The Accountability Era in HRO

Accountability is the new cost savings. Awash in a sea of stakeholders -government, shareholders, customers, employees, boards of directors, insurance carriers, and the media -public companies today are buying HRO mostly for its ability to provide accountability.

by Jay Whitehead

Here are three scenes from a little movie I call “The Accountables.”

Scene one: my house. The other night I was on the phone with my little brother. He was about to start his new job as the CFO of a big gas pipeline company, El Paso Exploration & Production. A few weeks back, he parachuted out of his old gig as chief accounting officer at Burlington Resources after it got snarfed up by Conoco.

The topic of corporate compliance came up. He immediately got grumpy, mostly because of all the money he says CFOs must now spend on outsiders to check, double-check, and triple-check everything.

“Hey, I’m an auditor from way back,” he told me. “But checkers checking the checkers is absurd. Oh, and even the big accounting firms can’t find enough people to do all the work, which just means we overpay for the people they send us. We can’t avoid doing all this stuff. It is totally 100 percent mandatory, no questions asked. But it feels bad, like a tax.”

By the time we got off the phone, I almost felt sorry for my bro. But then I remembered how much money he makes, and that feeling went away. Quickly.

Cut to scene two: the HRO World Conference in New York City on April 26 of this year, 4:20 pm. I was moderating the annual Presidential Debate with the 13 heads of HRO’s largest firms. More than 800 people jammed the ballroom at the New York Hilton—standing room only. The audience hushed as I turned to Keith Strodtman, head of Ceridian’s HRO business. Earlier that day, he told me that his clients and prospects are not buying cost savings any more. It’s all about something new.

“What are they buying these days, Keith?” I asked.

“If I had to boil it down to one thing, I would say it is accountability,” he replied. “What they want is for us to keep them in compliance, to file everything on time, to worry about data security, and have somebody else on the hook for HR systems and process integrity. Last year it was all about the money, and this year it is all about accountability.”

As I looked up and down the line of the 13 panelists, every one of them nodded their heads in agreement.

Flash to scene three: the New York City office of Business Ethics magazine publisher and editor Michael Connor. A veteran of ABC News, the Wall Street Journal, CNBC International, and TV’s “The Wall Street Journal Report,” Michael bought Business Ethics a while back because he felt “a weird accountability vibe in the air.”

Because he is a hard-nosed New Yorker, Michael’s “vibe” seemed oddly Northern Californian—in the granola-loving and tree-hugging sense. I gave him a spooky, explain-yourself-or-else look. So he did. As a business reporter, he saw a mega-shift in business attitudes following the dot-com hysteria and in the wake of the Enron-Tyco-HealthSouth-Arthur Andersen-Frank Quattrone-Henry Blodgett-et al scandals.

“This is the kind of shift that makes normally rational people do unreasonable things, like buy magazines,” he said. “Big money is betting big on credibility, ethics, trust. Look at the CSR [corporate social responsibility] movement. Look at General Electric going green. Look at mutual funds going with responsible investment portfolios. Look at the social responsibilities conferences popping up. It’s business realizing that we are all accountable to each other.”

I asked him if he was just having a mid-life crisis. He laughed. Then, without speaking, he pointed to the ad on the back cover of Business Ethics. There, in full color, was an ad for Hewlett Packard, featuring headline words “sustainability” and “innovation.” Suddenly, I saw his point.

This is our new movie. “The Accountables” is you, me, and the HRO industry. And it looks like the movie is boffo box office. As the world gets more crowded, businesses become more interdependent, and economies intermingle, accountability has become a value proposition. Surely, my brother knows the costs of buying accountability. But this new data point is even more interesting: today’s accountability industry is a seller’s market.

Tags: Consultants & Advisors, HRO Today Global, Professional Contribution

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