Last week I attended the Benefitfocus Seller Place 2020 conference. Benefitfocus has repositioned itself from a software company to a benefits platform provider with solutions focused on engaging and improving the user experience while helping employers and employees make more informed decisions and reduce cost.

Benefitfocus has 25m consumers, serving 150k employers with 15.5m employees, partners with 700 brokers, 144 medical carriers, 50 voluntary suppliers, and has 1,700 associates. The BenefitSAIGE platform processes 42m transactions per week, worth $18bn between BenefitFocus and its ~100 payroll partners with a 99.9% first pass yield. 100% of data is delivered on time during open enrollment and 100% of payroll and enrollment files/data transmitted is encrypted.

Why Benefits Engagement Matters

The importance of engaging employees with benefits for attraction and retention of talent cannot be underestimated. Benefitfocus presented data showing that there is a 19.3% employee turnover rate in the U.S. Employees are spending more on benefits than all other expenses except for home mortgages and car payments, yet they are getting less value. Since 2009, medical costs are up 54%, deductibles up 162%, while worker earnings are up just 20%, and 74% of employees are confused by their benefits options. In 2018, $3.65 trillion was spent in the U.S. on annual health costs, 20% of the GDP. Family costs have increased 2x faster than wages in the last decade, and 64% have delayed receiving care due to the costs involved.

BenefitSAIGE Platform Notifications

Benefitfocus has made significant investments in its BenefitsSAIGE platform, including the use of AI. BenefitSAIGE is event-driven: instead of benefits being an annual event, you can enroll and change benefits when you need to. BenefitSAIGE engages with participants throughout the year, including participants receiving a proactive notification when something changes. Every person who comes to the BenefitSAIGE platform receives push messages on a weekly basis that will help them to make informed decisions and save cost. A dedicated content manager helps to ensure compelling content is delivered throughout the year. A few examples of notifications are:

• If an employee gets married, they will receive a message (email or text) on the top 5 things newly married couples needs to do regarding benefits
• If an employee moves, their auto insurance may change, so BenefitSAIGE will notify the employee to review insurance products that the platform recommends
• Personal reminders such as ‘today is your core strength training day’ or ‘it’s time for your doctor’s appointment today’
• Cost-saving notifications such as ‘the prescription you just filled can be $3 cheaper at the CVS pharmacy near you’.

Examples of Benefits Achieved

The following are examples of the type of benefits that can be achieved using the BenefitSAIGE platform:

• Ability to make a company HR admin a super-hero! For example, in looking at medical claims and trying to get a handle on costs, with one click you can get the top 10 categories driving cost and the dollar amount spent on (say) cardiovascular, with the number of claims
• ER costs have risen dramatically in the last 10 years. As such, you can identify the types of claims and diagnosis appropriate for alternative care. An example was given of a Benefitfocus client with high ER costs that implemented telemedicine communication and realized a $50k saving with a potential of $400k over 2 years
• Ability to run a report on zero cost claimants that are never going to the doctor (even for preventative physicals) and deliver messages to inform them they are covered for no cost for preventative annual visits and/or incentivize them to open a Health Savings Account and then see the impact it has
• A midsize employer with a lot of non-compliant prescription diabetics created member populations to track strategy effectiveness and realized a 24% increase in medication compliance, getting employees the right medication, and increasing employee engagement
• A large employer who was seeing double-digit pharma cost increases y/y, analyzed data and found improper billing/fraud and was able to reduce y/y spend by ~10%
• Open enrollment daily insights to HR admins including number of log-ins, elections, comparison of plans selected vs. last year, number and types of questions asked; allowing HR admins to proactively communicate anything that needs to be clarified
• Individuals enrolling in benefits are given insights; for example, ‘We recommend 2019 HDHP Premier as your medical plan, which can save you $3,822 on premiums compared to the PPO standard plan’. It will then provide further information on Total Risk and Savings Opportunity.

2020 Roadmap

Benefitfocus’ planned enhancements for 2020 include:

• Integrated case management capability to allow employees and employers to have full access to case history
• Email notifications will incorporate employer branding, including client logo and email styles
• In Q1 2020, in addition to email, text notifications will be made on mobile devices
• Increasing the number of broker partners from 700 to 1,000.

Outlook

Benefitfocus’ emphasis on using its BenefitSAIGE platform to provide proactive communication throughout the year gives it a unique position as a benefits partner in helping employers, employees, brokers and carriers to make more informed decisions, reduce company and employee costs, and improve engagement.

In terms of challenges, Benefitfocus needs to ensure that its notifications continue to add value and not lead to communication overload. But that can be overcome if the messages are short and succinct and help to make better decisions while saving money. Also, while there is merit in being a premier platform provider, Benefitfocus should let it be known that they are still a service provider with a Benefits Center and specialists able to answer questions on the phone when needed.

NelsonHall expects to see double-digit growth in Benefitfocus products bought and revenue generated in 2020.

I recently attended Korn Ferry’s RPO Client Advisory Forum, which was all about talent management. The theme was ‘unplugged’ and featured frank discussions about the RPO industry, including the challenges faced by the clients and service providers who attended from every region.

Beyond RPO, Korn Ferry offers many complementary talent management services, including those from its Organizational Consulting practice. One of the emerging talent trends of 2019 presented by Byrne Mulrooney, CEO, Korn Ferry RPO, Professional Search and Products, is rethinking performance management, and here, discussion topics included: engaging talent to create solutions that transform, helping people to see brilliantly, and building value through people.

Korn Ferry’s goal is to be the preeminent organizational consultancy, specifically regarding talent and the importance of articulating the right relationships.

Partnering with Qualtrics

As a step towards its goal, Korn Ferry and Qualtrics partnered earlier this year to build a global delivery and advisory service to improve employee experience. The partnership combines Korn Ferry’s Organizational Consulting services with Qualtrics’ Experience Management (XM) platform, to be applied throughout the employee lifecycle.

By joining the Qualtrics Partner Network (QPN), Korn Ferry is going to market by combining its organizational methodologies and expertise with Qualtrics’ XM platform to provide organizations with the expertise and technology they need to achieve breakthrough results at every stage of the employee lifecycle.

Korn Ferry has standardized on Qualtrics as its technology platform and will become a global strategic consulting partner for Qualtrics, providing end-to-end delivery and advisory services for clients globally. Through the QPN, Korn Ferry will also offer consulting and advisory services to Qualtrics EmployeeXM customers in more than 50 countries globally.

The partnership will enable Korn Ferry to go to market with offerings that include its platform, employee engagement and culture surveys, 360-degree reviews, and social listening tools, to enable employers to better manage talent and the associated talent management systems.

Impact for RPO buyers

Per NelsonHall’s recent RPO market analysis, including interviews with end-user buyside clients, one of the top drivers for outsourcing recruitment today is to gain better access to expertise, insights, technologies and tools. This is an area Korn Ferry has excelled in according to client satisfaction data. Recent interviews with Korn Ferry clients conducted by NelsonHall revealed high client satisfaction scores for their partnership capabilities in particular. And, having now attended three events with Korn Ferry RPO providers and buyers, my observation is that Korn Ferry does have a very strong relationship with its clients.

In terms of what will be driving buyers to outsource recruitment in the future, the research indicates that this will include requirements for talent management services that are complementary to RPO, such as internal development of existing employees through upskilling and reskilling.

Last week I attended PeopleScout’s annual client NEXT Talent Summit 2019. In the keynote address, President Taryn Owen noted that this event marked one year since its acquisition of TMP to strengthen its global RPO and talent advisory capabilities. TMP, which operated in the U.K. under the brand name TMP Worldwide, provides employer branding, recruitment marketing, and RPO services through its Yocto brand. The acquisition expanded PeopleScout’s global RPO capabilities and EMEA client base, and its London office became PeopleScout’s EMEA headquarters. TMP expanded PeopleScout’s talent advisory offering by adding services such as employer branding, recruitment marketing, assessment services and talent acquisition strategy.

PeopleScout has also been growing organically, adding over 45 RPO contracts in 2018, and now has over 215 RPO clients with over 300k annual hires. In addition, there were around two dozen contract extensions. PeopleScout continues to be the largest RPO provider in terms of revenues in North America and they have continued to grow globally, across EMEA, APAC and LATAM. Half of PeopleScout’s employees are now based outside of the U.S.

Taryn Owen stated that a major priority for PeopleScout is its Affinix technology to enable a better user experience for candidates. Affinix is built on Amazon Web Services (AWS) cloud infrastructure, integrates with all ATS and VMS systems, and has a single sign-on. Its capabilities include:

• Digital and social recruiting, including the creation of job ads, job descriptions and career portals
• Artificial intelligence, including for immediate sourcing of passive and active candidates when a job requisition is opened
• ‘Mobile first’ platform for both the candidate and the hiring manager throughout the application, scheduling and screening process
• Video interviews and digital assessments to reduce time to hire using data analytics and machine learning to identify and rank the best candidates to communicate with hiring managers faster
• Predictive analytics and machine learning throughout the hiring process to better understand top talent behaviors and predict factors such as cultural fit, willingness to change companies, and future tenure potential.

One of the presentations by Andrew Wilkinson, PeopleScout’s Group Managing Director of Europe and APAC, was on creating a compelling brand experience across the employer lifecycle. Per NelsonHall’s RPO Market Analysis published last week, employer branding has elevated in importance as the global talent shortage has worsened. And in recent interviews with PeopleScout RPO clients, this was seen as an area where PeopleScout is excelling, as these two examples indicate:

• For a U.K. grocery chain, PeopleScout created a campaign featuring videos of a diverse group of people sharing stories about managers who inspired them. The video was viewed 484k times with positive feedback, resulting in exceeding the client’s goal of hiring 3k people for a new type of role
• For Virgin Media, PeopleScout focused on increasing employee referrals, updating its referrals website to elevate employer branding, and helped to communicate the Employee Value Proposition to current employees so they could identify the kind of people Virgin Media wants to hire. Within one year, referrals increased external hiring by 10% to 25%, employee participation increased to 40%, quality of hires increased, and Virgin Media saved $9k per hire on average.

Having attended these events four years in a row, I’ve observed that PeopleScout has a very strong and collaborative relationship with its clients, reinforced by achieving high customer satisfaction marks for quality of partnership in our most recent RPO NEAT vendor evaluation.

ADP held its 26^th annual Meeting of the Minds (MOTM) client conference recently, celebrating its 70 years in business. ADP is helping change the way employees work by continuously introducing new and enhanced products and services, and here I focus on three key areas: mobile, how pay is accessed, and recruiting.

ADP Mobile: growth & new developments

ADP has 20 million registered mobile users, with an average growth rate of 500,000 new users per month. Users use the mobile app on average ~10 times per month. There are 413,000 clients globally, with 20m notifications pushed to the mobile app per month, and in Google Pay it has a satisfaction rating of 88% (4.4 out of 5) with 500k 5-star ratings. ADP Mobile is available in 46 countries, in 27 languages.

ADP Mobile usage includes the ability to view and print pay and W2 statements and categorized pay reports, set up direct deposit of checks, view balances, and clock in and out (which is the most widely used feature).

Recently released features include:

• ADP Watch was released in November 2018, and has had 688k app sessions. Notifications can be received on a smart watch, and soon workers will have the ability to punch in and out with their watch
• Siri shortcuts, including ‘show me my pay and benefits’
• Managing notifications by grouping them however you would like
• Mobile federated single sign-on for users to use their own company credentials, so they don’t have to remember new login information
• Employees and manager dashboards to access lists of responsibilities of all the things they need to do. 95k policy approvals were made within 2 weeks of release
• Direct deposit check image capture – the ability to take a picture of your check to make a deposit so you don’t have to go to a bank
• Profile updating, including view/edit business title, preferred name, pay information
• Ability to do group texting to your team
• Wage garnishments and receipt of email notifications, reducing call center calls by 50%
• Viewing benefits, opening enrollment, updating life events, and uploading documents pertaining to your benefits
• Paycard self-enrollment and the ability to transfer money between cards
• Employee scheduling and the ability to swap work shifts via the requestor to the receiver and approval by the manager
• Via ADP DataCloud managers can obtain absence rate information, pin-point where problems are, and act right away by sending an email with a visual depicting data to be discussed.

Future enhancements will include:

• Notification where OT is highest
• Pay on ADP Watch
• Notifications sent to workers forgetting to clock in
• Chat feature, beginning with wage garnishments and benefits
• Learning, including courses you need to take
• Electronic signatures.

In sum, mobile is a game changer as it improves employee satisfaction via ease of use. As evidence, I sat in on several client presentations of ADP products, e.g. Vantage, and three clients specifically stated that adoption of mobile was much easier than deployment of equivalent desktop applications. The clients said that initial adoption was ~70%, 87% and 90% respectively.

New mobile features are released every three weeks by ADP.

Accessing pay

How workers want to get paid is changing, including lower income workers who may require more immediate access to pay. Thus, ADP is offering quicker access and more flexible choices to receive wages.

In May 2018, ADP Launched Wisely Pay following its acquisition of Global Cash Card. Wisely Pay provides individuals with multiple ways to receive, spend and manage money, including fully electronic options such as peer-to-peer transfers, instant pay, and mobile digital wallets by Apple Pay, Samsung Pay, and Android Pay.

In addition to Wisely Pay, employees can receive pay via options including direct deposit, Venmo digital wallet, Amazon, and Walmart money card. Employees can watch a short video to view the different options and benefits of each. Employees can split their choices of how they want to be paid across all options available with any percentage split. Employees can also track spending patterns and receive alerts on how much they spend and save. Employees can also have early access to pay for the current pay period. If they are short on available money to pay a bill, they can click on the amount needed from their current pay period and deposit into their account. Emergency funds can also be set up.

ADP recruiting (RPO)

This will be a big growth area for both standalone RPO clients and multi-process HR clients, as currently ~10% of its newest clients are existing ADP clients and there are thousands of current clients that can be targeted. A couple of immediate areas that will benefit clients are:

• Use of ADP DataCloud, including via mobile, to obtain insights on flight risks to retain talent
• Candidate chat. Since I have been involved in recruiting for ~25 years, candidates consistently complain about the time and difficulty to submit for jobs and then not hearing back on status, with a historic ~70% dissatisfaction rate across all companies/industries. Candidate chat will allow candidates to answer a few basic questions via chat that contain knockout questions; and if the candidate is qualified, they will receive immediate feedback and be able to continue job submission.

As I wrote this blog, I happened to see ADP’s latest TV ad, with a voiceover that says ‘At ADP, we’re designing a better way to work so you can achieve what you’re working for’, which is a neat summary of the ADP approach. Competitors will be sure to follow suit with similar initiatives, but by continuously innovating and improving its products and services, ADP is laying the groundwork for its next 70 years in business.

by Gary Bragar & Pete Tiliakos

This past week at Caesars Palace in Las Vegas, Ceridian held its 31^st annual client event, Ceridian INSIGHTS. The event attracted ~3k attendees and consisted of 150 sessions, many presented by clients highlighting the capabilities of the Dayforce HCM platform and the outcomes achieved following its adoption. In this blog, we highlight a few of the HCM modules showcased along with results reported by clients, as well as considering the outlook, opportunities and challenges for Ceridian and Dayforce.

2018 so far

Dayforce, which Ceridian acquired in 2012, now has ~3.3k customers live, with hundreds more going live every quarter. Ceridian serves clients of all sizes ranging from ~50 employees up to its largest customer with 186k employees in 20 countries in the U.S. and Europe. However, its sweet spot remains the middle to lower end of the mid-market, with the majority of its clients falling in the range of 500 to 5k employees.

2018 has been a big year for Ceridian and Dayforce so far. In April, the company went public on both the NYSE and TSX stock exchanges and indicated that its Dayforce Q2 18 revenues were up ~40% YoY. With a growing North America presence, and the platform now capable of supporting WFM in 50 countries and 21 languages, Ceridian now has its sights on international expansion (see Dayforce new developments & priorities below).

Recruiting

Client cases include a Denver-based yoga company with 185 studios and 11k employees who implemented Dayforce recruiting, saving $224k annually in system costs while reducing turnover. In another case, a global high-tech company headquartered in Portland, Oregon who implemented several Dayforce modules including recruitment, went paperless “overnight” (including generation of offer letters), saving recruiters ~2 hours’ per candidate offer.

Employee engagement

A high-growth global logistics company already operating on Dayforce added a performance management module, including the ability to measure employee competencies related to corporate values and culture. They also added “Conversations” in the module to enable employee feedback and adopted Ceridian’s TeamRelate solution to help managers better communicate with team members. One team in the organization reduced turnover from 72% to 5%. Other teams had at least a 5% reduction in turnover just from using the performance module. In addition, internal promotions increased 110%.

In terms of its own employee engagement, Ceridian uses Dayforce as its HCM solution, leveraging the platform to continuously survey its ~4.5k employee population – and has achieved a 92% rating for employees willing to recommend Ceridian as an employer. Further, its awards include being certified by Great Places to Work, it was recently ranked in the Working Mothers 100 Best Companies list, and its Chief People and Culture Officer, Lisa Sterling, was also named a Working Mother of the Year.

Onboarding

Onboarding features include online access to forms to be completed prior to start date, learning company culture, and meeting fellow team members and other key colleagues, all of which aim to improve employee engagement and productivity. A wide range of client benefits were reported, including reducing employee turnover by up to 33% YTD in one case. Another client making 50 hires per week saved 800 hours’ administration time on new hires each year with Dayforce Recruiting and Onboarding.

Other client cases

Across modules, a North American hospitality company with ~5.5k team members, mostly unionized, was fully automated with Dayforce. It realized better data quality for improved decision-making, reduced turnover from 78% to 47%, reduced compliance issues by 50%, and labor expenses (including OT) were down 19% due to better time scheduling.

An office/workspace solutions provider was directed by its new parent company to implement nine Dayforce modules, including payroll and recruitment, in 90 days, with Ceridian delivering in 59 days. Recruitment was a new Dayforce offering at the time and the client was able to conduct hires in 30 days. First year savings were >$200k in efficiencies.

Dayforce new developments & priorities

A key focus for Ceridian is to expand its global footprint and presence, with a recent addition including native payroll for the U.K. Next, Australia, New Zealand and Ireland are on the roadmap for 2019. Other priorities include increasing client adoption of Dayforce by adding new modules to existing client subscriptions, and targeting the upper mid-market and enterprise level customers.

New product developments include:

• On-demand payroll live in January 2019
• Succession planning, including a talent matrix to show which future leaders can succeed based on flight risk and performance history, linking to performance management and goal setting
• Advanced analytics, including drill-downs of sales data by location combined with people data to depict turnover, and analyzing total 2018 labor costs by region
• Decision support, including helping employees make better decisions about benefit choices
• Additional work on engagement surveys, compensation and benchmarking.

Opportunities & challenges

Ceridian Dayforce customers were broadly positive, though some said they were not utilizing all modules they had purchased – due either to time spent learning other modules and/or certain modules not being a priority for the business. This could be an opportunity for Ceridian client account managers to determine utilization of all modules bought and offer implementation assistance and/or change management consultation where needed.

One customer pointed out that, with Dayforce Onboarding, some forms can be completed using mobile, but the entire onboarding process is not yet mobile. The response was that this will happen, but no timeframe was given. Perhaps the plan for that could be communicated.

Finally, with Dayforce on a strong growth trajectory in North America, with a strategic focus now on EMEA and APAC, and with the goal of targeting larger enterprise clients (with sophisticated process expectations), Ceridian’s ability to scale to support demand will be tested. While Dayforce has a growing partner network of consultancies which can implement the platform, it will need to rely heavily on these partners to help support that growth and scale, particularly as its demand increases in new international markets. Ceridian and Dayforce could benefit from partnering with a larger global consultancy practice (e.g. one of the Big Four) or a major IT consulting firm, both from the perspective of pipeline building and of supporting its growth trajectory.

Last week, I attended Cielo’s annual analyst event, held at its service center in Buenos Aires, Argentina. Here I round up the latest high-level developments at the RPO vendor, then take a closer look at its Latin American business.

Latest developments & 2020 roadmap

Cielo performs ~157k hires for ~154 clients in ~92 countries in 36 languages. Clients are served by ~2k employees in 34 countries and 9 service centers in every major geographical region.

Judging by 2018 activity YTD, Cielo is well-positioned to continue double-digit revenue growth. So far this year there are 44 new clients (including in healthcare, hi-tech/engineering, life sciences, financial & professional services), 24 significant scope expansions with current clients, and ~90% reoccurring revenue via multi-year contracts.

Key areas of investment in 2017-2018 have included:

• Chatbots/live chat to qualify candidates in 6 questions
• High-volume hiring. This is a mobile-first platform for hourly positions where candidates can apply for jobs in under 7 minutes, be notified immediately if they qualify, and schedule interviews right away. This could be a game changer for clients with high-volume hourly hiring; results for one client include triple-digit improvement in the volume of offers accepted, double-digit increased offer rate, double-digit reduced overtime, reduced time to offer, and lower cost per offer accepted.

Cielo’s 2020 roadmap includes:

• Global footprint, including adding employees in 6 new countries, taking its total country count to 40 by 2019
• Building total talent acquisition capabilities to hire both permanent and temporary talent for its clients. To date, Cielo has total talent clients in financial services, including banking, managed services, and with a multi-national tobacco company. Per NelsonHall’s Q3 Total Talent Market Analysis, growth is expected to be ~24% globally.

Cielo in Latin America

Cielo began serving clients in LATAM from Buenos Aires to support the hiring needs of a large U.S. multi-national corporation (MNC) in the region. Today, Cielo supports the hiring needs of both MNCs and LATAM-only companies in a variety of industries including medical, pharma, consumer products, manufacturing, transportation, and energy. Over 150 recruiting staff, including ~60 in Buenos Aires, support ~24 clients with hiring needs in fifteen different LATAM countries. Cielo has hired talent from across LATAM, as well as from the U.S. and the U.K. Languages supported include Spanish, English, Portuguese, Swedish, French, Russian, Armenian, and German. Recruiters outside of the Buenos Aires center are located at client sites.

Buenos Aires was chosen as the prime location for supporting clients in the region for reasons including:

• It represents ~23% of Argentina’s GDP, has a population of ~14m within the metropolitan area, and ~3.5m in the city
• Prime cultural location, and strongly English-speaking
• A reputation for talent competitiveness (Global Talent Competitiveness Index)
• 400 technology centers, 41 universities, 574k college students and ~50k foreign students. ~70% of BA students study careers/take courses in BPO, equating to ~60K graduates each year educated in BPO disciplines
• It is ranked #10 globally as an outsourcing destination. In 2017, total BPO exports were $4.25bn, second in LATAM after Brazil.

Mexico, served in-county, has the biggest need for RPO services in LATAM, followed by Brazil in Rio and Sao Paulo (also served in-country). In South America, Buenos Aires, Rio and Sao Paulo are the largest RPO markets. Growth in LATAM is strong, with Cielo planning to double the size of its Buenos Aires service center by next year.

RPO contracts in LATAM are typically:

• In the region of $0.5m in contract value, with between 300-700 annual hires (though for one large client in the region, Cielo performs 2k-4k annual hires)
• 8-9 countries in scope, and this usually includes Colombia, Brazil, Argentina, Peru, and Chile
• With MNCs (90%) that are familiar with the RPO model in other regions, and want to replicate it in LATAM.

NelsonHall’s recently published global BPS market forecast reveals that the overall HR services market will grow at 5.8% in 2018. Here I look at how each of the key HRS sub-service lines have performed in H1 2018. In order of number of contracts announced (highest to lowest), this covers Benefits Administration, Multi-Process HRS, Learning, Payroll, and Recruitment. I also provide a brief analysis of HCM software contract activity in H1.

Benefits Administration

Defined Contribution (DC) benefits contracts make up the majority of benefits contracts announced. Employer DC plans such as 401k are increasingly important as many companies have eliminated their Defined Benefit (DB) pension plans. DC plans have become the way employees save for retirement and are now more important than ever as a means of attracting employees. H1 2018 contracts include:

• Prudential Retirement: a 3-year DC administration contract renewal by State of Hawaii to manage the State’s 457(b) plan, which has ~28k members and ~$2.4bn in assets. Prudential was also awarded a DC administration contract by IberiaBank to be the provider for its 401(k) and non-qualified deferred compensation plans which has ~2.8k participants, and ~$135m in assets
• TIAA was awarded a DC administration contract by Nichols College to be the sole recordkeeper of the school’s 403(b) plan, which has ~$35m in assets
• VOYA Financial won a DC administration contract renewal by Kansas Board of Regents (KBOR) to provide a 403(b) plan to all employees of KBOR and the State Universities; the plan has ~8k participants and ~$770m in assets. Voya was also awarded a DC administration contract renewal by the State of Oregon to continue administering the state’s 457 plan, which has ~$2.1bn in assets and ~31k participants. The contract is for three years, with an option for eight additional years, effective January 2018.

Multi-Process HR Services (MPHRS)

Though MPHRS contracts and revenue are in decline, being replaced by cloud-based HR services contracts, they are still important to buyers seeking the benefits of having one vendor, one contract, and one governance structure for the provision of multiple services. MPHRS contracts still make sense where vendors have specialist capability and proven results for each of the services in-scope. On average, MPHRS contracts today include three service lines. H1 2018 contracts include:

• IBM: a 7-year MPHRS contract by a financial services organization headquartered in Europe to provide the following services to ~53k employees in ~42 countries:
  • RPO: candidate sourcing, management and selection, and employment brand execution (~7-8k hires per annum)
  • Learning services: design and development and learning administration
  • Compensation and benefits administration
  • HR administration, including employee data management and contact center services
• Zalaris’ cloud MPHRS contracts include:
  • Expansion with Circle K to Ireland. Zalaris will now support an additional 2.2k employees in Ireland from its office in Dublin, providing transactional BPO support including: HR, Payroll, travel and expense processing
  • By Aker BP in Norway. Services include: Payroll, Time, Absence, Travel expenses.

Learning

The majority of buy-side organizations currently seek learning services to improve standardization and efficiency of the training function. The government sector accounts for the largest proportion of learning BPS revenues due to high contract values. In the private sector, manufacturing leads the way, followed by high tech and financial services. H1 2018 contracts include:

• Capita’s 12-year, £400m contract to run the Defence Fire and Rescue Services on behalf of the MoD. Capita will deliver improvements in the equipment and training available to military and civilian firefighter personnel. Capita already provides specialist operational fire and rescue training courses as part of its £200m, 10-year contract awarded in 2013 to run the Fire Service College
• SAIC’s contract to provide training and development services for the U.S. Army Mission and Installation Contracting Command-Fort Eustis. The contract, which has 33 awardees, has a ceiling value of $554m
• NIIT Ltd. Won a 5-year learning BPS contract with Pitney Bowes, including the following managed training services: learning consulting, demand management, design and development, learning delivery, learning administration, technology support and Vendor management.

Payroll

The mid-market (500-15k employees) is the largest segment of the payroll market with 47% market share, and is fastest growing at 6.2% CAAGR, primarily due to the demand for increased control of payroll operations and implementation of cloud software solutions. The sweet spot in terms of client size for several vendors is ~4k-5k employees, as evidenced by these H1 2018 contracts:

• SD Worx won a payroll services contract with cosmetics retailer Lush to support Lush's ~4.5k employees across 102 U.K. stores, its manufacturing site in Germany (~300 employees), and its support and digital teams
• Ramco was awarded a Fortune top 5 company contract for HCM and managed payroll services to support 4.5k employees across 21 cities.

Recruitment

RPO is the fastest growing HR service line. Growth is coming from large, mid-size, and SMB markets, with smaller size companies seeking the same benefits as their larger counterparts. Buyers are seeking vendor expertise for candidate attraction, cost savings, scalability, access to tools and technology, and improving quality of hire. Multi-country contracts make up ~31% of all RPO contracts, made up of: contracts with two or more countries in a single region (16%), multiregional contracts (7%), and global RPO contracts (8%).

An example of a multi-region contract win in H1 2018 is IBM’s 5-year RPO contract with a large global pharma company headquartered in North America. Services include RPO, IBM Talent Insights, Watson Recruitment, Employment Branding and Design Thinking. Services will be provided in the U.S., Canada and LATAM in support of hiring ~4,000 professionals per year, up through Associate Director Level.

HCM software contracts

HCM technology growth is split equally across all segment sizes, led marginally by the mid-market seeking HR technology to support growth and compete for top talent. Cloud HR services typically include advisory and/or implementation services at the onset.

More than doubling the number of HR services contracts are HCM software contracts, led by Success Factors, Ramco, Infor, Kronos, and Ultimate Software. Other vendors announcing HCM contracts in H1 2018 included ADP, Cornerstone OnDemand, SD Worx, and Ceridian. The top HCM modules purchased are core HR and payroll.

Vendors announcing HCM implementation contracts include Zalaris and Neeyamo. For a comprehensive look at modules purchased, including the top talent modules, please see NelsonHall’s recently published Next Generation HCM Technology Market Analysis by my colleague Pete Tiliakos.

What can we expect in H2 2018?

In terms of announced contracts, I believe we will see the same pattern continue. However, expect revenue growth to be led by RPO and HCM technology, followed by payroll, learning, benefits, and MPHRS.

Last week, I visited the recruitment and talent management vendor Alexander Mann Solutions’ Global Client Service Center (GCSC) in Cleveland. Here I take a quick look at the growth of the operation and at recent initiatives.

Cleveland as a location

Alexander Mann Solutions (AMS) has seven GCSCs, the fourth of which opened in Cleveland in September 2012 to support AMS’ vision of providing global capability with in-country/region presence. AMS’ other GCSCs are in Bracknell (U.K.), Belfast (N. Ireland), Krakow and Gdansk (Poland), Manila, and Shanghai.

AMS was attracted to Cleveland for several reasons, including being a lower cost area than other major U.S. cities. Cleveland also has a stable workforce and effective partnerships with colleges and universities for hiring new graduates. The average age of recruits is 27, and there is an attrition rate of 18% (12% voluntary), lower than the average millennial attrition.

AMS does hiring for its clients in all major regions globally, and ~40% of its RPO clients are headquartered in the U.S. However, it was a European automobile manufacturer with hiring needs in the U.S. that led to the creation of the Cleveland GCSC to support clients in-country. This was followed by a need to support a long-standing U.S.-headquartered investment bank, a client of AMS since 2006 for whom AMS performs thousands of RPO hires annually. 

The Cleveland GCSC started with just 14 employees supporting four clients. Today, over 200 employees support 14 clients in four languages across Eastern and Pacific time zones with services including recruitment, sourcing, administration, business intelligence, branding/marketing and internal operations. The GCSC’s clients are from the banking and financial services, insurance, retail, hospitality, and sales sectors.

Automation initiatives

AMS has nine bots that automate and streamline processes for repetitive manual activities. Three of the bots it uses are:

• DORIS: used to automate document administration. Implemented in 2015, what used to take 10 weeks’ worth of work can now be done in 36 hours
• ISAAC: automates interview scheduling, using robotics to automate processes and interface with candidates. ISSAC automates 90% of interview scheduling; the other 10% is done by employees when last minute changes need to be made to interviews scheduled and candidates need to be contacted via phone
• HANA: automates help currently provided via text chat (though voice capability can be activated where needed).

Talent development initiatives

Recent talent development initiatives include:

• Defined career paths and internal mobility programs for employees (in 2017, ~10% of the Cleveland GCSC was promoted)
• A global internal mentoring program (after nine months on the job, any employee can volunteer to be a mentor)
• Ability for employees to become virtual trainers after nine months
• Use of Yammer social networking to share best practices
• Pulse-point surveys.

In 2017, AMS was recognized by NorthCoast 99 as a ‘Best Place to Work in North East Ohio’ for the fifth consecutive year. The Cleveland GCSC is also certified as ISO 9001 Quality Management and ISO 27001 Information Security.

Looking ahead, though Cleveland supports all of the Americas, anticipated growth in Latin America (currently supported by ~50 people working in-country) means that AMS is likely to open a GCSC in Latin America within the next three years.

At its recent Talent Summit, PeopleScout announced the expansion of its service centers in the U.S., Canada, Europe, and Asia Pacific, plus the acquisition of TMP Holdings, a provider of employer branding and RPO services operating in the U.K. via Yocto, the RPO division of TMP Worldwide.

Already the largest RPO provider in terms of number of hires (~300k annually) and the largest RPO provider in terms of revenue in N. America, this acquisition makes PeopleScout one of the major RPO contenders in the U.K., moving from ~20^th largest in terms of revenue to ~5^th.

This acquisition expands PeopleScout’s EMEA client base and strengthens its global RPO capabilities. TMP’s London headquarters will become PeopleScout’s EMEA headquarters, and its Bristol delivery center also joins PeopleScout’s global delivery center network, which supports clients in ~70 countries. Bristol and London will continue to support TMP’s current clients.

In addition to expanding PeopleScout’s EMEA and global RPO capabilities, the acquisition adds a talent advisory offering which includes employer branding, recruitment marketing, assessment services, and talent acquisition strategy. Andrew Wilkinson, TMP CEO, will join the PeopleScout executive leadership team and report to President Taryn Owen as Group Managing Director of EMEA.

This latest acquisition continues PeopleScout’s global expansion, with Owen stating that just under half of all their clients have been involved in an acquisition. Previous significant acquisition activity on its expansion path includes:

• U.S.-based RPO and MSP provider SeatonCorp in 2014, which also expanded its presence in APAC
• RPO provider HRX in 2015 to expand its presence in Australia and New Zealand as part of the One Global PeopleScout initiative to increase its global footprint
• Aon Hewitt's RPO division in 2016, another One Global PeopleScout initiative, bringing 650 employees based in the U.S., Canada, Poland, and India
• The addition of MSP services transitioned from Staff Management|SMX, another TrueBlue company. With this addition, PeopleScout expanded its ability to provide total workforce services, with RPO and MSP services being blended into one overall service under one brand, while still offering RPO and MSP as stand-alone programs. This move enhanced its global capability (global MSP contracts account for ~19% of the market, with another 28% of the market represented by multi-region or multi-country contracts).

Putting PeopleScout’s continued geographic expansion into context, NelsonHall’s RPO market analysis shows that ~31% of RPO contracts are in two or more countries, with 16% in two or more countries in a single region, 7% in two or more regions, and 8% global (in three or more regions).

Approximately 34% of PeopleScout’s contracts encompass two or more countries, which is 3% more than the industry average. In 2018 and beyond, NelsonHall expects the proportion of single-country contracts to decrease and all other multi-country categories to increase to ~35% by 2021, and PeopleScout’s share to increase to ~40%.

Last week, I attended and presented at Futurestep’s second annual client event, themed Talent Disruption: What’s Next? with clients attending from Asia Pacific, Europe and North America. Below is a round-up of the event’s main talking points.

Key talent acquisition & retention challenges

The following summarizes some of the key challenges presented by Futurestep’s clients, which align with what NelsonHall is seeing across vendor clients globally:

• Talent shortage will only increase. Per Korn Ferry’s Global Talent Crunch study, there will be a possible talent deficit of 85.2million workers by 2030, with India being the only country to have a talent surplus
• Having the right talent, including the right cultural fit. To achieve this, you first have to determine the best talent more quickly, including being able to demystify resumes and match candidates faster
• Creation of talent banks, talent pipelining and talent communities are more important than ever before
• More automation will be needed. However, there is a false expectation that all technology means better and that it will eliminate manpower, and this is not always the case as businesses always want to do more with less
• Once you determine the candidates you want, they need to be given a standout experience.

Another challenge that featured strongly was that companies need to have an effective employer brand. Consumers and candidates have evolved. Twenty years ago, it took three impressions for candidates to decide on which employer they wanted to work for; today that number is 7-10 brand exposures. See also Employer Branding: An Essential Talent Management Strategy.

And the subject of cultural challenge was also covered, with one presentation on the world’s most admired companies citing the following challenges: the importance of culture supporting your strategy, the need to measure the impact of culture, and also to reward desired behaviors.

Perhaps the biggest challenge, however, is that leaders do not spend enough time on people-related aspects of the business, and would do well to follow the example of the most admired companies (whose leaders spend an average of 30% of their time on talent management, including talent acquisition and talent development).

So what is next for talent disruption?

NelsonHall research based on interviews conducted with end-user RPO clients in 2017 showed that candidate communication ranked highest in terms of future client importance at 96%, yet client satisfaction with candidate communication was only 82%, a big delta. Chatbots/virtual assistants were, not surprisingly, one of the most talked-about disrupters at the event. And, importantly, they are able to address the big issue of candidates not hearing back from potential employers.

Chatbots can complete up to 80% of candidate communications, e.g. understanding and evaluating candidates’ responses to job descriptions, sending job postings to candidates, scheduling interviews, answering questions, and providing updates (e.g. when a position is filled). They use NLP and machine learning to chat with candidates in their preferred language, and they also increase the speed of applicants to interview and the ratio of applicant to hire. In the case of Mya from Mya Systems, there is a 4:1 applicant to hire ratio vs. the industry average of 10:1, and it takes less than 72 hours to get candidates to the interview stage.

You can read more about talent acquisition virtual agents in a recent blog by my colleague Nikki Edwards.

Now in its tenth year, Neeyamo is hitting its stride as a niche global HR services provider. I recently caught up with the company at its first U.S. analyst and advisor event for an update on its HR service lines.

Strategic focus

Neeyamo aims to ‘address the white spaces in HR technology and services’, including underserved markets and geographies. It positions itself as a specialist long-tail country provider, targeting global organizations which have ~70% of their employee base across five countries, with the remaining 30% distributed in small numbers across multiple locations. In these multiple locations, clients typically have numerous payroll technologies, including legacy technology, often with payroll distributed across several platforms – resulting in poor overall data management, limited helpdesk and language support, and high fixed cost. Neeyamo’s goal is to be able to provide a single-point HR solution for all tail-country needs.

Starting with 50 employees and 30 clients in 2009, today Neeyamo has:

• 1.6k employees globally, serving ~250 customers
• 6 global delivery centers (California, Mexico and three in India) and 17 proximity delivery centers
• 4 lines of businesses: global payroll, multi-process HRO, pre-employment and other screening services, and cloud transformation services.

Global payroll

Neeyamo has~75 global payroll customers in 153 countries, and processes 7 million payslips per year, served by 500 payroll specialists. Its technology, PayNComp, is currently configured in ~30 countries. Neeyamo plans to bring this to ~70 countries within the next three years to handle most tail countries, and will use in-country partners elsewhere.

Neeyamo’s roadmap for PayNComp is focused on delivering real-time payroll results, and is currently capable of processing ~10k employees (gross to net) in ~90 seconds. Neeyamo is striving for three primary experiences from PayNComp:

• Executive experience: A single view of global payroll at a glance with the ability to view all relevant payroll reports for every country and business unit per pay period
• Payroll team experience: Country/BU level view of payroll, a maker/checker process to ensure validation at every level. Includes input validation to catch errors early, variance analysis, dashboards, and a compliance view
• Employee experience: Easy view/interface of payslips, tax documents and other payroll related information, supported in multiple languages.

Helpdesk

Though not a separate line of business, Helpdesk support is a strong area of focus for Neeyamo. Out of its 250 customers, 100 clients utilize helpdesk, supported in 25 languages and used by all payroll clients.

Helpdesk support and ticket creation is built into the process, so users don’t have to log out and log in to a separate system. Users also have the option to take a screen shot to attach to a ticket, add a category. Users can see the most common questions and answers, and can access the helpdesk via phone, email or chat. The following is a breakdown of how inquiries are handled, with two-thirds of inquiries answered via self-service (ESS, MSS), and only 5% requiring specialist support:

• Tier 0: 66% (ESS, MSS)
• Tier 1: 28% (HR Helpdesk)
• Tier 2: 5% (Specialist Helpdesk)
• Tier 3: 1% (Escalated Support).

Global multi-process HRO (MPHRO)

Neeyamo provides MPHRO in 100 countries for ~150k employees and ~24 processes, supported in 25 languages.

One of Neeyamo’s global clients spoke about MPHRO support including payroll, absence management, and leave management. The client runs a ‘topic of the week’ with the Neeyamo Service Center to provide continuous education, therefore minimizing the number of helpdesk calls. The client chose to leave the U.S. running on Workday payroll, with Neeyamo taking over payroll processing in another ~20 countries, serving ~4,200 employees. Implementation of Neeyamo replaced 8-10 other vendors.  

Other recent Neeyamo MPHRO contracts include a global CPG company headquartered in the U.K. with delivery in ~60 countries across six continents.

Global screening services

Neeyamo provides screening services in 190 countries, for 200 customers, providing 21 different kinds of checks (e.g. employment, background, criminal, education, reference, address, identity, drug testing), verifying 5 million elements. Of its clients, 125 U.S.-based companies use Neeyamo for all international checks. Neeyamo claims that they are the largest international verification company, and with a performance level of 80% of all checks achieved within five days.

Summary

In just 10 years, Neeyamo has scaled its geographic presence and its services and technology capability. Earlier this year, Neeyamo partnered with a French-based provider of HR and finance enterprise software, Talentia, to strengthen its global presence. Talentia supports clients directly in France, the U.K., Spain, Portugal, Greece, Italy, Switzerland, Germany, and Canada. Expect to see even more in 2018 and beyond as Neeyamo is opening offices in Argentina, Brazil, Costa Rica, China, Germany, Poland, South Korea, and Taiwan.

Neeyamo also covered its cloud transformation services, which my colleague Pete Tiliakos will cover in a separate blog, coming shortly.

At ADP’s annual Meeting of the Minds client event this past week, what caught my attention most were the initiatives geared towards improving employee engagement/satisfaction and retention. Clearly, ADP has identified these areas as key, with its own research institute finding that ~2/3 of all turnover is voluntary – i.e. employees are leaving because they have not been given a reason to stay. Here I look at some of ADP’s engagement and retention initiatives currently in play.

Improving the user experience in benefits administration

ADP manages benefits for 15 million employees – that’s 1 in 8 employees where employer benefits are provided. Not only is providing employee benefits important for the attraction of talent, but also in providing a positive employee experience and for retention of talent.

NelsonHall’s most recent Next Generation Benefits Administration market analysis report reveals that one of the top client drivers for outsourcing benefits is improving overall support around the employee/participant experience, including increasing employee participation via self-service and improving communications. A critical success factor here is incorporating convenience features into the user experience to reduce user frustration. Vendors need to add convenience features for participants, such as the following features offered by ADP Benefits Administration:

• Ability to receive continuous client feedback, including from annual enrollment
• Of ADP’s 160 Participant Service Center (PSC) annual enrollment clients, 91.5% of callers receive an answer to their inquiry in less than 45 seconds from the point at which they elect to speak to an agent. This has resulted in 95.9% customer satisfaction
• Option to receive a scheduled call-back
• Saturday call center hours
• Spanish call center (the center in Guadalajara, Mexico is also a top performing center)
• 24/7 email query capability and 24/7 live chat (live chat to be fully implemented by end of year)
• Concierge service option, with a dedicated support team
• Where clients use more than one of ADP's services, client executives are assigned to own the entire relationship across all services. The client executives add value in many ways, including hosting internal calls to discuss how to best facilitate client delivery across all services.

​Addressing employee retention: client case

Employee attrition has been increasing. Per the bureau of labor statistics, median employee tenure was 4.2 years in January 2016, down from 4.6 two years earlier. An example of an ADP client facing a significant challenge with retention was Developmental Disabilities Institute (DDI), who had a turnover rate of 36% for several entry-level positions, with 41% of staff terminating within the first year of hire. Key initiatives deployed to address the situation were:

• Focus groups with employees who have stayed longer than a year to talk about why they remained. Output from this was then added to the Employee Value Proposition (EVP) on the employee portal
• A custom 3-day classroom training course for all frontline managers on how to better engage employees
• Monthly program for new managers to come together and learn strategies and techniques from one another
• A better and faster onboarding experience, ensuring new employees are fully connected to all company resources and communications on day one
• Based on employee feedback, introducing events like holiday parties and picnics for associates and their families.

Results of these initiatives included:

• Reducing new hire time by 45%, from 51 days to 28
• Increasing exit interview participation by 20%
• Reducing turnover in 2017 by ~42%.

Summary

Success in initially attracting talent is not much of an achievement if an organization fails to retain that talent. Hence, initiatives for providing an enhanced employee experience, such as the ones implemented by ADP, are essential to avoid unwanted attrition.

However, it’s also essential to analyze and measure the effectiveness of those initiatives. NelsonHall’s most recent interviews with the clients of benefits administration vendors reveal that use of analytics for process improvement and employee insight was one of the highest rated vendor attributes sought, with a future importance score of 90%. And yet client satisfaction in this area, across all vendor clients interviewed, was just 62%, which should provide food for thought for HR services vendors.

Here I look at how working with candidates has emerged as the top area for improvement. Below is a small selection of potential benefits sought by RPO clients, each one related to the candidate process, showing current client satisfaction levels compared to future importance.

Candidate communication is considered to be of highest future importance, but current satisfaction levels lag some way behind, indicating that vendors have work to do in enhancing the ways in which they engage with candidates.

Similarly, targeting of passive candidates is considered to be highly important in future, but current satisfaction levels fall short by the same amount. Clients are expecting vendors not just to engage with active candidates, but to leverage a much wider talent pool that includes passive candidates. This was also reflected in the importance and satisfaction levels recorded for vendors’ ‘capability to deliver across diverse candidate populations’.

All of this tallies with the top client driver for RPO identified in NelsonHall’s market analysis report, which is ‘leveraging vendor expertise to better attract candidates’.

When asked about their expectations related to the candidate process, comments from clients included:

“… scheduling interviews, liaising with the candidates and hiring managers, booking local facilities, and making sure that everything is available that needs to be available – video conferencing, psychometric testing, etc. Also, sitting in at the interview, as a representative of the company.”

“I definitely think there is room for improvement… most of the time they reach out to active candidates only.”

“We have more work to do with hiring managers in working with external candidates… with the candidate experience, sometimes we lose control over the hiring managers when they come into the equation.”

Another related area that showed a large gap between satisfaction and importance was use of social media. Client comments on vendor performance in this area included:

“This is an area where we have struggled, there has been a gap in terms of their presence on social media and this is something they have started to look towards now, understanding the importance of a cohesive approach.”

“We have a model that does not provide for active pipelining. So, the only way they can engage candidates today is by email campaigns, which aren’t as effective as if they were keeping talent pipelines warm and talking to folks (via social media) to keep them interested in us.”

The big picture is that RPO providers are meeting client expectations in a number of areas, including reduced time to hire and cost reduction. These were the primary areas of vendor focus when RPO began, and that focus has clearly paid off. However, vendors need to turn their attention to areas related to candidate handling, where there is a clear opportunity to raise their game.

NelsonHall’s NEAT comparative vendor assessments look in detail at vendors’ ‘ability to deliver immediate benefit’ to their clients, and their ‘ability to meet future client requirements, and assist strategic sourcing managers in assessing vendor capability while cutting the time and cost associated with their sourcing projects.

The RPO NEAT shows how RPO vendors are positioned overall in terms of their ability to deliver recruitment services, as well as within three distinct market segments: these are Global/Multi-country Focus, Candidate Experience Focus and Innovation Focus. The NEAT online tool also enables buy-side organizations to input their own weightings and tailor the RPO dataset to their specific requirements across over 40 individual vendor evaluation criteria. In this way, sourcing managers can configure the NEAT evaluations in accordance with their own priorities and business requirements for service offerings, delivery capability, customer presence, benefits achieved, and other criteria. To find out more, Contact Guy Saunders.

Recent NelsonHall interviews with the clients of the top ~20 global RPO vendors revealed that candidate communication was rated the most important vendor characteristic, with an importance score of 96%. However, the satisfaction score for candidate communication across all vendor clients was 82%, falling some way short of client expectations.

Recognizing the importance of candidate satisfaction as integral to attracting and retaining talent, PeopleScout recently launched a new technology, Affinix, to improve candidate communication and the overall candidate experience.

Embedded within PeopleScout’s offering, Affinix is built on Amazon Web Services (AWS) cloud infrastructure, integrates with all ATS and VMS systems, and has a single sign-on.

Affinix capabilities include:

• Digital and social recruiting, including the creation of job ads, job descriptions and career portals
• Artificial intelligence, including for immediate sourcing of passive and active candidates when a job requisition is opened
• ‘Mobile first’ platform for both the candidate and the hiring manager throughout the application, scheduling and screening process
• Video interviews and digital assessments to reduce time to hire using data analytics and machine learning to identify and rank the best candidates to communicate with hiring managers faster
• Predictive analytics and machine learning throughout the hiring process to better understand top talent behaviors and predict factors such as cultural fit, willingness to change companies, and future tenure potential.

Though only recently launched, PeopleScout is already working to implement Affinix with several dozen clients, and preliminary results include:

• Increased capture of candidates by ~40% via a fast and user-friendly application process, and automatic calendar interview scheduling with hiring managers, including the ability to do so via text
• Reduced time to hire, with candidate scheduling time reduced by 8-10 days.

In summary, Affinix has the ability to engage candidates and communicate quickly to identify, screen, and assess the right talent for the job with the best likelihood of long tenure – which should go some way to meeting clients’ high expectations for the candidate communication process. 

Sevenstep RPO held its second annual analyst event last week. In addition to analysts, advisors, vendor leadership, and key service providers, practitioners/buy-side clients also attended for the day, including Commonwealth of MA, Amazon, and CVS. Here I discuss a few key take-aways.

Sevenstep RPO overview

With ~300 employees, Sevenstep RPO has global delivery centers in three countries, and onsite and remote employees delivering RPO in 47 countries across 6 continents.

Clients use Sevenstep services at a number of levels, including Enterprise RPO (e.g. Aetna), Project RPO (e.g. Amazon), Blended RPO (e.g. Toshiba), Data Analytics (e.g. CVS Health), Employer Branding & Talent Attraction (e.g. Equifax).

The company has 94% staff retention, and 97% management level retention. ~60% employee growth has come from internal staff promotions. Client retention is >85%, and >80% of clients have had their SOW expanded.

In 2017, Sevenstep will achieve 25% all-organic revenue growth, more than double the 11.4% overall RPO market growth rate forecast by NelsonHall for 2017.

Employee care focus

~20% of employees work remotely from onsite or at home. Sevenstep created a new position, “flexible workforce”, to scale clients quickly, using staff working flexible hours. This not only meets client needs (an example being quickly scaling a client from 12 to 80 hires), but also in meeting employees’ lifestyle needs (as in the case of an employee needing to take care of an elder).

There are ~160 specialized training courses and four certifications for employees, with recruiters receiving an average of 60 hours’ training annually.

Employee benefits include a low-cost family medical plan, 100% salary for 3 months’ maternity leave, and unlimited PTO at a certain level, where vacation does not need to be approved and tracked.

The working environment is geared towards optimizing productivity and collaboration. Features include:

• Account teams sit together in pods, and phone systems are linked so that managers can listen in on candidate calls for training, coaching, and learning from each other, with the effect of increasing time to competency
• Each account team holds a morning “daily spotlight” review, looking at metrics, and identifying who needs help, etc. Each day, the team documents its key objectives, including hiring goals and achievement levels
• Service providers have formed various clubs, e.g. fitness, and often collaborate outside of work
• Yammer social networking is used to engage across each service center.

YTD employee attrition is just 2%. Sevenstep does not lay off employees, but scales up and down by moving employees between accounts.

2018 focus

Sevenstep RPO’s key focus areas for 2018 include:

• Geographic growth plans – e.g. Australia, where Sevenstep now has six people based on client site
• Reducing cost and increasing quality (i.e. value-add beyond simply filling the recruitment brief)
• Continuing to be technology agnostic, working with any platform (though SevenStep has its own Talent AI recruiting analytics platform)
• Recruiter training focus to include strategy, onboarding, how to treat candidates.

At the end of the event, Sevenstep also encouraged attendees to brainstorm and create a SWOT analysis of their own on the organization, from which additional opportunity areas emerged including  consulting and total talent. 

Last week, Ceridian held its annual customer forum, Ceridian INSIGHTS, in Las Vegas, where it showed its support for the victims of the recent shooting, and demonstrated its commitment to people as the mainstay of its philosophy.

Ceridian established a website at the conference where attendees were able to make donations to a victim support fund, with Ceridian making the first contribution, and attendee contributions being matched dollar-for-dollar by Ceridian partner Zappos. At the end of the conference it was estimated that $100k had been raised. Conference attendees also had the opportunity to put together care packages and add a personal note to victims of the Puerto Rico hurricane, and an estimated 1k packages have been shipped as a result of the initiative.

Ceridian’s people philosophy was evident from the start of the conference, with CEO David Ossip stating that after Ceridian acquired Dayforce in 2012, one of his top three priorities was to improve the culture and to have an environment where everyone cares and is passionate about what they are doing; he also said that he would rather have people working 35 hours a week than 60. Ceridian created the brand promise ‘Makes Work Life Better’, and it has found that this resonates with candidates in its recruitment efforts. The resulting business impact has been growth of >60% CAAGR over the last 5 years, with the majority of revenue now being from the cloud with ~2700 customers live on Dayforce.

Below I take a quick look at the key components of Ceridian’s HCM offering and their role in employee care.

TeamRelate

Supporting managers on how to care for their team members is TeamRelate, part of Dayforce HCM. It is used to enhance and personalize communication, and to help team members understand each other better, driving more effective interactions. TeamRelate also helps guide managers on how to deliver better performance reviews and coaching. For more information, see my earlier blog, Ceridian Focuses on Employee Engagement with TeamRelate & WorkAngel.

Dayforce Onboarding

This module welcomes new employees, and those moving to a new position internally, helping them understand the culture, get to know the people they will be working with, and providing key contacts. Electronic forms are also provided (e.g. I9 forms) before joining Ceridian.

Dayforce Learning

Ceridian announced the launch of Dayforce Learning, which is embedded throughout the employee lifecycle, from onboarding to career development. It includes on-demand snippets of learning, including coaching for managers.

Predictive Analytics

Predictive analytics include identifying flight risk to mitigate undesired turnover, and incorporates employee analytics, including engagement level, compensation, time since last promotion, location, overtime, etc. The flight risk tool provides data to help managers in evaluating team members who have been identified as a potential flight risk via statistical probability of leaving their role. The toolkit provides practical and tactical coaching to help guide managers as they evaluate what actions to take.

Client feedback

Reasons cited by clients for using Ceridian Dayforce include:

• The intuitive nature of Dayforce, with all applications on a single platform
• Ceridian employees deliver on promises, and help make clients successful
• Delivery on time and on budget.

One client case is Rubio, who moved from being 100% paper-based, achieving cost avoidance and savings of $1.8m annually, and ROI of 148% annually. In addition, onboarding was reduced from ~3 hours to 30 minutes.

Ceridian is on the right track with its focus on people and the strength of its Dayforce platform. However, there will be challenges along the way. For comprehensive HCM solutions, competitors include ADP, Workday, Success Factors, and Oracle. However, as keynote closing speaker Earvin ‘Magic’ Johnson stated, you can learn from your competitors, and they can make you stronger and better.

A comprehensive analysis of cloud-based HR services, including key vendors, can be found in NelsonHall’s ‘Targeting Cloud-Based HR Services’ market analysis report, published in July 2017. Also, this month, NelsonHall is starting a ‘Next Generation HCM Technology’ market analysis that will include the leading HCM platforms. To find out more, contact Guy Saunders.

Last week, my colleague Amy Gurchensky wrote on the topic of ADP’s user-centric innovations paving the way for growth in its HR services business. Indeed, at its recent annual analyst event, CEO Carlos Rodriguez was keen to reiterate that ADP is a technology-enabled services organization, not a software company, and this was backed up by client case studies. Here I provide a summary of two client cases and examples of recent client wins that illustrate ADP’s positioning as a user-centric, service-oriented HR vendor.

Client Cases

Ally Financial

Previously known as GMAC (General Motors’ captive finance unit), Ally Financial has ~8,000 employees in the U.S. and some in Canada. ADP was chosen by Ally as its service provider for six key reasons:

• Tenure & maturity: including the need for a vendor who would be there for the long haul
• Comprehensive solution: full breadth of HR support for services including workforce administration, payroll, time, etc.
• Integrated technology: ADP’s talent suite including recruiting, performance, learning, succession
• Subject matter expertise: including call center support by ‘people that get it, not just tech guys’
• Vision for evolution: a provider with a strategic path forward, e.g. adding mobile capability, improving user experience, etc.
• Affordability: not a driving factor, but after considering other key factors, ADP was found to be meaningfully less expensive than some of its key competitors.

Ally Financial stated that the most important aspect of the ADP partnership was honoring commitments to each other, including the commitment to evolving products over time (e.g. implementation of mobile).

Canyon Ranch

With 1,850 employees in the U.S. and 100 gig workers, the luxury spa vacation company Canyon Ranch uses ADP services including ADP Analytics, and has been focused on a new metric: New Hire Attrition. To reduce attrition, an interactive onboarding process was implemented. In addition, the interviewing process was improved with more behavioral-based and peer interviewing. This has led to measurable improvement, including cost savings via reduced interview time because of less rehiring.

There is a dashboard that managers sign into each morning and see new hire attrition and retention. Average tenure is now ~8 years, while the average tenure in the hospitality sector as a whole is just ~1.5 to 2 years. Candidates are attracted and new hires are staying at Canyon Ranch due to its improved recruiting process, employer branding and culture. Thus far, there has been a 38% improvement in retention, translating into 190 people that Canyon Ranch has not had to replace. Going forward, Canyon Ranch will be looking to implement turnover probability metrics to further reduce attrition.

ADP’s HCM client base & new wins

ADP has 61,000 HCM clients. Workforce Now has 60,000 clients. 80% of new clients are multi-module, ~47% use Workforce Management, and ~24% use the Talent module. There are ~6,000 clients with >500 employees, of which 68% use HR and Benefits, 65% use the Time module, and 47% have one or more Talent modules. Recent wins include:

• Telligen (700 employees), who wanted a fully-integrated, seamless HCM solution and a partner with commitment to HCM innovation. This is a full HCM solution including Payroll, Analytics, Benefits, Talent, and Document Management

• Flynn’s Tire and Auto Service (500 employees) became a client based on progress made in Workforce Now Product and the Service model. Modules include HR, Benefits, Payroll, Workforce Management, Recruitment, Analytics, and Onboarding.

ADP Vantage has 650 HCM clients with over 4,000 employees per client. Less than 10% of new clients purchased payroll by itself in FY17, and new clients are purchasing 3+ modules. Recent wins include:

• Reynolds Consumer Products (21,000 employees) required a better service experience and model. ADP’s partnership with Hackett Group was a key influencing criterion. Modules include Payroll, HR and DataCloud
• Heartland Automotive Services (4,900 employees) needed a comprehensive and complete single HCM solution along with strong service and support for their change management initiatives. Modules include HR, Talent, Benefits, Payroll, DataCloud, and Workforce Management
• DHL Global Business Services (38,000 employees) was looking for a consultative rather than a transactional HCM solution and a strategic partnership to support and execute its change management strategy. Modules include Payroll, Analytics, DataCloud, Aline Card, and Strategic Advisory Services.

ADP Multinational has 1,500 clients in 112 countries, and pays 3.5m employees, processing 5m pay slips. Partner integrations include 61 clients with Workday and 42 clients with SuccessFactors. Recent client wins include:

• First Data (26,000 employees in ~40 countries) wanted a global footprint in time and payroll in all the countries where they operate. Modules include GlobalView HCM, Global Time, and Payroll
• XPO Logistics (45,000 Employees in ~15 countries) had multiple companies and systems after several M&As and wanted a vendor with integration, scalability, and global payroll experience. A key criterion was deep integration with SAP. Modules include GlobalView HCM and Payroll

I believe that ADP’s focus on continuous improvement in both technology and services will be key to its continued growth, though there will certainly be competition along the way that buyers will be evaluating. For comprehensive HCM solutions, vendors include Workday, Success Factors, Oracle, and Ceridian. For Workday integration, the competition includes the likes of OneSource Virtual, Alight Solutions, DXC Technologies, IBM, and NGA HR. And for SuccessFactors integration, the competition also includes vendors such as IBM and NGA HR.

To keep abreast of the competition, ADP has added Global Cloud Connect to simplify integration among disparate global and local systems in the cloud, which includes standard connectors for Workday, Oracle, and SAP SuccessFactors, and the ability for clients to ‘bring their own data’ in whatever format they have it in.

A comprehensive analysis of cloud-based HR services, including key vendors, can be found in NelsonHall’s Targeting Cloud-Based HR Services market analysis published in July 2017, and in October 2017, NelsonHall will be commencing a Next Generation HCM Technology market analysis that will include the leading HCM platforms.

We interviewed cloud-based HR services vendor clients in North America, Europe, and Asia Pacific, looking at ~50 specific service criteria. We ascertained importance and satisfaction levels, plus a measure of future importance. Below is a small selection of potential benefits from cloud-based HR services, showing the levels of importance and satisfaction attached to each one by the clients interviewed.

Three key areas where vendors are underperforming against client expectations that are also of high future importance to clients are:

• Improved standardization and consistency of services
• Enhanced in-house focus on value-adding activities
• Improved employee satisfaction.

Improved standardization and consistency of services is the biggest challenge for cloud-based HR services vendors, as it scored highest in current and future importance and has the highest delta of current satisfaction at -22%. Although client satisfaction for cost savings achieved is +2% greater than current importance, future importance is the same as that for improved employee satisfaction (94%, the second highest future importance rating).

Our market analysis identifies transforming the HR operating model as the top cloud-based HR outsourcing driver, for the following reasons:

• To provide a catalyst for standardization of HR processes across business lines
• To create a single global HCM platform providing access to real-time HR data
• To enhance employee experience and engagement features,

The second highest rated outsourcing client driver is improved cost structure/efficiencies, including lower, more predictable cost to operate, and costs shift to subscription-based (OPEX) vs. large investment (CAPEX).

Comments from vendor clients regarding improved standardization and consistency of services included:

“We already had a system that was not running properly and there was lots of confusion. So, people wanted a solution that created less confusion, that was fit for purpose, and created more understanding”

“It has improved across the entire duration of the contract. The importance is now starting to heighten as it drives cost”

“That was one of our top goals, but we keep having these quality control issues. It is probably going to be even more important”

Comments regarding enhanced in-house focus on value-adding activities included:

“There is room for improvement. My role is continuing to be more strategic and I need this system to do everything it can do – and a part of that is my team maximizing what the system can do”

“That's a big one and will stay so. I would put satisfaction low on this – because of the quality issues, we continue to have to manage the outsource service and really we should be able to 'set it and forget it'…”

“It is really important. At the minute, I am not satisfied – the account management is amazing and I think he is doing everything he can, but the support processes have to change within the vendor”

Comments regarding improved employee satisfaction included:

“Where they could help us more is making it very simple for an employee to use the tool… it’s fine for somebody who is an expert in HR, but my employees aren't expert, and I think we could do something to make it easier to use”

“The more services we move out to the cloud, the more employees are going to benefit from it. By doing that, we are hoping to improve the self-service level even more, so that employees can do more by themselves”

“The importance is really high, but has the vendor improved employee satisfaction? No, not at all”

Vendors are exceeding client expectations by a healthy margin in their ability to deliver cloud HR process change management, however: current importance is only 66% and future importance is 74%, while client satisfaction is 74%. Additional areas where clients gave high satisfaction marks to cloud-based HR services vendors included:

• Strength of partnership: 92%
• Flexibility of approach: 90%
• Vendor service culture: 88%
• Ability to deliver business benefit: 82%.

In summary, client satisfaction with cloud-based HR services is falling short of client importance in several areas. As this is a relatively new service offering, with rapid growth of client adoption, prompt attention by service providers would be prudent to increase client satisfaction.

NelsonHall’s NEAT comparative vendor assessments look in detail at vendors’ ‘ability to deliver immediate benefit’ to their clients, and their ‘ability to meet future client requirements, and assist strategic sourcing managers in assessing vendor capability while cutting the time and cost associated with their sourcing projects.

The Cloud-Based HR Services NEAT shows how vendors are positioned overall in terms of their ability to deliver cloud-based HR services as well as within two distinct market segments (i.e. areas of focus designed to meet specific cloud-based HR services requirements): these are Workday Focus and SAP SuccessFactors Focus. The NEAT online tool also enables buy-side organizations to input their own weightings and tailor the dataset to their specific requirements across over 50 individual vendor evaluation criteria. In this way, sourcing managers can configure the NEAT evaluations in accordance with their own priorities and business requirements for service offerings, delivery capability, customer presence, benefits achieved, and other criteria. Buy-side organizations can register for free access to the NEAT here.

We interviewed MSP vendor clients in North America, Europe, and Asia Pacific, looking at ~50 specific MSP service criteria. We ascertained importance and satisfaction levels, plus a measure of future importance. Below is a small selection of potential benefits from MSP, showing the levels of importance and satisfaction for each.

MSP Client Importance & Satisfaction Levels

Areas where vendors are underperforming against client expectations include ability to apply Vendor Management System (VMS) technology to streamline and approve processes, improved compliance and risk management, benchmarking ability, and reduced cost of contingent workforce.

Improving compliance and risk mitigation and streamlining and improving processes via VMS technology are the two biggest challenges for MSP vendors, scoring #1 and #2 respectively in current and future importance. While client satisfaction is fairly good at 84% and 78%, it still falls -6% and -10% short of the importance placed on this performance measure (and -14% short in terms of future client importance on both criteria). Our latest research identifies compliance, including local/global compliance to minimize organizational risk (legal, financial, industry-specific, etc.) as one of the top client drivers for companies outsourcing MSP today, and this has become one of the biggest challenges for MSP vendors.

Comments from vendor clients regarding ability to apply VMS technology to streamline/improve processes included:

“We don't dictate the pace on technology, it is for the vendor to do that themselves. If they use technology to support it or not, I don't necessarily mind. As long as the service is being delivered, they could have a thousand people working behind the scenes, or they could be providing it through technology – I don't really mind. There is low visibility, but it is for the vendor to get the balance.”

“They have still got some further improvements to do.”

“We've heard (from the vendor) that when we bring the new Beeline tool in, our efficiency improves 40% because we're doing that much manual labor. So, they need to put up or shut up on that when we get the tool.”

“When we went live in 2010, we launched the VMS, coupled with the vendor as our MSP, so it was done collectively. I think it was important that we were very efficient in leveraging the VMS tool. I would put the onus on the tool, Fieldglass, as much as on the vendor.”

Comments regarding compliance included:

“That will become more important as we continue to get hit with regulatory stuff.”

“That is front and center… that's most important to us. Being in financial services, there is no way that cannot be rated 5 for the future importance.”

Vendors are exceeding client expectations by a healthy margin in the areas of reduced turnover rates; improved ability to support high volumes and better manage resourcing peaks & troughs; application of tools to track worker visibility/value; and reduced time to fill posts. Additional areas where clients gave high satisfaction marks to MSP vendors included:

• Strength of partnership: 90%
• Value for money: 88%
• Diversity management: 86%
• Day-to-day administration/management of contingent workforce: 86%.

In summary, client satisfaction with MSP across a range of service criteria is holding up well, and exceeding expectations well in some cases. However, as continuous improvement is important for clients outsourcing MSP services, it is wise not to become complacent in areas where they are doing well. In the meantime, focusing on those areas showing a significant delta between expectation and performance must be the priority for MSP vendors.

NelsonHall’s NEAT comparative vendor assessments look in detail at vendors’ ‘ability to deliver immediate benefit’ to their clients, and their ‘ability to meet future client requirements, and assist strategic sourcing managers in assessing vendor capability while cutting the time and cost associated with their sourcing projects.

The MSP NEAT shows how MSP vendors are positioned overall in terms of their ability to deliver MSP services, as well as within three distinct market segments (i.e. areas of focus designed to meet specific MSP requirements): these are Strategic Talent Sourcing Focus, Talent Analytics Focus and Multi-Country Focus. The NEAT online tool also enables buy-side organizations to input their own weightings and tailor the MSP dataset to their specific requirements across over 50 individual vendor evaluation criteria. In this way, sourcing managers can configure the NEAT evaluations in accordance with their own priorities and business requirements for service offerings, delivery capability, customer presence, benefits achieved, and other criteria. To find out more, contact Guy Saunders.

randrr is a free career opportunities platform focused on providing individuals with insights to take control of their career development by helping them to identify and align with the opportunities they are best suited for. randrr’s goal is to be the only resource that people need to manage their career objectives. Here I take a closer look at the randrr platform.

Why the need for change?

randrr stands for ‘reinventing and revolutionizing recruiting’ and was developed to place the job-seeker at the centre of the job search process rather than the company, and to help people to take control of managing their careers. From their market research, feedback randrr learned from job-seekers included:

• Marketability: Having a career path was identified as the most important factor by younger job seekers in the job search process, but with key questions around marketability. For example, how do candidates know if they’re looking for jobs in the right location, in the right industry, or even in the right pay grade? Which jobs are they most qualified for? How does their compensation compare to others with similar experience in their industry or geography?
• Time: The job search process can be a long and drawn-out ordeal
• Effort: Searching for jobs is a job in and of itself
• Access: Candidates only being able to conduct a job search from their desktop greatly hinders the amount of time they can spend applying
• Uncertainty: Candidates not knowing where they are in the application process can create unnecessary stress and disorientation
• Relationship: Candidates can feel disconnected from companies
• Stagnation: Job searches have gone from paper resumes getting lost in stacks of paper to digital resumes getting lost in an email inbox.

~72% of respondents indicated that online job search technology was not intuitive or transparent. Online job searches and applications registered negative feelings, with the words ‘frustrating’, ‘disappointing’, and ‘depressing’ often being applied. In addition, job-seekers indicated that they want more feedback during the application process, more relevant and up-to-date jobs visible online, and an easier process to find jobs.

randrr aims to address these concerns by connecting people and companies in a better way – for example, using Zillow as an analogy (which allows you to see how improvements made to your home should increase its market value), the same principle can be applied to careers. Education, acquired skills and experience all increase a job-seeker’s personal value and marketability to prospective employers.

randrr approach & capabilities

The randrr approach puts the candidate at the center of things, providing the knowledge to help candidates feel confident regarding the career choices they make. This can include changing jobs, as well as exploring and taking actions to support their long-term plans and objectives. Recent recruitment process outsourcing (RPO) research conducted by NelsonHall shows that improving candidate engagement and satisfaction is of paramount concern, is one of the top drivers for companies seeking help from RPO specialists, and is also a key criterion by which vendors are ultimately selected. In NelsonHall client interviews, candidate satisfaction scored 80%. This might seem a high rating, but when asked about future importance of candidate satisfaction, clients scored it 90%, so there is clearly still an expectation gap to fill.

Phase 1 (closed beta release) of randrr started in May 2017. randrr is built to run on mobile first (>75% of all people searching for a job today do so using a mobile device); however, it also runs on other devices.

randrr allows individuals to discover their career potential and explore options for defining career paths that will help them achieve their goals. This is all done privately, so that no one else will be able to see jobs being considered, changes to job-seekers’ resumes, etc. randrr capabilities include:

• Ability to define what type of job you want to do, which may be your dream job (e.g. Sales Director), what are the steps to get there, including experience/positions needed, the top 5 skills you need to acquire, and how long it will take to get there
• randrr will recommend an occupation/job based on your experience, skills and salary – i.e. pointing to the next step in your career. Up to 50 career paths can be saved at one time, for those who are thinking of multiple career options
• Using proprietary system intelligence, randrr will match individual job experiences to desired occupations, and the algorithm will provide candidates with insights to understand available options. For example, if you have been in sales the last 5 years, what job options are available if you remain in sales, or what alternative career options are there?
• Based on your salary, randrr will compare where you are positioned relative to the market salary range across major U.S. geographies (global capability to be added). Comparisons can be done for multiple jobs by industry and geography
• By identifying job opportunities on randrr, candidates can link to the hiring company’s website and make applications
• Notification of job availability: candidates can determine the frequency of job alerts and how they wish to receive them, e.g. in app, email
• Users are able to upload their resume, or randrr can generate a tailored resume based upon the information that they provide
• Users can define and add in additional skills and other information any time, including education updates, courses taken, performance appraisals, and achievements (e.g. certificates, recognition received, articles written, conferences presented at, etc.). All this information is private and unknown to others (unlike LinkedIn, where others connected can see changes you make). Another key benefit is having a single place to store all this information
• Companies will also benefit by being able to share their job postings and an informative company profile with randrr users at no cost.

Looking ahead

The following randrr enhancements are planned:

• Ability to rate the interview process, including whether you heard back on the job application, if you were not interviewed, or interviewed but not hired (and why not)
• Additional career guidance
• Employer branding and culture: obtain information on company culture from job applicants, current and past employees, and provide feedback to the hiring company. Based on demand, consultants could be deployed to work with senior leaders to review results and work on improvement plans
• Anonymous interaction and direct connections between companies and individuals
• Global capability.

Summary

randrr helps job-seekers discover their career potential and identify the next career move to make. It also lets individuals set career goals and provides a path for achieving them. randrr helps candidates to understand their marketability based on skills, education and experience compared to others in the same position. randrr then identifies gaps to be filled (e.g. the main skills to be acquired) to enhance marketability and make progress on the job-seeker’s career path.

While built for the job-seeker primarily, a key benefit for employers is that companies with job openings will have a wider pool of the right talent available to them by reaching candidates identified as having the right skills and experiences.

The anticipated go-live date is early fall, 2017. Users can register for early access by visiting https://randrr.com/.

~3-4 months after go-live, I will interview users of randrr to get their feedback on benefits obtained and gather feedback on what enhancements they would like to see in the future.

Last week, Randstad Sourceright (RSR) held its annual client forum. Amongst the many topics discussed was Randstad’s and RSR’s commitment to invest in and transform its clients’ recruitment technologies, with a focus on innovation. Here I look at some of their initiatives in play.

Reviewing new recruitment technology

Per NelsonHall research, access to improved technology is one of the top recruitment outsourcing drivers. Talent acquisition technology is improving the delivery of recruitment services, resulting in higher quality candidates. New recruiting technology is continually being released, and some vendors, including RSR, have dedicated groups who review and evaluate new technology on an ongoing basis, and provide recommendations on which technology to incorporate. Not surprisingly then, the top buyer vendor selection criterion is recruitment service capability, which includes recruitment processes that leverage the latest and best technology.

In 2015, Randstad Sourceright interviewed ~250 clients to understand their challenges and goals and identified ‘technology innovations to manage talent solutions’ as the greatest need with a score of 71%.

Randstad Innovation Fund

Innovation is also one of the top vendor selection criteria, which includes vendors providing sourcing creativity, including in technology, and continually introducing new ideas and recommending new services. Buyers are looking for a vendor focused on continuous process improvement and innovation, with a partner that is future focused and understands and incorporates the latest trends and tools.

In 2014, Randstad Holding launched the Randstad Innovation Fund to identify, evaluate, invest in, and collaborate with, HR and talent technology companies. The innovation fund continuously evaluates the market for developments in social sourcing, recruitment marketing, talent assessment, freelancing platforms, mobile solutions, virtual solutions, gamification, and analytics. There are ~2,000+ HR tech ventures tracked globally by the Randstad Innovation Fund to date, with investments made by the Randstad Innovation Fund including:

• Twago: European freelancer marketplace with more than 255k experts in 190 countries
• Gigwalk: mobile workforce management platform for large distributed workforces
• RolePoint: online employee referral platform
• Vonq: European provider of online recruitment marketing services
• RiseSmart: technology driven career transition services and outplacement platform, acquired by Randstad in September 2015
• Brazen: allows organizations to host online recruiting and networking events and leverage real-time ‘many-to-one’ chat interactions
• Checkster: automated reference checking and other talent decision tools
• Gr8 People: comprehensive recruiting platform
• Crunchr: analytics platform supporting workforce planning, succession, talent management and employee preferences
• Pymetrics: job recommendations using big data, neuroscience, and gamification to identify best talent job fit
• Monster: In Q4 2016, Randstad completed its acquisition of Monster Worldwide Inc. to leverage Monster's digital, social, and mobile solutions for talent acquisition
• Wade & Wendy: a fully-automated chatbot to interact with candidates and clients using AI. Wade helps applicants introduce opportunities and shape their careers, and Wendy can assist hiring managers to build their teams
• Joberate: crawls public social media daily, looking for people’s job seeking activities
• HackerRank: an online recruitment community and assessment tool, using coding challenges in a variety of programming languages to source, rank, and match top programmers.

Also, important to note is TalentRadar, RSR’s proprietary technology platform which analyzes all aspects of the talent acquisition and retention process. It combines data from multiple sources in a single dashboard view, automates alerts on critical recruiting operations metrics, and provides predictive analytics.

Continued investments

RSR will continue investment in technology via the Randstad Innovation Fund and incorporate selected solutions into its technology offering to provide greater efficiencies and value for its clients, and improved candidate experience. RSR will also continue to make ongoing investments in its global Talent Innovation Center, which provides thought leadership, innovation and overall expertise in recruiting strategies, employer branding, diversity, and new practice areas surrounding talent and market analytics, technology enablement, and veteran recruiting.

PeopleScout held its annual Client Forum last week, with discussion groups covering employee engagement, diversity and inclusion, employer branding, the talent landscape, total workforce solutions, the impact of industry disruption on best practices, and improving the employee experience.

All these HR themes are important, but here I look specifically at what PeopleScout is doing to prepare for the changing world of work in three areas:

• Global expansion
• Offering total workforce solutions
• Enhancing its technology offering.

Global expansion

Globalization is changing how we access the workforce, and at the same time HRO contracts are becoming more global and multi-country in scope. For example, ~43% of all RPO contracts include hiring for more than 1 country, ~10% are global with hiring in 3 or more regions, 11% are multi-regional in 2 regions, and 22% are multi-country within 1 region. Steps in PeopleScout’s expansion include:

• In 2014, Seaton Corp acquired HRX, an RPO provider in Australia and New Zealand. In 2015, HRX integrated and rebranded as PeopleScout to expand its global capability, including in Asia Pacific
• In 2016, PeopleScout acquired the RPO division of Aon Hewitt, whose clients include Fortune 500 companies primarily in hospitality, banking, industrial, retail, government, and service industries.

Today, PeopleScout services clients in ~70 countries from delivery locations including Chicago, Charlotte, Sydney, Krakow, Beijing, Toronto, and Montreal. For one of its Healthcare clients, PeopleScout performs ~5,000 annual hires across ~70 countries.

Total workforce solutions

Most companies’ workforces are becoming more blended, including a combination of permanent, temporary, contractors, freelancers, FT and PT workers. Many of the new jobs being created are for contingent workers. NelsonHall research indicates that today, ~10% of RPO and MSP contracts are blended, supporting both permanent and contingent workforces. NelsonHall estimates that this will rapidly increase to ~15% of all contracts being blended within 3 years.

To meet client needs, in January 2017, PeopleScout added MSP to its suite of talent services. MSP services were transitioned from Staff Management/SMX, a TrueBlue company, to PeopleScout, along with its entire service provider teams. With this addition, PeopleScout expanded its ability to provide total workforce services, where RPO and MSP services are blended into one overall service under one brand (while offering RPO and MSP as stand-alone programs).

Technology enhancement

By the end of summer this year, PeopleScout plans to have a new integrated technology that sits on top of existing applicant tracking systems and will have candidate experience as its core focus. This includes:

• Mobile first, to apply for jobs, and for recruiters to schedule interviews
• Chatbots and messaging to engage with candidates
• Artificial intelligence and RPA to identify top talent more quickly, decreasing time to hire
• More personalized experience, aimed at treating candidates like customers.

I anticipate that PeopleScout will continue to have high double-digit growth attributed not just to its global service offering, but to the way the company engages with its customers. This was the second straight year I spent two days with PeopleScout and its clients, and what I observed is a partnership that is genuinely communicative and effective.

In NelsonHall’s 2016 RPO market analysis, recruitment capability and cultural fit were identified as the top two vendor selection criteria. With a 98% client retention rate, and with 94% of those retained expanding their business on renewal, PeopleScout is evidently delivering against clients’ most important priorities.

ADP’s CEO Carlos Rodriguez began the company’s annual client conference, Meeting of the Minds, by talking about unprecedented challenges faced, including global talent needs, growing compliance burdens, and rising expectations. And though perhaps not the most original of messages, Rodriguez singled out service as the core differentiator that enables ADP to deliver positive impact on its clients’ business and that differentiates it from software companies. Here I take a look at how ADP’s focus on service as a differentiator cuts across several lines of business.

ADP Comprehensive Outsourcing Services (COS)

COS provides a full range of integrated HR services to clients. Some recent service highlights include:

• With clients using on average ~3 ADP services, an effective governance team process is essential. ADP has taken its operational reviews to the next level, and its value proposition includes 6-month interval reviews to make sure processes are optimized and ROI expectations are met
• Adoption of mobile across all clients has resulted in a reduction of paycheck calls by 14%
• Benefits obtained for a new COS security client included change management workshops and detailed plans to manage organizational change, communication, and people strategy. Plus, process optimization and cost reduction (including pay group consolidation, pay frequency change, go green, and paycard).

ADP DataCloud

Predictive analytics, including Predictive Turnover Probability, are delivering insights including:

• Competitiveness: How much future voluntary turnover might my organization have, relative to others in my industry?
• Hidden Drivers: What combinations of factors are contributing to the likelihood of employees leaving, so I can take action?
• Hotspots: Where are the likely areas of highest voluntary turnover in my organization – within jobs, locations, or teams?
• At-Risk People: Who are the high- and medium-risk employees I need to work to retain?

ADP RPO

Growing from 90 clients in 2015 to 114 today, the majority of new recruitment process outsourcing (RPO) clients are first-time adopters. One of ADP’s competitive advantages is its AIRS Recruiter Training provided internally to ADP staff (who are required to be re-certified every year) and also to clients (for whom 750 classes are held annually, with 10,500 people trained, and 3,600 certified).

2017 investments include:

• Global expansion and capability building in EMEA, APAC and LATAM to support growing U.S. multi-national corporations
• Enhanced RPO analytics and DataCloud Integration, including linking candidate profile data to retention and performance.

Mobile

ADP has 10m+ mobile users, providing capability that includes:

• Accessing and printing pay & W2 statements, access to categorized pay reports, setup of direct deposit, and comparison of pay statements
• Tracking time and timesheet approvals, view, request and approve of time off
• Checking 401k account balances, viewing account performance, and changing contribution rate or account allocation.

Benefits Administration

Providing Benefits Administration for 1 in every 17 employees in the U.S. and 9.4m participants, ADP receives ~850k calls annually to its service center, and first-time call resolution is 90%. Recent client case studies include:

• Upon automating Benefits Administration for its client Areas (including open enrollment), errors were reduced by ~75%, and benefits enrollment was reduced from 2 months to 2 weeks. Client feedback was that this was a smooth experience, the process being intuitive and easy to understand (http://bit.ly/2lB7fBK)
• Sumitomo Electric Wiring Systems turned to ADP for ACA Compliance and automating open enrollment. Feedback from the Corporate Compensation and Benefits Administrator included acknowledgement of ADP’s customer service expertise (http://bit.ly/2hirs9u).

The importance of service

The importance of customer service is hardly a new theme, but it’s worth reflecting on just how much it makes a difference. Consider these statistics:

• Most customers make their decisions on who they will buy from based on service as the most important criterion
• 3 in 5 Americans (59%) would try a new brand or company for a better service experience
• The probability of selling to a new prospect is ~15%. The probability of selling to an existing customer is ~65%
• It is 6.5 times more expensive to acquire a new customer than it is to keep a current one
• 91% of unhappy customers will not willingly do business with you again.

ADP clearly grasps this, and is committed to improved customer service and experience as a core differentiator across its HR business lines.

Robotic process automation and artificial intelligence (RPA & AI) in HR are at an early stage, though the clear signs are that vendors are beginning to make investments that are paying off for their clients. Here I take a look at recent RPA & AI initiatives in three areas of HR: payroll services, recruitment process outsourcing (RPO), and learning services.

Payroll

RPA & AI in payroll is focused on increasing efficiency and processing speed while improving employee experience. One of the top payroll outsourcing drivers is reduced payroll processing cost and agility to support changing business requirements, and is achieved via increased automation of current payroll processes, including using RPA tools to support query handling. For example, SD Worx is investing in building an automated virtual assistant tool which will answer specific client queries relating to HR and payroll legal services.

Vendors are using RPA to increase operational efficiencies and speed of processing. Elements of the payroll process are highly repeatable, and human error remains the single biggest point of failure. RPA effectively automates transactional activities that used to be done manually. Examples include:

• NGA HR began a project in mid-2015 to automate all feasible manual processes within the payroll process, including investigating how it can use RPA to reduce errors and improve the overall productivity of its payroll outsourcing solutions
• Infosys has built a proprietary tool using RPA that can handle data population across multiple systems, automated query response, reporting, reconciliation and consolidation of bank sheet entry
• Ceridian has developed an implementation wizard, which supports small and medium sized companies during the discovery phase of an implementation, by importing data on demand to give clients a 70% pre-configured instance of Dayforce Go immediately; this cuts go-live time in half
• Ramco aims to move from ~55% automation to ~95% automation, using RPA & AI to detect errors and anomalies in data and identify suspect transactions
• SGWI is investing in RPA to drive down payroll processing cycles
• Other vendors including ADP, Excelity, OneSourceVirtual, and Neeyamo are all actively investing in RPA. NelsonHall expects vendors to continue to develop capabilities in RPA and self-learning AI tools to drive productivity, thereby allowing payroll practitioners to support strategic activities.

RPO

In 2016 ~25% of RPO vendors had either explored or begun to use RPA & AI to support recruiting processes. The goal is not to take the human aspect out of the process, but rather to provide recruiters and hiring managers with much better information to make decisions. The main focus has been on the sourcing portion of RPO. For example:

• Analysis of candidate profiles on social networks to determine who is more likely to be receptive to solicitations for jobs
• Analytics that show which combinations of words in a job posting generate the most response and then linking those to the quality of the candidates who were ultimately hired
• Selection and assessments are also a target for RPA to ascertain the best fit candidates and the most likely to stay and be productive.

Examples of vendors with RPA capability include:

• Cielo with Blue Prism, incorporating RPA into the front end of the process to improve the candidate experience and to provide higher quality insights to client teams
• Futurestep uses RiteTag to maximize exposure and reach. RiteTag provides it with tips on how to improve postings, enhance hashtags, gauge trends, and gather statistics
• IBM Watson Talent helps recruiters prioritize and work on filling requisitions based on complexity, skill requirements, data from talent systems, how the job was filled in the past, external market insight, and what the talent supply looks like. Examples of benefits to date include 20% increase in recruiter efficiency and 24 additional hires per year per recruiter.

Learning Services

Vendors are focusing on RPA within learning administration to increase efficiencies, including in scheduling and throughout the learning lifecycle. Vendors leveraging RPA include Raytheon Professional Services (RPS), IBM, Conduent, and Infosys. Examples include:

• Infosys is leveraging RPA around scheduling training certifications, the bot completing the same work in a fraction of the time
• IBM is leveraging RPA for scheduling training courses, and is expanding the use of RPA to the design and development of learning content via its Cognitive Content Collator, significantly reducing time and effort
• For a global telecoms company with a decentralized and non-standard training administration function that was manually processed, RPS designed a RPA solution with benefits including:
  • Enabled 24x7 visibility of training requests and streamlined approvals
  • Leveraged global, cross-industry experience to implement common training administration processes and procedures
  • Optimized use of learning resources and class fill rates through the design of an efficient and integrated scheduling system and processes.

RPA in HR will evolve quickly, providing on average 1/3 cost reductions, with quick implementation times. Across HR, businesses are looking to reduce costs and errors, increase efficiency and effectiveness, improve the user experience, and contribute to business results.

Coming soon, Amy Gurchensky will take a closer look at RPA in the learning space, and throughout the year we will look at the impact of RPA & AI across HR services.

Hiring is cited as one of the top challenges faced by CEOs in 2017, set against a backdrop of government and regulatory changes. However, it is effective performance management, including employee engagement leading to retention of talent, that will be key to enabling organizational success. Here I take a quick look at how ADP is approaching this with a recent acquisition.

Last month, ADP announced that it was acquiring The Marcus Buckingham Company (TMBC) to expand its talent portfolio. TMBC’s cloud-based performance and talent management offering, StandOut, enables more effective performance management and employee engagement, with both tools and coaches/consultants. It will now be offered as ADP StandOut.

Core components of ADP StandOut include:

• Know Your People: an assessment tool to discover the strengths of your team members. Frequency is one-time completion
• Focus Your People:
  • Check-Ins: conversations to accelerate team member engagement, which includes determining if you are focusing on the right thing, how you feel about the work you are doing, and what help you need from your team leader. Recommended on a weekly basis
  • Milestone Connect: In-depth strengths conversation, recommended quarterly
• Engage Your People with Engagement Pulse: an 8-question survey to measure and accelerate team engagement, recommended quarterly. Results can also be aggregated across all organizational levels. Questions can be added as needed. Team Leaders receive coaching on actions they need to take
• Organizational Talent Insights with Performance Pulse: providing quantitative insights on how to measure performance, recommended quarterly.

Using StandOut in 2016, 71% of users were checking-in bi-weekly or more often. Translating the benefits into engagement, in five studies ranging from two months to a year, across different industry sectors, the percentage change of those fully engaged increased by +10%, +29%, +46%, +62%, and +83%.

The addition of TMBC’s technology, consulting and research will be a key ingredient of ADP’s expansive cloud-based talent offering, which includes recruiting, onboarding, learning, goals, performance management, compensation and data analytics. Combining ADP DataCloud, ADP StandOut, and ADP Talent, engagement pulse scores can be used to determine turnover probability and other predictive analytics, which then triggers notifications to managers to take action as applicable.

Given that performance management, including engagement and retention of talent, is vital to the success of all companies, ADP has a large number of clients that could benefit. But with a base of ~630k clients globally, ADP will be strategic in its deployment, first targeting the larger market, including clients of ADP Vantage HCM and ADP GlobalView. 

In NelsonHall’s recently published Payroll Services market analysis report, the payroll outsourcing market is forecast to grow from $17.4 bn in 2016 to $21.8 bn by 2020. Growth is across all regions, with the greatest growth coming from multi-country payroll contracts. The multi-country payroll market is growing at three times the rate of the overall market and represents ~15% of total standalone payroll services revenues.

Analysis of multi-country payroll contracts also finds that:

• Global contracts consisting of more than two regions represent 15% of multi-country contract revenues
• Multi-region contracts consisting of two regions represent 50% of multi-country contract revenues
• Multi-country contracts consisting of more than one country within a region represent 35% of multi-country contract revenues.

Multi-country growth is primarily driven by:

• Process efficiency to support increased productivity
• Demand for consolidation of payroll suppliers
• Greater visibility of the global workforce and associated analytics
• Increased control over compliance and risk associated with payroll processing
• Demand for a more comprehensive global technology solution.

Approximately 75% of vendors included in NelsonHall’s market analysis are currently providing multi-country payroll, and continue to invest in this space. The average number of countries serviced is 14, and the average number of client employees being serviced is 7,000. Contracts signed in 2015/16 for multi-country payroll services included organizations with as few as 100 employees and as many as 50k client employees.

What can we expect in the future? NelsonHall predicts that multi-country payroll will grow at four times the rate of single country services to 2020, with a 23% share of the overall market, as the size and scope of contracts will continue to grow. Key trends include:

• Multi-country payroll will more often be combined with HCM. For example, in December 2016 and January 2017, Ramco announced several contracts for its global payroll, including HCM and global payroll contracts by Western International Group, Horizon Hospitality Holdings, LBC Express, Inc. based in the Philippines and Panasonic Group
• Vendors will continue to invest heavily in their integration capabilities and middleware products, with the aim of providing a seamless approach to payroll across multiple geographies and technologies, to enhance speed and delivery of services
• Tail country specialists, such as Neeyamo is today, are likely to emerge in the payroll space to service large global organizations with small and disparate employee populations in several countries and regions
• Vendors will look to broaden both their in-house and payroll partnership network, to continue to increase in-country payroll service delivery capabilities to support the growing requirement for multi-country and multi-language payroll offerings. For example, in December 2016, SD Worx partnered with Ascender to expand its payroll services geographical reach into Asia Pacific and the Middle East. Prior to this, SD Worx boosted its European footprint by acquiring Ceridian U.K., Ceridian Ireland, CTB A&A, and Fidelis HR in Germany, as well as a strategic partnership with Ceridian in the US and Canada. 

To find out about NelsonHall’s extensive research plans for HR outsourcing services in 2017, contact Guy Saunders.

Below is a small selection of the results comparing current client satisfaction with future importance.

Further Cost Savings: the biggest challenge for payroll vendors

While client satisfaction with cost savings is currently only moderately below client expectations, this gap will widen markedly unless payroll service providers can accelerate their ability to drive down cost. Key expectations include cost reduction through consolidation of disparate payroll systems, increased automation of current payroll processes, including the use of RPA tools to support query handling, increased use of technology and self-service, and improved integration of payroll and HR systems, reducing manual effort and duplicate data. Comments from users included:

“For the future of our type of industry, every aspect of the company cost is going to be important

“There is still too much time spent in checking and re-checking what we need done”

“We only got live in April 2016, we are still in stabilization. We are going to be looking at more ways for reductions”

“It is significant as we are constantly reducing the budget”

Improved Reporting: could do better

Similarly, while client satisfaction with reporting is also currently only moderately below client expectations, this gap will again widen markedly unless payroll service providers can enhance their use of analytics in support of reporting. Improved consolidated reporting across the business, to provide business insight and inform strategic decision making, is important here as is the introduction of more predictive and prescriptive analytics. Comments from users included:

“I think that the more user friendly it gets it takes away from detailed reports, it turns it into over-simplified data. I would rather have them more data savvy”

“This is a hot topic just now as we are going through audits”

“It is meeting expectation but it is becoming more important to us”.

Payroll Accuracy & Improved Usability remain areas for focus

Other areas where vendors need to enhance their payroll services include continuing to improve payroll accuracy and usability. As in cost reduction and reporting, the keys to success lie in the introduction of new digital business models incorporating combinations of RPA, analytics, and cognitive technology to introduce improved accuracy, and reduced “customer effort”, alongside improved analysis, and reduced cost.

What does the future hold?

In terms of ability to meet future client needs, areas scoring the highest client satisfaction include:

• Strength of partnership
• Time and attendance
• Vendor service culture.

Areas scoring the lowest in terms of ability to meet their future needs include:

• Ability to be proactive
• Innovation and creativity
• Analytics and reporting.

Clearly, these are opportunities for improvement. Clients are looking for vendors to take the initiative in introducing new ideas, new processes, and new technologies, and not feeling like they are the ones always leading the vendor. Accordingly, it is important for vendors to be proactive and develop new standards and process models based on new thinking and new technologies. RPA, in particular, is starting to become very important to payroll clients as demonstrated by the following RPA-related comments:

“It will drive down the cost and risk”

“Main goal for next three years”

“Very important”

“Some things are still done manually”

In addition, I believe innovation is a joint responsibility, and my suggestion is for the vendor to ensure that thirty minutes is set aside at each governance and operational team meeting to focus on both innovation and continuous process improvement.

For example, in terms of analytics and reporting, the good news is that the single biggest investment area for payroll providers at present is analytics with ~2/3 of vendors making investments in their analytics offerings, including predictive analytics. Vendors need to make sure that clients are fully aware of the new possibilities arising from these new and emerging capabilities.

NelsonHall’s NEAT comparative vendor assessments look in detail at vendors’ ‘ability to deliver immediate benefit’ to their clients, and their ‘ability to meet future client requirements, and assist strategic sourcing managers in assessing vendor capability while cutting the time and cost associated with their sourcing projects.

The payroll NEAT shows how 16 payroll vendors are positioned overall in terms of their ability to deliver payroll services, as well as within four distinct market segments (i.e. areas of focus designed to meet specific payroll requirements): these are Analytics and Reporting Focus, Technology and User Experience Focus, HR Cloud Integration Focus and Multi-Country Focus. The NEAT online tool also enables buy-side organizations to input their own weightings and tailor the payroll dataset to their specific requirements across over 50 individual vendor evaluation criteria. In this way, sourcing managers can configure the NEAT evaluations in accordance with their own priorities and business requirements for service offerings, delivery capability, customer presence, benefits achieved, and other criteria.

Seven Step RPO recently held its first analyst event, which featured a select group of analysts and recruitment SMEs, two clients, and six members of the Seven Step leadership team. This made for an engaging dialogue around Seven Step RPO’s services, strategy, and best practices, with both clients (CVS Health and engineered product firm TriMas), contributing to the discussions throughout the day. Here I take a look at some of the main RPO themes that emerged.

The importance of company culture

Both CVS Health and TriMas identified the importance of company culture when working with an RPO provider. This includes:

• Leading on values – e.g. CVS Health recognized that Seven Step RPO shared its own belief in recruiting on values first
• Willingness to learn – the RPO vendor may not know everything on day one, but a willingness to learn and adapt is essential, particularly if the environment the vendor is recruiting for is constantly changing
• Quality and strength of the vendor team – e.g. TriMas identified the seven-step career path of Seven Step RPO’s recruiters as one of the reasons they chose to work with them
• A ‘can do’ attitude – something that both CVS Health and TriMas attribute to Seven Step’s rigorous training. There are ~160 specialized training courses and eight certifications, with recruiters receiving an average of 60 hours training annually
• Openness – e.g. in allowing direct access to the vendor’s senior leadership, as well as knowing the Seven Step delivery team on a first name basis.

Scalability

TriMas stressed the importance of wide country coverage, with Seven Step now delivering RPO in ~45 countries across North America, Latin America, Europe, Middle East and Asia Pacific. However, as TriMas is an acquisitive organization, scalability is just as important. According to NelsonHall’s recent RPO market analysis study, scalability and agility to meet business needs is the top driver for RPO.

CVS Health also highlighted scalability as a key capability. Seven Step currently hires ~3,500 personnel annually for CVS, and is capable of scaling up or down quickly. This is evident in the floor plan Seven Step uses for its recruiters, with client-dedicated pods designed with flexibility in mind so that recruiters can move quickly between clients as needed.

Predictive capability

Seven Step RPO’s Talent AI (Actionable Insights) predictive analytics platform allows it to make proactive and insightful suggestions to improve the quality, quantity, and timeliness of talent acquisition decision-making. The reports library is extensive and fully customized to the SLA/KPI strategy for each client, giving clients a high level of recruitment visibility.

Predictive decision-making is one of the key tenants of CVS Health’s talent acquisition strategy, and it is the first client to use Seven Step’s Talent AI directly themselves (at manager level). It also plans to extend this to their own recruiters.

Outlook

The company has been selective in choosing the right clients they can grow with and transform, while at the same time not growing so fast that they have difficulty meeting client needs. Its delivery centers are currently in the U.S. (Boston and Denver) and in the U.K. (Reading and Devon). To date this has worked well in terms of meeting client needs, as they are prime locations to attract recruiter talent. However, as they are higher rent locations, Seven Step is also now looking at offshoring opportunities, possibly in India and Manila, for some of its back office administration as well as in-region support.

NelsonHall’s recently published Payroll Outsourcing market analysis reveals that the Asia Pacific market is forecast to grow at 11% CAAGR to reach $1.2bn by 2020, which is approx. twice the rate of the overall market. Along with Latin America, APAC is the region seeing the highest growth, with increasing demand for outsourcing solutions in relatively immature markets. Growth is also due to demand for multi-country payroll in these regions, together with an increased focus on compliance. It’s therefore no surprise that half of all the vendors included in our market analysis are targeting clients in APAC.

APAC is typically supported from service delivery centers in Manila, India or China. China is becoming increasingly popular as a delivery location, not only for onshore clients but also for nearshore clients based out of Japan.

One of the leading vendors in the region, achieving double-digit growth, is Excelity Global, which has delivery locations in Singapore, India (Bangalore, Gurgaon, Noida, Hyderabad, Pune, Chennai, Mumbai), China (Shanghai, Beijing, Shenzhen) and the Philippines. In addition, China is also used as a nearshore center for all Japanese service delivery.

Growth in APAC is evidenced by a wealth of market activity from Excelity and several other vendors, including:

• Excelity onboarded a number of new countries including Bangladesh, Macau, Cambodia and Pakistan in 2016. Excelity will focus on expanding its presence in Malaysia, Japan and Australia
• Neeyamo provides payroll globally from six  global delivery centers including four delivery centers in India (Chennai, Pune, Gurgaon and Madurai), with an additional presence in Manila and Mexico. Its APAC clients are typically supported through the service centers in India and Manila as well as in-country presence. Neeyamo has also created a niche for itself in long tail country support. Neeyamo’s partner network enables it to support payroll services in ~100 countries
• Ramco began offering managed payroll services to China, Australia and New Zealand in 2015, and will continue to develop its presence in the ANZ market. Following recent wins in the Philippines, Ramco is expected to build a delivery center in the region
• MHR has opened legal entities in Australia to support growth in its international business in 2015/2016
• NGA HR is looking to develop its Australian market share by leveraging its onshore service center in the region
• Infosys is continuing to build its presence in the ANZ and APAC region, where it has recently won new clients
• Ceridian is looking to expand its presence in ANZ
• ADP, the leading provider in the region by revenue, has service centers including in India, Singapore, Philippines, China, and Australia
• TMF Group acquired KCS Group in 2014, a leading business services provider in Asia, significantly increasing its scale across APAC, with growth plans including China, India, and Hong Kong.

Vendors will continue to invest in developing cloud technology solutions to address the growing demand from the APAC market. For example, Excelity’s first cloud services product, Payroll on Demand, was launched in Q2 2016 – and it will be launching a fully unified regional payroll platform and SaaS capability in eight additional APAC countries in 2016, including Australia, New Zealand, Taiwan, and Japan.

With the evolution of its cloud-based payroll offering, Excelity has the chance to make further inroads into organizations needing a payroll solution initially in single country. As its experience and product offering strengthens over time, with localized client wins, Excelity is likely to gain multinational clients seeking a standardized payroll platform across the entire APAC region. Excelity’s certified partner relationship with Workday will help to accelerate its growth, particularly given Workday’s roadmap to increase its own APAC presence. Its cloud payroll offering will appeal to fast-growing companies due to its relatively low cost and quick implementation times.

ADP’s recent annual Analyst Day was held at its new Innovation Lab in Pasadena, California, with CEO Carlos Rodriquez and others articulating ADP’s strategy and vision for its clients. Top of Rodriquez’s list of priorities was the ability to meet the global talent needs of clients, the importance of which was underscored by several client presentations, including one from Irma Long of Follett Corporation, the focus of this blog.

Rodriquez’s opening remarks reflected ADP’s strong focus on talent management, including:

• Recognizing that the job of the CHRO has changed, and is now focused on attracting the best talent
• The importance of focusing on the user and associate experience
• The objective of solving clients’ business problems seamlessly and completely (including via ADP’s HCM solutions).

Addressing Follett’s requirements

Follett Corporation is the world’s largest source of books, entertainment products, digital content, and multi-media for libraries, schools and retailers. Follett has 10k associates and averages 18k employees during its busy season.

Amongst Follett’s HR requirements was the need for a recruitment system that was configurable and simple to use, and that alleviated their store managers from the burden of recruitment. Follett also wanted to improve the candidate experience.

Follett is an ADP Vantage HCM client, with services that include HR, Payroll, Benefits, Recruitment, Onboarding, Talent Management, Background Screening, and ADP DataCloud. To help fulfill Follett’s recruiting needs, ADP held a 2-day brainstorming session with the client. As a result, ADP was able to significantly improve the candidate experience for Follett, with initiatives including:

• Employment Branding, with the objective of treating candidates as individuals, and not just as a set of résumés. An interactive website was implemented, which gives candidates the ability to chat instantly with recruiters. In addition, to maximize candidate engagement, the website includes fun facts about Follett in the form of a scavenger hunt. When one question is completed, candidates move forward in the maze
• Thank-you emails to candidates visiting the website, including links to a tool to help candidates with their job search
• Talent Communities, which includes the ability for the CMO to talk to the candidate audience with a video presentation of what it’s like to work at Follett
• Social distribution of job openings, including via Facebook and Twitter, were used to improve visibility (as a lot of the candidates were not familiar with Follett).

Quantifiable results

Results to date include:

• Candidate satisfaction improved by 80%
• 90% of candidates said they would refer other candidates to Follett (even if they did not get the job)
• Candidate traffic on the Follett website increased by 90% (>200k applicants YTD)
• Process optimization reduced hiring manager workflow from 12 to 2 steps.

In NelsonHall’s recent interviews with the clients of RPO vendors, improvement of candidate satisfaction was ranked as the third most important expected benefit, after improved scalability and improved quality of hire. Although Follett is an ADP Vantage HCM client and not a full RPO client using ADP recruiters, it is still a good example of how an outsourcing provider can greatly improve a client’s recruiting process via an effective combination of service and technology. 

Mid-market adoption of Managed Service Provider (MSP) programs is seeing high growth driven by the increasing need to manage costs, along with greater uptake of the direct hire MSP model (which is more common in mid-market organizations where there is a limited need to use specialist agencies). Here I take a brief look at the launch of a new mid-market MSP offering from Allegis Global Solutions (AGS).

Growth of the Mid-Market

In the direct hire MSP model, the vendor places workers through specialized teams using the client’s brand, with a typical target of achieving ~85% or more direct hires before approaching specialist agencies.

The mid-market (500 – 15,000 employees) grew from 30% market share in 2013 to 37% in 2014, with the small market (<500 employees) growing from 4% in 2013 to 6% in 2014. During this time the large market decreased from 66% to 57% market share.

The top MSP mid-market outsourcing drivers include:

• The need for cost visibility and cost reduction
• Compliance with, and adherence to, increasingly complex regulations
• Quality of hire/better talent with the right cultural fit.  

AGS’ SIGMA MSP launch

AGS launched SIGMA MSP, a standalone contingent workforce management solution, in July 2016.  SIGMA was designed to support companies that traditionally rely on master-supplier relationships for candidate fulfillment, and provides:

• Requisition fulfillment via dedicated supply chain resources
• A preconfigured technology platform to streamline the acquisition, on-boarding, payment, and off-boarding of contingent workers
• Business intelligence via data and reporting through ACUMEN, AGS’ analytics platform, which includes identifying non-employee worker trends
• Faster implementation time than traditional MSP models, due to preselected vendors and the preconfigured technology platform. Estimated deployment is 8-10 weeks depending on complexity, ~50% less time than a standard enterprise solution.

The program is targeted at small to mid-market companies that spend between $5m and $50m annually on contract labor services. As a product, SIGMA represents a deviation from AGS’ traditional offering. It combines the benefits of an MSP program with a vendor-on-premise partner or a preferred supplier.

SIGMA is targeted at companies that are:

• Looking for an MSP solution that can be implemented quickly, but still provides the fundamental MSP service benefits, including increased visibility and control over their contingent workforce resources, spend and compliance
• Not requiring an expansive supply base
• Not requiring overly complex vendor management system integrations or configurations, and are using less IT resources.

NelsonHall forecasts that the global MSP market will reach ~$4.6bn by year-end 2016, by when I expect the mid-market to have grown to ~40% market share, equating to $1.85bn in revenue.

NelsonHall has just commenced its 2016 global MSP project, and a comprehensive market analysis report, along with detailed vendor profiles and a NEAT vendor evaluation will be published in early Q1 2017.

Employer branding has become an integral component of an effective talent strategy. It is synonymous with a company’s reputation as an employer, portraying the image of what the company is like to work for. The purpose of properly conveying and clearly communicating an employer’s brand is essential to attract, engage, develop, and retain the best talent for an organization. Here I take a look at an example of employer branding that has worked well, producing quantitative results: IBM and its real estate client Waypoint Homes.

Employer branding is already evident in ~48% of RPO contracts today, and NelsonHall’s recently published RPO market analysis reveals that employer branding is increasing in future importance to clients by 10%.

RPO critical success factors include providing consulting services that include talent pool development and employment branding, and convincing clients of better results through candidate engagement, including developing employer brand messaging to attract candidates with cultural fit and improved retention.

Waypoint’s Decision to Outsource

Prior to outsourcing to IBM Kenexa, Waypoint Homes used internal recruiters, contract recruiters, search firms, and placement agencies, which Waypoint found to be ineffective. The principle reasons for deciding to outsource were to:

• Reduce costs
• Attract top talent
• Improve the recruiting and hiring process
• Reduce screening and interviewing time by hiring managers, and focus on its core business
• Grow from a small to mid-sized public company, be able to rapidly scale up as well as down (given the uncertainty of a start-up), and not have to worry about hiring recruiters and downsizing them should a reduction in staff be required.

Services In-Scope

IBM Kenexa was chosen from among four potential RPO providers, with employer branding in-scope, which includes:

• Culture research 
• Employee value proposition creation
• Career website development, replacing an inadequate career site.

One of IBM Kenexa’s first projects completed was quantitative and qualitative research to assess Waypoint’s organizational culture. An IBM Kenexa Organizational Cultural Insight Survey was conducted, as well as stakeholder interviews and a review of company data. In eight weeks, Waypoint realized benefits from using IBM Kenexa Recruitment Services and IBM Kenexa Employment Branding, including being able to more clearly articulate company culture, and to provide input to the development of a new career website to help candidates better understand what it’s like to work at Waypoint.

Also delivered early on, IBM Kenexa rewrote existing job descriptions to be better suited for external job postings, with clearer language, and including a description of the impact these jobs have on the company.

Managers were trained in behavior-based interviewing skills, and interview guides were created for all common job types, including guidance for managers on how to assess candidates for cultural fit.

In addition, the IBM Kenexa recruitment manager was located at the client site to better understand Waypoint’s culture and to build effective relationships with hiring managers.

According to Andrew Bartlow, VP HR at Waypoint Homes, “the cultural work provided by employment branding was a huge value-add that IBM Kenexa brought to the table, in a very short time; their support helped us to more effectively source and select the kind of talent we need to be successful.”

Results Achieved

Tangible results arising from the outsourcing arrangement were:

• Cost Per Hire reduced by ~20%
• Within seven months, reduced ‘time to fill’ by ~35%
• Reduced turnover by ~22%
• IBM Kenexa RPO was able to immediately source 100% of Waypoint’s targeted hiring needs in year one, scaling up and down as needed
• Reduced administrative burden. Bartlow commented, “From IBM, we’re getting candidates with a higher hit ratio. When a candidate is presented, they are more likely to be hired than they used to be, and they’re much more likely to stay with us, and we are getting great quality candidates now. Our managers used to spend a lot of time screening and onboarding new people, when we really want them to be servicing our residents”.

NelsonHall’s RPO NEAT client survey reveals that, overall, vendors are doing well regarding clients’ employer branding expectations: satisfaction with improved employer branding exceeds current importance by 8%. In the case of IBM’s own client ratings, satisfaction exceeded importance by 20%, confirming IBM’s ability to add value in this area.

Given that future importance of employer branding is increasing, I expect employer branding to be included in ~60% of RPO contracts within three years.

The company has a history of aggressive growth, including mergers & acquisitions, and wanted to centralize and standardize its payroll services across its new entities being established, all on one platform. Excelity was chosen in 2004 due to its ability to scale and quickly deploy, and its ability to partner, which has remained a key renewal criteria for the client throughout its journey with Excelity.

Contract Scope & Expansion

The contract began with only China in scope in 2004, and Excelity became an approved global vendor. In 2013, Hong Kong was added, as was Taiwan in 2015. In Q3-Q4 2016, Korea will be added. Although there are some countries still providing payroll in-house, the company is exploring more opportunities. In China, Hong Kong, and Taiwan there are ~15,000 employees across ~48 legal entities in scope. Korea will be an additional ~1,000 employees.

Services in scope include:

• Multi-country payroll administration
• Gross to net payroll processing and delivery for all employees
• A hotline service where employees can call Excelity if they have a payroll question (both China and India support payroll administration, with China providing employee call support)
• An employee self-service (ESS) portal where employees in Taiwan and Hong Kong can access pay statements online. This is a future scope expansion opportunity for China. All employees in China, Taiwan, and Hong Kong receive their pay via wire transfer/direct deposit
• Customized reporting for the HR leadership team
• Mandatory benefits regulation research in ~50 cities, plus Hong Kong and Taiwan
• Individual income tax regulation research, calculation and filing in ~40 cities
• Pricing of the contract is based on a fixed fee per employee per month.

Governance, SLAs & Benefits

Governance includes quarterly leadership team reviews and monthly operations meetings which includes review of metrics/SLAs and process improvement opportunities.

Metrics include timeliness and accuracy of pay and tax filing, issue resolution response time, and compliance with local tax laws. To date, SLA targets are being met, including accuracy of 99.9% and timeliness of 99%. Additional benefits obtained include:

• Regulation compliance across ~50 cities
• Standardized reporting system across ~48 legal entities and customized reporting specific to different business unit requests
• Standardization of payroll processes and employee experience.

Lessons Learned & Best Practices

These include:

• Building a successful working partnership. This was important when the company first outsourced to Aon Hewitt and is equally important now with the rebrand to Excelity, which came with new management changes. This requires many regular meetings between the parties, and commitment to achieve working best practices around requirements and priorities
• Effective communications, reviewing contacts and connections, including the escalation process for any service issues
• Focus on continuous process improvement and service excellence. As the company grows, adds new entities, and outsources payroll in additional countries to Excelity, process improvement, including continuous improvement of communications and development of both parties’ teams, is imperative.

Outlook

This Excelity client’s global strategy is to expand payroll outsourcing, so I expect to see additional countries added in 2017 and beyond. As Excelity currently supports ~450 client organizations across 17 countries in Asia Pacific, I expect Excelity to continue to meet the client’s needs by paying particular attention to best practice processes and effective governance.

We interviewed RPO vendor clients in North America, Europe, and Asia Pacific, looking at over 50 specific RPO service criteria. In each case, we ascertained importance and satisfaction levels, plus a measure of future importance. Below is a small selection of potential benefits from RPO showing the levels of importance and satisfaction for each.

Areas where vendors are under performing against client expectations are scalability, quality of hire, and hiring manager satisfaction.

Scalability: the biggest challenge for RPO vendors

While client satisfaction with scalability is high at 80%, it still falls 10% short of the importance placed on this performance measure. Our latest research identifies scalability and agility to meet business demands as the top driver for companies outsourcing recruitment today, and this has become the biggest challenge for RPO vendors. Comments from vendor clients included:

“That was one of the compelling reasons to outsource”

“Great job for effort, but only a good job for delivery”

“They are able to scale down well, but not able to scale up fast enough”

“There is an inability to bring in the right resources when scaling up”

Quality of hire & hiring manager satisfaction: could do better

Quality of hire also falls into the ‘could do better’ category, with clients pointing to issues such as:

• Need for improved quality in the selection process
• Poor cultural fit of candidates
• Lack of metrics to demonstrate quality of hire.

Similarly for improved hiring manager satisfaction, where clients asserted that vendors need to:

• Be more proactive
• Provide more of a high-touch and relationship focus
• Be more realistic and manage expectations better
• Make better use of data related to available talent to hire.   

Doing well, keep it up, and even more please

Vendors are exceeding client expectations by a healthy margin in the areas of support for new regions/countries/languages, predictive analytics, diversity, candidate retention, and employer branding. However, the increased levels of importance placed on future service delivery make these the main areas where vendors need to maintain momentum and look to deliver even more in the future.

In addition, while improved candidate experience and ability to tie results to business outcomes are meeting current expectations, future importance shows a 10% increase in both cases, while the future importance of reduced time to hire and reduced cost of recruitment both show an 8% increase. These too are areas where vendors need to continue improving.

In summary, client satisfaction with RPO across a range of service criteria is holding up well, and exceeding expectations handsomely in some cases. However, there is never a good time for sitting on laurels, and future client expectations demand that vendors redouble their efforts to satisfy clients across the board. Meanwhile, addressing those areas showing a significant delta between expectation and performance must be the priority for RPO vendors.

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NelsonHall’s NEAT comparative vendor assessments look in detail at vendors’ ‘ability to deliver immediate benefit’ to their clients, and their ‘ability to meet future client requirements, and assist strategic sourcing managers in assessing vendor capability while cutting the time and cost associated with their sourcing projects.

The RPO NEAT shows how 19 RPO vendors are positioned overall in terms of their ability to deliver RPO services, as well as within three distinct market segments (i.e. areas of focus designed to meet specific recruitment requirements): these are Candidate Focus, Talent Management Focus, and Global/Multi-Country Focus. The NEAT online tool also enables buy-side organizations to input their own weightings and tailor the RPO dataset to their specific requirements across over 50 individual vendor evaluation criteria. In this way, sourcing managers can configure the NEAT evaluations in accordance with their own priorities and business requirements for service offerings, delivery capability, customer presence, benefits achieved, and other criteria.

RPO provider PeopleScout recently held a client forum to discuss key recruitment themes, one of which was a discussion around Diversity and Inclusion (D&I) led by Dr. Arin Reeves. This focused on the importance of D&I, including the tendency for diverse groups to outperform non-diverse groups in solving problems, and how D&I can support the hiring process.

Tips on how D&I can support the hiring process included:

• Video interviewing – this is still valuable, and can actually reduce selection bias so long as interview guidelines/questions are issued beforehand
• Talent acquisition needs to be connected to talent development – every time there’s attrition, it makes it harder to retain others. Insist that talent acquisition is part of the onboarding process, including following up quickly with new hires after they have joined to make sure they are getting what they need
• Talent acquisition also needs to be part of the exit interview process to find out why people are leaving, and to feed data back to leadership for improvement opportunities, and to help talent acquisition teams in recruiting talent that is more likely to stay. Exit interviews are best conducted by third parties, as employees tend to be more honest and open regarding reasons for leaving than they would be with their own employer
• Talent acquisition teams should also conduct ‘stay’ interviews to find out why people remain with the company. This is helpful in determining how to improve employee engagement, and in turn helps with employer branding (see my earlier blog on Employer Branding: An essential Talent Management Strategy)
• The resume (CV) stage can be the most biased part of the process, as someone reviewing a resume may start to make judgments before having spoken to the candidate. Good practice includes simple actions such as taking notes separately during a candidate interview rather than annotating the resume
• Obviously, but importantly, don’t make hiring decisions until you see sufficient candidates. This can be a challenge, as RPO vendors try to put forward the best, but fewest, candidates for hiring managers to interview to help the business save time. Talent acquisition needs to be part of workforce planning with the business, and engage in discussions around the optimum number of candidates to be interviewed.

As part of NelsonHall’s recent RPO market analysis, interviews were conducted with clients of ~20 leading RPO vendors, which included a question on the vendors’ ability to ‘improve diversity of employees’. PeopleScout’s customer satisfaction score was 10% higher than the overall RPO industry average, which indicates that its focus on getting D&I right is paying off.

More widely, all RPO providers need to continue improving the diversity of their clients’ workforce. In our survey, clients rated the ‘future importance’ of diversity to be on average 18% higher than ‘current importance’.

In July, I will publish a blog on overall RPO client satisfaction, along with current and future importance in key areas such as diversity, quality of hire, and employer branding.

Yesterday, the people of the U.K. did what many thought unlikely, and voted the nation out of the European Union (EU). And while the wider political ramifications surrounding ‘Brexit’ start to unravel, what might be the impact on talent acquisition and the related outsourcing industry? 

It’s still unclear what kind of agreement Britain and the EU will negotiate post-Brexit, but the options are that Britain could become a virtual associate member (like Norway) and participate in the single market, pay budget dues and open its borders to EU workers, or it could choose a more drastic and estranged relationship, taking back full control of its borders and reducing the number of people who are able to come and work in the U.K.

Free movement is one of the most important principles of EU membership, allowing individuals from any EU country to live and work in another EU country without the need for a visa. And if the U.K. takes back control of its borders, this would mean the flow of individuals both into and out of the country would be limited to those who are able to obtain visas. 

U.K. skills shortage & the impact of border control

This is likely to impact U.K. companies and their ability to attract talent into the country. There are currently ~2 million EU nationals working in the U.K. (as referenced by the latest ONS statistical bulletin, U.K. Labour Market 2016), and U.K. companies are used to employing people from across the EU because of a lack of qualified talent with the skills and experience businesses need. By imposing restrictions on those wishing to move to the U.K., this could compound the issue and make it a less attractive prospect for the best talent to relocate there. An obvious consequence of closing its borders is that the U.K. would increase the number of jobs available to U.K. citizens, but what happens in industries where those skills simply don’t exist?

If the U.K. imposes visa restrictions, not only might the U.K. be a less attractive work destination, it could also restrict the freedom of movement of U.K. workers seeking opportunities abroad; this is at odds with the new world of work, with more and more workers wanting to travel, and wanting the ability to work from anywhere, any time. If the U.K. were to close its borders, it may put a premium on in-demand skills and will certainly cost businesses time and money in order to recruit and retain talent. There are some who also believe that foreign companies may scale back their operations in the U.K., and whilst this may have a negative impact on the jobs market, there is also the question of how many jobs this would create in the wake of the U.K.’s exit.

Considerations for talent acquisition teams

It is unlikely that we will see many changes immediately, as the U.K. will need to continue to abide by EU treaties and laws for at least the next two years. One thing is for sure: now that the U.K. has chosen to leave the EU, talent acquisition teams, whether in-house, outsourced, or even agency side, will need to watch the developments closely to understand the impact it’s likely to have on their working practices, their underlying processes, their pricing mechanisms, and their compliance responsibilities.

Those vendors in existing outsourced relationships will need to consider the cost implications to themselves and the client associated with recruiting and processing candidates on visas, the likely increase in time to hire, the impact on SLAs and any risk/reward pricing, and the additional complexity this may add to their recruitment process.

On the other hand, the U.K.’s exit could create opportunities for outsourcing companies to support new businesses who may not have the in-house skills and capabilities in sourcing, hiring and retaining staff, and also in upskilling and training existing employees to fill the skills gap. Companies may require additional support in managing recruitment processes that involve visa applications, and there will be opportunities for outsourcing vendors who provide L&D services to help with training and upskilling existing employees.  

Quite what the full implications of the vote to ‘Brexit’ are, no-one yet knows. The only certainty right now is uncertainty.

To illustrate client centricity, medical device manufacturer Boston Scientific described its relationship with NGA HR in some detail. The company has been a legacy Convergys client since 2003 (the Convergys HRO business was acquired by NGA HR in March 2010). Boston Scientific has 13 manufacturing facilities and 25k employees worldwide. Its strategic imperatives in support of growth include high performance, strengthening execution, and enhancing its global capabilities – all supported by HR.

Key elements of the NGA HR relationship include:

• NGA HR spends a considerable amount of time with Boston Scientific to better understand the client culture
• Continuous process improvements driven by effective governance
• Technology improvements that have resulted in fewer NGA HR support staff being needed. This has had a positive financial impact for both the client and NGA HR, who share in the gains. Staff have been redeployed to other jobs
• Support for large transformations, including moving to SuccessFactors from PeopleSoft
• Most importantly, ongoing dialogue regarding how to make operational efficiencies to support Boston Scientific’s business imperatives. Important conversations have also taken place on how to support geographic expansion, including growth in China and other parts of Asia.

NGA HR also monitors and improves customer satisfaction in several ways, including:

• Customer connection points, including one global account manager with overall client responsibility across all regions and a client operations leader that manages delivery across all countries and operations centers
• Proactive account planning with quarterly business reviews
• Customer satisfaction surveys, which have shown an 11% improvement in average CSAT score in the last 2 years, and a 10 point improvement in net promoters scores in the last year
• A drive to make each client ‘referenceable’, including quarterly reviews of referenceable status and what NGA HR can do to ensure a positive reference from the client.

‘Client centricity’ is one of those phrases that seems almost unnecessary. Making the client the center of attention is important to every service provider’s business. What matters is how this is executed, and based on evidence from clients such as Boston Scientific, NGA HR seems to be executing well.

~~~~~~~~~

NGA HR at a glance

• Serves 8 million employees globally
• Provides HR and Payroll services in 145 countries, of which 80 are run in NGA HR service centers by NGA HR employees
• Has performed 1k implementations
• Has 8k employees in 35 countries, speaking 25 languages. 3k employees are dedicated to HCM technology, with delivery on 8 platforms, including cloud-based HR platforms
• Has >150 HRO clients
• Gained 117 net new clients in fiscal year 2017, including 42 enterprise clients which have >15k employees in > 3 countries.

In June 2016, NelsonHall published a comprehensive ‘Cloud-Based HR Services’ profile of NGA HR.

KellyOCG is the outsourcing and consulting group of Kelly Services Inc., and represents the largest growth segment of Kelly Services. In 2015, Kelly Services reported revenues of $5,518m, down 0.8% y/y (or up 4.7% in constant currency), while KellyOCG’s revenues were $674m, up ~15% y/y from $587m in 2014 and +16.6% in constant currency. KellyOCG’s operating profit in Q4 2015 was $14m, up 44.3% y/y, while gross profit was $48m, up 13.5% y/y. The largest profit and revenue growth came from MSP followed by RPO.

Within MSP, KellyOCG has 4,600 registered and active suppliers with $7.2bn total spend under management, which according to NelsonHall, puts KellyOCG among the top tier of global service providers. There are ~232 MSP clients across the Americas, EMEA and Asia Pacific with a 99% client retention rate.

KellyOCG has ~50 RPO clients, including ~14 new clients since January 2015, and in 2015 performed ~47,000 hires in the Americas, EMEA and Asia Pacific. Its longest running RPO client has been with them for ~20 years. A recent trend has been clients starting with project RPO for a specific number of hires and then, once benefits are realized, expanding into full RPO clients. 

Talent Management Consulting

KellyOCG began providing talent management consulting services in Q1 2015. Services are typically provided with RPO and MSP and include:

• Talent Strategy Advisory, which includes: Strategic Workforce Planning, Process Optimization, Business Care Development, Talent Strategy Alignment
• Talent Attraction and Engagement, which includes: Specialized Career Events, Employer Branding, Candidate Experience Measurement, Talent Community Management
• Workforce Governance and Execution, which includes: Program Structure & Governance, Market & Competitive Intelligence, Program Performance Management, Change Leadership
• Talent Counseling, which includes: Career Transition, Outplacement, Executive Coaching, Leadership Development
• Workforce Analytics, which includes: Labor Market Intelligence, Talent Supply Chain Analytics, Business Process Analytics, Predictive Analytics.

Talent Supply Chain (TSC) Analytics

KellyOCG’s TSC Analytics Portal helps to give clients insights to drive change, and focuses on:

• Rate analytics: providing insights on current spend and competitiveness by supplier, geography, and marketplace
• Supplier optimization: providing insights on supply chain attributes of time, cost, and quality
• Order efficiency: providing insights on cycle type, benchmarking on efficiency of the supply chain, and on risk due to aging orders
• Workforce planning: providing insights on percentage breakdown of workforce, trends, alignment to workforce plan, how sourcing aligns and compares, where changes can be made to optimize cost, and where talent pools can be implemented. This includes the ability to view attrition by region, country, state, client, vertical, etc. and also compare how a particular client compared to all other clients. Scatter diagrams can also be used to view tenure and attrition rates for FT and temp workers.

Predictive analytics are also provided, e.g. clients can predict when aging orders are going to cancel, and also predict cycle times, and recommend what can be done to improve performance.

Over the last year, KellyOCG has focused investment on delivering analytics to support its MSP offering and has recently deployed its offering across RPO and is now focused on enriching the data. New clients will have the toolset implemented within 3 to 6 months. All clients get the analytics portal included with the program and can do their own analysis or, if they prefer, can pay extra for help with analysis.

In Summary

In NelsonHall’s latest RPO Market Analysis published last week, we report that the key client drivers for RPO adoption include the ability to improve performance and meet business demands, and clients are looking for providers with broader talent management consulting capability and talent analytics for improved decision making. In this regard, KellyOCG is addressing the right client issues.

Future market needs will include more upfront strategic talent consulting and longer term workforce planning. Service offerings are expected to develop in the areas of consulting services, analytics, and assimilating labor market data, to support better planning and sourcing choices. Increasingly, RPO contracts will be bundled with consulting services as RPO clients expect higher quality and more value.

NelsonHall has just published a comprehensive global RPO Market Analysis report, plus associated RPO vendor profiles, including KellyOCG. For more details, contact Guy Saunders.

However, of all of this, I believe a key ingredient to Cielo’s success is its strong candidate focus, something that was highlighted on a tour of their Impression Center and Bridge Center.

Impression Center: A High Touch Candidate Experience

The purpose of the center is to ensure a high touch experience with the candidate and not tie up recruiter time (with a resulting 96% reduction in unnecessary calls to recruiters). Satisfaction is immediately evidenced upon entry to the center with a bulletin board displaying notices of candidate accolades relating to Cielo’s performance throughout the recruitment process. Scorecard data includes first call resolution of 96% and candidate satisfaction of 96%.

When candidates call into the Impression Center with an inquiry about a job opportunity with a specific client, they do not know they are speaking with Cielo. For example, Comcast has Cielo recruiters dedicated solely to candidates applying for Comcast jobs. Every client has a specific phone number which connects to Cielo recruiters trained on serving that client. Recruiters know who is calling and then log into the system for that account, prepared to answer the candidate question. On an average day there are 1,435 client interactions, of which 85% are calls, 13% are email and 2% are live chat. The high percentage of phone calls is an interesting and important statistic given that there is an upward industry trend in usage of live chat, but given the high touch and positive experience candidates have with Cielo recruiters, the vast majority would rather call than chat. The Impression Center is a service clients do not have to pay extra for and is a value-added service.

Bridge Center: Elevating Candidates’ Pre-Employment Experience

After a candidate is offered a job and accepts, there are pre-employment background and drug screens provided by the Bridge Center. Formerly, recruiters used to perform these screens but then would not have time to follow up with candidates on their status in a timely fashion. Now, upon being offered a job, each candidate gets a welcome call and email with an explanation of the process from the Bridge Center. Results include:

• 100% of new hires receive a welcome call
• 30% average reduction in time to clear
• 100% compliance with organization, local, state and federal regulations
• 98.6% of hiring managers surveyed agree that “my candidates’ pre-employment experience is elevated through their interactions with the Bridge Center”
• >50,000 candidates were processed through the Bridge Center in 2015.

The process has been so successful that Cielo has three standalone Bridge Center clients and three in the pipeline.

Per NelsonHall’s latest RPO research, clients’ top vendor selection criterion is recruitment capability, with expectations of high candidate engagement and satisfaction. Hence, it’s easy to understand why Cielo has been successful, growing revenue at ~25% CAAGR since 2011. Given its global expansion and its strong focus on candidates, including building and managing talent pools, I expect that Cielo will continue to have double-digit profitable growth.

On 23rd June, the people of the U.K. will have the opportunity to vote on whether or not to stay in the European Union (EU). But while the wider political debate surrounding a possible ‘Brexit’ rumbles on, what might be the impact on talent acquisition and the related outsourcing industry? 

It’s still unclear what kind of agreement Britain and the EU would negotiate post-Brexit, but the options are that Britain could become a virtual associate member (like Norway) and participate in the single market, pay budget dues and open its borders to EU workers, or it could choose a more drastic and estranged relationship, taking back full control of its borders and reducing the number of people who are able to come and work in the U.K.

Free movement is one of the most important principles of EU membership, allowing individuals from any EU country to live and work in another EU country without the need for a visa. And if the U.K. were to take back control of its borders, this would mean the flow of individuals both into and out of the country would be limited to those who are able to obtain visas. 

U.K. skills shortage & the impact of border control

This is likely to impact U.K. companies and their ability to attract talent into the country. There are currently ~2 million EU nationals working in the U.K. (as referenced by the latest ONS statistical bulletin, U.K. Labour Market 2016), and U.K. companies are actively seeking to employ people from across the EU because of a lack of qualified talent with the skills and experience businesses need. By imposing restrictions on those wishing to move to the U.K., this could compound the issue and make it a less attractive prospect for the best talent to relocate there. An obvious consequence of closing its borders is that the U.K. would increase the number of jobs available to U.K. citizens, but what happens in industries where those skills simply don’t exist?

If the U.K. leaves the EU and imposes visa restrictions, not only might the U.K. be a less attractive work destination, it could also restrict the freedom of movement of U.K. workers seeking opportunities abroad; this is at odds with the new world of work, with more and more workers wanting to travel, and wanting the ability to work from anywhere, any time. If the U.K. were to close its borders, it may put a premium on in-demand skills and will certainly cost businesses time and money in order to recruit and retain talent. There are some who also believe that foreign companies may scale back their operations in the U.K., and whilst this may have a negative impact on the jobs market, there is also the question of how many jobs this would create in the wake of an exit.

Considerations for talent acquisition teams

If the U.K. does decide to leave, it is unlikely that we will see many changes immediately, as the U.K. would need to continue to abide by EU treaties and laws for a minimum of two years following the decision. One thing is for sure: by choosing to leave the EU, talent acquisition teams, whether in-house, outsourced, or even agency side, will need to watch the developments closely to understand the impact it’s likely to have on their working practices, their underlying processes, their pricing mechanisms, and their compliance responsibilities.

Those vendors in existing outsourced relationships will need to consider the cost implications to themselves and the client associated with recruiting and processing candidates on visas, the likely increase in time to hire, the impact on SLAs and any risk/reward pricing, and the additional complexity this may add to their recruitment process.

On the other hand, an exit could create opportunities for outsourcing companies to support new businesses who may not have the in-house skills and capabilities in sourcing, hiring and retaining staff, and also in upskilling and training existing employees to fill the skills gap. Companies may require additional support in managing recruitment processes that involve visa applications, and there would be opportunities for outsourcing vendors who provide L&D services to help with training and upskilling existing employees.  

Quite what the full implications of a possible Brexit are, no-one knows. As with almost every aspect of the Brexit debate, the only certainty right now is uncertainty. 

Xerox focused on the importance of ensuring the right job fit for candidates. Aside from reducing recruiting time and improving retention, ensuring the right job fit is important from a cost perspective. Data revealed that the cost of a bad hire can be ~30% of an employee’s first year salary, and to replace an employee can cost ~150% of salary.

Ideally, companies should be using assessments to determine both job fit and cultural fit. However, only 30% of organizations use cultural fit questions when assessing candidates, which is surprising, as poor cultural fit is one of the top reasons why employees leave. It is important for candidates to know about the values of their prospective employer, their views on work-life balance, and so on.

An increasing number of companies have contracted to evaluate candidates prior to onboarding using Massive Open Online Courses (MOOCs) and ~75% of organizations using MOOCS say they have had a positive impact on hiring and recruiting. However, the downside of MOOCs is that completion rates are very low. Also popular are Small Private Online Courses (SPOCs), but whether companies use MOOCs, SPOCs, or other forms of candidate evaluation, the fact remains that companies can’t afford to make wrong hiring decisions. Allowing candidates to self-opt out of the application process during assessment is an effective way of enabling hiring managers to focus their time on more suitable candidates and improve quality of hire.

RPS and K4 presented data to further support the case that organizations need to hire the right talent the first time. The global workforce is aging, and more people are retiring: the median age of the workforce increased from 39.4 years in 2000 to 42.3 years in 2012. However, at the same time, tenure has decreased from 4.6 years in 2000 to 3.5 years in 2012, with millennial tenure at only 2.3 years.

While there were ~5.6 million unfilled American jobs at year-end 2015, 41% of organizations report that the labor pool does not meet their hiring needs. So, in addition to needing to hire the right talent, it is imperative to ensure an effective onboarding process to retain talent at the start. However, 30% of organizations rate their onboarding process as ineffective, and 54% rate onboarding as only somewhat effective. But for those organizations who rate onboarding as effective, 84% say best practices include instructor-led training, shadowing, and short-form content. In summary, effective learning starts at the very beginning of the employee life cycle with pre-employment, then progresses to onboarding, knowledge capture, and knowledge transfer.

Given the skill set shortages faced by many companies, there will need to be tighter linkage between recruiting and learning to ensure that any new hire skill gaps are addressed by immediate learning plans. I will look more closely at the connection between recruiting and learning in an upcoming blog.

In partnership with Thomsons Online Benefits, ADP is now offering global benefits management via the cloud, with Darwin software used to provide global employee benefits administration. ADP Enterprise Benefits is a centralized, yet locally integrated, platform supported by ADP’s managed services. It is country and benefit agnostic, and does not need to be hard-coded to a specific country. Benefits can be configured at local level, which includes setting up employee data from a client local system of record or, if they are an ADP GlobalView client, from the GlobalView platform.  Currently 75 countries and 26 languages can be supported, with 100 countries contracted to be live by end of 2016.

Client drivers for adopting global benefits management include:

• One system to manage a global and diverse workforce, with increasingly complex legislation in each country
• A standardized user/employee experience in any country in their own language, e.g. enrollment in benefits
• Globally aggregated analytics to obtain actionable workforce data. Examples include understanding who is utilizing which benefits by country with the ability to drill down into demographic data
• Global insight into spend (according to a recent Thomsons Online Benefits survey, 44% of companies do not know what they spent on benefits)
• Ability to provide total rewards statements globally, contributing to increased employee engagement.

In a live demo, several benefits of the global system were apparent, including:

• Ability to toggle to a local country and see a total rewards statement of salary and benefits (plus additional benefits available)
• Depiction of ‘% of salary’ by basic salary, finance and protection (i.e. life insurance, disability), and lifestyle benefits
• Analytics showing a global overview of headcount, spend (including spend per headcount, spend over time), and benefits utilization (including login rate by demographic)
• Map-based analysis of spend by country, along with usage of medical and wellness, etc.

ADP has yet to build its own global client base for this new offering, but examples of Thomson Online Benefits clients include a tech consumer products company in 44 countries and a manufacturer in 19 countries. Clients using the Thomsons global system include Volkswagen, Microsoft, Samsung, Visa, and NCR.

ADP will primarily target existing clients using ADP GlobalView (available in ~110 countries for large MNCs), which currently has ~1,120 clients. The provision of global benefits will be attractive to MNCs, and we would expect a good proportion of ADP’s clients to adopt the new offering. Deployment times vary depending on the number of countries involved (a 52-country deployment took 18 months, ~3 countries per month). 

More generally, ADP will continue to focus on product and service innovation (a key theme of the MOTM conference) by working with clients via its 55 product advisory councils and the ADP Innovation Labs. 

Capita

In December 2015, Capita acquired the consultancy and resourcing operations of Work Group to strengthen its employer branding and employee engagement consulting capability. Earlier in 2015 Capita also acquired ThirtyThree to expand its recruitment services and employer brand consulting capability. Combined with Work Group, who have offices in the U.K., New York, and Hong Kong, Capita Resourcing will be able to expand its service offering to MNCs in North America and Asia. Initially the New York office will provide consulting services for employer branding, candidate communication and employee engagement. Growth plans in the short-term include sourcing services to include talent search and talent pipelining as well as locally delivered pre-employment screening services. In the medium-term, Capita plans to deliver RPO services from New York to clients with operations in North America. In addition, Capita recently established a sourcing operation in Krakow. Capita’s next target for global delivery expansion is Singapore, to serve clients in Asia Pacific along with Hong Kong. Via the acquisition of Work Group, Capita also acquired its candidate management and assessment business in Colchester, U.K. which is heavily focused on graduate recruitment.

Capita’s recent acquisitions expand its geographic capability and broaden and strengthen its service offerings. Capita will target U.K.-based MNCs, while emphasizing its focus on employer branding, employee engagement and the employee value proposition.

RTM

Upon completing its acquisition of Consort Group, Rethink Talent Management rebranded to RTM on February 10. In 2015, Consort Group was acquired to expand and strengthen RTM’s RPO and recruitment consulting capability, with services including:

• Employment branding and attraction
• Talent pooling and talent profiling
• Onboarding
• On-demand services
• Permanent and contingent hiring using RPO (the predominant model) and MSP.

The acquisition expanded and strengthened RTM’s RPO services, including in the financial services and retail sectors. RTM is now able to provide Consort’s RPO and talent management offerings to existing clients and vice versa. RTM had already been providing employer branding and MSP services, but Consort strengthens RTM’s offering, the primary focus of which will be on talent acquisition.

RTM is targeting U.K.-headquartered organizations with a global presence. RTM already has global contracts, including clients with employees in Canada and South Africa served from the U.K. and in Asia Pacific served from Melbourne and Singapore. RTM provides service employees onsite and also utilizes recruitment partners in its aforementioned hubs. European client locations, including Germany, are serviced from the U.K. and Ireland, specifically from its Dublin and Cork offices. Client locations in South America will be serviced via partners.

The above expansions and enhancements of service offerings are more important than ever as clients seek to attract the right talent for the right jobs, and with high retention rates. In addition, there continue to be more and more MNCs looking to expand RPO to additional countries. NelsonHall research shows that currently ~ 1/3 of all RPO contracts are multi-country, and we forecast this to increase to ~ 50% within four years. We also expect further vendor consolidation and partnerships, as providers continue to strengthen their service delivery and geographic capability.

• TrueBlue’s acquisition of Aon Hewitt’s RPO business
• The completion of the merger between Pontoon and its sister company, hyphen
• Orion International’s acquisition of Novotus

TrueBlue acquires Aon Hewitt’s RPO business

TrueBlue, via its PeopleScout RPO business, acquired Aon Hewitt’s RPO business and also announced a broader, ongoing relationship to connect PeopleScout’s recruiting services with Aon Hewitt’s assessment, employee engagement and analytics talent services. Prior to the acquisition, PeopleScout had ~1.5k employees and local presence in 14 countries across North America, Europe and Asia Pacific. It provides services to ~70 countries for ~60 RPO clients, six of which have >10k hires per annum each.

The acquisition expands PeopleScout’s global delivery capabilities, and brings in 650 Aon Hewitt employees based in the U.S., Canada, Asia Pacific, and Europe. In 2014 Aon Hewitt provided RPO services to ~100 clients across 64 countries, supporting nine languages.

In NelsonHall’s 2015 RPO market analysis, PeopleScout was ranked 9th globally by revenue, with Aon Hewitt ranked 5th in global standalone RPO revenues (4th including RPO as part of MPHRO contracts). NelsonHall is in the process of conducting its seventh global RPO market analysis, but even based on 2014 revenue estimates, the combined company would have been ranked number one.

Though not an acquisition of Aon Hewitt’s selection and assessment business, via the broader relationship, PeopleScout will have access to Aon Hewitt’s strengths including in:

• Specialists in selection and assessment, with ~125 employees, including ~30 I/O psychologists, involved in the development, management and administration of tests and assessments
• Aon Hewitt’s proprietary pre-employment assessments and platform, used to assess ~10m candidates annually covering sixteen languages and five continents: North America, South America, Europe, Asia and Africa.

Pontoon and hyphen merger completes

Pontoon and its sister company hyphen completed the merger first announced in October 2015, with hyphen's ~300 U.K. employees joining Pontoon's workforce. The combined brands will operate under the Pontoon name. Pontoon is now the global HR outsourcing brand for Adecco Group. 

The merger consolidates Adecco’s MSP and RPO providers into a single business unit with ~ 1,500 employees, and 150 clients operating in 92 countries. Hyphen, headquartered in London, also has offices in Singapore and Sydney. Pontoon opened its Manila office in 2012, and leverages Krakow as a nearshore center for European languages. Pontoon RPO delivers services to 40 countries in 20 languages and plans to expand across countries in Latin America.

In NelsonHall’s 2015 RPO market analysis, Pontoon was ranked 10th in North America and 5th in Continental Europe. In our 2015 MSP market analysis, Pontoon was ranked 3rd in 2014 global MSP spend under management, 3rd in North America, 2nd in EMEA, 2nd in APAC and 1st in Latin America.

Though NelsonHall had not previously estimated hyphen’s revenues separately, hyphen strengthens the Pontoon brand. Prior MSP contract awards included  Bank of America, Merrill Lynch, Experian, Tesco, Credit Suisse, Lloyds Banking Group, Jaguar Landrover, Prudential and National Grid. Prior RPO contract awards included CGI.

We previously noted that hyphen’s MSP brand in the U.K. competes with the Pontoon brand, with a lack of business alignment, but the merger of the two companies will eliminate the internal competition. In addition, hyphen’s local presence in London, Poland, Singapore and Sydney will strengthen Pontoon’s geographical reach to provide both single-country and multi-country contracts for clients. Multi-country contracts represent ~36% of all RPO contracts, with 6% being global contracts covering three or more regions, and NelsonHall estimates multi-country contracts will represent ~50% of all contracts by 2019. Global MSP contracts account for ~15% of the market, as significant contract expansions and global awards were undertaken in 2014; with another 22% of the market representing multi-region or multi-country contracts. NelsonHall estimates Global MSP contracts will increase in importance and will account for 25% of spend under management by 2019, with another 25% of the market taking the form of multi-region or multi-country contracts.

Orion International acquires Novotus

The third M&A deal in January was Orion International (a specialist in U.S. military recruiter) acquiring Novotus, a provider of RPO and recruiting services. The acquisition will see Novotus leveraging Orion’s sales team and providing a military recruiting offering to its customers, and Orion leveraging Novotus’ RPO capability.

Orion International is headquartered in North Carolina and has five other regional offices in the U.S. Based in Austin, Texas, Novotus expanded to Houston in 2013 to accommodate growth. Houston is used to service RPO, sourcing services, temporary staffing and contingency services along with executive search services.

In the last few years, RPO providers have increasingly focused their recruiting efforts to include military veterans, a subject I’ll be looking at in a future blog.

Excelity Global is one of the leading Asia Pacific providers of payroll and HR outsourcing services, and Everstone, an India and South East Asia private equity and real estate investment company, plans to invest in Excelity Global for further growth in Asia Pacific and globally. Though a new name and brand, Excelity is an established provider with ~600 employees and ~400 clients across 17 countries in Asia Pacific. Formed in 1997 as Hewitt Associates, the company’s development in the region has seen various transformations, including:

• Hewitt forming a JV with India Life, creating India Life Hewitt in 2003
• Hewitt completing the acquisition of India Life in 2004, consolidating payroll processing centers, and starting payroll operations in China
• Further expansion to Singapore (2005-8)
• Aon Hewitt broadening its product portfolio for the APAC market in 2010, adding Workforce Administration as an offering
• Signing its first WFA client in India in 2011, a leading chain of fast food restaurants
• Expanding HRO services in 2012 to add regional payroll as an offering
• Launching the myPay app for accessing payroll on mobile, and being certified as a Workday Global Payroll Cloud partner (2013-14).

Excelity’s service offerings extend beyond payroll administration, also including tax processing, benefits administration (including mandatory, supplemental and flexible benefits), employee data management, learning, performance management, and recruitment.

Excelity targets single-country, regional and global companies. Service delivery locations include Singapore, India (Bangalore, Gurgaon, Noida, Hyderabad, Pune, Chennai, Mumbai), China (Shanghai, Beijing, Shenzhen) and the Philippines. China is also used as a nearshore center for 100% of Japan’s service delivery. Based on NelsonHall analysis, Excelity is one of the largest payroll service providers in Asia Pacific in terms of payroll revenue. Excelity processes over 1 million pay slips per month across the APAC region, with a value of $5bn per annum.

Clients are across several industries, including a multinational pharma company in China for payroll, a local bank in Singapore for payroll administration, a large restaurant chain in India for workforce administration, and a business processing center in the Philippines for automated time tracking and leave system.

Payroll in Asia Pacific is proving to be a very active HRO market. NelsonHall’s 2015 global payroll market analysis study reveals that the multi-country payroll market continues to grow at ~3X the rate of the total market, and the highest growth rates are in Asia Pacific and Latin America.

Meanwhile, HRO M&A activity continues unabated, with four acquisitions in 2016 already. NelsonHall believes this is a trend that will continue, including acquisitions of all sizes of companies, though we expect to see mostly mid-size companies acquiring to expand their geographic footprint and their ability to deliver multi-country, regional and global services. We will also continue to see acquisitions by private equity investors. Another very recent Asia Pacific example is Talent2 agreeing to sell its managed services business to private equity partners 5 Value Capital, rebranding to Ascender, providing payroll and learning services. Both Ascender and Excelity Global are in the top 5 payroll providers in Asia Pacific by revenue.

Excelity’s first Cloud Services product, Payroll on Demand, will be launched in Q2 2016. Excelity will be launching a fully unified regional payroll platform and SaaS capability in eight additional countries in the APAC region in 2016. NelsonHall expects Everstone to invest in Excelity's Hire-to-Retire HCM platform, enhance its service offering, and expand regionally and globally within the next 1 – 2 years. 

In its latest white paper, Workforce Horizons, Capita reflects on the issues and challenges HR and resourcing leaders must overcome as they attempt to impact the bottom line, and high on the list of future priorities for the HR organizations surveyed is candidate engagement, along with skill shortages, quality of hire, and employer branding.

According to the Harvard Business Review, companies spend ~$720m each year on employee engagement and this is expected to grow to ~$1.5bn per year. However, employee engagement rates continue to score poorly. Studies by the Gallup organization over the last 15 years consistently reveal that only ~30% of employees are considered ‘engaged’.

HR service providers are actively trying to build capability to help organizations improve employee engagement. Here are just a few recent examples:

• In December 2015, Capita announced the acquisition of Work Group Plc Consultancy and Resourcing Operations to strengthen its employer branding and employee engagement consulting capability
• In October 2015, Xerox Services launched a new HR portal, Xerox Life Connect Solution, to improve employee engagement and access to workplace health, wealth, and career programs
• In July 2015, Ceridian launched a team-building tool, TeamRelate. TeamRelate assesses individual leadership styles, core convictions, and motivators to understand how employees can relate to each other better, and hence lead to greater engagement and productivity. Employee engagement is one of Ceridian’s top 3 business priorities.

Many businesses believe social/online media (74%), branded mobile apps (49%) and talent communities (45%) will become more important for future employee engagement over the next ten years. ADP, for one, recognized this back in 2013 when it launched the ADP Recruiting Management platform, which includes mobile and social media capabilities to enhance the talent acquisition process. The platform includes social and mobile tools to enable targeted communication and talent community creation, helping to build an employer’s brand, expand candidate reach, and boost interaction and engagement.

Talent acquisition providers are already walking the talk. At Randstad Sourceright the quality and loyalty of its employees is demonstrated by a single digit attrition rate. Approximately 80% of the entire RPO workforce is virtual, yet recruiters keep engaged by various means including participating in a Google+ community.

All of the above is important, but my own take is that the greatest impact on employee engagement will need to come from an organization’s senior leaders, down through line managers/supervisors. One very important thing that can be done to increase employee engagement with little or no expense is to improve employee recognition. According to Dr. Bob Nelson’s book Recognizing & Engaging Employees For Dummies, 85% of employees say they are overworked and underappreciated. In a recent survey of American workers, ~2/3 agreed that most people would like more recognition for their work, and the same proportion considered ‘a pat on the back’ as a meaningful incentive. Increased recognition leads to improved performance, as demonstrated by the percentage of managers agreeing to the following statement:

• Recognizing employees helps me better motivate them (91%)
• Providing non-monetary recognition to my employees when they do good work helps to increase their performance (84%).

NelsonHall is currently conducting its 7th global Recruitment Process Outsourcing (RPO) market analysis and associated client interviews, to be published at the end of Q1 2016. And the early signs are that we will continue to see an increased focus on candidate and employee engagement. 

However, in our parallel RPO NEAT vendor evaluation study, when we interviewed clients of 15 leading RPO vendors, ‘innovation and creativity’ scored the lowest in terms of client satisfaction (68%), while ‘ability to be proactive with ideas for change’ scored just 73%. Verbatim comments from clients interviewed included:

“They provide us with the quarterly business review, but the topic isn't focused on improving, it's usually on current state and issue resolution.”

“Suggestions keep coming up in our business reviews, yet when I ask for data to support those things, it’s not there.”

“They don't drive anything to us that we can see.”

“That's the piece that's really missing.”

The good news is that ‘improved recruiting processes’ scored well at 81%. But clearly innovation is an area where vendors can improve and seek to differentiate themselves.

The November edition of HRO Today magazine featured an article by Beth Gilfeather, CEO of Seven Step RPO, entitled ‘Pinpointing Innovation, Three Ways to Determine if Your Talent Acquisition Process is Ahead of the Curve’, in which she identified the following criteria:

• It must be breakthrough
• It must be proven
• It must be continual.

In effect, vendors need to have specific mechanisms in place to address innovation – it just doesn’t happen by itself.

To ensure there is a dedicated focus on breakthrough innovation, several vendors have launched Innovation Centers, including:

• ADP Innovation Lab in Chelsea NY, with focus on new product development within HCM, including creation of a new user experience
• Ochre House, now Cielo, launched a COE to drive innovation and growth, to focus on new talent developments
• Kelly Services launched an office of innovation, to develop and implement custom workforce services
• The Infosys Innovation Lab, which functions as a place to innovate and co-create apps with clients
• Accenture establishing a Center for Innovation in Dublin, with R&D and design expertise in cognitive computing, IoT, advanced analytics, security and digital marketing.

Innovation is also a critical determinant in the client’s decision-making process when it comes to contract renewal time. Not only for RPO, but across HR service lines, lack of innovation has been cited as one of the primary reasons for changing vendor.

As Beth states in her article, innovation needs to be continual, and certainly it should be an agenda item for discussion at every joint vendor/client operational team meeting and every governance team meeting. From my own client outsourcing and governance team experience, innovation is most likely to occur when it is a shared responsibility between client and provider with both parties contributing to the process.

• MNCs can use ADP’s global payroll functionality from within Workday's user interface in one process for managing their global workforce and process payroll in ~100 countries
• Clients can enter complete local data directly into Workday where it is automatically validated and utilized by ADP to create one global payroll experience
• Legislative updates from ADP via the Workday user interface, including country-specific and local regulatory changes, will be automatic.

Prior to the Workday announcement, ADP already offered payroll services that supported cloud HR technology integration into third party SaaS technologies, including Workday, with certified interfaces across several countries in North America, Latin America, Asia Pacific, and Europe. ADP’s multi-country payroll business has been experiencing strong double-digit growth, and its expanded partnership with Workday will further increase its payroll revenues. Although not part of the announcement, clients can also use ADP’s other HRO services which, in addition to the full suite of payroll, includes HR administration, RPO, and benefits administration.

Other HRO providers partnering with Workday to provide services include:

• OneSource Virtual (OSV): all of its clients include Workday implementations, of which ~85% include payroll, with OSV doing payroll administration for ~70%. OSV also provides services that include garnishments, payroll tax, HR administration, employee call center, and benefits administration

• NGA HR: Several clients use Workday payroll in the U.S. and NGA HR for payroll in all other countries. A significant share of NGA HR’s revenue is linked to clients using Workday, and several Workday clients are multi-country connected through its Payroll Exchange; NGA HR also provides HR administration and employee call center support.

Workday continues strong revenue growth, with recently reported FY Q3 2016 revenues up 42% y/y. And ~40% y/y growth is expected in FY 2016. ADP and all the aforementioned providers should benefit from this growth as clients seek HCM technology and HR services support.

Other NelsonHall blog articles reporting on the increasing momentum of cloud HR and Workday include:

• HRO: 2015 Highlights & the Shape of Things to Come: identifies new offerings launched that will gain momentum in 2016, including cloud-based HR services on Workday
• Workday Increasingly Important to HR BPO Vendors as Momentum Continues: focuses on Workday’s HCM offerings and vendors launching Workday consulting and implementation practices, often alongside HR BPO capability, reporting that it is increasingly critical for HRO providers to develop integration capability with HCM vendors
• KPMG’s Towers Watson HRSD Acquisition Strengthens Global HR Transformation Capabilities: discusses KPMG strengthening its Workday implementation ability to rival HR consultancies and HR BPO vendors including Deloitte, Mercer, Accenture, IBM, Aon Hewitt, CSC, HP, and NGA HR. 

As a result, the merchant banking division of Goldman Sachs and funds advised by Park Square Capital will become the primary shareholders, owning 95% of the business. Until the transaction is approved (expected in early Q1 2016), KKR will keep 100% ownership and then retain 5%.

Adel Al-Saleh, NGA HR and Northgate Information Solutions CEO, confirmed that over the past four years, the company has been “on a journey to streamline our portfolio, which included selling the Northgate Managed Services and Northgate Public Services businesses, and building strong foundations to grow NGA Human Resources.”

An area of growth announced in June 2014 is enhanced multi-country payroll capabilities via its Payroll Exchange, which connects cloud-based HRMSs including Workday, SuccessFactors, SAP, euHReka, Oracle, and PeopleSoft with NGA’s managed or comprehensive payroll services – which can be provided in 145 countries. Around fifteen clients supporting ~250,000 employees are being scheduled for deployment with these technologies between H1 2015 and H2 2019, and several more clients are in the pipeline. New client industries now using Payroll Exchange include pharma, transportation, food and beverage, financial services, and consumer services.

NGA HR’s strategic priorities in support of growth include:

• Delivery:
  • Build scale via its seven global delivery centers and ~30 local delivery centers
  • Provide consistency in delivery across all centers, as well as increased automation and quality including usage of Lean Six Sigma and Robotics.​
• Technology platforms & offerings: Process improvement of platforms and service offerings including Payroll Exchange, Service Center Tools, and increased localization

• Strengthening partnerships:
  • Certified Payroll connectors with Workday & SuccessFactors, integrated into Payroll Exchange
  • BPaaS: BPO service wrappers around Workday & SuccessFactors
  • Expand network of local payroll partners for selected geographies.
• Target areas for growth & expansion:
  • Enhance mid-market capabilities and growth in select markets, including the U.S., U.K., Western Europe, Australia and New Zealand
  • Seek growth in new markets.

NelsonHall believes the outlook for growth at NGA HR is very positive, as it has been making the right investments to quickly deploy and integrate HR solutions in the cloud (including HR Cloud Accelerators, announced Q4 2015). Plus, NGA HR has been enhancing its multi-country payroll capabilities via the Payroll Exchange, and is one of only a few companies that can deliver payroll and HR globally, via on-premise and cloud technology service and/or BPO and BPaaS payroll & HR outsourcing focused on workforce administration.

By properly reflecting a company’s image and what it is like to work for, higher quality talent will be attracted and be more likely to stay. Bad hiring decisions can be attributed in part to improper alignment of potential candidates and organizational values and culture, which often results in high employee turnover. However, if an employer’s brand is in alignment with what a candidate is seeking, employee turnover can be reduced by ~2/3, saving time and money from the cost of re-hiring, lost productivity, and potentially lost revenue.

Employer branding enables recruiters to attract talent since it makes it easier to approach candidates. Organizations with a best-in-class employer brand will experience better responsiveness to emails, application rates, confirmation of interviews, acceptance of offers, and employee referrals – all contributing towards improved talent attraction and retention.

Organizations can take several steps to improve their employer brand, including surveying and hosting focus groups of recent graduates, candidates, and recent hires to find out why they are looking at certain companies. This could delve into the recruitment process itself, including the onboarding process. Internal surveys can be conducted to understand why top performers stay and what is key to keeping them. Customer surveys can help drive what consumers think about the brand versus competitors. Organizations can also analyze data to gain insight into website effectiveness and traffic: how candidates link to the career website, how many pages are viewed, and when candidates opt out. 

WilsonHCG recently published 2015’s Fortune 500 Top 100 Employment Brands. Criteria I thought noteworthy included employee reviews and candidate experience, which deservedly were given a higher weighting this year. Candidate experience was measured objectively through the use of Glassdoor and Indeed’s company ratings data. Recruitment marketing, including use of talent communities, was also an important criteria used, among several others.

NelsonHall estimates that in 2015 ~60% of RPO contracts will include employer branding. WilsonHCG is one of the RPO providers offering employment branding services including assessment, design, delivery, management of the employment brand, and measurement of its effectiveness. Client-branded satisfaction surveys of hiring managers and candidates are conducted, including survey creation, distribution and analysis. WilsonHCG’s employment brand practice enables its recruiters to more closely align candidates with company culture during the recruiting process.

RPO vendors help to convey employer branding through the marketing of recruitment campaigns, including campus recruiting and communicating the brand in advertising. Employer branding is an opportunity for organizations to identify and promote their employee value proposition through social media, search engines, networking sites, and the company’s own employment and career sections.

Recruiters align their strategy with the company’s employee value proposition when speaking with candidates, and can provide answers to why they would want to work for their organization based on company values, culture, career path, compensation, and benefits. And RPO vendors help with high-touch responsiveness to all candidates, something that many companies are not good at.

NelsonHall RPO research reveals that employer branded career sites are the third top sourcing channel, behind employee referrals and LinkedIn. The ability to provide broader HR services, including talent management services and employer branding, is one of the top drivers of RPO. And developing a talent pool and improving a client’s employer brand are top critical success factors for a successful RPO engagement.

Contributing to the bottom line… the impact of increased focus on employer branding will be the ability to attract the right talent who will then be engaged, leading to increased employee satisfaction, customer satisfaction, productivity, sales, and reduced attrition. This leads to ever-important cost savings for the company, which is something the business continually asks HR to contribute towards.