsourcing market grows, costs go down and outsourcing may becomes financially viable for small and mid-sized companies; meanwhile, large organizations find a total solution in outsourcing 7. Increasing appeal of outsourcing due to demographic changes – labor recruitment and selection more difficult as labor market changes (baby boomers’ retirement and predicted low birth rates) and benefits of outsourcing recruitment and selection increase 8. Reliance on improved HR outsourcing metrics – HR activities are being standardized and quantified; organizations can benchmark and compare performance again other organizations 9. Reshaping of industry by consolidation and competition – consolidation provides broader range of services, more competitive offerings, and specialized services; HR outsourcing firms expand scope and quality of their services
  • HR Executives that stick with status quo and maintain transactional focus will soon become obsolete. Meanwhile, HR Professionals that meet the need for strategic expertise (in human capital management and organizational effectiveness) will contribute value that far exceeds past contributions to the HR function and in process will become indispensible to the organization
  • Transition process – communication and project management are key Plan to jointly review all project plans, services, equipment and staff who will be in transition Ensure responsibilties for transfer are defined and confirmed in advancej A successful transition should be transparent to the organization Culture of the company is a factor to be considered
  • Who manages Relationship with Vendor? 85% HR Department 10% Other 2% Vendor Management Group 1% Legal Department 1% Procurement Department Source: BNA, (2004), HR department benchmarks and analysis 2004. Washington, D.C.: Author.
  • Incorporate multiple time periods – reflect investments today that yield payoff in future periods
  • Selective path toward HRO – explore individual sourcing strategies for different HR functions rather than total outsourcing strategy Multiple vendor relationships – choose vendor that is right for each function rather than focusing on vendor consolidation Combination of internal and external strategies – ex: shared services - internal and vendor (external) ** Special thanks to Watson Wyatt for the use of their 2005 HR Tech Trends Survey
  • Maintain heat of competition during negotiation – clearly articulate that if for any reason contract negotiations should fail to produce mutually agreeable document within specified time frame, you will move to runner-up vendor
  • Hold-Harmless Statement – protects vendor, holding them unaccountable for anything short of gross negligence; can be a deal breaker; if your company has own hold-harmless clause disclose it in RFI/RFP to avoid later problems Fees – indicate level of billing detail and any reconciliation process you need to satisfy treasury or internal audit; negotiate general and administrative percentage and fees at risk for nonperformance Data Security – ask IT to underwrite these provisions Communication Review – stipulate that you have right to review communications sent directly to your employees before they go out; define process for reporting emergencies Contingency Plans – anticipate disasters and their impact upon vendor’s ability to provide service Audits – specify details of audits now to avoid fees and misunderstandings later Final Contract Review – now that HR has developed contract, have other departments review and sign off on their sections
  • Human resourcesoutsourcingpresentation 000

    1. 1. HR Outsourcing (HRO): Its Impact on Your Company, Your Career, and the HR Profession Presented by Tom Darrow 2006/2007 SHRM-Atlanta President Principal, Talent Connections Copyright 2005 Talent Connections. All Rights Reserved.
    2. 2. Agenda <ul><li> HR Outsourcing Overview </li></ul><ul><li> Impact on Companies </li></ul><ul><li> Impact on HR Profession </li></ul><ul><li> Impact on Your Career </li></ul><ul><li> Selecting, Managing, and Measuring Outsourcing Providers </li></ul><ul><li> Helpful Resources </li></ul>
    3. 3. What is Outsourcing? <ul><li>The performance by outside parties, on a recurring basis, of tasks that would otherwise be performed in-house. </li></ul>
    4. 4. Other Definitions <ul><li> In-sourcing </li></ul><ul><li> Off-shoring </li></ul><ul><li> Co-sourcing </li></ul><ul><li> Geo-sourcing </li></ul><ul><li> Outplacement </li></ul>
    5. 5. Types of Outsourcing 1 <ul><li> Business Process Outsourcing </li></ul><ul><li> Information Technology - 28% </li></ul><ul><li> Human Resources – 16% </li></ul><ul><li> Sales & Marketing – 15% </li></ul><ul><li> Finance – 11% </li></ul><ul><li> Administrative – 9% </li></ul><ul><li> All Others – 22% </li></ul>
    6. 6. How Common is HRO? <ul><li> 58% of companies outsource some HR function 2 </li></ul><ul><li> 91% of companies with $1 billion+ annual revenues are now considering HRO 3 </li></ul><ul><li> HRO grew 28% from second half of 2004 to first half of 2005 4 </li></ul>
    7. 7. The HRO Market <ul><li> In next 5 years, global spending on HRO will double – from $40 billion to $80 billion 5 </li></ul><ul><li> From 2002 to 2004, 14% increase in large firms that would consider HRO 6 </li></ul>
    8. 8. 5 Most Commonly Outsourced HR Services 7 <ul><li>Background Checks – 73% </li></ul><ul><li>Employee Assistance/Counseling – 66% </li></ul><ul><li>FSA Administration – 67% </li></ul><ul><li>COBRA – 55% </li></ul><ul><li>Healthcare Benefits Administration – 60% </li></ul>
    9. 9. Other Types of HR Outsourcing 7 <ul><li> Pension Benefits Administration – 55% </li></ul><ul><li> Temporary Staffing – 54% </li></ul><ul><li> Retirement Benefits Administration – 47% </li></ul><ul><li> Payroll & Software Services – 48% </li></ul><ul><li> Recruiting, Staffing & Search </li></ul><ul><ul><li>Non-executives - 30% </li></ul></ul><ul><ul><li>Executives - 29% </li></ul></ul>
    10. 10. Other Types of HR Outsourcing 7 <ul><li> Employee Relocation – 29% </li></ul><ul><li> Training and Development – 21% </li></ul><ul><li> Incentives – 19% </li></ul><ul><li> HRIS & Web-based Services – 15% </li></ul><ul><li> Reference Checks </li></ul><ul><li> PEOs and ASOs </li></ul><ul><li> Sourcing Consultants & Legal Services </li></ul><ul><li> Screening & Workplace Security </li></ul><ul><li> Process, Project, and Systems Management </li></ul>
    11. 11. Least Commonly Outsourced Functions 7 <ul><li> Performance Management 3% </li></ul><ul><li> Strategic Business Planning – 4% </li></ul><ul><li> Policy Development/Implementation – 4% </li></ul><ul><li> Employee Communication Plans – 10% </li></ul>
    12. 12. Audience Survey <ul><li> How many of you outsource part of your HR function? </li></ul><ul><ul><li>Payroll </li></ul></ul><ul><ul><li>Benefits </li></ul></ul><ul><ul><li>Recruiting, Staffing, & Search </li></ul></ul><ul><ul><li>Training </li></ul></ul><ul><ul><li>HRIS & Web-based services </li></ul></ul><ul><li> How many of you outsource all of your HR function? </li></ul><ul><li> What led to the decision to consider outsourcing? </li></ul>
    13. 13. Why Outsource? <ul><li> Allow HR to focus on core competencies </li></ul><ul><li> Creates strategic opportunities for HR professionals </li></ul><ul><li> Improve quality, efficiency, and effectiveness </li></ul><ul><li> Relief from administrative burdens </li></ul><ul><li> Reduce operating costs </li></ul>
    14. 14. Other Benefits to HRO <ul><li> Access to outside HR expertise </li></ul><ul><li> Greater diversity of HR services </li></ul><ul><li> Leverage vendor investments in technology rarely available to HR organization </li></ul><ul><li> Limit fiduciary, audit, and litigation risks and liabilities </li></ul><ul><li> Upgrade level of customer service </li></ul><ul><li> Ease time pressure demands </li></ul><ul><li> “Better, faster, cheaper” </li></ul>
    15. 15. Risks <ul><li> Over promise and under deliver </li></ul><ul><li> Nonperformance of key function </li></ul><ul><li> Cost </li></ul><ul><li> Loss of institutional knowledge </li></ul><ul><li> Difficulty managing vendor relationship </li></ul><ul><li> Change in provider’s business or financial stability </li></ul><ul><li> Lack of fit with company culture </li></ul><ul><li> Organizational resistance or unreadiness </li></ul>
    16. 16. When to Outsource <ul><li> High HR service delivery costs </li></ul><ul><li> No further investment in technology </li></ul><ul><li> End administration of transactions and focus on strategic work </li></ul><ul><li> Improve quality of HR services </li></ul><ul><li> Strong business case </li></ul><ul><li> Other business reasons </li></ul>
    17. 17. Considerations <ul><li> Core Competency? </li></ul><ul><li> Best in Class? </li></ul><ul><li>What is your vision for your HRM business? </li></ul><ul><li>What metrics will measure progress toward vision? </li></ul><ul><li>What business outcomes are needed from the HRM aspects of the business? </li></ul>
    18. 18. Poor Reasons to Outsource <ul><li> Do not outsource just because you are frustrated </li></ul><ul><li> Do not outsource as a last resort, just because you have tried everything else </li></ul>
    19. 19. Outsourcing Myths <ul><li> Outsourcing is just a fad </li></ul><ul><li> Outsourcing can be kept secret from employees </li></ul><ul><li> Outsourcing is only for the largest companies </li></ul><ul><li> Messes must be fixed before outsourcing </li></ul><ul><li> Outsourcing is for everyone </li></ul>
    20. 20. Trends in HR Outsourcing Market <ul><li> Specialization </li></ul><ul><li> Globalization </li></ul><ul><li> Standardization </li></ul><ul><li> Regionalization </li></ul><ul><li> Consortia Buying </li></ul><ul><li> Mid-market Mania </li></ul><ul><li> Utility Model Evolution </li></ul><ul><li> Consolidation and Partnering </li></ul>
    21. 21. The Future of HRO <ul><li>Growth-Maturation of HRO market </li></ul><ul><li>Increasing weight of non-cost drivers </li></ul><ul><li>“Commodization” of HR functions </li></ul><ul><li>New roles for internal HR departments </li></ul><ul><li>New career opportunities for HR professionals </li></ul>
    22. 22. The Future of HRO (cont’d) <ul><li>6. Expansion of small/mid-sized HRO markets </li></ul><ul><li>7. Demographic changes </li></ul><ul><li>8. Improved HRO metrics </li></ul><ul><li>9. Reshaping of industry </li></ul>
    23. 23. Impact on Companies <ul><li> Employee reactions </li></ul><ul><li> HR executives taking part in operational and strategic decisions </li></ul><ul><li> Elimination of bureaucracy </li></ul><ul><li> Customer service improvements </li></ul>
    24. 24. Impact on Companies (cont’d) <ul><li> Growth of self-service platform </li></ul><ul><li> Slimming down staff </li></ul><ul><li> Cost savings </li></ul><ul><li> Model will serve to guide other organizational functions (IT, accounting) </li></ul>
    25. 25. Impact on HR Profession <ul><li> Internal HR at significant disadvantage in cost per transaction </li></ul><ul><li> Loss of control of key processes </li></ul><ul><li> Enhanced credibility </li></ul><ul><li> Strategic focus </li></ul><ul><li> Decentralized structure </li></ul><ul><li> Internal politics – HR as business partner </li></ul><ul><li> Move to customer service culture </li></ul>
    26. 26. Impact on HR Profession (cont’d) <ul><li> Management and Organizational Development – big picture view </li></ul><ul><li> New roles – consultant and HR strategist </li></ul><ul><li> Develop competencies to remain valuable </li></ul><ul><li> HR is exposed and more visible as organizational function </li></ul><ul><li> HR is far more measurable </li></ul><ul><li> Align HR strategy with corporate goals </li></ul>
    27. 27. Impact on Your Career <ul><li> Transformation – from transactional administrator to business partner that sets strategy </li></ul><ul><li> Develop competencies to negotiate and manage vendor relationships </li></ul><ul><li> Demonstrate ability to provide business solutions for employee and customer problems </li></ul><ul><li> Change bureaucratic culture </li></ul><ul><li> Develop strategic expertise necessary to manage human capital </li></ul>
    28. 28. Impact on Your Career <ul><li> Deliver exceptional customer service </li></ul><ul><li> Sharpen your skills </li></ul><ul><li> Build/Develop your network </li></ul><ul><li> Stay on top of trends and their implications </li></ul><ul><li> Utilize vendors now so that they can help you later </li></ul>
    29. 29. Online Resources <ul><li> Better – </li></ul><ul><li> EquaTerra – </li></ul><ul><li> Everest Group - </li></ul><ul><li> HRO Today – </li></ul><ul><li> HR Executive – </li></ul><ul><li> Human Capital Magazine – </li></ul><ul><li> “ HR Outsourcing Gaining Traction Fast” – </li></ul>
    30. 30. Online Resources (cont’d) <ul><li> Nelson Hall – </li></ul><ul><li> Outsourcing Center – </li></ul><ul><ul><li> </li></ul></ul><ul><li> Outsourcing Institute – </li></ul><ul><li> Outsourcing Suppliers – </li></ul><ul><li> </li></ul><ul><li> The Outsourcing Management Zone – </li></ul>
    31. 31. Books <ul><li> The HR Scorecard: Linking People, Strategy, and Performance by Becker, Huselid, and Ulrich (2001) </li></ul><ul><li> Strategic Outsourcing: A Structured Approach to Outsourcing Decisions and Initiatives by Greaver (1999) </li></ul><ul><li> Out of Site: An Inside Look at HR Outsourcing by Beaman (2004 ) </li></ul>
    32. 32. Books (cont’d) <ul><li> Outsourcing: A Guide to Selecting the Correct Business Unit…Negotiating the Contract…Maintaining Control of the Process by Bragg (1998) </li></ul><ul><li> The Challenge of Outsourcing Human Resources by Vanson (2004) </li></ul><ul><li> Outsourcing Human Resource Functions: Strategies for Providing Enhanced HR Services at Lower Costs by Cook (1999) </li></ul>
    33. 33. Professional Organizations <ul><li> Human Resources Outsourcing Association – </li></ul><ul><li> – </li></ul><ul><li> International Association of HR Information – </li></ul><ul><li> Shared Services & BPO Association – </li></ul><ul><li> </li></ul><ul><li> SHRM National – </li></ul><ul><ul><li>Outsourcing Forum – </li></ul></ul>
    34. 34. QUESTIONS?
    35. 35. THANK YOU! Tom Darrow [email_address]
    36. 36. Selection Process <ul><li> RFI – request for information </li></ul><ul><li> RFP – request for proposal </li></ul><ul><li> Site visit </li></ul><ul><li> Create and use scoring tools </li></ul><ul><li> Top 3 potential providers deliver presentation </li></ul>
    37. 37. Selecting a Provider <ul><li> Identify must have’s and nice to have’s </li></ul><ul><li> Discuss provider with consultant, competitors, former customers/employees </li></ul><ul><li> Perform reference checks </li></ul><ul><li> Determine current state of provider’s market share </li></ul><ul><li> Consider local vs. remote </li></ul>
    38. 38. Selecting a Provider (cont’d) <ul><li> Identify provider’s recent disappointments </li></ul><ul><li> Determine provider’s current weaknesses </li></ul><ul><li> Beware of off-the-shelf solutions from vendors </li></ul><ul><li> Determine provider’s current workload and capacity </li></ul>
    39. 39. Selection Criteria <ul><li> Proven track record </li></ul><ul><li> Cost of vendor services </li></ul><ul><li> Service level guarantees </li></ul><ul><li> Flexible contract options </li></ul><ul><li> Cost savings guarantees </li></ul><ul><li> Recommendations from other companies </li></ul><ul><li> Compatible corporate culture </li></ul><ul><li> HR process expertise </li></ul><ul><li> Leading technology </li></ul>
    40. 40. Transitioning Resources <ul><li> Launch period between selection and implementation </li></ul><ul><li> Approximately 90 days </li></ul><ul><li> Time of learning in order to gain mutual understanding of company and processes </li></ul><ul><li> Communication and project management are key </li></ul><ul><li> Slowly turn over control as you transition resources </li></ul><ul><li> Cannot measure results until end of this period </li></ul>
    41. 41. Managing the Provider <ul><li>Who should manage the provider? </li></ul><ul><li> CFO </li></ul><ul><li> Head of HR </li></ul><ul><li> Other HR individuals </li></ul>
    42. 42. Managing the Provider <ul><li> Establish performance targets and set expectations up front </li></ul><ul><li> Determine priorities and communicate them to vendor </li></ul><ul><li> Establish reporting relationships up front </li></ul><ul><li> Provide forum and timing for discussion of issues </li></ul><ul><li> Anticipate and plan for conflict resolution – arbitrate when it occurs </li></ul><ul><li> Ongoing ownership, involvement, supervision </li></ul>
    43. 43. Managing the Provider (cont’d) <ul><li> Where continuity is critical, establish long-term relationships with vendors </li></ul><ul><li> Review annual operating plans and major initiatives </li></ul><ul><li> Guidance for provider and buyer’s managers’ oversight </li></ul><ul><li> Require competitive bidding for outsourced service at regular intervals </li></ul><ul><li> Review contract terms and suggest changes as needed </li></ul>
    44. 44. Managing the Process <ul><li> Look beyond initial cost savings and track affect on employee satisfaction and organizational performance </li></ul><ul><li> Ensure senior management buy-in and involvement </li></ul><ul><li> Reinforce/reward through incentives </li></ul><ul><li> Focus on quality first, cost second </li></ul><ul><li> Test outsourcing with specific function before expanding </li></ul>
    45. 45. Managing the Process (cont’d) <ul><li> Facilitate feedback from internal HR team </li></ul><ul><li> Manage resistance from internal HR team and company at large (communication is key) </li></ul><ul><li> Anticipate and manage culture change </li></ul><ul><li> Develop staff members to effectively manage vendor relationships </li></ul>
    46. 46. Measuring Performance <ul><li> Insist on accurate and frequent status reporting by vendors </li></ul><ul><li> Demand immediate notification when problems arise </li></ul><ul><li> Metrics are key </li></ul><ul><ul><li>Quantitative terms </li></ul></ul><ul><ul><li>Incorporate multiple time periods </li></ul></ul>
    47. 47. Measuring Success <ul><li> Internal metrics: effectiveness, efficiency, quality, productivity </li></ul><ul><li> External metrics: revenues, expenses, market share, customer relations, quality productivity </li></ul>
    48. 48. Typical Problems <ul><li> Lack of measurement </li></ul><ul><ul><li>88% of large business require metrics 8 </li></ul></ul><ul><ul><li>Only 41% of mid-sized companies stipulate metrics in contracts 8 </li></ul></ul><ul><li> Rush into autonomy too soon </li></ul><ul><li> Unrealistic expectations and goals </li></ul><ul><li> Outsourcing for the wrong reasons </li></ul><ul><li> Overly focused on cost savings </li></ul><ul><li> Lack of communication </li></ul><ul><li> Difficulties managing vendor </li></ul><ul><li> Employee resistance </li></ul>
    49. 49. Success Factors <ul><li> Preparation is paramount </li></ul><ul><li> Be a knowledgeable buyer </li></ul><ul><li> Realistic goals and expectations </li></ul><ul><li> Strategic vision </li></ul><ul><li> Consider permanence of outsourcing - costs involved in switching outsourcing vendors or ending HRO </li></ul><ul><li> Find the right vendor </li></ul>
    50. 50. Satisfaction <ul><li>Recent survey of 129 large companies representing 2 million employees 9 : </li></ul><ul><li> 89% satisfied with outsourcing arrangement </li></ul><ul><li> 85% achieved hoped-for benefits </li></ul><ul><li> Additional 20% achieved unexpected benefits </li></ul>
    51. 51. Best Practices <ul><li> Selective path toward HRO </li></ul><ul><li> Multiple vendor relationships </li></ul><ul><li> Combination of internal and external strategies </li></ul>
    52. 52. Overview of Process <ul><li>Outsourcing Model – Greaver, 1999 </li></ul><ul><li>Planning </li></ul><ul><li>Exploring strategic initiatives </li></ul><ul><li>Analyzing costs/performance </li></ul><ul><li>Selecting providers </li></ul><ul><li>Negotiating terms </li></ul><ul><li>Transitioning resources </li></ul><ul><li>Managing relationships </li></ul>
    53. 53. Planning <ul><li> Prepare HR </li></ul><ul><ul><li>Develop and communicate new HR strategy </li></ul></ul><ul><ul><li>Define new roles and responsibilities </li></ul></ul><ul><ul><li>Restructure HR </li></ul></ul><ul><ul><li>Hire new employees to fill skill gaps </li></ul></ul><ul><ul><li>Provide training for employees in new roles </li></ul></ul>
    54. 54. Planning (cont’d) <ul><li> Prepare Organization </li></ul><ul><ul><li>Develop HR strategy within overall organizational strategy </li></ul></ul><ul><ul><li>Communication plan </li></ul></ul><ul><li> Resolve issue of whose payroll individuals are now on </li></ul><ul><ul><li>Are HR employees actually employees of provider? </li></ul></ul><ul><ul><li>Does head of HR work for company or provider? </li></ul></ul>
    55. 55. Exploring Strategic Initiatives <ul><li> Assessment </li></ul><ul><ul><li>Self examination </li></ul></ul><ul><ul><li>SWOT of department </li></ul></ul><ul><ul><li>Organizational scan </li></ul></ul><ul><li> Define opportunities and benefits </li></ul><ul><li> Build the business case – consider all costs and impacts on organization </li></ul><ul><li> All functions that are not core competencies should be considered for HRO – nothing is sacred </li></ul><ul><li> Consider the driver behind HRO decision </li></ul>
    56. 56. Analyzing Cost/Performance <ul><li> Understand market trends and competitive position </li></ul><ul><li> Identify goals and objectives </li></ul><ul><li> Determine added value </li></ul><ul><li> Gather baseline HR costs and metrics </li></ul><ul><li> Compare current HR operations to benchmarks </li></ul><ul><li> Determine which processes have highest strategic importance and add most value </li></ul>
    57. 57. Identifying a Provider <ul><li> Referrals/Networking </li></ul><ul><li> Newspapers and Magazines (HRO Today) </li></ul><ul><li> Internet </li></ul><ul><li> Mailings </li></ul><ul><li> Professional Association Lists </li></ul>
    58. 58. Negotiating Terms <ul><li> “Good contracts make good partners” </li></ul><ul><li> Maintain heat of competition during negotiation </li></ul><ul><li> Reasonable, but clearly established, expectations </li></ul><ul><li> Well-documented deliverables regarding every aspect of deal </li></ul><ul><li> Attorney involvement </li></ul>
    59. 59. Specifications of Contract <ul><li> Contract Duration </li></ul><ul><ul><li>Exact beginning and ending dates </li></ul></ul><ul><ul><li>Financial penalties for early termination </li></ul></ul><ul><li> Parties to the Contract </li></ul><ul><ul><li>Allow for additions or deletions (in case of acquisitions or divestitures) </li></ul></ul><ul><ul><li>Require vendor to name all subcontractors and give you right of approval for those introduced later </li></ul></ul>
    60. 60. Specifications (cont’d) <ul><li> Services Performed </li></ul><ul><ul><li>Specify all functions to be provided </li></ul></ul><ul><ul><li>Outline all support services </li></ul></ul><ul><ul><li>Ensure escalation process and dispute governance included </li></ul></ul><ul><li> Performance Standards </li></ul><ul><ul><li>Tweak standard performance guarantees </li></ul></ul><ul><ul><li>Reinforce performance guarantees through at-risk fees </li></ul></ul>
    61. 61. Specifications (cont’d) <ul><li> Hold-Harmless Statement </li></ul><ul><li> Fees </li></ul><ul><li> Data Security </li></ul><ul><li> Communication Review </li></ul><ul><li> Contingency Plans </li></ul><ul><li> Audits </li></ul><ul><li> Final Contract Review </li></ul>
    62. 62. Articles <ul><li> Adler, Paul S. 2003. “The HR Outsourcing Decision.” MIT/Sloan Management Review. Fall 2003 </li></ul><ul><li> Gelman, Lisa & David Dell. 2002. “HR Outsourcing Trends Study.” New York: The Conference Board. </li></ul><ul><li> Goldsmith, Neal M. 2003. “Outsourcing Trends.” The Conference Board, July 2003. </li></ul><ul><li> Holincheck, James. 2003. “Deciding to Insource or Outsource Human Resources.” Gartner Research, 28 February 2003. </li></ul>
    63. 63. Footnotes <ul><li>Offshore IT Outsourcing – </li></ul><ul><li>2004 SHRM Human Resource Outsourcing Survey </li></ul><ul><li>Human Resource Outsourcing Association – citing the Yankee Group </li></ul><ul><li>Fidelity Investments – “Fidelity Building Its Share in HR Outsourcing Market” by Matt Ackermann; American Banker; July 19, 2005 </li></ul><ul><li>5. Human Resources Outsourcing Association – citing the Yankee Group </li></ul>
    64. 64. Footnotes – (cont’d) <ul><li>6. Human Resources Outsourcing Association -Conference Board Report </li></ul><ul><li>According to the 2004 SHRM Human Resource Outsourcing Survey </li></ul><ul><li>“Outsourcing Comes to the Middle Market” by Bob Violino – SHRM HR Outsourcing Forum </li></ul><ul><li>Survey from Hewitt Associates Press Release April 18, 2005 “HR Outsourcing Continues to Boom as Organizations Gain Experience and Reap Benefits” </li></ul>
    65. 65. Sources <ul><li> Anonymous. “HR Outsourcing: Success Steps to Observe for Your Company.” HR Focus, September 2003 . </li></ul><ul><li> Anonymous. “Planning to Outsource.” HR Focus, May 2004. </li></ul><ul><li> Ackermann, Matt. “Fidelity Building Its Share in HR Outsourcing Market.” American Banker, July 19, 2005. </li></ul><ul><li> Greer, C., Youngblood, S., & Gray, D. “Human Resource Management Outsourcing: The Make or Buy Decision.” Strategic Human Resource Management. Southwestern, 2002. </li></ul>
    66. 66. Sources (cont’d) <ul><li> Grensing-Pophal, Lin. “Outsourcing Performance Management: Is It Right for You?” SHRM HR Outsourcing Forum, August 2005 </li></ul><ul><li> Hewitt News and Information – April 18, 2005 Press Release - “HR Outsourcing Continues to Boom as Organizations Gain Experience and Reap Benefits” </li></ul><ul><li> Henneman, Todd. “Measuring the True Benefit of Human Resources Outsourcing” Workforce Management. July 2005 </li></ul>
    67. 67. Sources (cont’d) <ul><li> HRO Today Magazine – July 2005/August 2005, May 2005, January/February 2005, December 2004, October 2004 </li></ul><ul><li> Human Resources Outsourcing Association Certification Course - “Outsourcing as an HR Strategy” </li></ul><ul><li> Landberg, Steven. “Effectively Utilizing Recruitment Outsourcing: Lessons Learned From Early Users.” SHRM White Paper, August 2005 </li></ul><ul><li> Miller, Stephen. “SHRM 2005 Conference & Exposition: HR Outsourcing: All the Way?” June 2005 </li></ul>
    68. 68. Sources (cont’d) <ul><li> SHRM Special Expertise Panels 2005 Trends Report – HR Consulting/Outsourcing </li></ul><ul><li> Violino, Bob. “Outsourcing Comes to the Middle Market.” SHRM HR Outsourcing Forum, August 2005 </li></ul><ul><li> Watson Wyatt “HR Outsourcing: Finding the Optimal Mix – 2005 HR Technology Trends Survey.” </li></ul><ul><li> Weatherly, Leslie A. “HR Outsourcing: Reaping Strategic Value for Your Organization.” 2005 SHRM Research Quarterly. </li></ul>