In this roundtable, four service providers and employers of HR professionals weigh in on the impact of outsourcing on HR career choices and opportunities. So dust off your résumé (if you haven’t already) and consider the life of a provider.
Bob Hakeem (BH) joined Fidelity in July 2005 as senior vice president. In this role, he is responsible for developing and managing Fidelity’s market offering for its HR Services business. This includes accountability for strategy, product development, and management.
Kathryn Kelly (KK) in 2006 was named president of ExcellerateHRO, the HRO service provider jointly held by EDS and Towers Perrin. She has decades of experience in business consulting and healthcare.
Arthur Mazor (AM) is managing director, global service lines, at ACS Human Capital Management Solutions and is responsible for overseeing the company’s HRO services.
Keith Strodtman (KS) leads Ceridian’s HRO business segment and is responsible for client solutions development, implementation, and service delivery. He has worked in the HR industry for more than 16 years.
If you’re from the old school of HR, you know that a career in this field usually begins with a position within the HR department of a company as a specialist or a generalist working your way up the ladder. But with the arrival of HRO, HR professionals have been both threatened by and offered a new career path—that with a service provider. For many, having the luxury of choice means a career on the inside or outside of the organizations they serve.
Service providers and their customers, however, face the same struggle as all other employers as they battle for the necessary skills to satisfy the end customer—the employees. How to acquire the human capital needed, what new skills are required in the brave new outsourced HR world, and other critical questions were posed to four seasoned HRO service providers. Here’s their take on the state of HR careers.
HRO Today: Under the old lift-and-shift model, HRO providers often inherited their customers’ HR staff. Today, with fewer providers willing to engage in this model, what is the most effective way of recruiting and retaining seasoned HR professionals who have a strong understanding of your customers’ businesses? Are you competing for the same resources with your customers in a tight labor market?
BH: As Fidelity has grown its HR outsourcing business, we have worked hard to build a strong workforce poised to meet our customers evolving needs. In our opinion, people will be our on-going competitive differentiator. In recent years many of our external new hires have come from employee referrals, reinforcing the idea that good people know good people. We look for individuals with strong customer service “genes” that embody Fidelity’s rich service culture, as well as expertise in process management, Six Sigma practices, and disciplined product management. Today, we are not in direct competition with corporate HR departments, yet as business dynamics evolve, and needs for competencies change, we anticipate a convergence of resource sourcing in the future.
KK: Talent is a big issue for all of us. Interestingly, the first-generation HRO models lifted talent (and service locations) from their client organizations—which is why we see such fragmented service delivery and unleveraged global service centers across the early players. At the time, this model may have been an expedient way to gain market share, but it ultimately lacked the discipline required to service global HR organizations and their cost and service requirements.
AM: It is important to recognize that there are instances where taking on a client’s HR staff in certain areas still makes good sense. While the days of complete “lift and shift” of a client’s team and environment have appropriately waned, often transferring HR team members is very valuable to the client and provider in retaining deep expertise in the client’s culture, programs, and policies. Although process and technology transformation changes the roles, where there is
experience and geographic fit for client employees, migration to the provider team can be very helpful. As the scope of solutions in HRO has become increasingly common, I believe we have little overlap or competition for resources with our customers.
KS:I believe people are still going to either want to work for a provider—and use their skills to support multiple organizations—or want to work for a single company directing the HR function. I see this competition for talent as being healthy for our industry, and I believe that HR professionals who want to work in a strategic, consultative role—for either a provider or an employer—are going to have more and better career choices going forward.
HRO Today: Buyers have complained about the provider community not being able to adequately address human capital needs. How severe of a problem is this for the industry? Is it just the buyers’ perception? How much of an impact does it have on service quality? What are some of the steps your company is taking to address these concerns?
BH: Our clients expect service excellence with predictable results. To achieve this outcome, it takes a balanced investment in quality people, efficient processes, and high-performing technology. Once the quality benchmarks are defined, we believe it is equally important to evaluate and measure our performance against those benchmarks on an on-going basis. A high degree of transparency into our processes and activities is achieved through data and regular documentation of measurements and key metrics. Performance against our mutually agreed upon benchmarks is continually assessed through frequent dialogue with client service teams and when necessary, escalation strategies employing Six Sigma methodologies are used to determine root causes and prescribe solutions and alternative processes.
KK: HR outsourcing organizations require top HR talent. And that talent is not necessarily the same as required by employers who outsource HR delivery. HR outsourcers require talent in execution, delivery, and operational excellence. Corporate HR functions that outsource need a blend of HR strategists, service provider management, and professional staff who can serve the organization in constructive partnership with the HR outsourcer.
AM: In the early days of the HRO industry, there were clearly some providers who lacked a certain level of depth in human capital management. Understanding HR strategy and program design makes for more effective HR service delivery overall and provides our operations teams with better context to support the retained HR organizations, management, and end-user participants. At ACS, for example, the integration of global HR program design knowledge, HR transformation, and change management to our service offering has been a critical success factor over the last 18 months.
KS: I am not surprised to hear that some buyers may have that perception. We have heard it from some of our clients and prospects, as well. Conversely, we also know that many companies are very satisfied with their providers’ HCM capabilities. From our perspective, I would not view this as a “severe” problem but rather something in a bit of a transition. I am optimistic that in the short term that whatever problems may exist will be remedied. It is also possible that some of these frustrations come from the continued disparity in how the term, “human capital management” is defined. There is not a universal definition, and usually when that happens, confusion and frustration can mount.
HRO Today: Traditionally, those entering the HR field focus on serving as part of the internal HR staff. Is it necessary for the HRO industry to reach graduates and get them to think about a career in HRO? What different skills are needed as an HRO professional?
BH: An on-going challenge for any organization is the recruitment of high-performing talent. We believe it’s necessary to reach out to graduates, encouraging them to consider an alternate career path focused on the evolving industry of outsourcing. Traditionally the HR generalist has held a strong affinity for personal employee interactions. In HRO, there are customer touch points at every turn from recruitment through retirement, and as such the HRO professional must also possess these critical people skills. Other HRO skills require a focus on operations management, process definition, financial acuity, and the ability to effectively manage scale. They must also be able to demonstrate industry knowledge and be analytical and articulate on emerging trends.
KK: It’s not just the new entrants in the field who are being asked to take on bold challenges and myriad demands within HR. It’s all of us. HR has never been a more demanding profession—and one requiring skills ranging from strategic planning, business analytics, vendor management, and deep subject-matter expertise in the many facets of HR. Having been in the profession nearly three decades, I do not think there has ever been a more exciting time in the field of human resources.
AM: As we continue on the quest for talent to enable the exponential growth of our industry, the HRO talent pool must include a balanced mix of HR subject-matter experts, operations and technology experts, and outsourcing delivery experts. HR professionals often make the best delivery team members because they understand their functional subject matter and often have solid experience supporting the ever-changing business needs in the companies where they have worked. The challenge, however, is that the typical HR role does not require delivery to set service levels, contractual commitments, or the management of large P&Ls.
KS: The growth in the industry is quickly making HRO one of the largest recruiters of HR talent. With labor and skill shortages impacting the U.S. workforce, it’s important for HR outsourcing vendors to implement strategies to attract HR professionals—both new graduates and experienced staff members.
For professionals just entering HR, working for HRO vendors is a great place to start a career. By working in HRO, they are part of an organization where HR is a core competency, not just a support function.
To be successful in an HRO environment, HR professionals need a variety of competencies including strong business skills (e.g.,
contract management, negotiation skills, and project management expertise); relationship skills (e.g., communication skills and ability to manage networks of people inside and outside the organization); and technical skills (strong HR functional expertise and knowledge of HR applications and interfaces).
HRO Today: How do you envision the role of the retained HR professional? Also, have clients asked you for input on restructuring their organizations?
BH: HR teams can become more agile to meet business needs. Roles will evolve. Analytic skills, vendor management, and project management will be increasingly valued traits for generalists. Strategic planning and governance disciplines will also become highlighted attributes viewed inside the retained organization.
KK: In the early stages of outsourcing HR, it’s critical that the outsourcer and provider carefully map the process from insourcing through transition to a steady-state, transformed HR function. As part of the planning process, the future, retained HR organization should be clearly defined. Post-transition, there is a clear need for new capabilities and knowledge such as consulting and business competencies, and the skills to manage complex service models and provider relationships.
AM: HRO requires a true partnership between the provider and client organizations. This sounds trite or cliché, but it is critically important and only achievable when the retained HR organization defines and performs its role effectively. In a few instances, ACS has been fortunate to guide our clients in redesigning the roles of the retained HR professional organization. It is not enough to simply promote “getting HR to be more strategic.” At all levels of the retained organization, role profiles, revised performance criteria, and modified compensation structures are necessary to enable the true transformation of the retained HR organization. Retained HR’s focus must shift from managing operational delivery to aligning human capital strategies with the true business needs. All too often, however, this does not occur and, as a result, the retained HR staff find themselves focusing on
monitoring service delivery rather than participating in setting human capital strategy.
KS: The outset of an HRO partner relationship is a great time for a client organization to clarify what it means to say “retained HR organization.” Does that mean vendor-facing, or HR business partner? Often times, an outsourcing partner assumes some of the responsibilities of all HR team members. Does that mean the entire organization is the “retained” organization? Usually not, so an outsourcing relationship can be another solid step to greater alignment between strategic, programmatic, and administrative HR roles and the needs of the client’s business. A good HRO partner can help organizations define the roles in their retained organization because the outsourcing partner knows which activities are typically best performed by the client and vendor, and it draws on the collective wisdom of best practices across all of their clients.
Yes, prospects and clients ask for our guidance on restructuring their vendor-facing teams. They sometimes ask for exact numbers and ratios, but we know the best guidance from an HRO partner is regarding the functions that the client team will handle, not headcount projections.
HRO Today: The issue of diversity never seems to go away. As HRO providers, can you serve as role models to clients in terms of creating greater diversity of gender, ethnicity, age, etc.? How much emphasis do you place on diversity in your own organization? How effective can you be in injecting more diversity in your clients’ workforce? And is it your role to encourage greater diversity among clients’ workforce?
BH: As the economic realities of globalization become more commonplace, we clearly recognize the value that employees’ individual differences can bring to our organization. With Fidelity’s continued expansion in both the U.S. and abroad, we strive to create an inclusive work environment, understanding that diversity can be a conduit for new perspectives, ideas, and innovations. Our clients have their own business strategies for diversity, driven by unique business needs. We respect and applaud their efforts but do not believe it is our place to influence or direct them. As an outsourcing partner however, there is an opportunity for Fidelity to facilitate effective workforce management. By supplying data, workforce analytics, and insight into best practices, we offer the ability for organizations to optimize performance among various geographies and ethnicities, delivering the best of a diverse workforce to their bottom line.
KK: At ExcellerateHRO, diversity is a core belief practiced from three perspectives—diversity in the workplace, diversity in our workforce, and diversity in the marketplace. We maintain an inclusive work environment where differences are represented and seen as strengths. We hold leaders accountable for how well they attract and retain a diverse workforce that represents the diverse markets and clients we serve. We are recognized in the global marketplace as a company that fosters inclusion. As an organization built on the principle that diverse people generate diverse ideas and approaches to solving common problems, we exert influence by the example we set.
AM: At ACS, we don’t treat diversity as an “issue.” Rather, a diverse workforce is one of the key enablers to our historic success as a corporation. We deliver our HRO services from many countries around the globe. By definition, therefore, our teams are comprised of very diverse talent. Every day in delivering services, our employees team with each other virtually across Asia-Pacific, EMEA, and the Americas. ACS employees understand how to be sensitive to other team members’ cultures and traditions while delivering toward a common goal. Like many companies, we use traditional recruiting methods to maintain diversity even within countries, but we don’t find ourselves needing to spend time making diversity an issue. Our culture, by nature, seeks out the best talent and this makes for a diverse workforce naturally. I’m not sure it is our role to affect the diversity of our clients’ workforces, but by delivering services in the way that we do, I hope we provide a positive model for others to assess and emulate.
KS: Diversity is an advantage. Like many other forward-thinking organizations, Ceridian recognizes diversity as a competitive advantage—and we’re conscious of ways to help our organization better reflect the diversity in the world around us whenever we make business decisions. One way to ensure that your company’s solutions reflect the complexities of a diverse business landscape is to build those ideas with a diverse team. This philosophy is core to how Ceridian operates—and we build on this strength in our recruiting, retention, and employee development programs. As a multinational service provider, we find that some of our clients already successfully operate in diverse business climates. Ceridian’s role as an HR partner is to help our clients manage their information assets and HR service relationships so that their employees can concentrate on what’s really important—bringing the strength of their diversity to bear in their business.