Hewitt announced this morning that they have acquired the assets of the LewisCo Group (LCG) as a means of creating a comprehensive, end-to-end solution for absence management.  According to the release, the combination of Hewitt’s existing leave administration solution with LCG’s absence management suite will serve approximately 60 clients and over 2.3 million individuals.

This is a very significant acquisition and will have a cascading effect on the HR industry.  In my opinion, Hewitt has effectively boxed out both EAP and HRO providers from potentially leveraging LCG’s Nucleus technology platform and other value-added services.  What remains to be seen is if Hewitt continues to offer distribution and access services to its former outsourcing foes as part of a wisely morphed (and highly focused) transition to be “all-things-benefits” in the HR industry.  I applaud Hewitt for seeing the value in the particular subsegment.

So why all the hubbub?  According to the most recent CCH Unscheduled Absence Survey, while 34% of employees call in sick at the last minute due to “personal illness”, 66% of those are actually dealing with personal or family issues.  Said CCH Employment Law Analyst Pamela Wolf

“Unscheduled absenteeism is a problem that no organization can afford to ignore – either from a cost or productivity standpoint. With the appropriate programs in place, businesses can significantly reduce the number of last minute no-shows, improve the work environment for all employees and realize substantial savings.”

And the LCG/Hewitt combination addresses much more than just unscheduled absences.  Said the announcement:

With solutions including administration and management of all forms of absence, Web-based data integration and reporting, root cause analysis, and innovative return-to-work programs, LCG’s approach identifies and addresses the fundamental causes of unplanned absence to help employers better manage costs and maintain compliance. The combination of Hewitt’s rich health plan usage data and expertise in absence management consulting, coupled with LCG’s absence and clinical information, will allow Hewitt to identify the unique patterns linking health and absenteeism that, when addressed proactively, can lead to improved workforce productivity.

Having personally seen the LCG system in action, I will say that this is a tremendous value-add to the Hewitt portfolio.  So who else is left in the market?  Most of the major HRMS/HRIS systems have basic absence management capabilities, but they lack significant depth in features and functionality.  Absentys is also on the market and had announced a distribution relationship with ACS/Buck in July of last year.  In my opinion, this will continue to be a hot sub-market with tremendous potential ROI.

Let’s keep the conversation going. 

After weeks of deliberation, the good people at FedPitch have announced their Top 20 Finalists.  For those unaware of FedPitch, it is a competition initiated by 13L and co-sponsored by a variety of non-profit entities including the Council for Excellence in Government, the Partnership for Public Service, Young Government Leaders, and American University’s Institute for the Study of Public Policy Implementation.  The intent is to identify innovative concepts that materially improve some facet of the federal workforce experience.  

Several weeks ago we debated the merits of this initiative in a point/counterpoint with our resident OD expert Dr. Shannon Flumerfelt.  Given that making a difference requires direct and overt participation, I went ahead and submitted a concept for consideration.   Imagine my surprise when I was selected to present.

So, if you would like an excuse to visit Washington, DC, come on down to the National Mall during the afternoon of May 7th to witness FedPitch in person.  Yours truly and 19 other finalists will have two minutes each to pitch their concepts without props, notes or other presentation wizardry.  I will personally endeavor to make my speech as compelling as possible, although those who know me well will chuckle at the idea that I am only allowed to talk for 120 seconds.  It should be a fun time and I truly hope that the winning idea sees the light of day.

Let’s keep the (short) conversation going.

Several weeks ago we addressed the issue of vendor sustainability, with acquisition activity one of the confounding variables in the constantly shifting sands of the HR vendor community.  Many thanks to my good friend Bridget Boix of Krill Northgate for pointing me to a an article in Mergers & Acquisitions Magazine entitled, “The Sideline Offensive”.

The premise is as follows - When Company A acquires Company B, competitive firm C should have a field day by overtly targeting the best customers, employees and suppliers of both A & B, thus effectively attacking from the sidelines.  Said the article:

“The most vital area up for grabs is the combined customer base of the merging companies. As anyone who has gone through an integration process can attest, attention very easily gets diverted in a merger. It might mean customers’ calls go unreturned or maybe… pricing gets ratcheted up. Even if these scenarios don’t develop, clients may habitually think about alternatives as a precaution.” (The Sideline Offensive, M&A Magazine, page 40)

So when should such an offensive begin?  Jeff Gell of Boston Consulting Group recommends:

“The best times to strike are when deals are announced. There’s a lot of uncertainty and an initial paralysis. People can’t make decisions,” Gell says. The other time to strike, he adds, is “shortly after the close,” when the attention is focused on executing the 100-day plan. After 12 to 18 months, however, it’s usually too late to capitalize.  (The Sideline Offensive, M&A Magazine, page 40)

The larger vendors in our marketplace tend to have a fairly well established mechanism for monitoring consolidation among the niche providers.  When instability arises, prepared players may trump rising uncertainty with stability, targeted messaging and superior service.  Needless to say that both HR providers and buyers need to pay close attention to these issues.  With thousands of vendors in our glorious HR marketplace, consolidation via M&A may accelerate out of necessity versus design.

Let’s keep the conversation going. 

After a few days of respite in Las Vegas, I unpacked my bag to the overwhelming stench of smoke.  It seemed a bit worse this time around, although perhaps the dry and dusty desert air simply doubled the impact on my typically healthy nonsmoker lungs.  Now I have a seemingly endless “Vegas cough” that I can’t seem to shake….

The issue of smoking in casinos is nothing new, but as the Chicago Sun-Time reports in a recent article, players and dealers are split on a proposed Atlantic City smoking ban.  The State of New Jersey actually banned smoking in all public venues two years ago.  The only exception to the ban?  Casinos.  But the debate raises a questions of who has more rights, the casino workers/nonsmokers or the smoking patrons.  Despite existing regulations which limit smoking to no more than 25 percent of the casino floor, dealers such as Kam Wong are still paying the price.  Wong, a nonsmoker, was recently awarded damages for contracting lung cancer on the job.

In June of last year, the National Council of Legislators from Gaming States (NCLGS) held it’s Committee on Casinos in Las Vegas.  Ironically, no legislative representatives from Nevada were present.  Testimony from NCLGS minutes addressed concerns ranging from decreased revenues (if smoking were banned) to worker health, concluding that:

“…studies show that secondhand smoke affects casino workers and leads to fatal health problems.  [Two] recent reports from the World Health Organization and the US Surgeon General stated the only way to effectively protect against secondhand smoke is to ban smoking in public places.  [The] reports also said smoke-free policies and regulation will not have a negative impact on the industry.”

Although the good people who make Febreze do their part with the smell, I personally would love to see the casinos embrace the smoking ban while allowing smokers to seek refuge outdoors or in designated areas.  Casino employees have it hard enough without feeling like they are betting their life at “the office”.

Let’s keep the conversation going.

As predicted, it was an extremely telling few days at the annual HRO World conference.  My personal experience was that the talk of the conference was the lack of facilitated dialogue surrounding:

• Recent market events:  I personally find it irresponsible to not formally address the unfortunate number of ceased, modified and un-awarded transactions over the past few months.  The brainpower of the collective community missed a tremendous opportunity to apply calm and logical theories as to the underlying cause(s) and confounding variables that impact today’s buyer and provider community.  Without these discussions, individuals are apt to absorb misinformation, draw improper conclusions and suffer from fearful paralysis relative to current or future transactions. 
• Language:  Purists of old applied quite stringent criteria to what would “officially” qualify a deal to be called HRO.  The language of our industry has commoditized the term to the point of irrelevance, as one could successfully argue that any service provisioning to the HR buyer, regardless of size, scope and relative importance, is outsourcing.  Thus, we have nearly 2,000 vendors who could (and often do) call themselves HRO providers.  This begs the question of which type of buyer HRO World is intended to help.
• Market evolution:  It is no exaggeration when I say that more than 75 attendees asked me where this market is headed.  This was not idle chatter but instead genuine interest and concern about who is driving the bus and where we’ll all get dropped off.  Will mega deals cease to exist?  Is mid-market quietly rolling up share without the ire of public display?  Should I forget holistic outsourcing and simply contract out by single processes such as TBO, RPO, talent management, payroll, benefits, HRMS, etc.?  Do I even need an advisory firm to contract out each of these processes?  All excellent items to ponder.
• Conference evolution:  There is tremendous value in bringing this tightly knit community together on an annual basis.  However, many (including myself) never stepped foot into a single session.  Most come to this show to network, brief or be briefed, create and extend relationships, catch up with old friends and listen.  Similar to past years, I heard many vendors claim this is the last time they will sponsor a booth.  I believe them.  The lack of large buyers (as Naomi Bloom soberly pointed out in her request for a show of hands) amplifies this issue.  I would like to see this show morph into more of a forum.  The key difference in my mind is overt acceptance that the business that actually gets done at HRO World is accomplished over meals, in coffee shops, at bars, in concourse rooms and by walking the halls. 

Just to be very clear, I am a huge fan of this market and the people who populate this industry.  They are generally smart, driven and innovative individuals who truly hope to make a difference in the challenging and ever-changing world of HR.  However, we all know that survival requires evolution and I, for one, am calling for change.

Let’s keep the conversation going.

In Friday’s post, As the HRO World Turns, Mark called for buyers to independently tell their stories about experiences with outsourcing providers.  I concur with his plea, as there is a need for this type of dialogue in the marketplace (and the workplace) based on two important factors – (1) the reconceptualization of commoditization and (2) the value of collaborative networking.  

Seth Godin’s book, Meatball Sundae: Is Your Marketing Out of Sync, describes new thinking around commoditization quite well.    Godin explains how emerging trends have changed the rules for marketing.  These trends demand personalizing the message and creating an authentic story.  What is required is for buyers to provide the actual narrative of what they lived through and what was valuable and not valuable for them.  This means that the agreed-to communication from buyers and outsourcing providers focuses on conveying the realities of the service engagement.  So, the idea that an outsourcing provider can “bundle” their organization in a presentation given by buyers is thinking that is outmoded in today’s marketplace.  Instead, when the transaction is described to the HRO World attendees by buyers, that story in itself becomes a commodity.  So, this is one way that the shift in rethinking traditional commoditization play out; that is, from the idea that the service itself is a commodity to the idea that authentic interaction is the commodity.  A second shift in commoditization is that buyers, in fact, buy the provider organization itself as a commodity.  In other words, providers are framed symbolically based on meaning created from the stories that are put forth that people can relate to and affirm.  These stories have to be conveyed considering the soft side of the buyer.  Hence, providers have a perfect opportunity to allow buyers to describe their experiences and explain what the provider is about, a marketing strategy that matches commoditization forces.

The second factor listed above, the value in collaborative networks, seems to be relevant to Mark’s humble request as well.  A recent study published by Wipro and Knowledge@Wharton, Innovation Sourcing:  All Roads Lead to Collaborative Partnership Networks, highlights the importance of effective strategies for innovation and places collaborative networks at the centerpiece of this arrangement (with the caveat that a certain culture and mindset has to be in play for collaborative networks to add value).   The study states that innovation is viewed, “. . . not just as Company A and Company B doing something together, but as innovation being sourced from a network of partnerships.”  Given certain conditions for sourcing innovation, collaborative networks are endorsed in this study.  

The wealth of partnerships present at the HRO World represent the brain trust for the future of HR and outsourcing solutions.  By opening up dialogue in a way that is less protective of the relationship between buyer and provider and more prone to interaction with the audience, all parties can benefit. 

Let’s keep the conversation going.

The drama.  The intrigue.  The palpable angst.  Yes folks, it’s time for the annual pilgrimage to Manhattan for the sixth installation of HRO World.  Hosted once again at the boxy, wood-paneled New York Hilton, providers, advisors, consultants, analysts and industry pundits (…and a few buyers) will gather round the campfire to fan the flames of HR outsourcing success. 

No ghost stories allowed, I’m afraid, although undoubtedly questions will arise relating to the recently publicized HRO contract hits with buyers/providers such as Starbucks/Convergys, Wachovia/Hewitt and NiSource/IBM.  Add to this list yesterday’s announcement that UBS has scrapped their global training and HRO contract.  Unfortunately, the lack of marketing surrounding positive wins and successes may burn the edges of the usually delicious “HRO market momentum” s’mores.

So what should a good outsourcing camper do?  The agenda does have a few notable sessions such as Naomi Bloom’s “Trust, But Verify”, but for once I would like to see buyers take the stage without their outsourcing provider and speak independently about their experiences.  That type of untainted advice and guidance would be invaluable to an industry that largely continues to suffer from growing pains.  

In the midst of it’s second four-year term, HRO World will need a strong showing to ensure that sponsors continue to vote with their wallets.  Several individuals have asked me whether I believe this will be the last HRO World, and many regulars consistently scratch their heads wondering why they bother to attend at all.  It’s actually quite simple - there is no other event in the industry that brings this entire community together.  The majority of business is conducted around the fringes, with offline meetings, meals, relationships and resumes dominating a participant’s time and attention.  Although this show will likely begin to morph out of necessity, I suspect we’ll find ourselves walking the expo floor for several years to come.

Let’s keep the conversation going. 

More companies are starting to look at the back of their India-based outsourcing agreements to assess what impact March 31, 2009 will have on their business.  This is the date that the Software Technology Parks of India (STPI) tax break is scheduled to expire, a 10-20% development incentive program designed to foster net-new growth across the country.  

For those who are interested, I’d call your attention to two fantastic blogs that are examining the impact of this pending expiration in further detail:

1. Phil Fersht’s Horses for Sources questions how such a sudden increase in costs would impact and Indian outsourcing industry, or if, in fact, the Indian government will heed the cry of industry and extend the STPI.
2. Tony of 360 Vendor Management emphasizes the need for buyers to start planning for the real fiscal impact of such changes within their vendor agreements.  

Both touch upon an issue that Inflexion is increasingly concerned about, vendor sustainability, and how buyers assess current and future risks associated with their most deep and meaningful relationships.  Follow the advice of Phil and Tony and stay educated, start preparing for scenarios which represent likely outcomes, and communicate with your Indian partners on a regular basis.  One year is a very short period in today’s environment and the STPI expiration may arrive sooner than you think.

Let’s keep the conversation going. 

As a serial entrepreneur, I am constantly seeking new and innovative approaches to a wide variety of market challenges.  Imagine my excitement when a good friend recommended a click over to Springwise.  The hip web 2.0 site engages 8,000 “spotters” who scan the world for new business ideas.  The result is a wide ranging and constantly updated cache of innovation just waiting to be tapped for broader applicability.  

Recent finds include:

• Magazine publisher for the masses: Talks about Issuu, a site that converts your docs into an interactive, magazine-style online publication.  
• Book lending made convenient: Applies the trend of transumerism to BCS, or “book clutter syndrome”, an ailment I have been diagnosed with again and again.
• Cellphone workshops by teenage teachers: Describes Netherlands-based non-profit group Bellendoejezo, which roughly translates into “this is how you make a call”. 

Although some of these may be too farfetched or not applicable to your immediate needs, just wait a day or two.  You never know what might kick off a spark of fresh thinking.

Let’s keep the conversation going. 

Those who know me well also know my love for a good laugh.  Many an April Fools’ Day past involved elaborate schemes to cajole my unsuspecting colleagues into a web of increasingly humiliating situations for a brief moment of “humor”.  I put humor in parenthesis because, as I found out on several occasions, not everyone finds these situations to be very funny.

So how does on approach this 24 hour window of alleged hilarity?  Let’s get some expert opinions:

• Popular Mechanics offers five do-it-yourself pranks you can pull on your office mates.  I’m personally torn between the refrigerator handle switch and the office filled with packing peanuts.
• Zug.com offered a contest for the funniest office prank.  Fairly elaborate but no one got hurt in the end.
• CNN and CareerBuilder.com posted an article on the Top 10 April Fools’ Work Pranks based upon responses from their annual survey, which found that roughly one-third of us are on the giving or receiving end of a workplace prank each year.
• This morning’s HR Executive article provides a light-hearted air of caution for today’s workplace jokers, including a funny (but risky) tale of pulling one over on the HR department itself.

If you do fall victim, follow the sage advice of SelfGrowth.com’s Anger Management Tips - “Even saying a phrase like ‘Serenity Now,’ popularized by Frank Costanza on the classic sitcom Seinfeld, can actually have a positive impact on how you feel.”

Let’s keep the conversation going.