The ASQ, the global quality organization did a straw poll at their recent conference and found:
“Fifty-five percent are substantially dissatisfied with their provider(s) in the area of innovation and making process improvements.”
This was a broad swathe of participants and the type of BPO included was:
Back office services such as accounting, record-keeping, compliance and IT. (36%)
Facility services/security. (23.6%)
Quality assurance/management. (18.4%)
Human resources. (12.6%)
Front office services such as customer service, sales and marketing. (7%)
So what is the lesson for HR providers? Feels like continued feedback on three themes:
1. The era of the cost-play deals are way gone. Every area of outsourcing with through the period of base-case financials (I will do what you did for less), to models that targeted cost reductions, and now there is a renewed focus on value plays. This doesn’t mean cost is not a factor, but it is not the only factor.
2. Suppliers need to get better on the innovation and strategy story. However, this is easier said than done – as often this is a different type of personelle than most outsourcers have in their ranks. Most are operations teams focus on delivering to the existing contracting, and there are quality/process individuals who are looking for ways to standardize and consolidate processes. This new drive brings to new roles to the forefront:
1. Product development – outsourcers need to be thinking in terms of product life cycles, focus groups, and how to do develop product that the customers care about. Changing a leaves of absence process from 10 steps to 3 steps is definitely improvement, and is good – but hardly something that is going to get enough credit for the client to say you are getting innovation client.
2. HR Strategists – Every HR outsourcing group out there migrated to standard approaches (or at least as much as they can), and their sales presentations are about standards and best practices. Which was good for all of the right reasons. That was the right approach when customers were worried about cost and quality. Now that customers are adding innovation to the mix – it is important that the providers have someone that can connect the sales approach to the clients business. Yes – it may be the standard platform – but there are different approaches that are key. Here is an example:
If you are selling to a financial institution – then focus on the talent portion of the platform, and the portal and how it makes life easy for the branches. According to Cedar Crestone – financial services groups outspend every other sector on talent and HR operations.
If you are selling to a manufacturer – key is going to be on time and attendance, employee relations, payroll, benefits flexibility, etc.
The above are very generic versions but every group needs the talent that can dig into a potential client’s business, read the SEC reports, and help build the story as to how the tools and delivery model add specific strategic value – because often the client doesn’t connect those dots.
3. Lastly, the client needs to bring a different talent to the table. Two years ago, Equaterra did a great study of relationships that were failing, and the number one reason cited was that clients said they put the wrong personelle in charge of the relationship. Often it was someone who was in HR previously, and they just assumed the role. However, HR outsourcing deals require the client has a leader that has a number of competencies:
Understanding of the HR customer needs – can they convert Functional needs into a language the supplier can understand?
Vendor Management – there are going to be times the vendor makes mistakes (as in house did too). Is the talent fair? Will they work to bring out the best in the supplier team instead of turning every event into a whipping fest?
Contract Management – Often HR deals are in the hundreds of pages – and have lots of provisions that need to be maintained over the years (e.g. promoting and demoting SLA’s).
Strategic Focus – is the person focused on accomplishing what the original strategic purpose of the deal was?
Change Agent – this person needs to be able to continue to sway the internal organization.
(source: BPO Providers Fall Short on Service, ASQ Survey Shows)