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Linda Merritt AT&T HR Director lmerritt@att.com

Should Outsourcing be a Part of Your HR Strategy?. HR Planning Society – June 7, 2006. Linda Merritt AT&T HR Director lmerritt@att.com. The world’s networking company SM. AT&T’s strategic agreement with Aon.

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Linda Merritt AT&T HR Director lmerritt@att.com

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  1. Should Outsourcing be a Part of Your HR Strategy? HR Planning Society – June 7, 2006 Linda Merritt AT&T HR Director lmerritt@att.com The world’s networking company SM

  2. AT&T’s strategic agreement with Aon • 7-year outsourcing agreement with Aon Human Capital Services (AHCS) starting in 2002 • End-to-end HR administrative, transaction and payroll services • 400 employees and 100 contractors transferred to AHCS to support, implement and administer AT&T’s policies • 200 employees remained in AT&T, with work direction from AHCS • Retained: 200 HR professionals to set AT&T HR policy and strategy, support HR initiatives and provide HR consulting for business unit leaders © 2006 AT&T Knowledge Ventures.  All rights reserved.

  3. Benefit Plan Management Pension Plans Capital Accumulation Plans Health & Insurance Plans Relocation vendor management Benefit Communications Compensation Plan Management Equity program administration Employee Relations Delivery & Admin Compensation analysis & forecasting Grievance & arbitration research Legislation and Policy review IT Support for HR & Payroll Payroll Operations HR Reporting & Other Support Health Affairs & Disability Plan Management Occupational Health Services Family and Medical Leave Act (FMLA) Sickness/Accident Disability/ Workers’ Compensation Long-Term Disability Benefits Work & Family Employee Assistance Program Employee Services and Employment General employment Employee care call center Transaction Service Center (data) Occupational Career Placement Selection & Assessment Equal Opportunity/Affirmative Action delivery & administration Outplacement Services AT&T in-scope services © 2006 AT&T Knowledge Ventures.  All rights reserved.

  4. Outsourcing – Building the Value Chain or Breaking it? • Outsourcing Dynamics • When to make the move • Which shore • Critical success factors • Impact on retained HR © 2006 AT&T Knowledge Ventures.  All rights reserved.

  5. Question: Why do only 6% of HR managers consider outsourcing non-core workforce management processes to a third party as very important? Aberdeen Group Research Brief, December 2, 2005 www.aberdeen.com © 2006 AT&T Knowledge Ventures.  All rights reserved.

  6. HR Outsourcing Pitfalls ... Service Quality Achieving Savings Partnership Controlling Costs Keeping Current Losing Control Security and Compliance Changing Business Needs © 2006 AT&T Knowledge Ventures.  All rights reserved.

  7. What is Your HR Value Proposition – Business Outcomes Business Operations New Revenues Tomorrow More Revenues Today Productivity Asset Management Customer-driven value Business driven- value © 2006 AT&T Knowledge Ventures.  All rights reserved.

  8. Moving Up the Value Chain Transform Enhance BusinessValue Chain Transact RelationshipComplexity © 2006 AT&T Knowledge Ventures.  All rights reserved.

  9. When to make the move? Focus on strategic work compared to administrative work Outgrown your current systems Reducing cost of service delivery Access to subject matter expertise Reducecompliance and regulatory risk © 2006 AT&T Knowledge Ventures.  All rights reserved.

  10. Value + Cost + Risk Outsourcing Business Dynamics: • Work • SME • Partnership • Price • Total Cost • Life-Cycle Cost • Security • Compliance • Reputation © 2006 AT&T Knowledge Ventures.  All rights reserved.

  11. Which Shore and More Cost savings • Shoring • Systems • Staffing • Vanilla or mixed berry non-fat mocha-latte © 2006 AT&T Knowledge Ventures.  All rights reserved.

  12. A Recipe for Disaster • Make the decision on cost, “influenced” by finance • Pick the vendor with the best sales pitch • Agree to move to the vendor’s systems and do not send any of your people • Transition immediately to offshore and trust the vendor’s testing and implementation • Change management is a memo and a meeting • Assume just about anybody left can also do contract administration and governance © 2006 AT&T Knowledge Ventures.  All rights reserved.

  13. Critical Success Factors Build value added partnerships and ensure delivery of the full benefits of outsourcing Contract: Terms are tools Governance: Have a team with Business, finance and HR skills Issues Management: There are issues now, there will be issues in outsourcing Change Management: Greatest barrier is organization readiness © 2006 AT&T Knowledge Ventures.  All rights reserved.

  14. HR Outsourcing Satisfaction is highest for processes outsourced the most Basic savings and operational capabilities are proven Total value proposition outcomes vary Where and when does it fit your strategy © 2006 AT&T Knowledge Ventures.  All rights reserved.

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