The Super Seven

Mid-market HRO rules and tools.

by Harry Feinberg

Are you a mid-market company with 1,000 to 10,000 employees? If so, youre probably outsourcing specific HR functions to specific providers, for example payroll to ADP, benefits administration to Fidelity, and other processes to other specialists. And yet, if you are reading the pages of this publication, you know theres a better way to be outsourcing your HRhanding all functions to one multi-process provider.

 

Each month, you have read HRO Today cover stories about the largest, global companies engaged in HR business process outsourcing (BPO) dealscompanies such as Sun Microsystems and Proctor & Gamble. You have read about how these companies are reducing costs, gaining expertise, and becoming more strategic. You know as an HR professional that your mid-market company needs the same strategy as the big guysso why are you handling your HR outsourcing differently?

 

With more than 20 million employees in the U.S. midmarket, you can bet that the largest HRO providers are gearing up and equipping their companies to make standardized offerings available so that they can move down stream and start serving the mid-market organizations (admittedly, to make a bucket load of profit). Taking the opposite approach are the service providers known as professional employer organizations (PEOs), looking for a way to take their co-employment model, traditionally designed to serve the small company market, and move upstream to the mid-market (again, seeking profits from the same bucket). These two different approaches have both pros and cons for the potential buyer. So when shopping for an HR BPO provider, it is important to know the service providers model and remember these rules to steer your efforts in the right direction. Here are the seven shopping rules and tools you need to keep in mind when browsing for a service provider in the mid-market.

 

Rule # 1:

Shop in the right shopping mall. Attend HRO World, April 12-14, at the New York City Hilton Hotel. All the providers will be there, all in one place, and all at the same time.

 

Rule # 2:

Seek out the most scalable mid-market provider and you shall find that it is the one that has mastered the art of systems standardization. Multifunction standardized outsourcing that integrates HR and finance and accounting will reduce your costs and reduce your need for managing more than one provider. Standardization allows providers to leverage infrastructure and implement more quickly, more effectively, and at less expense. Be prepared to take on the providers process and change yours.

 

Rule # 3:

Shop for the innovators. They are the ones that created this industry and are doing the most valuable things in HRO.

 

Rule # 4:

Talk with some of the big guys. When we say big, we mean enterprise-level, like Accenture and Aon for example. The big guys are starting to smell the sweet opportunity of mid-market HRO and have begun to move downstream. The large-company market is getting saturated. Analysts are saying that the demand for smaller sized BPO deals of less than $100 million is extremely high in the United States.

 

Rule # 5:

Look for a stellar client reference list from providers. And call them all.

 

Rule # 6:

Determine your HR goals and know your HR metrics before starting your search or outsourcing transaction, so that you can effectively measure cost saving with provider prospects. Know thy annual cost of HR per employee.

 

Rule # 7:

Shop til you drop, or use a sourcing consultant to help show you a more sophisticated way to shop. In fact, think of sourcing consultants as your personal shoppers, but remember they will cost you.

 

Using these rules and tools as your starting point in your search for a mid-market HRO provider will help ease the pain. And as you continue your search and start to add your own rules, please e-mail and tell us about what you are learning so that we can pass on your knowledge to other readers of HRO Today magazine. And, if youre at the HRO World conference and expo and bump into me, please let me know how helpful the super seven are when shopping on the trade show floor.  

 

Posted April 10, 2005 in Engaged Workforce

Leave a Reply