HRO Business Metrics Presentation finalx Oct 22... · What advice would you give to HR...

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HRO Summit, Tampa, FloridaOctober 22, 2008Debora Card – TPIBrian J. Day – IBMJoel Meeker - Convergys

Business Metrics Project

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�What is it Like in the “Trenches”� Finance Perspective

� Business Case Discussion

� Overview of Research

� How You Get Engaged


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� How significant was the business case in gaining approval to move forward with your transformation and outsourcing?

� How closely have you monitored the results achieved to the business case?

� How have your results compared to expectations?

� At what level in the organization are the results being monitored?

� What lessons learned / advice would you share on building a business case?

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� What is it Like in the “Trenches”

� Finance Perspective� Business Case Discussion




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� In general, what measures do you use to evaluate potential internal investments by your firm?

� To what extent, if any, do you think that business value (indirect savings or revenue increases) should be considered in evaluating a business case?

– I never consider business value/indirect savings– I occasionally consider business value if the evidence is convincing– I frequently include business value in my financial evaluations

� If you were to consider business value, what criteria would you apply to deciding whether or not it is a valid addition? Would you apply a discount factor to the projected benefits?

� Would enterprise savings or productivity improvements have to beapproved by the business group leaders and incorporated into their budgets or would you rely upon accepted industry research that quantifies expected benefits.

� What advice would you give to HR practitioners about building a business case for HR transformation?

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� Finance Perspective

�Business Case Discussion




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� For an HR base case, the most significant elements of cost will include:

– Direct staff and related cost

– Technology support – HRMS, point solutions, and related IT staff

– External services – third party administrators, recruiting & training providers

� HR functions are often decentralized or delivered by field HR generalists who wear many hats; staff allocations provide insight by sub-process

� Nearly all HR functions have both retained and delivery components, so you must generally capture the total HR staff/cost in order to derive the in-scope

� The quandary: not all HR delivery cost is considered “impactable”

– The current cost including all HR FTE is used to identify the full opportunity for savings

– It is often difficult to project savings based on anything less than whole person (FTP) reductions


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� Draft high-level planning assumptions for each scenario

– Identify a handful of alternatives with material differences

– Evaluate the HR functions that may be included in-scope and how they can be bundled internally or in the outsourcing market

– Clarify any global processes or expectations for geographic scope

� Consider the timing of key milestones and interdependencies

� Discuss the impacted delivery cost and, more importantly, any items that can NOT be considered for impact

� Identify who must sign-off on the valuation of business value and the evaluation criteria that will be applied

� Agree on the approach to calculate missing costs and validate estimates


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� Begin with a well-validated HR Cost Baseline

� Determine impact to staff and costs for each scenario

� Model impact to baseline costs– Direct staff expense

– Operating cost

– External services (admin vs. program)

� Identify technology investment costs

� Identify transition costs

� Identify significant business value expected from the transformation, quantify financial impact to the enterprise using approved evaluation criteria

� Draft business case projections (typically 5-7 years)

� Identify risks and impediments


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�Overview of Research� How You Get Engaged


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Building a Better Business Case – Beyond the transaction cost

� What is a Business Case Metrics Framework and why do we care– The goal is to produce research based results to outline return on investments /

business improvements through transformation projects– Most organizations today are given no value for the “soft savings” outside of

headcount and capital expenditures

� How do we quantify the value of transformation (how does your organization value improvement)

• There is value outside of headcount reductions• Analytics improves decision making• Improved applicant tracking systems reduces time to hire

� What will the membership get out of it– Access to the Workbook for your projects– Workbook is based on functional groupings (Talent Management, Payroll)

� How have we approached the work– Focus on functional areas

• Payroll• Recruiting• Talent Management• Workforce Administration


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� Who is engaged on the project– Open to all members– Current membership is multi-organizational:

– Unilever - IBM– TPI - ExcelerateHRO– PriceWaterhouseCoopers / Saratoga - Convergys– PeopleScience - Ceridian– Patersons Payroll - Bersin & Associates– Oracle - AT&T– Mercer HR Services - ADP– Kelly Outsourcing Consulting Group - Accenture

� How can the membership help– What research have you found helpful in quantifying business value– What are the areas that most concern you in showing value to the

business

� BUYER PARTICIPATION REQUESTED


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Financial ValuePay Calculations

Automated timekeeping system collects hours by type – hours worked vs. exception time (i.e., vacation, holiday). All gross pay calculations are automated.

Overpayment of regular pay (i.e., straight time), premium pay (i.e., overtime), etc. due to time data collection and entry errors and incorrect interpretation of pay calculation rules.

American Payroll Association Study (2-4% leakage in self administered

payroll)

Post-Termination Over Payments Automated manager self service and workflow

for termination processing.

Inability to stop payment on overpayments electronically deposited prior to termination notification.


payroll)

COBRA Eligibility

Automated life-event processing with automatic triggers for COBRA eligibility. Automated COBRA billings with automatic notifications and termination triggers.

Overpayment of premiums for terminations and changes in coverage not recorded on carrier’s database.Non-payment (i.e. no coverage) of premiums for enrolled participants not recorded on carrier’s database.

Ghost PaymentsPay cycle reconciliation of checks to headcount, checks to time reported, checks in excess of a specific dollar amount, reasonability check for total payroll dollars within a reasonable tolerance. Separation of duties between establishing individuals to be paid and the approval and processing of payroll.

Payments to non-employees, extra payments to existing employees, and/or excessive salary payment to existing employees.


payroll)

Time Off Over Payment

Automated time-off accruals with automated time collection and exception time reporting.

Overpayment of time off and lost productive time (extra time off taken).Overpayment of time-off accrual at termination.Excessive accrual for unused/ carried over balances.

# of Days per Employee per Year

Better identification and control of institutional knowledge and information

Knowledge management system is widely used and maintained, particularly for areas of policy/process that are critical, unharmonized, or highly specialized or prone to exceptions.

Organization is well-prepared as key knowledge assets leave and baby boomers begin to retire.

Average of Financial Value

Item Description of Best Practice Risk/Benefit Calculation GuidanceEnterprise Benefit (Y/N) Industry Study or Reference


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Compliance ValueFLSA and Wage and Hour

Centralized payroll system with automated pay calculations.

Data Privacy System security profiles that restrict access to information in compliance with emerging data privacy laws.

EEO/AAP Automated tracking of job applicant and selection process by vacancy. Historical database of employee demographics by position, promotions/demotions, and terminations linked to OFCCP job groups/categories.

Tax Compliance Automate tax tables and tax calculations with automatic quarterly tax filings.

IRS Limits Centralized payroll system with automated tracking of IRS contribution limits with automatic cut-off.

Item Description of Best Practice Risk/Benefit Calculation GuidanceEnterprise

Benefit (Y/N)Industry Study or Reference


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�How You Get Engaged


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Brian Day – [email protected]

Brian Day – [email protected] Topic

Julie Fernandez – [email protected] Administration

Including ERP, Analytics, Absence Management, Contact Center and Retained Organization

Jennifer Swindle – [email protected]

Jill Kidwell – [email protected]

Talent

Including Performance, Succession, Compensation & Learning

Candy Lewandowski – [email protected]

Laura Showalter – [email protected]

Recruiting

ContactFunctional Area

HRO Business Metrics Presentation finalx Oct 22... · What advice would you give to HR...

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