Event: NY HR Week Conference & Expo
When: April 17-18, 2007
Where: Hilton New York
What: Previously known as HRO World, HR Week now features three conferences simultaneously: There is HRO World for the outsourcing providers, consultants and buyers; HR Management Solutions, which focuses on the strategic issues facing workforce management executives; and the HR & EEO in the Federal Workplace Conference, for HR managers in the public sector.
Conference info: For information, go to www.nyhrweek.com.
Day 2—Wednesday, April 18, 2006
BlackBerry Blackout: By early Wednesday morning, many attendees were in a full-on state of panic because of the widespread BlackBerry failure that had begun the night before. Over coffee and bagels, many lamented not knowing when systems would be up and running again. "I got a message at 4:30 a.m., but that was it," said one attendee.
"Some people got so bored last night that they started to play with the old e-mails since they weren’t getting new ones," said Naomi Bloom, an HRO consultant. "I think it’s hysterical."
Howard Belknap, a self-proclaimed BlackBerry addict, didn’t think it was funny at all, however. By 8:30 a.m., Belknap, the director of business development at Morgan Lewis, had already been in touch with the firm’s IT director about the state of affairs. "She says that things are starting to go back up," Belknap said with relief.
Warning Call: Instead of lecturing providers about what HRO buyers want to see, keynote speaker Warren Pfister, director of HR customer services at Lockheed Martin, decided instead to address the mistakes buyers often make.
"Too much of the time is spent with the providers on what to do now and what to do over the next year," said Pfister, who will be the head of the HRO Buyers Group starting in May. Instead, companies and providers need to talk to each other about their business plans and HR strategies for the future and then find out "where they mesh," he said.
Other tips that Pfister gave to HRO buyers included:
• Don’t underestimate the effectiveness of personalized recognition. Too often, buyers think that money is enough to make providers happy. But Lockheed used to hold dinners and parties for the teams when they finished the implementation part of the HRO process. Food was served by team leaders on the buyer side (Lockheed) and the provider side (ACS). "The room for creativity for personalized recognition is endless," he said.
• Remain accountable. "Just because you outsource doesn’t mean that buyers are not responsible for their own business processes," he said.
• Shoot for customer intimacy and gauge satisfaction levels, not just length of time the service provider spends on the phone with company customers.
Fellow keynote speaker Naomi Bloom continued in that tone, albeit a bit harsher, in her presentation, which followed Pfister’s. Her message: Focus on business outcomes.
Too often, buyers are surprised to find after they signed an HRO agreement that their provider won’t do something that they need done immediately because of a market or business model change, Bloom said.
"When you sign an outsourcing agreement, you have no reason to expect anything more than what you signed up for," she said.
For that reason, buyers need to look ahead and plan for flexibility. And they need to keep their eye on their business goals. How should they measure the success of their HRO relationships? It would seem that here is where most companies have got it all wrong, Bloom said.
"Who cares about the number of paychecks being processed?" she said. "Providers should be measured by profit per full-time employee. Isn’t that what it’s all about?"
And it’s up to the HR executive to deliver this, Bloom said. "The HR executive at any company is responsible for a set of business outcomes, and you should know what they are," she said.
Testy, Testy: Things got a little heated at the final panel discussion of the day—"Has the HRO Model Grown Up?"—when moderator John Wilmott pushed provider panelists to say what percentage of their HRO business is subcontracted out.
"I think the number is completely meaningless," said Ellen Balaguer, who recently was promoted to global managing director at Accenture HR Services and Accenture Learning. "When you look at our scale, it just doesn’t make sense to break it down like that."
Wilmott didn’t let it go there, however, and pressed Balaguer, asking whether it was true that Accenture uses subcontractors for non-U.S. payroll processes. "No, not in its entirety," Balaguer said.
"Well, almost," Wilmott replied, undeterred, and moved on to his next target.
Day 1—Tuesday, April 17
Dollars and sense: Despite the hubbub about how the desire for "business transformation" is why companies outsource their HR processes, IDC analyst Lisa Rowan showed some recent research revealing it’s still about cost savings for most HRO buyers.
Speaking at an early morning breakfast meeting, Rowan shared data that showed that the No. 1 driver for both large and midmarket companies to sign an HR business process outsourcing agreement was cost savings.
"HR transformation came very low," she says.
When large-market buyers were asked what vendor attributes were most important, 70 percent said price competitiveness.
The findings came much to the dismay to many of the providers in attendance, who are still trying to figure out how to make a profit in this business. And Rowan’s statistics proved that they might have a reason to be concerned.
More than half the respondents expect cost savings of 10 percent to 30 percent, according to IDC. Many of the large-market buyers are expecting as much as 30 percent to 50 percent, Rowan says.
"That’s a scary mismatch between expectations and reality, and will require a lot of education of buyers," she said.
But vendors who stayed for the last panel discussion of the day received some good news on the cost front. Mark Hodges, executive director of corporate development at EquaTerra, a Houston-based sourcing advisor, told attendees that at least three of EquaTerra’s clients have signed off on HRO deals where they would be spending more than they are spending on their current infrastructure.
"The providers weren’t ready for that," he said. "They were used to pushing cost savings, but now they need to focus on how they can help the client with innovation."
Planning for unpredictability: As HRO groupies were on one end of the hotel, HR managers and consultants largely in the public sector heard Peter Cappelli, a professor from the University of Pennsylvania’s Wharton School of Business, talk about the death of workforce planning.
Cappelli didn’t actually say that workforce planning is a lost cause, but noted that the old-school strategy of hiring employees straight out of college and developing them throughout the careers is ancient history.
"It’s just not happening," he says.
On one hand, the competitive markets of today won’t allow for it. There is no way that companies can plan for what kind of talent they are going to need 10 years down the line, because the hot product of the day is gone tomorrow, he said.
At the same time, talent doesn’t stick around like it used to. To prove his point, Cappelli presented a list to attendees of things first-year workers want from their jobs and asked them to guess what was ranked No. 1.
The list included such items as salary, work/life balance, opportunity to learn and the ability to change positions.
What won out among all of the responses? "A good reference for the next job."
To address this unpredictability, companies need to apply just-in-time hiring and just-in-time training. Hiring has to be a mix of outside hiring and internal development, and it’s up to HR to determine how that mix should be achieved.
Training should focus on long-term competencies that would allow employees to jump from position to position within the company.
"Focus on general development and delay specific development until you have a shorter forecast," he says.
If a company knows it’s going to need more specific skills, send those employees to a course or provide coaching.
"It’s expensive, but if you can keep that talent, it’s worth it," Cappelli said in an interview following his presentation.