Earlier this week, I was in NY attending the HRO World Conference. The general consensus of the conference was disappointing, lacked any new ideas and energy, and that the industry, as a whole, has temporarily stalled in its effort to become more mature.
Although I am still a fan of the HRO model, and enjoy the conference as a community event for the industry, I think some dramatic changes need to be made in the industry itself for it to move forward. Instead of focusing on what’s wrong with HRO, I thought I would share my thoughts on how to move the industry forward.
1. Both buyers and sellers need to embrace a broader set of knowledge and skills outside of HR. When I hear, “I’ve been in the HR industry for 30 years” I kinda cringe because what the HRO industry needs is less domain experience and more understanding of how other functional areas address and manage their outsourced relationship. For example, why aren’t more buyers leveraging the expertise of their counterparts on the manufacturing, supply chain, or customer care side who have been outsourcing for 20 years? (It should be noted that I spent much of my career in supply chain and manufacturing outsourcing and I personally think it has given me a much better perspective on the market). Some providers are starting to do this but we have a long way to go.
2. Providers and advisors must eliminate their “conflicts of interest”. If I had a dollar for every association or “expert group” funded by the providers I could quit my job. An example…the HROA. The association, originally designed to be a community of buyers, is now controlled by mostly people trying to make a buck, namely providers, advisors, and consultants. Although I have not done the correlation, I feel confident to suggest the folks that won the awards at the HROA dinner are the same folks that provide the most sponsorship, dollars, and support to the HROA. Just look at the nominations. Sure…these types and awards and recognition are important for the industry, and do have some influence, but they should not only transparent but defined, managed, and run without influence, period.
3. The provider and advisor community must come together to establish a common framework. Similar to how many of the technology vendors have come together to establish the W3C, a community to develop web standards and guidelines, the HRO community must do the same. This is happening in pockets, including recently announced OpenDoor, but this needs full support from all stakeholders in the industry and not a controlled environment by a few of the industry gorillas who are more interested in posturing their own message and protecting their position than being innovative and foward-looking. The fact of the matter is that HRO is complex in structure and execution and unfortunately today buyers are not comparing apples and apples.
4. There is alot that is right about HRO…why can’t we talk about that? There is still lots of negativity about HRO missteps and how some of the vendors most notably Hewitt (due to their own public admission) are failing. Many of the competitors have stomped on these challenges with their competitors while facing many of the same issues themselves. When one vendor fails to delivery, it creates a black-eye for all of the providers. I sense there are some exciting things happening behind the scenes with many of the providers (more at the transactional level than strategic level). Health and welfare is one area. Everyone in the industry should be elevating the message on why HRO really matters beyond outsourcing and offshore core HR functionality.
5. Both buyers and sellers must eliminate the gap between where the deal is executed (executive level) and where the relationship is managed and delivered (much lower down). I liken the deal execution and delivery to me going into a car dealership, buying a Hummer, and then handing the keys over to my wife who has always driven a Honda. The delivery team must play an important role in the selection process so they know what, how and why they exist instead of taking a reactive, “save my butt”, “blame the vendor” mentality.