the outliers of hr...
TRANSCRIPT
The Outliers of HR (Out)sourcing
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White Paper | The Outliers of HR (Out)sourcing
Contents Are you an HR outlier?
A few ideas from NGA Human
Resources customers
Why companies look at hybrid HR
A final note on HR sourcing
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About the Author
Anita is VP Northern Europe and leads NGA Human
Resources' activities in this region. In addition to full P/L
responsibility, she is responsible for leading the region on
a profitable growth strategy, overseeing all of NGA Human
Resources’ client relationships, business development, sales
and operations.
Anita has extensive experience working for global
organizations and has acquired a great amount of international
experience while working with multinational teams in a variety
of roles, ranging from expert consultant to program director.
Prior to her current role at NGA Human Resources, Anita was
Managing Director for the Netherlands, leading one of NGA
Human Resources' largest business operations. She joined
NGA Human Resources in 2001 and has a proven track record
in delivering value to customers by leading HR Transformation,
Consulting and Outsourcing engagements. Anita played a
key role in founding the HR Business Consulting team at
NGA Human Resources. From 2008 to 2011, she worked
as Director HR Outsourcing, where she transformed the
operations and was responsible for the CIAN acquisition.
As guest speaker, Anita regularly delivers keynotes on the
subject of HR Transformation and Outsourcing at industry
conferences. She is also the author of several white papers
and articles.
Anita holds a master of arts degree from the Free University of
Amsterdam and has followed several postgraduate courses in
business administration and executive management, among others,
at the Eberhard Karls University of Tübingen, Open University of
Maastricht and Vlerick Management School.
Copyright 2015 NGA Human Resources
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White Paper | The Outliers of HR (Out)sourcing
Are you an HR Outlier?
Our global economic climate remains volatile, as the world has not yet found a
way out of the recession: Companies report mixed results; governments feel the
consequences of previous stimulus plans; and consumers are not spending for
fear of worse times to come.
For all of us in HR, it’s no longer a choice between cost efficiencies, talent
conservation and regulatory compliance – they are all equally important. The
question is, how we can expertly manage our day-to-day challenges without
losing sight of long-term strategies? This requires a well-balanced approach in
making the right choices that allow the company to contain cost, while still being
able to focus on securing and engaging the right talent for the future.
Cost containment is back
It’s obvious that cost containment is back on the agenda and that HR
departments must demonstrate renewed interest in outsourcing as a viable
option to improve efficiencies. Very often they view outsourcing as the best
approach to lower and control costs. But as attractive as it may sound from a
cost perspective, outsourcing is not always the most viable option: The sheer
size of this undertaking—creating a business case, moving staff, implementing
new technologies that support new processes—and the organizational change
involved all prohibit a quick decision.
The traditional view on outsourcing is that it is an “either-or” decision, where you
either outsource your entire HR department or keep everything in-house. Today’s
reality is different: Outsourcing does not have to all or nothing.
When we look at HR service delivery, we distinguish between four options:
Pro
ce
ss
Outsourced
BPAAS
Shared
Services
Business
Process
Outsourcing
Software
as a Service
Discrete
Provisioning
Outsourced
Insourced
Technology
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White Paper | The Outliers of HR (Out)sourcing
In the last 24 months, there has been a stronger emphasis on technology as
the solution for all HR delivery challenges. The “cloud” is presented as the
ultimate solution, and Software-as-a-Service (SaaS), the only answer. To be
a modern employer, you have to communicate through social media, your
systems must be in the cloud, and your HR department outsourced, preferably
to an offshore location.
But many of us can not start from scratch, “rip and replace” our systems, leave
our legacy behind and switch to a completely new, outsourced HR delivery
model in the cloud (BPAAS). We want to use an HR solution that we have
invested in for years and that contains historical information, data models and
processes that we cannot do without. We don’t have the funds to spend on new
technologies that change our HR service delivery, simply to make us
future-proof. We need a solid business case to make the case for change.
So what to do if your company is not ready for BPAAS? Or never will be?
Does that mean that the benefits are out of reach?
Fortunately not.
Why not consider your HR service delivery landscape as a box of Lego bricks
that you can assemble and reassemble based on your business strategy? Why
not become an HR outlier and create a hybrid solution that fits your company?
Why would you want to be an HR outlier?
Let me zoom into the concept of an ‘outlier’ first. An outlier is something so unlike the
rest of a sample, it is thought to be unrepresentative. It is a value far from most others
in a set of data. An outlier is statistically impossible and therefore, usually neglected.
Many of the companies NGA Human Resources works with are outliers: Instead
of adhering to a standard ‘middle of the road’ model, they smartly combine
sourcing options that precisely fit their unique business needs. They don’t fit into
any standard model but define their own solution instead. In doing so, they create
a hybrid HR Service Model that connects insourcing, outsourcing, offshoring and
onshoring using different providers that include on-premise and cloud solutions.
At NGA Human Resources, our experience has taught us that outsourcing is
never a one-size-fits-all solution and that every customer has unique needs.
The HR Service Wrapper, our proven process approach, in combination with our
state-of-the-art technology, allows us to create hybrid HR Service Models that
include managed services that best fit the unique needs of our customers.
Thanks to our methodology, we know how to create a hybrid solution that allows
our customers to build onto their current investments, while providing them with
the benefits of NGA Human Resources’ economies of scale and incorporating
cloud offerings where they make sense.
NGA Human Resources examines your current situation from various angles to
create the optimal situation between people, process, service management and
technology on one hand, and between in-house or outsourced at the other end
of the spectrum. And if that means you become an HR outlier, all the better: It
ensures that the final solution is exactly right for you—not for your competitor.
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White Paper | The Outliers of HR (Out)sourcing
A Few Ideas from NGA Human Resources Customers
There are many reasons why companies choose not to create an in-house service center or to fully outsource HR, but rather to design a hybrid service delivery model. In this chapter we show you examples of the choices our customers made and the reasons behind their decisions.
Financial services
Following a major restructuring and divestiture, a financial services customer
needed to find a solution for its HR department, especially the technology pillar.
Most of the IT staff remained behind, and the new IT department lacked the
necessary skills to reliably run the HRIS and payroll solutions. In addition, the
company did not want to create a new payroll department and was looking to
outsource this as a managed service. The solution called for a quick approach
with minimal business disruption, since most efforts where focused on the
divestiture, and funds and time were limited.
NGA Human Resources proposed hosting their current, customer-specific HRIS,
as the general feeling was that this was a reliable, well-established system.
NGA Human Resources also took over all application maintenance services
and provided the company with an online solution to manage its new HR shared
service center. All services are governed by the NGA Human Resources Service
Level Agreement, and an annual ISAE3402 report is provided to ensure
regulatory compliance.
People
• HR staff employed by customer
• HR/IT staff employed by NGA Human Resources onshore & offshore
Technology
• Customer-specific HRIS
• euHReka self-service by NGA Human Resources
• Hosted by NGA Human Resources
• System administration by NGA Human Resources
Service Management
• NGA Human Resources Service Center Management Tools
• NGA Human Resources SLA
• NGA Human Resources ISAE3402
Process
• Customer-specific HR process model
• Managed Payroll outsourcing by NGA Human Resources
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White Paper | The Outliers of HR (Out)sourcing
Utilities
Due to regulatory changes, a utilities company was forced to break up into
three separate entities, forcing its HR service center to split into three separate
departments. The company’s HRIS had to be separated, as well. Due to the
complexity of the split and associated time constraints, there was no time to
switch to a new technology backbone, and the company wanted to avoid an
increase in people costs.
NGA Human Resources proposed taking over the HR Service Center staff and
providing services to all three entities under separate contracts, while using the
same processes and technologies run by staff working in the NGA Human
Resources service center in onshore and near-shore locations. In addition, NGA
Human Resources introduced Service Center Management tools to help govern
HR delivery services, as well as provide monthly SLA reports and an annual
ISAE 3402 report. For the time being, the HRIS is run by the customer’s IT center
of excellence, with NGA Human Resources providing change support and expert
help when necessary.
Facility Services
This customer initially approached NGA Human Resources to request a system
migration to an ERP backbone. After examining the customer situation, NGA
Human Resources determined that, while the current system could benefit from
some IT improvements, the company as a whole would gain the most by adopting
standard HR processes and ensuring that the HR staff made no exceptions.
People
• HR staff employed by NGA Human Resources onshore & nearshore
• HR/IT staff employed by customer
Technology
• Customer-specific HRIS
• Hosted by customer
• System administration by customer using NGA Human Resources support
Service Management
• NGA Human Resources Service Center Management Tools
• NGA Human Resources SLA
• NGA Human Resources ISAE3402
Process • NGA Human Resources process
model
• HR outsourcing (Workforce Admin and Payroll) by NGA Human Resources
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White Paper | The Outliers of HR (Out)sourcing
NGA Human Resources proposed taking over HR staff from all business
ocations to create an HR Shared Service Center at a central location, serving the
company as a whole. In addition, NGA Human Resources streamlined all existing
processes and created a digital point of entry for all paper documents. Staff that
did not want to move to the SSC was replaced by staff in NGA Human
Resources’ near- shore location. NGA Human Resources oversees all service
delivery using powerful Service Center Management tools and delivers SLAs and
the annual ISAE3402 report. The company still uses the same third-party HRIS,
thereby avoiding a costly and unnecessary IT migration.
What's your outlier model?
The examples above have given you a taste of what you can do to make your
HR department ready for the future. These companies are HR outliers in their
own way: They had very specific reasons for their choices and the final sourcing
model. In doing so and by using the standard building blocks, they designed a
unique HR service delivery model that fits their needs and is future-proof due to
the use of modern technology.
People
• HR staff employed by NGA Human Resources onshore & nearshore
• IT staff employed by 3rd
party vendor
Technology
• 3rd party HRIS
• Hosted by 3rd
party
• System administration by 3rd
party with NGA Human Resources support
Service Management
• NGA Human Resources Service Center Management Tools
• NGA Human Resources SLA
• NGA Human Resources ISAE3402
Process
• NGA Human Resources process model
• HR outsourcing (Workforce Admin, Time and Payroll) by NGA Human Resources
People
• HR employees
• HR/IT employees
• Onshore, nearshore, offshore
Technology
• HR system
• HR self service
• Hosting
• System administration
Service Management
• Service Center Management Tools
• SLA
• ISAE3402
Process
• HR process model
• HR process outsourcing (single – full)
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White Paper | The Outliers of HR (Out)sourcing
The illustration below allows you to create your own hybrid model. The remaining
question is this: What is your perfect fit in insource vs. outsource, onshore vs.
offshore, on-premise vs. cloud, and fully or partially managed? Are you ready to
become an HR outlier?
Why Companies Look at Hybrid HR
There are many reasons why companies look at hybrid HR models. Here is an
overview of the most important ones:
Cost
efficiencies
Achieving economies of scale by sharing people and
technology innovations across companies
Switching from capital expenses to operating expenses
Access to near-shore and offshore resources
Knowledge
access
Baby boomers who are leaving the workplace must be
replaced.
HR has difficulties attracting people due to the perceived
lack of career opportunities.
Creation of a flexible HR resource pool to assign as
needed to replace tenured talent
Regulatory
Compliance
The legislative environment is rapidly becoming more
complex, and hard-to-find expertise is required to ensure
your HR environment remains compliant in all areas of
the world.
Need to deliver an unqualified ISAE3402 report annually
The list above is not exhaustive, and objectives, as well as underlying reasons,
vary between companies. But most companies looking at restructuring their HR
Services Delivery have a few things in common:
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White Paper | The Outliers of HR (Out)sourcing
They know they need a change in direction.
They have to submit a viable business case.
They’re in a time crunch.
Upfront costs must be minimized.
Cost of delivery should be lower and preferably operational not capital.
Past investments must be leveraged.
What works well should not be replaced.
Onboarding to the new model needs to be accomplished with the least
possible disruption.
There must be opportunity to move to BPAAS in the long term.
Hybrid sourcing models
A hybrid sourcing model allows you to gain the benefits of outsourcing, including
flexibility, leverage, service levels, speed to market, tools, and subject matter
expertise without requiring large upfront investments in time and money. Prior
investments can be leveraged in the final solution. And because the investment
is smaller, the return on investment is achieved more quickly and with less risk.
Here are some ideas on hybrid models that provide an optimal solution based
on your business requirements. By reading through them, you can decide which
components may contribute to designing your optimal solution.
Customer Employees NGA Human Resources
Customer specific Service Delivery NGA Human Resources
Standard
Onshore Geography Near & Offshore
Discrete Process Full HR BPO
Customer Location NGA Human Resources
ERP HR System euHReka
3rd
party/In-house HR System hosting Hosted & Cloud
Customer HR System admin NGA Human Resources
Ticketing system HR SSC Tools euHReka SCM
Activity-based Cost Per employee
OPEX Investment CAPEX
People: To deliver HR services, you need both HR and IT staff. If you outsource
HR processes, then the HR staff usually follows. Consequently, if you outsource
your HR technology, then your IT staff follows. There is one important guideline:
Those responsible for the results must also be directly responsible for the
associated staff that delivers those results—no exceptions.
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White Paper | The Outliers of HR (Out)sourcing
NGA Human Resources uses a “hub-and-spoke” model. The generic HR and IT
services are delivered from the hub center, and country-specific services from
the spoke center. This ensures that service delivery is as effective and efficient
as possible. Legislation changes are addressed regularly, and unique, local
knowledge is consistently interpreted and executed in the right way through
a local HR specialist in the “spoke.
Process (or scope): If you want to retain certain HR activities in-house, a
process hybrid provides an effective solution. Your in-house HR staff performs
the activities that can’t (or will not) be migrated to the vendor, who takes care of
the remaining support services. For example, although NGA Human Resources
handles executive services for many customers, some of them prefer not to
outsource this and have in-house staff in charge of delivering executive services.
Process hybrids also pertain to the way processes are executed. A company
can either choose to adopt the NGA Human Resources standard or request that
some processes are executed in a company-specific way. In addition, companies
can choose to switch to a partially or fully managed service, with different service
delivery setups per country.
Technology: Clearly aligned to the overall HR strategy, the technology is the
base of process delivery and ties the service together. As long as an HRIS
can be accessed from anywhere in the world, location is not an issue. Support
services can be delivered by either the customer’s in-house IT department or
by the outsourcing provider.
Most modern HRIS systems can support the services as defined by the NGA
Human Resources Service Wrapper, making it feasible to use a company-
specific system in an outsourcing scenario, thereby leveraging previous
investments. Companies can also choose to switch to NGA Human Resources’
euHReka as a worldwide HR foundation. A technology hybrid is a good choice
when the current system is well equipped to handle HR processes, and your
company would like to roll out new HR services to its employees using cloud
vendors.
Looking also at the current state of the market, many HRIS vendors have
recently acquired a cloud vendor for add-on services and are integrating these
solutions as “front-end” to their existing back-end services. If you use one of
these systems, it might be worthwhile to closely follow the integration and see
which value such a setup delivers, unless you have a pressing need for change.
Location: If you are looking at a location hybrid, it’s usually because some skills
are not available at your location or you want to benefit from wage arbitration.
An organization may choose to use near-shore and offshore resources for a
particular service, while for others, all staff is located close to or at the customer’
location.
The main reasons behind the choice of location are available language skills,
access to specialist (country-specific) knowledge and data-privacy legislation.
From an operational point of view, technology allows NGA Human Resources
to perform most services regardless of location, and NGA Human Resources
has service centers in all regions of the world.
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White Paper | The Outliers of HR (Out)sourcing
A Final Note on HR Sourcing
If your company can afford to spend the time and the money, there’s no question
about it: A BPAAS solution offers the largest savings and the best return on
investment, simply because of the seamless integration of people, process
and technology in combination with service management and economies of
scale. It’s like putting together four pieces of a puzzle so they fit exactly right.
However, if that’s not the case, hybrid models are a good alternative to leverage
the benefits inherent to outsourcing and offering organizations greater flexibility
and options when it comes to managing HR processes more efficiently. In
essence, it is a more flexible outsourcing service, designed for customers who
own and operate their own IT equipment, software or staff and where NGA
Human Resources can assist in improving the utilization and cost management
of their HR service delivery.
There are two keys to a successful hybrid model: finding the correct balance and
finding the right partner. Responsibilities must be clearly divided between the
organization and the service provider, and a strong governance model must be in
place to ensure adequate collaboration. NGA Human Resources has a long-term
vested interest in designing and operating hybrid service models, and we bring
the necessary expertise to managing these engagements. Streamlined and
efficient processes are also important, as provided by the NGA Human Resources
Service Wrapper and supported by great technology. NGA Human Resources
has a long- standing interest—and unique expertise—in designing and running
hybrid service delivery models.
Now is the right time to take a step back and assess what matters most: Are
your HR talents best devoted to managing day-to-day workforce administration?
Making sure your processes and systems are transparent and compliant? Or
would you be better off leaving that to experts who can achieve economies of
scale and provide you with an efficient and cost-effective solution? This way,
your HR professionals could spend their time where they are most valuable to
your company: identifying, acquiring, developing, engaging and retaining talent.
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White Paper | The Outliers of HR (Out)sourcing
NGA Human Resources is a global leader in helping organizations transform their business-critical HR
operations to deliver more effective and efficient people-critical services.
We help our clients become better employers through smarter, more streamlined business processes - to
save money, manage employee life cycles and support globally connected, agile organizations. This is how
NGA makes HR work.
What sets us apart is The NGA Advantage. It’s a combination of deep HR expertise and insight, advanced
technology platforms and applications and a global portfolio of flexible service delivery options.
www.ngahr.com