Talent Management vs. HRO – it’s not an “either or” proposition

If you’ve ever ventured into the brave world of HR Outsourcing (and you need to be brave…) the chances are you’ll hear the views of Ceridian’s Keith Strodtman.  Keith Strodtman

Keith has been a constant at the global $1.6 billion HR services and store-card solutions giant for many years now, and when he’s not coaching his twin girls’ fastpitch softball team (that’s “rounders” for any Brits on here), he’s been running Ceridian’s global HRO practice.  He is also widely recognized as HRO’s smoothest man, with a constant smile, never a raised word, and never a hair out of place.

Keith has some excellent views on how companies can use third-party managed services to take on their administrative work and focus their HR executives on what they should be doing:  helping develop their organizations’ talent.  Over you Keith…

I’m not sure about you, but I don’t get why some analysts and bloggers advocate that companies have to choose between outsourcing HR/ payroll/ benefits administration and managing talent. It’s beyond me why those two things are mutually exclusive. For an organization that wants to manage costs and retain top talent – outsourcing administration allows it to focus on their people and the business at hand, rather than paper pushing. If I may be so bold, I think the combination presents an opportunity for HR to finally get that “seat at the table”.

Studies have shown that pre-HRO, companies spent 75 percent of their resources on transactions and operations and 25 percent on strategy and management. That means resources spent on administration and processing rather than attracting great people, skills development, and performance management.

When HRO comes into play, the numbers reverse to spending only 15 percent on transactions/operations and 85 percent on strategy and management. That’s more than three times the resource allocation on the most critical parts of your business. With those numbers – talent management is getting a huge boost from outsourcing.

So let’s look at the impact:

• Resources focused on key business areas.

• Employees more satisfied doing bottom-line impact work instead of administration.

• Retention improving as as result.

• And your HR department? Well, they can now focus on talent management and add value to the business.

Worried about the costs of doing both? Apply the cost savings from HRO administration to areas that will improve organizational performance. By implementing programs for personal and professional development, succession planning, recognition programs and even ancillary benefits, it furthers the appeal of your organization now and in the future.

Actually David Poole from Capgemini did an excellent job explaining the benefits of outsourcing in this column in March. I couldn’t agree more with his “truths” – especially that “outsourcing is a bold strategy for growth.” Incorporating HRO into an organization means you are poised for growth because this economy reality will not be the economic reality one, five or even 10 years from now.

So with all due respect to my friends in the talent management business, it’s never really been an either/or proposition between HRO and talent management. It’s just a matter of looking at the pieces and deciding where HR should spend its time to add the most value to the business.

Keith Strodtman (pictured) is Senior Vice President and General Manager of Ceridian’s HR Outsourcing business. With over fifteen years experience in the Business Process Outsourcing, HR services, product management, and finance, including involvement in the pioneering days of HR Outsourcing, Keith is well versed in the benefits of HRO. Prior to joining Ceridian, he was a Director in the Global BPO practice at PricewaterhouseCoopers (now part of IBM), responsible for the HR BPO service offering and for implementing large-scale HRO outsourcing engagements.

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4 Comments

  1. Christopher W. Myers
    Posted May 26, 2009 at 11:18 am | Permalink

    There is no question that if a company can offload its administrative burdens, it can focus on more strategic and growth opportunities. That is, if they reinvest the savings.

    Unfortunately, with companies looking at outsourcing primarily (at least initially) as a cost and time saving initiative, management will count on those savings for investment elsewhere in the business or for dropping to the bottom line.

    If outsourcers are successful in convincing companies to reinvest those savings into higher-level HR initiatives, then they will have accomplished a great thing. I am a firm believer that it can be done, but it is a lot of hard work….much harder than executing the outsourcing plan.

  2. Naomi Bloom
    Posted May 26, 2009 at 4:35 pm | Permalink

    When you outsource the management of your administrative HRM data, you are also outsourcing the data foundations for strategic HRM (aka talent management). The great danger here, and it’s all too common a problem, is that you don’t consider the full data needs of strategic HRM when selecting and implementing an outsourced HRMS with the surrounding administrative HRM processes. You can get into just as much trouble on your own, with poorly selected,implemented and integrated on-premise or SaaS HRM applications, but HRO can exacerabate the inadequacy of talent management data foundations because the providers of administrative HRO are judged most often not on how well their service offerings support talent management but only on how well they deliver the within scope administrative HRM processes. And you don’t get a seat at the table (or you’re asked to leave the table) when you can’t execute talent management processes, regardless of the technology used, because your administrative data foundations aren’t sufficiently granular, properly modeled, semantically accurate, etc.

  3. Keith Strodtman
    Posted May 27, 2009 at 10:34 pm | Permalink

    Naomi – I agree with you. In most HR systems initiatives, whether part of an HRO model or a customer administrated solution, getting the data right is typically driven by the behavior of the data owner (the buyer). If the data owner wants to have a strategic HCM outcome they must plan for the required administrative data. If the buyer only holds the provider (HRO, SaaS, ERP, etc) accountable for administrative results then they should not expect data suitable for strategic HCM.

  4. Keith Strodtman
    Posted May 27, 2009 at 10:37 pm | Permalink

    Christopher – Well said. Many of us who have been in the HRO field for a long time have been working toward this goal. We have more work to do.

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