Supplier’s viewpoint

It’s a small, small world: ‘the new new thing’ for HR (Adapted froma recent
presentation to the Global Mobility Roundtable of the National Foreign Trade
Council, New York)

With the growth of business and infrastructure activity in countries such as
China, the Asia Pacific region is taking on a global economic significance
previously unheard of. This scale of social and economic change has profound,
yet familiar, implications for HR service providers and for the clients and
employees we serve around the world.

There is good news in the present climate for HR professionals. The
competitive landscape among HR service providers has shifted and ‘customer
service’ is making a comeback.

The path of globalisation is filled with… change and adaptation

Globalisation has become a reality in a way that just wasn’t possible a few
short years ago. It is making significant political and social inroads into how
we view our world and, specifically, how we conduct our international business
dealings. Consider the following:

– The emergence of China as a major trading power in the world economy and
Chinese being taught in progressive children’s schools outside China- alongside
French, Spanish and other ‘mainstream’ languages

– The idea that China could ‘make Mexico look expensive in relative terms’
in relation to the cost of production of hard goods, in particular, electronic
devices and parts

– The suggestion that Shanghai could become the regional business hub for
the Asia Pacific region, displacing its competitors

– Recent and visible thawing of relations between North and South Korea

– The not-so-distant fall of the Berlin Wall, once more creating a unified

– The economic might of the European Commission and emergence of the
long-fabled euro

– The reality of ‘super-size’ global companies reporting their dealings in
one financial denominator – the US dollar

– The ability not just to e-mail, but also to ‘instant chat’ from London or
New York with a colleague or family member in China, India or Japan

What does this all demonstrate? Perhaps, that advances in technology and
investors’ seemingly endless appetite for finding and subjugating ‘new markets’
(at least in certain ostensible ways) have been successful to a material
degree. And there’s no sign of abatement. It demonstrates a change in commonly
perceived horizons and expectations on the part of businesses and other
economic powers – that is governments – and when expectations change,
complacency and common practice have to go out the window or catch up fast.

The ground-breaking, new-world philosophy that got us where we are now will
drive demand for international employee support systems and astute service
providers that meet the needs of increasingly global workforces comprised of
local workers and managers – not just expats and international assignees.

Will this change HR’s Monday mornings?

Even if China or Korea isn’t top of your Monday to-do list yet, it is
reasonable to expect that such significant global economic changes will impact
on your company’s business and the employees you support over time.

There’s no mistaking that even the hitherto ‘domestic’ HR landscape will not
be insulated from the reality of the changing world and the events and fiscal
characteristics that are driving radical and permanent changes – changes in
both corporate and individual consumer education and expectation as it relates
to ‘value’, underpinned by broadly-accepted changes in attitude to business
practices and support expenditures.

The latter changes are no more clearly seen than in the significant and
increasing momentum towards out-sourcing of HR support services and, most
recently, towards ‘exporting’ of service functions to service hubs in India,
for example, and ‘bundled outsourcing’ of ‘total support services’.

The outsourcing dilemma

Love it or hate it, outsourcing represents a key feature of HR’s recent past
and a significant measure of its future – especially in terms of providing a
viable means for supporting growing international business operations. History
suggests a good way to meet change is to embrace it, figure out what it means
and how to work with it – not against it.

Black Mountain’s own philosophy is that no two clients are exactly the same
and a one-size-fits-all solution is probably flawed in terms of meeting a
client’s needs. The key is to focus on what the ‘need’ is and continually adapt
to meet the need as it changes.

Looking back to look forward

If it is accepted that the world is changing and that clients will expect
solutions that reflect that change, it is as important to look back as it is to
look forward in terms of understanding why many companies are already outsourcing
their HR support solutions and what they need and expect from it. Consider the
following common reasons offered:

– Reduce and control costs/share risks

– Gain access to world-class capabilities/resources not available internally

– Improve company focus/free resources for other purposes

– Accelerate re-engineering benefits

Source: The Outsourcing Institute

Cost reduction and control/share risks

Never more so than now, companies are looking for ways to reduce their costs
and, in addition, get a greater level of control over their costs going
forward. Outsourcing provides clear opportunities to pass on or ‘share’ the
risk of cost increases in service provision and productivity, including
insistence on providers entering ‘fixed fee’ arrangements – particularly
attractive in the current market.

Access to world-class capabilities/resources not available internally

Outsourcing is not just about cost reduction, it is also about the provision
of a level of depth and expertise the client could not afford or access on its
own – obtaining expert local advice or providing employee support in
international locations, for example. Often, it is a matter of response time
and sheer convenience. It is likely that the provider’s expertise and industry
positioning will enable it to scale up, across or down quicker and more
efficiently than a client within its area of expertise.

Improve company focus/free resources for other purposes

After the burgeoning of e-mail, internet and ‘silver bullet’ HRMS solutions
in the 1990s, it might be tempting to think that the complexity of the HR
function might begin to ‘level out to a new continuum’.

However, this is not so any time in the foreseeable future. The ROI and
efficiencies of such systems is much debated, but whatever time and resources
they have freed up seems already to have been soaked back into the daily
activities and projects of ever-more complex HR operations. The constant
dilemma for many HR managers, especially those running operations in multiple
jurisdictions is how to restore focus on the most strategic activities that
represent the most economically astute use of time for limited staff resources.

Accelerating re-engineering benefits

Some organisations have implemented ‘re-engineering’ of the HR function to
prioritise good service to the employee base by positioning available HR
generalists in a meaningful consultative, relationship management role –
supported by ‘centres of excellence’ or similar.

Some organisations adapt quicker and better to such paradigm shifts than
others and some internal support functions are better or indeed, lesser
equipped, than others to support this new way of doing HR business. The use of
outsourcing can be a useful tool in the kit helping to achieve the new look and
feel of HR.

In Black Mountain’s case, the shift in paradigm worked out fine. It was a
voluntary outventuring of the department to provide outsourced benefits
management to CSFB.

As David O’Leary, global head of HR for Credit Suisse First Boston, describes
it: "Here we had a benefits department that was perfectly fine, then they
literally walked out the door, and the next minute they were actually better
because they owned the business."

The new new thing: ‘Service. Service. Service.’

Plus ça change… service is back with a vengeance (that is, it never went out
of style in the first place).

There is perhaps no more compelling lesson to be learned from the 90s’ zoom
boom – and no better guiding light for judging future provider activity – than
the importance placed on knowing your client and prioritising good
old-fashioned service.

Service is the new new competitive landscape between providers and that is
good news for HR managers – whether you are buying HR services in dollars, yen,
sterling or euros.

There’s an increasingly mature and competitive landscape out there to
support what you as HR managers want to do for your employees both domestically
and internationally. On the basis that marketplace economics are on your side
in terms of securing good pricing, and there are some mature technology
solutions available now, you shouldn’t settle for second or third row back when
it comes to service. You really don’t have to.

Steve Medici, president and CEO of Black Mountain Group and previously director
of benefits for Credit Suisse First Boston, firmly agrees. He sees the key to
long-term success for HR clients through up and down market cycles as being
more than just cost reduction, technology and re-engineered processes. That’s
all part of the basic toolkit and taken as read in his book.

"Fundamentally, it’s about providing exceptional, not just good, client
service. A position that is central to Black Mountain’s business model and
day-to-day operations," observes Medici.

About the author

David Kinnear
Business development director, Black Mountain Group

Prior to joining Black Mountain Group, David was a director of Credit Suisse
First Boston (CSFB) where he had been global head of finance and infrastructure
and then chief adminis-trative officer for HR. During this period, a number of
‘globalisation’ initiatives were undertaken, including outsourcing of European
benefits, background checking, data entry and record keeping, together with the
implementation of PeopleSoft HRMS and an HR intranet globally. He started his career
in the UK, subsequently working for law firms Masons and Linklaters before
moving to New York as counsel and CAO for CSFB’s highly successful move to its
Manhattan headquarters.

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