We've certainly had a full dose of the "How can HR Outsourcing find its rhythm" discussions over the years, and the consistent theme has been one of reducing operational complexity and increasing the focus on the retained HR organization, to help companies actually add some value to their HR operations throughout the whole outsourcing experience.
We sent our HRO diva, Mindy Blodgett, out to investigate where some of the leading minds are focusing in this post-recession environment, and her first port of call was with Erica Volini, one of Deloitte Consulting's leading Principals in the HR transformation field.
Erica Volini has been working with HR on the elusive goal of HR transformation for 12 years, with a particular focus on HRO for the past eight. She has therefore had a privileged perch and a decidedly insider’s view from which to assess HR’s struggles with outsourcing and other solutions – and she knows what works, and what doesn’t, when implementing HRO. When not advising organizations on their HR journeys, Erica loves to explore her home base of New York City. She also professes to loving 80’s music and secretly admits to being fascinated with the latest entertainment news. She took a break from her grande, skim caramel macchiato to chat with us about the direction she sees HRO going in today.
Mindy Blodgett: How is it that you are working with HR organizations today?
Erica Volini :My focus has been on helping organizations figure out how to take HRO and get it up and running. This is no easy task. When I first started, multi-process HRO was all about “big bang” and people viewed implementing everything all at once as the right answer. Now, buyers are starting to understand how complex it is and everyone is trying to figure out how to simplify in the hopes of increasing success. In that way, HRO has almost followed a reverse maturity curve.
Mindy Blodgett: We’ve heard so much about HR transformation as a goal of HRO – but that concept seems tired and overused. What is your view of whether HRO can achieve true organizational transformation?
Erica Volini: When HRO first came along, it was viewed as THE answer to transformation. We all realize now that outsourcing is only an enabler of transformation and that it takes a lot more than HRO to truly transform. Organizations need to start looking at HRO as a way to increase operational efficiency and organizational credibility. Then they need to leverage that credibility to drive transformation. And they can’t forget the retained HR organization. If the focus is only on the provider, and what the provider brings, transformation will never be achieved.
Mindy Blodgett: What is wrong with the way some organizations approach HRO?
Erica Volini: It comes down to too many organizations taking a vertical, silo-ed approach. A typical HRO contract is set up in silos – so the benefits team is defining one set of services while the recruiting team is doing another. The problem comes in when trying to drive integration among them. Unless they start looking across the silos, it’s hard to see how services and activities need to connect. Without finding ways to embed that interconnectivity into the HR solution, it will always fall short. HRO providers have the capability to look across processes – but the challenge is taking that integration capability and turning it into a set of services that providers can offer and organizations can measure.
Mindy Blodgett: How are the providers positioned to provide these integration services?
Erica Volini: A lot of the large providers are well positioned to do this because of their breadth of services – and a lot of the offshore providers are extremely well positioned, because their legacy of BPO and ITO taught them how to connect disparate systems and processes. But on the buyer side, the problem is that integration services don’t jump out on an organizational chart. It doesn’t automatically come up when purchasing services because there is no single role in charge of integration. The buyers need to start saying to the providers, “I want to purchase integration services because I know they’re key to optimizing service delivery. I want you to own cross-process activities such as data monitoring and vendor management. I want SLAs tied to it and I’m willing to pay for that service so that I know it will be done right.”
Mindy Blodgett: Why is focusing on integration so important for organizations engaging in HRO?
Erica Volini: Because providers can’t deliver services in a vacuum. If their services aren’t integrated across the end-to-end process and if they aren’t working hand-in-hand with retained HR, they will always fall short of delivering what the organization needs and expects.
If you look at the typical HRO challenges, integration is usually the issue. Retained HR can’t be strategic because they’re left filling the administrative gaps in the delivery of services (such as end-to-end process integration, data clean-up, workflow routing); SLAs fall short because providers don’t have the accountability for the hand-offs between processes which is where the majority of operations-related issues lie; and customers are unhappy because they get bounced around when trying to get their questions answered. Each one of these issues points to a lack of integration, so if we don’t fix the integration issue, I’m not sure how HRO can succeed.
As we shift from the one-provider-does-everything model to best-of-breed, integration becomes even more important. While a best-of-breed approach can offer customers the best individual solutions, it creates an even greater need for integration amongst them. You can’t just tell your providers, hey, please go and integrate with each other. But when you turn the concept of integration into a service that providers can sell and organizations can buy, you’re on your way to making it work.
Mindy Blodgett: What do you foresee as an answer to this integration challenge in HRO implementations?
Erica Volini: The new world of HRO will emphasize customization – not in terms of processes (which has been the focus in the past) - but in terms of which solutions and providers can be pulled together to form a comprehensive HRO solution that can best meet the buyers’ needs. That means changes for both buyers and providers.
Buyers need to figure out what capabilities they need and communicate that effectively to the provider community. And HR needs to engage the full organization to figure out what those needs are. Finance, IT, Legal, Procurement, business leaders – they all have a role to play in making integration happen.
Providers will need to think more out-of-the-box in terms of what they offer and how they partner with other providers to create an integrated HRO solution. Consider payroll as a prime example. While very few providers have the capability to do global payroll by themselves, many have figured out how to partner with other providers to offer it as an integrated service. Best-of-breed doesn’t always mean that the buyer needs to be the glue holding it all together.
And finally, the buyers and providers need to work together to form an integrated approach to implementing HRO. We need to stop thinking about HRO as the implementation of a provider solution and start thinking about it as a way to embed the provider into the broader service delivery model. It may sound overly simplified, but if we want to make HRO succeed moving forward, integration is key.
Mindy Blodgett: Thanks so much for your time, Erica, am sure our readers will enjoy reading this discussion.