Expect a lot from your service providers, but when it comes to the retained organization, look to take on some heavy lifting yourself.
HRO providers inherently focus on transitioning services, technology, and processes out of an organization. They often assume that initiatives critical to the retained organization have already been addressed by Day One of the contract or that the client has the resources to support these initiatives throughout the transition. These initiatives are key inputs to HRO but often do not fall into the provider’s scope. We call them “The Forgotten Projects.” Two of these include:
• Policy Harmonization
• Retained HR Process Design and Integration
Policy harmonization activities should focus on the policies and programs that will be affected by outsourcing. Harmonization’s goal is to simplify and standardize policies to help reduce implementation and operation costs by streamlining the supporting technology and processes and, in the long run, allow providers to deliver consistent, high-quality service to their customers. The critical steps include:
• Create an inventory of the affected policies by collecting information for all in-scope processes;
• Establish policy harmonization guiding principles. For example, determine if policies will be harmonized across business units/countries and the reasons by which a policy exception will be allowed;
• Analyze existing policy data, develop recommendations for harmonization, and present findings for approval. Our experience shows this is most effectively done in a group setting with representation from all business units/locations;
• Assign ownership for policy harmonization efforts and develop a timeline that is coordinated with provider milestones. Most providers will indicate the date by which harmonized policies are required, so working with the provider to determine the appropriate timeline is key.
The future-state policy recommendations will be a necessary input into process design. Harmonization will set the tone for the level of standardization the organization anticipates to drive through HR BPO.
The policy harmonization level often improves operational performance. There is less room for error when the provider manages fewer policies instead of a different policy for each business unit/location, usually resulting in increased levels of client service and program satisfaction.
HR Process Design and Integration
An effective go-live is more than a smooth transition of outsourced services to the provider. It must also include a smooth transition for the retained HR function. Therefore, it’s critical to clearly define those processes and activities to be retained, the supporting organizational structure, and how these activities and personnel will integrate with the outsourced services. The critical steps include:
• Take time to clearly define the work that will remain within the HR function during future-state process design. Providers will traditionally limit process design to the processes and activities they own. Push the provider to design “end-to-end” to allow for more effective integration and interaction with the retained HR function.
• Create a detailed organizational design to support the retained HR processes and shift in responsibilities. This will allow you to identify future-state competencies and support talent assessment efforts to secure the most appropriate people.
• Develop a workforce transition plan that allows ample time to train your HR function, develops future-state competencies, and supports the move to the new structure and activities.
Clearly-defined processes and touch points between the provider and retained HR function can improve the overall customer experience and operational efficiency. And focusing on the retained HR function early should allow the function to focus on strategic HR areas that reward employees and the business.
These include talent management, succession planning, leadership development, and workforce analytics.
As an HRO customer, you will have accountability for numerous activities that are critical to the objectives of the outsourcing initiative, including those that lack direct assistance from the provider. Policy harmonization and retained HR process design and implementation are just two of the “forgotten projects” that can significantly affect your organization. Managing these early on will play an essential role in the effectiveness of your transformation. Remember, HRO takes a lot of work, and the provider is not going to do it all.