The "New HR"

Harvard Business Review's July-August 2008 issue reels in on an article about the dynamic shift in the Human Resources industry. HR is no longer confined to administrative work, but really, companies now have to consider issues of improving talent management, more employer responsibilities, higher risks, increasing litigation -- these number of challenges have contributed to this change in HR.  

These factors of change are indicated in HBR's article, “Why Did We Ever Go into HR?”  Written by two recent Harvard Business MBAs who have deviated from the norm career path to go into HR, they explain why the HR industry is changing into something much more than what many businesses should believe and the importance of embracing these changes.

“Forward looking companies treat HR as an engine for both savings and revenue, deliberately blurring the lines between business activity and people development.”

Countless factors to ensure a strong HR team are no longer as simple as it was before. The versatile structure of HR is being redefined as the direct connection to a company’s productivity.

The reason for this change in HR is that “. . . the HR function is responding with a shift from managing the monetary levers of human resources – compensation, benefits, and other expense – to increasing the asset value of human capital, as measured by intangibles such as employee engagement.”

Is your business responding to these changes as effectively and productively as it should? To read the rest of the HBR article click here. 

Industry Terms

• HRO = Human Resource Outsourcing
• HR BPO = Human Resource Business Process Outsourcing
• PEO = Professional Employer Organization

Industry Significant Facts

• The average business owner spends between 7% and 25% of his or her time handling employee-related paperwork. When you add in the time spent on all the other HR tasks, this figure rises from 35% to 45%. (Source: U.S. Small Business Administration)
• Generally, in comprehensive HR outsourcing deals, at least a 10% to 15% cost reduction should be expected; 20 percent to 30 percent is a typical average – obtainable based on the calibration of the following seven variables: Degree of HR consolidation required, Leverage of standardized platform, Amount of global delivery applicable, Transfer of HR personnel to the vendor, Scope of HR services included, Length of the HR outsourcing contract and Degree of complexity required for HR outsourcing key performance indicators. (Source: Robert H. Brown, "Gartner Research – Seven Critical Variables Reduce Costs in HR Outsourcing Deals, June 1, 2006)

Industry Trends

• The HR BPO market is forecast to grow from $20.8 billion in 2004 to $31.3 billion in 2009, reflecting an 8.3% compound annual growth rate (CAGR). The estimated revenue is $28.69 billion in 2008. Based on the geographic region, North America is the biggest HR BPO Market in the world which contains 63.9% of the worldwide estimated revenue - $18.33 billion. (Source: Robert H. Brown, "Gartner Research - Sourcing options Grow as the HR BPO Market Matures", July 26, 2006)
• 85% of HRO transactions include IT. Technology transformation is a primary driver of HRO. (Source: Everest Research Institute, "Human Resources Outsourcing Annual Report – Preview Deck", November 2007)
• The HRO industry is at a critical point in its short history. Buyers are increasingly looking at HRO as an opportunity to streamline processes, reduce direct and indirect costs, get access to the latest technology and tools, consistently achieve better quality, and align HR with the overall business in the fastest time possible. (Source: Everest Research Institute, "HRO Benchmarks: Scope, Quality, and Pricing", 2007)

Industry News

• In June 2006, Unilever signed a seven-year human resources outsourcing contract and is executed in 100 countries. This arrangement is considered the largest HR outsourcing contract up to date.(Source: HRO TODAY, "HRO Boosts Unilever’s Brand Wagon", July/August 2006)

Why do large corporations need HRO services?

Advantages for Using HRO services:

• Reduce Liabilities
• Reduce Costs
• Reduce Risks
• Save Time and Increase Efficiency
• Better and Convenient Technology

Do only larger companies need HRO services?

No. MMC provides comprehensive Human Resource Consulting and Outsourcing Services that benefit both the employer and the employee. The value of human resource consulting and outsourcing services for medium and small companies are more significant and beneficial than for larger companies.

MMC’s Human Resource Consulting and Outsourcing Services can help you grow

MMC is consistently evolving to provide the most innovative Human Resource Consulting and Outsourcing solutions. Our service solutions are catered to answer to the most demanding challenges business organizations are beginning to face: increasing litigation and complex HR issues that deter business owners from what they do best: generating revenue. 

Advantages for Medium and Small Companies:

• Increase your company’s values and core competency
• Avoid redundant administrative work
• Employers can focus on their core business
• Being able to offer employees the same benefits plan as large corporations

Call (888) 866-2476 for more information or email us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .