For talent managers exploring or currently involved in human resource outsourcing (HRO), there are several noteworthy trends that bear closer examination in 2008.
Perhaps not surprisingly, there is a growing trend around individual responsibility. This means HRO providers will have to offer employees multiple portfolio capabilities in workplace and personal savings planning and vehicles, payroll and health care administration and management tools, among other things.
“When the 401(k) plan came out, it was supposed to be supplemental to defined benefits or pension plans. Well, how supplemental is 401(k) now? It’s really the primary vehicle,” said Pat Goepel, president of Fidelity Human Resource Services. “A similar shift is happening with HSAs (health savings accounts) and HRAs (health reimbursement arrangements), kind of the alphabet soup of savings vehicles. The individual is now responsible for their retirement, their college, their kids, themselves, etc. and that means they need access to information that’s more personal and really takes their life stage into account.”
Shifting demographics related to the baby boomer retirement exodus and the emergence of Gen Y as a force to be reckoned with in the workplace also may impact how talent managers deliver and package compensation and benefit offerings. Gen Y is the fastest growing segment of the U.S. workforce, and Goepel said this generation’s comfort with the Internet must be considered because they will drive a change in the requirements and habits of employers and their providers.
“They want an HR experience that ties into the experience they have in their day-to-day lives,” he explained. “No longer can you do paper-based systems or systems that don’t have the same standards in place as the Internet. Ten years ago, I might drive into a gas station and get a map. Then, I might go to Mapquest to get directions. Now, when I turn on a car, I have a navigation system that gives me directions every step of the way. That’s what Gen Y is expecting from their HR services and the systems that support them in their life choices.”
One-off service models don’t maximize the client experience from a quality perspective, Goepel said. Thus, the HRO industry will likely embrace standardization for employer and employee offerings, and success in HRO vendor relationships will be defined by new and collaborative approaches to quality that may go as far as Six Sigma level.
“When we look at the process from end to end, as a provider we start at the client level,” he said. “Then, we continue that all the way to the provider level, which could be a financial institution, or it could be an insurance company. Too often vendors define quality as what’s done in their four walls. The future of human resource outsourcing, to have a good employee and employer experience, is really taking the information starting with the life event, such as a new hire.”
Goepel said for productivity reasons, the modern enterprise will need all new hire paperwork in its HR system via the Internet two weeks in advance of a start date. The employee will be able to easily select benefits, find I-9 forms, etc. World-class providers will ensure that not only can the employee successfully engineer the process, but each participant from the employee benefit provider all the way to the insurance company can enjoy the same ease of use.
“There’s about 1,200 providers in the human resource outsourcing area, and not all of them are on the same page. They looked at their siloed process. The future of human resource outsourcing from a quality perspective will mean that a provider can cross all 1,200 providers, get a standard process that allows the employer to attract new employees, get the paperwork done before that employee starts, and do it in such a way that the process allows it to be 99.99 percent a success. If you can provide that type of quality across that many vendors, you have a sustainable business model for now and in the future.”