Description
The expiration of a multi-process BPO agreement, which typically outsources three or more HR functions, presents a strategic opportunity to negotiate a new agreement that will improve outsourcing processes, effi ciencies and business value.
view
point of
Highlights
• As the ?rst wave of HR BPO
contracts expire, HR leaders are
being forced to decide whether to
renegotiate—or retire—existing
outsourcing agreements.
• Early, proactive assessment
of an existing outsourcing
arrangement is critical to
achieve maximum value when
negotiating a new deal.
• HR leaders must understand
gaps in current outsourcing
processes and performance—and
be prepared to provide metrics
for negotiation.
• HR should identify improvements
that must be implemented in
new agreements in order to drive
business value and HR ef?ciency.
New opportunities in the second generation of Business
Process Outsourcing (BPO)
The expiration of a multi-process BPO agreement, which
typically outsources three or more HR functions, presents
a strategic opportunity to negotiate a new agreement
that will improve outsourcing processes, ef?ciencies and
business value. These gains can free HR to pursue more
strategic, value-adding activities.
Understanding the fast-changing outsourcing industry
The outsourcing landscape has changed dramatically over
the past seven years. HR leaders must ensure that they
understand new technologies, processes and suppliers
before they begin to renegotiate an outsourcing deal.
Engagement of pivotal talent is increasingly critical
Changing demographics will soon put businesses in
the grips of an unprecedented talent squeeze. Effective
outsourcing of transactional tasks can enable HR
departments to better explore new policies, practices
and technologies to help engage and retain those in
pivotal roles.
February 2011
HR Outsourcing 2.0 —
Revising outsourcing
contracts to re?ect
lessons learned
2 PwC point of view
1 Achieving Effectiveness in HR Outsourcing,
Towers Watson, 2009
2 End of Term Market in HRO,
Everest Research, 2009
As the smoke from the global economic
meltdown begins to clear, it is apparent
that one thing has not changed:
Companies will continue to seek ways to
do more with less.
PwC’s 13th Annual Global CEO Survey
found that 69% of respondents intend to
implement cost-reduction initiatives in
the next 12 months. Outsourcing remains
one of the most effective—and enduring—
responses to the “more with less” mandate.
In our CEO survey, 35% of respondents
said they plan to outsource a business
process or function in the coming year.
The appeal of outsourcing is undeniable.
Many HR areas—payroll, bene?t
administration and retirement plans, for
instance—are full of time-consuming,
transaction-based tasks that rob HR of its
ability to innovate. In fact, our research
shows that more than 75% of HR work
hours are spent on transactional tasks. And
73% of respondents to a recent Towers
Watson survey said eliminating this
administrative clutter is a primary goal of
HR outsourcing
1
.
Transferring these tasks to an outside
service provider can help boost an
organization’s productivity, standardize
processes, reduce shadow (or indirect)
HR activities, cut costs and improve
compliance with regulatory mandates.
Outsourcing can also free HR to refocus
on a broader strategy that delivers value
and better focuses on helping the company
achieve its overall business goals.
Preparing for the future of HR
outsourcing
Outsourcing is nothing new, of course.
Many HR departments caught the ?rst
wave of HR Business Process Outsourcing
as it began to swell seven (or more) years
ago. Today those agreements, which
typically range from ?ve to seven-plus
years, are beginning to expire in very big
numbers. More than 110 outsourcing
deals with a combined contract value of
about $6 billion will near their end-of-term
between 2010 and 2012, according to the
Everest Research Institute
2
.
And that leaves HR leaders with a new
challenge: They must decide whether to
renew, revise or terminate an existing
outsourcing agreement.
For many, it’s unfamiliar territory.
Continuing advances in technology and
improvements in processes, as well as
an avalanche of new suppliers and new
variations in ways to procure services,
have created an outsourcing environment
that may be all but unrecognizable to
companies that entered deals years ago.
This can put HR in the untenable
position of having to blindly evaluate the
performance, costs and ef?ciencies of its
existing agreement vis-à-vis those of other
providers. In other words, the HR leader
risks committing to the next seven years
of service without fully understanding the
previous seven years of progress.
It’s not that HR has been asleep at the
wheel. Outsourcing vendors may have
promised results that were never delivered,
and performance shortcomings may have
compounded over the years, resulting in a
failure to realize promised value. Attention
was often focused on the underperforming
vendor, leaving the HR leader unaware of
advances in the outsourcing industry.
That’s not to say outsourcing vendors
shoulder all the blame, however. To
achieve maximum value and effectiveness
from an outsourcing deal, HR must
participate as an engaged, committed
partner to the outsourcer. Doing so
requires that HR adopt the vendor’s
leading practices and challenge itself to
standardize its procedures. It also is critical
that HR establish a governance model
that can manage the supplier partnership,
monitor service delivery performance and
help resolve operational issues. Simply
put, HR leaders must approach BPO as
a partnership, not as a lopsided service
arrangement.
Too often we have seen contracts renewed
with an incumbent out of simple inertia.
Effective negotiation of second-generation
outsourcing will help de?ne the success
of the HR function, but it requires very
careful planning.
Background
Understanding
today’s
outsourcing
landscape
Outsourcing remains key to cutting costs
Implemented a
cost-reduction initiative
Outsourced a business
process or function
Entered into a new
strategic alliance
or joint venture
“Insourced” a previously
outsourced business
process or function
Completed a
cross-border
merger or acquisition
Ended an existing
strategic alliance or
joint-venture
Have initiated in past 12 months
0%
Divested or spun-off
majority interest in a
business or exited a
significant market
Plan to initiate in coming 12 months
88%
69%
35%
34%
35%
46%
23%
17%
20%
17%
20%
30%
18%
14%
Source: PwC 13th Global CEO Survey
PwC point of view 3
Analysis
Taking the
right steps
toward contract
renegotiation
Negotiating an outsourcing agreement,
whether with an incumbent vendor or
a new provider, represents a powerful
opportunity to achieve new ef?ciencies
in costs and processes. Yet it is fraught
with potential missteps that can adversely
impact the organization’s operations for
years to come.
The decision comes down to three options:
Renew, revise or replace. And in the fast-
changing HR outsourcing industry, it’s not
an easy choice.
Nor is there a one-size-?ts-all process to
arrive at an answer. We believe the best
approach is to rigorously assess business
needs and strategies, then develop a
disciplined outsourcing renewal plan that
delivers value and minimizes impact to
users and stakeholders. HR leaders should:
1. Review agreements early.
Those responsible for HR service delivery
should begin reviewing outsourcing
agreements 18 months before the contract
is due to expire. This will allow time to
gain a detailed understanding of current
and future business needs and then build
consensus among the right stakeholders,
including the CFO, CIO and appropriate
business-unit leaders. HR should follow
two parallel processes, one with the
current provider and another to identify
whether other viable vendors could
improve service and/or costs.
2. Understand existing
shortcomings.
Before an HR leader begins discussions
with an incumbent outsourcer or new
provider, it is critical to investigate and
understand any shortcomings in the
existing relationship. Determine what
needs have been met by the agreement
and understand any gaps that exist in
service delivery. Be prepared to hand
over quantitative and qualitative metrics
to support your assessment. It is also
important to review the governance
in place for managing the vendor
performance and relationship—and make
changes if necessary.
3. Identify improvements.
Working with the provider, HR leaders
should identify improvements to current
processes and technologies that will drive
ef?ciencies and value during the upcoming
stage of outsourcing. These improvements
should always be evaluated in the context
of how the outsourcing agreement can
help the HR organization contribute to
the success of the business and innovate—
today and over the life of the next contract.
The scope of these improvements should
drive the scope of the analysis with other
viable providers.
4. Build checkpoints into
the process.
When formulating an outsourcing strategy,
it is critical to include checkpoints for
assessing the quality and performance of
the implementation. For instance, at the
user acceptance phase HR leaders should
carefully evaluate the effectiveness of the
implementation. Next, when going live and
transitioning to a “stabilization period”
of operation, HR must communicate,
collaborate and resolve all issues. The
stabilization period typically lasts three
to six months, although the quality of
the outsourcing service is more critical
than the duration of the phase, since
the stabilization period pre?gures the
relationship with the vendor for the term
of the contract. HR should assess its
relationship with the supplier to ensure
that the deal maintains the agreed-upon
partnership and transparency.
5. Know when it’s time to let go.
Once an acceptable steady state has been
reached, HR leaders should ensure that
the retained governance and HR teams
no longer be involved in the transactional
activities that have been outsourced.
This will free HR to pursue strategic,
value-adding activities that can elevate
the department’s effectiveness and
in?uence within the business. Only then
will business stakeholders recognize that
the governance and retained HR team
are strategic partners in helping build the
company’s future.
HR leaders deciding whether to renew or end
an HR outsourcing agreement have three
basic options to choose from. Each has its
advantages and drawbacks.
1. Renew the agreement ‘as is’. The
company renews its contract with an
incumbent vendor because it has a
workable relationship that is providing
acceptable service. An ‘as is’ renewal may
be fast and simple, but it often provides
a false economy because it will not help
the organization maximize ef?ciencies
or lower costs. Nor will it help the HR
function evolve and progress.
2. Opt for a ‘hybrid status quo’. The
organization retains the existing
outsourcing vendor but mandates key
performance and service improvements.
This approach may not add signi?cant
value, however, because it yields only
marginal changes in performance.
3. Hire a new outsourcing supplier. The
company assesses the ?eld of appropriate
vendors and engages one that can provide
better services at lower costs. This tactic
offers the potential of transformative
business improvements, but it also requires
a potentially costly and disruptive change
management effort.
Three choices: Pros and cons
Contact information
To have a deeper conversation, please contact:
Diane M. Youden
Principal
214 754 5150
[email protected]
Michael J. Brown
Director
214 704 6710
[email protected]
Sushil Ahuja
Director
214 754 5288
[email protected]
Q&A
Q: Why are some HR departments bringing
outsourced functions back in house?
A: In some cases, HR organizations have
found that their unique needs have not
been met by providers’ standardized
solutions. In other situations, HR has
reviewed its outsourcing initiative and
decided to bring certain core competencies
in-house. Recruiting, for instance, is
a function that many HR leaders are
renewing some or all components for
in-sourcing because they want to take
ownership of the cultural relationship with
incoming employees. Regardless of reason,
in-sourcing requires that HR rebuild
its infrastructure, processes and staff.
Accordingly, HR should begin planning
at least 18 months before the outsourcing
deal expires.
Q: Are there new alternatives to HR BPO?
A: Some HR organizations are adopting
new on-site technologies that enable
them to effectively achieve results without
end-to-end outsourcing. For instance,
Software-as-a-Service (SaaS) can
provide a con?gurable model that can be
employed in-house to gain better control
over the function. Other HR departments
are adopting a hybrid model in which
they may retain key HR functions while
outsourcing select processes, such as
background checks.
Q: Why is the need for talent management
escalating?
A: Despite the shaky economic recovery,
demographic shifts, increasing global
mobility and skill shortages in critical
areas point to a future talent shortage
3
.
Anticipating talent needs and retaining
highly skilled employees is critical for
the future growth. Yet HR also must
be prepared to swiftly reallocate talent
to better align people strategy with
business strategy to meet the needs of the
organization over the term of the contract.
Q: How can HR better measure talent and
predict future staf?ng needs?
A: HR must employ fact-based metrics to
ensure the organization retains high-value
employees. Yesterday’s baseline metrics—
such as new hire, staff cost and turnover
rates—won’t do the job. Effective analytics
requires both data repository and business
intelligence tools, plus at least ?ve years
of meaningful employee data, to help
prevent the loss of high-value employees.
Measurements such as PwC’s Saratoga
metrics enable a ?rm to benchmark itself
against companies in similar industries and
of similar size. Ensure your outsourcing
provider is well-equipped to provide access
to and analytical analysis of this type of
data. The ability to leverage meaningful
workforce data will be a key driver to
enabling your HR organization to speak
with impact to business leaders.
Q. How should HR rightsize its retained
organization?
A: As the size and scope of BPO contracts
expands, HR must rightsize itself to
take full advantage of the partnership.
HR leaders should eliminate in-house
activities and positions that are redundant
to the outsource provider, while adding
positions that bring new capabilities to
the department. The ability of the HR and
Talent functions to effectively manage and
complement the services of the outsource
provider will enable the organization to
more effectively align the outsourcing
relationship with its strategic needs.
HR leaders need great servicing
solutions, rightsized HR functions
and workforce metrics if they hope to
engage employees in pivotal roles
© 2011 PwC. All rights reserved. “PwC” and “PwC
US” refer to PricewaterhouseCoopers LLP, a Delaware
limited liability partnership, which is a member ?rm of
PricewaterhouseCoopers International Limited, each
member ?rm of which is a separate legal entity. This
document is for general information purposes only, and
should not be used as a substitute for consultation with
professional advisors. LA-11-0169
3 Managing tomorrow’s people, PwC, 2009
Talent acquisition metrics
Internal management
hiring rate
Percent of management
requisitions ?lled by
internal candidates
New hire
performance rate
Relationship between
new hire performance and
overall performance ratings
Talent development metrics
Average time
to promotion
The average number
of months required for
promotion
Career path ratio Percentage of upward
employee movement
Talent retention metrics
High performer
separation rate
Percentage of high
performers that left the
organization (voluntarily or
involuntarily) during
the period
Low performer
separation rate
Percentage of low
performers that left the
organization (voluntarily or
involuntarily) during
the period
Succession management metric
One-through-three
candidate succession
planning depth
Percentage of key roles
that have a succession
pool of one-through-three
unique candidates
HRS International Conference, Orlando, November 2010
Key metrics for assessment of
employee engagement
doc_644378529.pdf
The expiration of a multi-process BPO agreement, which typically outsources three or more HR functions, presents a strategic opportunity to negotiate a new agreement that will improve outsourcing processes, effi ciencies and business value.
view
point of
Highlights
• As the ?rst wave of HR BPO
contracts expire, HR leaders are
being forced to decide whether to
renegotiate—or retire—existing
outsourcing agreements.
• Early, proactive assessment
of an existing outsourcing
arrangement is critical to
achieve maximum value when
negotiating a new deal.
• HR leaders must understand
gaps in current outsourcing
processes and performance—and
be prepared to provide metrics
for negotiation.
• HR should identify improvements
that must be implemented in
new agreements in order to drive
business value and HR ef?ciency.
New opportunities in the second generation of Business
Process Outsourcing (BPO)
The expiration of a multi-process BPO agreement, which
typically outsources three or more HR functions, presents
a strategic opportunity to negotiate a new agreement
that will improve outsourcing processes, ef?ciencies and
business value. These gains can free HR to pursue more
strategic, value-adding activities.
Understanding the fast-changing outsourcing industry
The outsourcing landscape has changed dramatically over
the past seven years. HR leaders must ensure that they
understand new technologies, processes and suppliers
before they begin to renegotiate an outsourcing deal.
Engagement of pivotal talent is increasingly critical
Changing demographics will soon put businesses in
the grips of an unprecedented talent squeeze. Effective
outsourcing of transactional tasks can enable HR
departments to better explore new policies, practices
and technologies to help engage and retain those in
pivotal roles.
February 2011
HR Outsourcing 2.0 —
Revising outsourcing
contracts to re?ect
lessons learned
2 PwC point of view
1 Achieving Effectiveness in HR Outsourcing,
Towers Watson, 2009
2 End of Term Market in HRO,
Everest Research, 2009
As the smoke from the global economic
meltdown begins to clear, it is apparent
that one thing has not changed:
Companies will continue to seek ways to
do more with less.
PwC’s 13th Annual Global CEO Survey
found that 69% of respondents intend to
implement cost-reduction initiatives in
the next 12 months. Outsourcing remains
one of the most effective—and enduring—
responses to the “more with less” mandate.
In our CEO survey, 35% of respondents
said they plan to outsource a business
process or function in the coming year.
The appeal of outsourcing is undeniable.
Many HR areas—payroll, bene?t
administration and retirement plans, for
instance—are full of time-consuming,
transaction-based tasks that rob HR of its
ability to innovate. In fact, our research
shows that more than 75% of HR work
hours are spent on transactional tasks. And
73% of respondents to a recent Towers
Watson survey said eliminating this
administrative clutter is a primary goal of
HR outsourcing
1
.
Transferring these tasks to an outside
service provider can help boost an
organization’s productivity, standardize
processes, reduce shadow (or indirect)
HR activities, cut costs and improve
compliance with regulatory mandates.
Outsourcing can also free HR to refocus
on a broader strategy that delivers value
and better focuses on helping the company
achieve its overall business goals.
Preparing for the future of HR
outsourcing
Outsourcing is nothing new, of course.
Many HR departments caught the ?rst
wave of HR Business Process Outsourcing
as it began to swell seven (or more) years
ago. Today those agreements, which
typically range from ?ve to seven-plus
years, are beginning to expire in very big
numbers. More than 110 outsourcing
deals with a combined contract value of
about $6 billion will near their end-of-term
between 2010 and 2012, according to the
Everest Research Institute
2
.
And that leaves HR leaders with a new
challenge: They must decide whether to
renew, revise or terminate an existing
outsourcing agreement.
For many, it’s unfamiliar territory.
Continuing advances in technology and
improvements in processes, as well as
an avalanche of new suppliers and new
variations in ways to procure services,
have created an outsourcing environment
that may be all but unrecognizable to
companies that entered deals years ago.
This can put HR in the untenable
position of having to blindly evaluate the
performance, costs and ef?ciencies of its
existing agreement vis-à-vis those of other
providers. In other words, the HR leader
risks committing to the next seven years
of service without fully understanding the
previous seven years of progress.
It’s not that HR has been asleep at the
wheel. Outsourcing vendors may have
promised results that were never delivered,
and performance shortcomings may have
compounded over the years, resulting in a
failure to realize promised value. Attention
was often focused on the underperforming
vendor, leaving the HR leader unaware of
advances in the outsourcing industry.
That’s not to say outsourcing vendors
shoulder all the blame, however. To
achieve maximum value and effectiveness
from an outsourcing deal, HR must
participate as an engaged, committed
partner to the outsourcer. Doing so
requires that HR adopt the vendor’s
leading practices and challenge itself to
standardize its procedures. It also is critical
that HR establish a governance model
that can manage the supplier partnership,
monitor service delivery performance and
help resolve operational issues. Simply
put, HR leaders must approach BPO as
a partnership, not as a lopsided service
arrangement.
Too often we have seen contracts renewed
with an incumbent out of simple inertia.
Effective negotiation of second-generation
outsourcing will help de?ne the success
of the HR function, but it requires very
careful planning.
Background
Understanding
today’s
outsourcing
landscape
Outsourcing remains key to cutting costs
Implemented a
cost-reduction initiative
Outsourced a business
process or function
Entered into a new
strategic alliance
or joint venture
“Insourced” a previously
outsourced business
process or function
Completed a
cross-border
merger or acquisition
Ended an existing
strategic alliance or
joint-venture
Have initiated in past 12 months
0%
Divested or spun-off
majority interest in a
business or exited a
significant market
Plan to initiate in coming 12 months
88%
69%
35%
34%
35%
46%
23%
17%
20%
17%
20%
30%
18%
14%
Source: PwC 13th Global CEO Survey
PwC point of view 3
Analysis
Taking the
right steps
toward contract
renegotiation
Negotiating an outsourcing agreement,
whether with an incumbent vendor or
a new provider, represents a powerful
opportunity to achieve new ef?ciencies
in costs and processes. Yet it is fraught
with potential missteps that can adversely
impact the organization’s operations for
years to come.
The decision comes down to three options:
Renew, revise or replace. And in the fast-
changing HR outsourcing industry, it’s not
an easy choice.
Nor is there a one-size-?ts-all process to
arrive at an answer. We believe the best
approach is to rigorously assess business
needs and strategies, then develop a
disciplined outsourcing renewal plan that
delivers value and minimizes impact to
users and stakeholders. HR leaders should:
1. Review agreements early.
Those responsible for HR service delivery
should begin reviewing outsourcing
agreements 18 months before the contract
is due to expire. This will allow time to
gain a detailed understanding of current
and future business needs and then build
consensus among the right stakeholders,
including the CFO, CIO and appropriate
business-unit leaders. HR should follow
two parallel processes, one with the
current provider and another to identify
whether other viable vendors could
improve service and/or costs.
2. Understand existing
shortcomings.
Before an HR leader begins discussions
with an incumbent outsourcer or new
provider, it is critical to investigate and
understand any shortcomings in the
existing relationship. Determine what
needs have been met by the agreement
and understand any gaps that exist in
service delivery. Be prepared to hand
over quantitative and qualitative metrics
to support your assessment. It is also
important to review the governance
in place for managing the vendor
performance and relationship—and make
changes if necessary.
3. Identify improvements.
Working with the provider, HR leaders
should identify improvements to current
processes and technologies that will drive
ef?ciencies and value during the upcoming
stage of outsourcing. These improvements
should always be evaluated in the context
of how the outsourcing agreement can
help the HR organization contribute to
the success of the business and innovate—
today and over the life of the next contract.
The scope of these improvements should
drive the scope of the analysis with other
viable providers.
4. Build checkpoints into
the process.
When formulating an outsourcing strategy,
it is critical to include checkpoints for
assessing the quality and performance of
the implementation. For instance, at the
user acceptance phase HR leaders should
carefully evaluate the effectiveness of the
implementation. Next, when going live and
transitioning to a “stabilization period”
of operation, HR must communicate,
collaborate and resolve all issues. The
stabilization period typically lasts three
to six months, although the quality of
the outsourcing service is more critical
than the duration of the phase, since
the stabilization period pre?gures the
relationship with the vendor for the term
of the contract. HR should assess its
relationship with the supplier to ensure
that the deal maintains the agreed-upon
partnership and transparency.
5. Know when it’s time to let go.
Once an acceptable steady state has been
reached, HR leaders should ensure that
the retained governance and HR teams
no longer be involved in the transactional
activities that have been outsourced.
This will free HR to pursue strategic,
value-adding activities that can elevate
the department’s effectiveness and
in?uence within the business. Only then
will business stakeholders recognize that
the governance and retained HR team
are strategic partners in helping build the
company’s future.
HR leaders deciding whether to renew or end
an HR outsourcing agreement have three
basic options to choose from. Each has its
advantages and drawbacks.
1. Renew the agreement ‘as is’. The
company renews its contract with an
incumbent vendor because it has a
workable relationship that is providing
acceptable service. An ‘as is’ renewal may
be fast and simple, but it often provides
a false economy because it will not help
the organization maximize ef?ciencies
or lower costs. Nor will it help the HR
function evolve and progress.
2. Opt for a ‘hybrid status quo’. The
organization retains the existing
outsourcing vendor but mandates key
performance and service improvements.
This approach may not add signi?cant
value, however, because it yields only
marginal changes in performance.
3. Hire a new outsourcing supplier. The
company assesses the ?eld of appropriate
vendors and engages one that can provide
better services at lower costs. This tactic
offers the potential of transformative
business improvements, but it also requires
a potentially costly and disruptive change
management effort.
Three choices: Pros and cons
Contact information
To have a deeper conversation, please contact:
Diane M. Youden
Principal
214 754 5150
[email protected]
Michael J. Brown
Director
214 704 6710
[email protected]
Sushil Ahuja
Director
214 754 5288
[email protected]
Q&A
Q: Why are some HR departments bringing
outsourced functions back in house?
A: In some cases, HR organizations have
found that their unique needs have not
been met by providers’ standardized
solutions. In other situations, HR has
reviewed its outsourcing initiative and
decided to bring certain core competencies
in-house. Recruiting, for instance, is
a function that many HR leaders are
renewing some or all components for
in-sourcing because they want to take
ownership of the cultural relationship with
incoming employees. Regardless of reason,
in-sourcing requires that HR rebuild
its infrastructure, processes and staff.
Accordingly, HR should begin planning
at least 18 months before the outsourcing
deal expires.
Q: Are there new alternatives to HR BPO?
A: Some HR organizations are adopting
new on-site technologies that enable
them to effectively achieve results without
end-to-end outsourcing. For instance,
Software-as-a-Service (SaaS) can
provide a con?gurable model that can be
employed in-house to gain better control
over the function. Other HR departments
are adopting a hybrid model in which
they may retain key HR functions while
outsourcing select processes, such as
background checks.
Q: Why is the need for talent management
escalating?
A: Despite the shaky economic recovery,
demographic shifts, increasing global
mobility and skill shortages in critical
areas point to a future talent shortage
3
.
Anticipating talent needs and retaining
highly skilled employees is critical for
the future growth. Yet HR also must
be prepared to swiftly reallocate talent
to better align people strategy with
business strategy to meet the needs of the
organization over the term of the contract.
Q: How can HR better measure talent and
predict future staf?ng needs?
A: HR must employ fact-based metrics to
ensure the organization retains high-value
employees. Yesterday’s baseline metrics—
such as new hire, staff cost and turnover
rates—won’t do the job. Effective analytics
requires both data repository and business
intelligence tools, plus at least ?ve years
of meaningful employee data, to help
prevent the loss of high-value employees.
Measurements such as PwC’s Saratoga
metrics enable a ?rm to benchmark itself
against companies in similar industries and
of similar size. Ensure your outsourcing
provider is well-equipped to provide access
to and analytical analysis of this type of
data. The ability to leverage meaningful
workforce data will be a key driver to
enabling your HR organization to speak
with impact to business leaders.
Q. How should HR rightsize its retained
organization?
A: As the size and scope of BPO contracts
expands, HR must rightsize itself to
take full advantage of the partnership.
HR leaders should eliminate in-house
activities and positions that are redundant
to the outsource provider, while adding
positions that bring new capabilities to
the department. The ability of the HR and
Talent functions to effectively manage and
complement the services of the outsource
provider will enable the organization to
more effectively align the outsourcing
relationship with its strategic needs.
HR leaders need great servicing
solutions, rightsized HR functions
and workforce metrics if they hope to
engage employees in pivotal roles
© 2011 PwC. All rights reserved. “PwC” and “PwC
US” refer to PricewaterhouseCoopers LLP, a Delaware
limited liability partnership, which is a member ?rm of
PricewaterhouseCoopers International Limited, each
member ?rm of which is a separate legal entity. This
document is for general information purposes only, and
should not be used as a substitute for consultation with
professional advisors. LA-11-0169
3 Managing tomorrow’s people, PwC, 2009
Talent acquisition metrics
Internal management
hiring rate
Percent of management
requisitions ?lled by
internal candidates
New hire
performance rate
Relationship between
new hire performance and
overall performance ratings
Talent development metrics
Average time
to promotion
The average number
of months required for
promotion
Career path ratio Percentage of upward
employee movement
Talent retention metrics
High performer
separation rate
Percentage of high
performers that left the
organization (voluntarily or
involuntarily) during
the period
Low performer
separation rate
Percentage of low
performers that left the
organization (voluntarily or
involuntarily) during
the period
Succession management metric
One-through-three
candidate succession
planning depth
Percentage of key roles
that have a succession
pool of one-through-three
unique candidates
HRS International Conference, Orlando, November 2010
Key metrics for assessment of
employee engagement
doc_644378529.pdf