Engaged Workforce

Agile and social models are changing performance management, rewards, coaching, goal-setting and development. How you engage with your workforce will directly correlate with how to maximize the productivity of employees whilst giving the best possible opportunities for development.

Hewitt Associates to Provide HR BPO Services to PepsiCo

Firm Continues Growth of HR BPO Business, Signing Eighth Deal Since Close of Hewitt and Exult Merger

LINCOLNSHIRE, Ill. — Hewitt Associates (NYSE: HEW), a global human resources services firm, announced today that it will provide comprehensive HR business process outsourcing (BPO) services to PepsiCo (NYSE: PEP), a world leader in convenient foods and beverages. Financial terms of the deal were not disclosed.

Under a ten-year agreement, Hewitt will provide HR BPO services in the U

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ARINSO International wins HR BPO contract with a global leader in the specialty pharmaceutical and medication delivery industry.

ARINSO International (Euronext Brussels:ARIN), a leading provider of HR technology consulting and outsourcing, announced the successful go-live of an HR BPO contract with a global leader in the specialty pharmaceutical and medication delivery industry. Under this contract, ARINSO People Services provides comprehensive HR services for all US employees. ARINSO provided Benefit Administration Open Enrollment services to the client in October 2005, and commenced the full contracted HRO services in January 2005

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ARINSO International adds new US HR Outsourcing contract

ARINSO International (Euronext Brussels:ARIN), a leading provider of HR technology consulting and outsourcing, announced the successful go-live of an HR BPO contract with a global leader in the specialty pharmaceutical and medication delivery industry. Under this contract, ARINSO People Services provides comprehensive HR services for all US employees. ARINSO provided Benefit Administration Open Enrollment services to the client in October 2005, and commenced the full contracted HRO services in January 2005

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Solaris Health System Selects Egan, Amato & O’Connor as New Employee Benefits Consultant

MANASQUAN, N.J., April 1 /PRNewswire/ — “We are pleased to announce the selection of Egan, Amato & O’Connor as our new employee benefits consulting partner,” says Shirley Higgins Bowers, Vice President of Human Resources for Solaris Health System

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Cruise Control for 401(k) Plan Participants

Running on auto pilot is okay, as long as plan administrators keep their hands on the wheel.

by Larry Heller

Although much has been written about the controls put in place by 401(k) plan sponsors to protect day traders from themselves, participants at the opposite end of the spectrum are often overlooked. Lets call them the auto pilotsthe participants who arent paying much attention to their 401(k) plan. Todays technology and typical plan design have made it very easy for the hands-off participant to remain that way, even in a generous, well-advertised retirement program.


Without necessarily understanding the plan or tax rules in any detail, the auto pilots know it is a good thing to contribute some of their pay. So they joined the plan, perhaps with contribution amounts and investments dictated by automatic enrollment. They have been contributing via automatic payroll deduction. Perhaps this plan also offers automatic contribution increases, whereby contribution percentages (of pay) automatically increase upon pay increase, and automatic rebalancing, which saves the participant the effort of reacting to an account that, for example, has skewed far from the investment split that the participant (or the automatic enrollment) originally intended.


In this hypothetical (but very possible) scenario, the participant who once chose or defaulted into a healthy contribution level might now be a mere spectator while the plan applies the IRSs annual contribution limitsstopping their pre-tax contributions at this years $14,000 limit, perhaps with an automatic restart of contributions in the first pay period of 2006.


On a more sophisticated level, perhaps the participant chose managed accounts, where the participant delegates responsibility to a financial entity authorized by the plan sponsor to make all of that accounts ongoing investment decisions. If so, that step of allowing their account to be managed for them might be one of the only active steps they ever take during their participation in their plan. Perhaps the plan also offers an employee stock ownership feature, offering automatic dividend reinvestment or cashout, with a likely default to reinvestment.


Its all automatic, and its all under control by the plans recordkeeper. But the auto pilots need several defense mechanisms to be in place on their behalf. At the very least, the plans overseers are obligated to communicate the plans default rules and their implications, and carry the fiduciary responsibility to monitor investment performance. Yet plan sponsors usually delegate to plan administrators much of the responsibility for helping those who have chosen not to help themselves. Lets look at these lines of defense:



By law, all plan participants are notified if their plan employs any of the automatics mentioned above and, if so, its default contribution rate and investment approach. Printed account statements confirm the status of the account, and Summary Plan Descriptions lay out the participants alternatives, deadlines for changes, and implications of inaction. But is the plan administrator monitoring the level of default elections taking effect, or how or how often participants override them? Are their communications personalized and targeted enough to catch the eye of the auto pilots who just let their 401(k) ride until their retirement, despite what it might be costing them?


Investment Selection

During the past decade, lifecycle and lifestyle fundspresetting an investment mix appropriate to the assumed age or investment time horizon of the investorhave solidified their place in the offerings of 401(k) plans. These funds help investors follow proven long-term investment strategies and diversification without requiring them to make ongoing, explicit reallocation decisions. Again, are all of these default options made clear to a generally unsophisticated and often uninvolved audience?


Fiduciary Responsibility

The recent growing trend towards offering the managed accounts described above expands the plans fiduciary exposure. All along, the retirement or pension committee overseeing the plan has had the responsibility of offering its participants a prudent array of investment options. The fate of the auto pilot is especially in their hands. Ironically, for the recently terminated employee who never contributed much to the plan, their final action could be just as automatican involuntary rollover of their vested account balance (if it has not exceeded $1,000) to an IRA preselected by the company they just left. Defaulters should beware. It is always a good idea to remind them to drive with their eyes open.   

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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.  


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Orientation–Not Just a Once-Over-Lightly Anymore

If your new hires are falling asleep during orientation, it may be time to revamp your program.

by Matt DeLuca

One word that makes everyone in HR a subject matter expert is orientation. This termcurrently part of the onboarding processmeans a lot of things to everyone. The last time I checked, orientation to Disney meant a required four-day (4-day!) session for its theme park employees. At the other end of the spectrum are those brief, 45-minute orientations, where the subject matter expert (or a small team of experts) races through a catalog of details concerning the minutiae of the different prices for lost limbs according to the rate chart for the organizations up-to-date accidental death-and-dismemberment coverage. Then there are those orientation programs that cover retirement in a lengthy session, despite the fact that the person just started and may not even be eligible for retirement benefits.


And dont forget the HR professionals who love one-on-one orientation sessions, all the while complaining that they have too much work and too little time. This situation always grows heated when, in an effort to reduce the demands on HR, the one activity they really love doing (the orientation sessions) is often the first to be cut.


It is important to remember, though, that none of the various orientation options above take into account the most important factor: Extensive research has shown that a new employee would much rather be starting his or her on-the-job responsibilities than sitting through an orientation.


Despite the challenges of orientation programs, however, research conducted by industrial psychologists consistently shows that an effective orientation program has staying power. Results have shown that an effective orientation program has a direct impact on employee turnoverwith those undergoing orientation more likely to stay with an organization longer than one year (usually the most difficult period for the new employee).


The question you should be asking is whether it makes more sense to use an outside provider for this all-important activity. How do you determine if entrusting this function to outsiders is important to your effectiveness in this activity?


As Stephen Covey, author of the enormously popular The Seven Habits of Highly Effective People, says begin with the end in mind. Do you recognize what constitutes an effective orientation program? Many believe the process is so important that organizations should really have a series of orientation programs. There are two reasons for this: First, intermittent training works best, and second, many successful training efforts have shown that less is more. With more than one session, you dont have to worry that everything will be covered. If it werent so sad to see how often well intentioned HR professionals insist on piling a ton of information on new employees, it would really be comical.


Your next step should be to employ gap analysis. What would effective orientation training look like? What would the results include? What would the results be immediately after training? How about three and six months later? Also consider your current new employee turnover. If there were a better orientation program, how do you forecast turnover levels decreasing for new employees? What other metrics should you consider that could be tied to effective orientation?


 Next, see what best practices employers are doing. Then network with vendors to see who offers what. When you learn of a program that you want to explore further, request the opportunity to witness it firsthand and ask how its effectivenes is measured.


At this point, you will have an understanding of what the marketplace has to offer. Compare those results with your current internal program. If you have a strong program, then you could do two things: First, see if there is anything else you want to offer or anything you want to change to make your program even stronger; second, consider (if your program is so effective) whether it is a core competency for your organizations HR program. If this is so, that fact should be shared not only as part of your internal branding initiatives but also with the outside world. When you become a provider of orientation programs elsewhere, as Disney has so successfully done in partnership with SHRM, generating revenue is certainly achievablethough hopefully it wont result in four-day orientation programs!


Regardless of the outcome, examining the effectiveness of orientation efforts is a valuable exercise to undertake periodically. You avoid doing so at your own peril.

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Running Training Like Business

Dont get phased out of the big picture.

by Ed Trolley


Listen to that faint, distant rhythm. What youre hearing is the sound of impatienceexecutive impatience. Leather soles pacing on hardwood. Fingertips drumming on desk. Pencils tapping on coffee cups. And, its getting louder. Corporate executives from Sydney to Syracuse are looking at traditional training organizations with crossed arms and raised eyebrows. They want results. They want the same kind of productivity and performance gains from their investment in training and development that they see from information technology, research and development, manufacturing, and sales. They want results and they want them yesterday.


Executives tell us, and prove through their continual support of training, that they believe in the value of learning. They believe committed and capable employees drive the results that shareholders demand. Executives want training to work. But theyre not convinced that their training organizations are delivering the goods. They are right to be skeptical.


Businesses spend billions on training, but what is the tangible return on that investment. Do we have anything more than neatly framed certificates that prove we attended a Sales Strategy class? More competitive wins? A better close rate? Improved customer retention? More revenue? Somethinganythingthat flows to the bottom line? No? Listen to that tapping!


In companies around the world, the timer is expiring on trainings feel-good charter, measuring success by how training participants feel when they complete a class. Theres a brave new world of expectations taking root these days, where training can and will be measured on real business results, and where training is expected to deliver economic and strategic value on every investment.


Meeting these new expectations requires much more than producing better training courses. It requires transforming the traditional training operation into a customer- driven, results-hungry, value-producing machine. It requires dramatic changes in the way training interacts with the rest of the business. I call this new modus operandi running training like a business, but whatever we call it, it changes the training game forever. Training will transform from a backroom support function to a strategic tool, fully aligned with the companys central business plans. Running training like a business produces training that is more effective in driving the desired business results with more cost-and-time-efficiency. In short, it quiets the sounds of impatience that ring in the ears of training leaders.


Because of continuing changes in business itself, the need for change in training has never been more urgent. The rate of change in business accelerates every year, yet in recent decades, training has evolved only in small ways. It is worrisome in itself that many in the training and development world consider the philosophy of running training like a business a radical one. This perception indicates that the training and development sector is lagging behind the rest of business, where the demand for results has driven efficiencies and innovations that energize the bottom line. Technology, having revolutionized virtually all other business functions, is altering fundamentally how training is designed and delivered. Business leaders, encouraged by technologys impact in other areas of their companies, have higher and often unmet expectations for trainings marriage with technology.


Pushed by its customers and pulled by technology, training needs to take bigger, bolder stepseven experimental onesto keep up with the business at large. Relentless improvement must become the battle cry for training, because ultimately much more is at stake than the patience of company executives. Training organizations that fail to keep up with business face a battle for survival, and companies that cant deliver valuable training to employees may in turn find themselves fighting for survival in the markets they serve.


Making the transition to running training like a business is a formidable undertaking. The planning is intricate; the implementation is exacting. In many ways, it is as challenging as opening a new business, because that is essentially what is involved. The transition demands hard work and total commitment.


These challenges notwithstanding, I can say unequivocally that running training like a business can silence the rhythmic tapping of executive impatience. No approach responds so directly to the interests and expectations of senior management, line managers, and shareholders. Training organizations fully aligned with corporate strategy and consistently delivering tangible value on every investment can inspire a great deal of peace and quiet.  


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Switzerland Inn Picks The Castleton Group for HRO

Asheville, NC Jim Stilgenbauer, Vice-President of Client Services at The Castleton Groups Asheville office, has announced that the firm has been chosen to provide comprehensive human resource outsourcing services for Switzerland Inn, located in Little Switzerland, North Carolina

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Case Study: Lifestyles of the Rich and Outsourced

Multi-million dollar Anderson Companies still likes to save money through HRO.

by Marsha Kendall


The Anderson Companies are a real estate development operation focusing on recreational and residential communities. Founder Lyle Anderson defined this market in the early 1980s with the creation of exclusive golf communities in north Scottsdale, Arizona. Current properties are located in Santa Fe, New Mexico; on Hawaiis Kona coast; east of Phoenix, Arizona; and Scotland. With a variety of business interests in luxury homebuilding, golf-related enterprises, and investment properties, the HR department had to juggle numerous employees in different regions and with different needs. It made Anderson the perfect candidate for outsourcing.


Our employees serve a very sophisticated clientele, explained Bill Siwek, executive vice president and chief financial officer for the Anderson Companies. In choosing an HR provider it was critical that we partner with an organization that understands our business as well as treats our employees the way we expect them to treat our members.


Andersons initial needs were the consolidation and standardization of accounting and payroll functions. However, after re-evaluation, the opportunity for full service human resources and payroll outsourcing was present. In late 2002, Anderson partnered with Core3, Inc., a provider that specializes in human resources, payroll, finance and accounting, and information technology outsourcing for the mid market, with shared service centers located in Phoenix, Arizona and Delhi, India. The company chose Core3 because it provided every level of service from field support for the Anderson Companies employees and management to strategy, recruiting, training, and transaction processing, as well as access to a Phoenix-based shared service center.


This is a unique delivery model in that the client wanted to maintain employee visibility to HR on a daily basis, while improving the quality of the function and reducing costs. The provider has on-site staff who are committed to employee and management support, while all strategy, development, and the majority of transaction processing are handled on a centralized basis at the providers shared service center.


The first-year results were impressive. Employee satisfaction with HR grew from 74 percent at the start of the relationship to 92 percent by the years end. Accuracy in benefit administration rose from 64 percent to 100 percent in the same time frame, and payroll accuracy has consistently exceeded 99 percent each month.


Special projects during the first year included the introduction of a standardized HR Policy Manual, new employee handbooks in both English and Spanish, new hire orientation, customized trainings, and the standardization of job titles and job descriptions, thus reducing titles by more than 20 percent. In addition, through a combination of field and support staff, the service provider was able to successfully partner with two Anderson Companies properties and increase staffing by more than 30 percent to handle the seasonality in the business. Equally important, the outsourcing relationship contributed to the reduction of HR/payroll costs by more than 20 percent, and impacted other related costs, such as a 40 percent reduction in legal fees and tighter controls for severance and relocation packages.


These accomplishments were driven by the providers combination of HR expertise, experience with global models, and comprehensive set of delivery tools. Core3s familiarity with global delivery allowed it to take the model a step further and understand the challenges and opportunities surrounding the support and management of thier own employees placed at client sites. Daily calls, weekly phone conferences, and regular site visits, are some of the tools they have has utilized to create a sense of team with its HR staff assigned to this relationship. In addition, through tools such as CoreSupport, the HRO companys new issue identification, management and resolution tool, Core3 has up-to-the-minute access to employee issues and concerns. This information allows them to ensure a timely and consistent response at the property level, report to client executives on the specifics surrounding a particular employee issue, plus identify trends for proactive workforce management.


Core3 has enabled the Anderson Companies to focus on our core competencies related to real estate development by addressing all our employee related issues. They truly understand our business and continue to deliver innovative solutions to support our success, concluded Siwek.   

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