HRO Summit, Tampa, Florida October 22, 2008 Debora Card TPI Brian J. Day IBM Joel Meeker - Convergys

Transcription

1 HRO Summit, Tampa, Florida October 22, 2008 Debora Card TPI Brian J. Day IBM Joel Meeker - Convergys

2 What is it Like in the Trenches Finance Perspective Business Case Discussion Overview of Research How You Get Engaged

3 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?

4 What is it Like in the Trenches Finance Perspective Business Case Discussion Overview of Research How You Get Engaged

5 !"!" 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 be approved 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? ##

6 What is it Like in the Trenches Finance Perspective Business Case Discussion Overview of Research How You Get Engaged

7 $ %!! 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

8 &$ '# 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

9 # 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

10 What is it Like in the Trenches Finance Perspective Business Case Discussion Overview of Research How You Get Engaged

11 #( " 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

12 #( " 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

13 )*'#! +"+,& Enterprise Item Description of Best Practice Risk/Benefit Industry Study or Reference Calculation Guidance Benefit (Y/N) Financial Value Pay Calculations Automated timekeeping system collects hours Post-Termination Over Payments COBRA Eligibility by type hours worked vs. exception time (i.e., vacation, holiday). All gross pay calculations are automated. Automated manager self service and workflow for termination processing. 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. Inability to stop payment on overpayments electronically deposited prior to termination notification. Overpayment of premiums for terminations and changes in coverage not recorded on carrier s Automated life-event processing with automatic database. triggers for COBRA eligibility. Automated Non-payment (i.e. no coverage) of premiums COBRA billings with automatic notifications for enrolled participants not recorded on and termination triggers. carrier s database. American Payroll Association Study (2-4% leakage in self administered payroll) American Payroll Association Study (2-4% leakage in self administered payroll) Ghost Payments Pay cycle reconciliation of checks to headcount, checks to time reported, checks in excess of a specific dollar amount, reasonability check for Payments to non-employees, extra payments to total payroll dollars within a reasonable existing employees, and/or excessive salary tolerance. Separation of duties between payment to existing employees. establishing individuals to be paid and the approval and processing of payroll. American Payroll Association Study (2-4% leakage in self administered 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

14 )*'#! +"+,& Enterprise Item Description of Best Practice Risk/Benefit Industry Study or Reference Calculation Guidance Benefit (Y/N) Compliance Value FLSA and Wage Centralized payroll system with automated pay and Hour 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.

15 What is it Like in the Trenches Finance Perspective Business Case Discussion Overview of Research How You Get Engaged

16 - ) Functional Area Contact Recruiting Candy Lewandowski lewanca@kellyocg.com Laura Showalter showala@kellyocg.com Talent Including Performance, Succession, Compensation & Learning Payroll Jennifer Swindle jennifer.swindle@mercer.com Jill Kidwell jill.j.kidwell@us.ibm.com Brian Day bjday@us.ibm.com Workforce Administration Including ERP, Analytics, Absence Management, Contact Center and Retained Organization Cross Topic Julie Fernandez julie.fernandez@tpi.net Brian Day bjday@us.ibm.com