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Johnson & Johnson on the Verge of Signing HRO Contract

September 7, 2006
Related Topics: Outsourcing, Latest News
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Johnson & Johnson is planning to outsource a number of its global HR processes and is down to choosing between three providers, company officials say.

Like many other employers that have signed HRO deals, the New Brunswick, New Jersey-based company wants to enable its 2,000 HR managers across the globe to be more focused on contributing to the strategic business of their markets, says Kaye Foster-Cheek, vice president, human resources at Johnson & Johnson. Working with an HRO provider is one way to do this, she says.

"The first thing I ask my HR managers is ‘Do you understand how your business makes money?’ " she says. It’s that understanding of the business that makes HR professionals relevant, she says.

"That’s a capability that is not necessarily resident within the [HR] function right now because that hasn’t been the expectation of it," Foster-Cheek says.

She would not identify the three providers in the running, but one analyst who declined to be identified heard that IBM, Accenture and Convergys were the three final candidates.

Johnson & Johnson began the process of evaluating HR outsourcers in January and expects to make a decision by the end of the year.

Given the company’s decentralized operations, with 250 separate business units across the globe, Johnson & Johnson is taking a very cautious and thorough approach to the process, Foster-Cheek says.

"We have spoken to executives at other HRO buyers like DuPont, Prudential Financial and Pitney Bowes, and what we have learned is that we have to be very clear about what the culture and makeup of our organization is," she says. "For example, we will say that we are decentralized, but what does that really mean? Is it about the makeup of the organization or the way decision-making occurs?"

After the deal is signed, Johnson & Johnson will make it a point to evaluate its HR managers to decide who should be a frontline HR representative for the company and who might be better suited working in a services center.

"I feel personally accountable, as do the HR and business leaders here, for at least assessing and giving an opportunity for development to folks," Foster-Cheek says. "Service center leaders and customer contact individuals are critical jobs and we have to make sure that we don’t inadvertently send the message that those jobs are not just as important."

Jessica Marquez

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