HR Access: Get HR Outsourcing Right the First Time - Alan Brennan
Outsourcing, not least in HR, has all too often not delivered, either in terms of promised savings or efficiencies. This matters all the more at a time when companies need to control costs. Alan Brennan, MD of HR Access, UK and Ireland, speaks to Nigel Ash about what has been going wrong and how it can be put right.
Before HR Access decided to pursue outsourcing, UK and Ireland MD Alan Brennan says his company took a thorough look at the market to see what other providers had not been delivering. It commissioned an in-depth report, in which every respondent indicated that, in the area of payroll, arrangements could be more efficient.
The study demonstrated that suppliers failed to properly consider service requirements for their clients, provided weak account management practices, handled change requests inadequately, were poor at communicating with their customers and did not provide continuous improvement of their services.
‘These shortcomings are far from insignificant,’ says Brennan. ‘With HR outsourcing expected to experience double-digit growth over the next five years, potential clients need to be sure they are going to obtain the expected value from the new arrangements.’ He predicts the key growth area will be in middle market companies with 1,000 to 10,000 employees.
More importantly, adds Brennan, HR cannot be viewed as a purely operational concern to be dealt with by its dedicated director. ‘It has a key strategic component which must sit high on a CEO’s agenda, because in the credit crunch, a company’s HR team could make the difference between survival and demise. While the search for cost savings is paramount, not least in payroll, the most expensive HR component, the CEO also has to consider talent management.’
HR is not, therefore, simply a question of cost control; it is also an issue of being able to shrink or expand the HR portfolio as events dictate. ‘If a company has outsourced to a provider that has its client’s evolution in mind, whether it be downsizing, expansion, acquisition or divestment, the costs involved can be contained and efficiencies boosted in a way that would very probably not be the case if the company sought to handle the evolution itself,’ Brennan says.
The right outsourcer should be flexible and capable of adjusting their service and the total price to the evolution of a business. Brennan believes that creating such a sound partnership removes a key risk and safeguards a CEO’s ability to make strategic decisions.
The right HR solution will include talent management as well as the day-to-day payroll functions. Talent management in its broadest sense includes the acquisition of the right people, whether internally or externally, along with the continued training of the workforce in line with the strategy of the business.
Talent management, explains Brennan, has everything to do with making sure a business has the right people in the right places at the right time, and in the right volume. ‘Let’s say a company intends to make a German acquisition in year two of a five-year plan. The HR team needs to be working in advance to ensure that the people are in place when the time comes to execute that strategy.’
Another regular shortcoming identified in HR outsourcing is a failure to provide fully contracted services. This has been most notable, Brennan believes, where the contract has involved the phasing in of different modules, beginning, almost inevitably, with payroll. ‘Unfortunately, there is significant evidence of a lack of follow through on this and subsequent phases. The entire promise to do more, to bring revolution and evolution evaporates, and frustrated clients are left with the people who run the change management help desk as their only point of contact,’ he says.
Do HR differently
‘We are dedicated to convincing CEOs that HR outsourcing with HR Access is a valuable weapon and not a future constraint,’ says Brennan. ‘If a company chooses the right partner it will have ensured that a lot of business content and best practice will be brought to the table. That partner has to make it their job to understand the client, to stand alongside them, to evaluate the work that has to be done for the change and, just as importantly, to assess the work that is likely to be needed, as the client’s strategy evolves.
‘A CEO who outsources HR with a partner that has his or her company’s future evolution in mind, whether it be growth or repositioning, needs to be sure that the provider has the flexibility to adjust immediately to every change, both in terms of service and total price. If the CEO has done that deal, he or she has taken the risk out of their ability to make and implement key strategic plans.’
HR Access, says Brennan, actively seeks to set out in full the value add that its HR solutions will deliver. The promises are sealed into the contract with such vital documents as definition of services, service level agreements and KPIs.
HR Access can honour its contractual pledges because it has maximised its investment in the necessary IT tools and best practices. Its HR software plugs in to the client’s existing ERP system. Moreover, this technological base is fully proven. It is a fully integrated, best-of-breed HR and payroll application that underpins its outsourcing capabilities. The software is based on a flexible, scalable, open architecture, that is quick to deploy, highly configurable and easy to use. Brennan concedes that some potential clients have initially taken the view that in times of uncertainty they would rather stick to their in-house HR arrangements than take on board the added risk they see as inherent in outsourcing.
‘Our answer is that a CEO should be accelerating a move towards HR outsourcing precisely in order to de-risk the business. A company may have a fine, well-established in-house operation today, but what would happen if, due to a change in strategy, the business needed to make an acquisition in, for instance, Germany or a divestment in Northern Ireland or cope with any sort of similar change that could have a massive impact on the existing HR operational team? At this point, that in-house HR team becomes a constraint on what a business can do.
‘However, if the CEO has given the responsibility to an HR partner who has the flexibility and ability to expand or contract their services and rapidly take on new responsibilities, then the CEO can plan strategy in the full knowledge that HR Access has all bases covered.’ Brennan says HR Access is determined to avoid the mistakes of its competitors, which its research has shown have stemmed in large measure from a poor definition of what was actually being outsourced.
‘This is why we come with a much stronger contract to protect the client. It is also why we come with a much stronger commitment to deliver continuous change, to stay involved with a customer’s business, to provide first-class access to account management tools that will track the service quality in real time.’
The success of HR Access is borne out by its credentials in the in-house world, where it has long supplied HR solutions. ‘We are carrying over our established level of commitment to our new strategy, which is to become a world-class outsourcer,’ says Brennan.
‘To achieve this, we will remain totally focused on the current and future needs of our clients, delivering on our contractual promises by having powerful and flexible technology and highly adaptive and responsible people-based services.’