We've had the privilege of hearing from a host of industry leaders over the last couple of years (just look under the Outsourcing Heros category), and I'm delighted to present an interview with Deloitte's Jason Geller. Jason has been instrumental in driving some of the largest and most complex global HR transformation initiatives over the last decade, and has gained a stellar reputation within the industry as one of HR's most prominent thought leaders and consultants. I also had the privilege of working with Jason, and discovered he's quite a bashful chap who frequently shuns the spotlight in favor of his colleagues, so I thought I'd do something about that…
PF: Jason, in a nutshell, what do you see as the major challenges and opportunities facing HR executives today – and what measures do you recommend to address these?
JG: In these uncertain times, it is more important than ever to focus HR on activities that create business value. That means having a HR Strategy/Business Plan laser-focused on business value drivers:
Revenue Growth: Business Transformation, Globalization, M&A, New Markets, Innovation
Talent Strategies: Workforce Planning, Learning & Development, Total Rewards, Mass Career, Customization, Global Mobility
Operational Effectiveness: HR Policy, HR Service Delivery, HR Operations & Technology, Change and Culture, HR Analytics, Compliance
HR must deliver the HR services needed to support business strategy, such as revenue growth, talent and operational effectiveness. HR must make sure it is doing the right qqwork at the right level within the organization: By the right person; At the right location; By the right entity; Through the right delivery method; By the right HR role, which will lead to improved alignment with business goals.
The economic environment adds a complicating factor to HR ability to deliver business. It must determine how to support the business strategy while at the same time maintaining, or even reducing, the cost base for HR services – that will require a hard look at programs and policies, not just process, technology, and sourcing.
PF: Being one of the behind-the-scenes pioneers of HRO delivery models, you've already experienced first-hand the opportunities and challenges of HRO. Where do you see the industry going in 2009? Are we really back on a growth path, and what will the characteristics of future HRO initiatives look like?
JG: The HRO industry has evolved, matured, and morphed over the past 10 years. The early lift and shift driven HRO model focused on cost first and value second. When it became clear that lift and shift was not viable, the focus moved to transformation based deals where cost mattered, but value was equally, if not more, important. As we head into 2009 I believe that the HRO industry will go through yet another round of maturation. With a smarter provider and buyer community, the industry will grow again.
Some key characteristics of the HRO initiatives moving forward:
HRO does NOT equal HR Transformation. In the rush to move away from the lift and shift HRO model, HRO and HR Transformation became synonyms for each other. While HRO can be an enabler of HR Transformation, organizations looking to transform HR need to do much more than just HRO. With better context and a more realistic set of expectations, the buyer/provider HRO relationships will be more successful.
Multiple HRO Providers and Multiple Contracts. In the past, organizations have always looked for the “one throat to choke” when constructing an HRO deal. Moving forward, there will be a greater openness to having multiple HRO and HR Consulting providers involved in a deal, each focusing on their areas of strength. Depending on the scope and nature of the deal, this may result in multiple contracts directly between the various providers and the client. This doesn’t signal the end of the “mega” deal, just another options for organizations to consider.
Client Side Solution, Implementation, and Governance Responsibility and Accountability. As HRO deals evolve, the role of the client during the solution design, implementation, and ongoing governance will become significantly more important. It is no longer about providing requirements for a single HRO provider to implement and operate. The client must now be intimately involved in architecting the solution, leading the implementation, and managing the ongoing delivery, particularly the coordination among the various providers. The complexity that was once the responsibility of the HRO provider now becomes the client’s to manage.
HRO Solution Definition. In the drive for standardization and commercialization of HRO, providers attempted to define and sell a “standard” solution to clients. Unfortunately, conceptual level standards discussed during the sales process actually end up creating a greater gap in expectations during the implementation. The understanding and implications of a standard solution sold by the provider and purchased by the buyer is rarely aligned. Moving forward, I expect a greater emphasis on embedding the true details of a standard solution in the contracting process, before the final deal is signed, with the main goal of reducing assumptions on either side to bring more predictability to the implementations.
PF: Do you see the economic challenges impeding investments in strategic HR initiatives? And what's your advice to HR executives in this environment?
The bar will certainly be higher as HR request funding from a smaller pool of corporate dollars to support investments. HR must provide a measurable contribution to the growth and profitability of the organization and to each business segment. Additionally, HR must provide greater access to HR services, resources, tools, and information to focus on the business, its employees, and the more effective deployment of talent for business growth. The key is to demonstrate the business value of their HR initiatives.
Organizations will have to carefully balance short term HR and people related cost savings against the longer term strategic needs of the function and the organization overall. The economy will rebound and the war for talent will be back in full force – not simply isolated to key positions, but talent broadly.
PF: And how do you see the role of HR technology impacting the HR function in the next few years? Do you see a rosy future for the best-of-breed HR applications, or a move towards more holistic services-led talent services from the HR service providers and consultancies?
JG: HR technology has been and will continue to be an important enabler of an HR functions ability to meet its objectives. Organizations have more options than ever before – traditional ERPs, Software as a Service ERPs, Point Solutions, HRO Provider Delivered Solutions, etc. With more options, comes more complexity. The integration of these various components into a holistic HR technology platform becomes essential to deliver the promised value. The integration needs to take place from the data level to the HR service center/help desk level and all the way to the end user experience level in the portal. The architecture of the HR technology platform and how it works within the context of the overall HR service delivery model is absolutely critical. They must be designed together, not separately.
With respect to the Talent technology marketplace, there is still a significant opportunity for improvement. The term Talent is used very broadly in an attempt to sell services, technology, and outsourcing. The term is inconsistently used and the solutions pitched by vendors vary greatly creating confusion in the marketplace.
There is a clear business demand for a comprehensive approach to Talent – Talent Strategy, Talent Solutions, and Talent Infrastructure. Talent technology is an important part of the equation, but not the total answer. Just like the marketplace learned that implementing an ERP or signing an HRO deal was not the same thing as HR Transformation, the marketplace is learning that implementing a Talent technology solution is not the same thing as having a true complete, business driven approach to Talent.
Jason Geller is a Principal in Deloitte Consulting's Human Capital practice where he leads the Northeast HR Transformation service line and is responsible for Deloitte's global HR BPO competency. He primarily consults to global organizations on their HR transformation initiatives.
Posted in : Business Process Outsourcing (BPO), HR Outsourcing, HR Strategy, Outsourcing Advisors, Outsourcing Heros, Sourcing Best Practises
I think Jason is spot on with his analysis. One area that I have seen big differences in high performing HR environments vs. lagging HR environments is in the area of understanding the basics of running their portion of the business. The high performers seem to: always know their financials (budget vs. actuals, 3rd party costs, etc), are always open to having a detailed operations conversations, have strong project management skills, and demonstrate a daily “passion for execution” on even the most mundane tasks. Lastly, these leaders are able to “fold em” when something is not working and try something else.
Jason and Phil: thanks for sharing this excellent discussion. Your separation of HRO and HR Transformation is spot-on. HRO provides a vehicle for better access to HR data on a global scale and can help enable transformation. However, as Hank points out, having a better handle on your data, costs and processes is critical in this economy and “sensible HRO”, which is not a lift-and-shift model, can drive companies to get much tighter with managing their costs and processes more effectively.
Stephen
Hi Jason – great article, particularly split between HRO and HRT. I agree that the HRO industry has matured in many ways, but do see an increased demand from clients in “lift and shift” solutions at the moment. The main driver is cost, with organisations requiring improvements quickly. Also companies are still working out their new longer-term business strategies in the current economic environment, so while these are being developed HR execs are being more tactical.
For info see Blog entry :-
http://www.glassbeadconsulting.com/the-lift-and-shift-comeback-in-hr-outsourcing-7-tips-to-reduce-the-risks/
Andrew Spence
Glass Bead Consulting