HR outsourcing lessons from Home Depot, Devon Canada

Finding right benefits administration provider from outside can benefit employees

If finding enough skilled personnel to handle transactional HR activities is increasingly challenging, is outsourcing the way to go? Many organizations are answering that question with a “yes” and, in doing so, are experiencing additional advantages.

When it comes to benefits administration, the right provider can help reinforce an organization’s strategy for becoming an employer of choice.

The trend to outsource does not mean employers are jumping on the bandwagon without a rigorous selection process and evaluation of potential outsourcing providers. Two organizations that recently outsourced flexible benefits administration for their Canadian operations, Devon Canada and The Home Depot, talk about their outsourcing experiences.

Lessons from Devon Canada

Devon Canada, a subsidiary of an independent oil and gas producer with Canadian operations based in Calgary, has 1,500 employees. It recently designed a new flexible benefits plan and looked for a provider to handle administration.

“Our HR team is close to our employees,” said Ann Blackwood, leader of total compensation with Devon. “We like to provide a ‘personal touch’ to deal with specific problems or issues. However, we knew that we weren’t the best to handle day-to-day queries, simply due to volume. We looked for a provider that could supply the same high level of service we would offer ourselves.”

The company needed an experienced provider with a platform that was ready to go, said Gail Cramer, supervisor of benefits with Devon. “However, what was really important to us was a partner that could provide immediate phone support with no more than a 30-second wait for our employees. We expected a large volume of calls with the rollout of our new plan.”

Devon recently went through its first online benefits enrolment. Cramer said there was some trepidation as to how that exercise would go.

“Our employees range from the savvy to the unsophisticated when it comes to familiarity with both benefits and online tools,” she said.

However, this concern proved unfounded as 92 per cent of eligible employees made their benefit choices online, far exceeding the company’s expectations.

“Employees wouldn’t have been penalized if they hadn’t enrolled online — they still would have received a good benefits package,” she said. “But the fact that so many chose to do so is a testament to the user-friendliness of the tool and the effectiveness of our communication efforts.”

Employees became ambassadors

Employees were through the online enrolment process in 20 minutes, said Blackwood. In fact, employees themselves became “ambassadors” for the new process.

“After a few had enrolled, they said to others: ‘This tool is so slick, you’ve got to try this,’” said Blackwood.

“Employee endorsement went a long way to increasing the number of online enrolments.”

But Devon didn’t limit communication to word-of-mouth. The company held 29 employee sessions to discuss the plan, timed to coincide with the arrival of enrolment packages. Screen shots were included, along with scenarios of what choices would best suit the needs of employees in various situations. Combined with the call-centre service available through their provider, employees understood what their new plan entailed, how to determine their best choices and what was expected of them.

“Our communication made our plan and enrolment real, not scary,” said Cramer. “Our employees gained a better appreciation of the breadth of our benefits plan and how we’d given them the extensive choice they’d requested.”

There was a lot of preparatory work behind the scenes between Devon and its new outsourcing partner to get ready for the online enrolment. There was testing and tweaking of the new tool, as well as weekly phone meetings.

“That frequent communication hasn’t changed now that we’ve moved from implementation to the ongoing service team,” Cramer said.

Blackwood offers a final word about choosing an HR outsourcing provider.

“If they’re arrogant with a ‘we know best’ attitude, don’t choose them,” she said. “They can’t have the vested interests of your company at heart. Look for somebody who is interested in your organization, your culture and your employees and is willing to accommodate your needs. You’re going to be working closely with these people. Make sure you like them.”

Lessons from The Home Depot Canada

For The Home Depot Canada, a home improvement retailer based in Toronto, outsourcing was a means to enable its HR professionals — there’s one in every store — to focus on attraction, retention and engagement of employees. It recently introduced outsourced benefits administration for all employees in Canada when it launched a benefits plan for part-time employees.

“HR benefits administration is not our core business,” said Shane Ward, director of compensation, benefits and HR Systems for The Home Depot Canada. “It made better business sense to find a partner.”

“We looked for a provider that had the capacity to deal with a growing company. We considered various large providers that understood the retail industry and could deal with a large volume of calls from our 30,000 Canadian employees,” said Ward.

While saving money was not a primary part of the decision to outsource, Ward acknowledged there are opportunities to control — and even cut — costs.

“While it’s too early to tell if we’ll have success in this area, we know that our provider is faster off the mark than we were at getting people into and out of the plan,” said Ward. “Right away, there are cost savings to doing that efficiently.”

Encouraging self-service

Ward said outsourcing requires a change in mindset on the part of HR staff to achieve maximum efficiencies.

“While our associates have provided positive feedback and our HR people are delighted that they are no longer bogged down with administration, we have a way to go to establish the self-service environment we’re trying to create,” said Ward. “HR has to encourage our employees to use the online tools to their best advantage. We want our tools to be a differentiator — something that will help with attraction and retention.”

Like Blackwood and Cramer, Ward is also a proponent of choosing an outsourcing partner that is interested in getting to know the company and its way of doing things.

“Implementation took longer than expected — we’re a big corporation,” said Ward. “But our provider was very patient, while doing what they could to be flexible and expedite the process, particularly in addressing the concerns of our IT people.”

Jean-François (JF) Potvin is Hewitt Associates’ Canadian practice leader, and can be reached at [email protected]. Aamir Mian is Hewitt’s benefits implementation leader in Canada, and can be reached at [email protected].

Outsourcing observations

Trends in outsourcing

Devon Canada and The Home Depot’s recent experiences with HR outsourcing suggest some new trends in this area:

HR outsourcing is not just for large organizations. Devon Canada, with 1,500 employees, had no trouble finding prospective providers. Look for a bigger uptake in outsourcing from considerably smaller organizations.

Timing is everything. Updates to an existing plan or the introduction of a new one provide a perfect opportunity to implement outsourced delivery. Communication efforts around plan changes can be coupled with explanations on how to use the new tools.

Ongoing advances in technology. User-friendly tools provide clear advantages to both employer and employee. These include:

employee self-service (with call centre support), freeing HR staff to focus on core business;

more options to provide a benefits program that’s customized to meet diverse employee needs — an advantage when it comes to attracting and retaining employees;

better modeling tools to enable employees to understand and appreciate their benefit plan; and

faster and easier online enrolment.

Increased provider competition. With increased demand comes a larger pool of providers to choose from. Technological capability combined with HR expertise are prerequisites, but also consider flexibility, service and experience when choosing an outsourcing partner.

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