Three big trends sure to shake up HRO practitioners. Learn how to take advantage of these.
Wouldn’t you have liked to have been an anti-depressant maker in 2008? I know that for the past three months, reading the news has been a saddening experience. Globally, it was the most difficult economic time in my generation, and I’m hoping that at some point in 2009, recovery comes into the mainstream dialogue.
In our HRO world, there wasn’t a lot to cheer about either. It seems that new, large comprehensive deals have all but disappeared, even as contract renewals now swing into full motion. That’s right, those first-gen deals are about to be reexamined, and lots of scrutiny of incumbent providers will be underway. But consider that outsourcing is kind of recession proof because in down cycles, organizations look to reduce headcount and change fixed costs to variable ones. So what can we look for in the new year?
• Most deals will end up being renewed. Companies today are too overwhelmed to reinvest in HR processes; they will want to conserve all resources to maintain profitability and cash reserves. If you have outsourced payroll and HR administration for the past five years, are you likely to move those services in-house even if you’re unhappy with the provider? Logic dictates no. In any case, you’re probably going to seek out a different vendor instead.
The fact is most buyers have not terminated their contract up to this point, and if anything, renewals will center around service excellence and innovations. Basic blocking and tackling have been completed, and what buyers should discuss now is how HRO can help raise their service delivery to a new level. Providers will need to offer up sound solutions around talent management, recruitment, learning, succession planning, and more. Their survival will depend on it.
• The HR executive sitting at the table is the one with the business case. Nothing impresses the CEO more than a well-prepared department head who comes with money. Who doesn’t like to have extra money to make shareholders happy? Outsourcing HR these days is less about transformation or business alignment and more about cost cutting and short-term return on investment. CEOs are too busy putting out fires to listen to grand plans for a utopian HR department, but flashing a little savings will naturally get executive attention and garner buy-in.
The business case must be sound and near-instant. Long implementations will almost guarantee rejection because no one can afford to be distracted at a time like this. HRO champions need to be realistic about how quickly gains can be made and adjust expectations accordingly.
• Technology will be the differentiator. Access to technology without the big overhead has always been HRO’s great value. Whether it’s an applicant tracking system, a learning management platform, or even an enterprise resource planning system, appropriately selected hardware and software help reduce administrative burdens, improve performance, and minimize costs. Technology is seen as so important to efficiency gains that the Obama administration is appointing a chief technology officer to help the Federal Government identify ways to cut spending. Another benefit of technology investments is the ability to generate critical data and reports, which have become even more important these days for organizations to be able to react quickly to changing market conditions.
Conventional thinking dictates that 2009 will be a harsh environment in which to survive. For the smart HR executive, it mean opportunities to win and secure that precious seat at the table.