Vol. 49, No. 9
Working for outsourcing vendors may lead HR professionals to a more satisfying career.
Just two years ago, Richard Genovese thought he knew exactly what he wanted to do with his life. “I really wanted to take a permanent HR position with a large company in a staffing function,” says Genovese, who was then doing HR consulting work with pharmaceutical companies. “The reality is, that’s less and less possible. At this point, the nature of the beast is that the industry is moving toward the service provider model and away from the kind of permanent positions in corporate HR.”
Today, Genovese isn’t mourning the career that didn’t come to pass, but instead is embracing a new one: He’s now the client services manager of strategic sourcing at Kenexa, a human resource outsourcing vendor headquartered in Wayne, Pa., that provides staffing and technical services to companies of the type he once hoped to work for.
Instead of bringing his staffing expertise to a single Fortune 100 company, Genovese services multiple clients. “My career focus has totally changed,” he says.
Welcome to the brave new world of HR outsourcing. In a recent survey of large companies, 76 percent of respondents said they outsource one or more major HR functions. Of those who have made the switch, not a single one plans to bring those outsourced HR activities back in-house, according to the Conference Board, a New York-based business research and consulting firm.
While the move to outsource is rapidly changing the way companies do business, it is also remaking the world of employment for HR professionals. “There are ample job opportunities right now,” says Diane Shelgren, chief operating officer at Accenture HR Services, North America, in Chicago. “And as the HR outsourcing business grows, we’re seeing more dynamic career growth for HR professionals as well.”
Just how many HR jobs will be affected—or created—by the outsourcing trend has yet to be determined. The anecdotal evidence is in, however: A growing number of HR professionals are leaving their traditional human resource jobs—by choice or by force—and joining the ranks of outsourcing vendors, says Elliot Clark, Kenexa’s chief operating officer. “There are a number of outsourced engagements that have been contracted in the past five years, and they have to be staffed by someone. People have begun to make that transition.”
As the trend takes shape, the debate over what it ultimately holds for HR professionals will no doubt heat up. But lost in the back-and-forth about the future of HR employment are some more fundamental questions: What are these jobs actually like? How do they differ in responsibility, necessary skills and compensation from their traditional corporate counterparts? What prospects do they hold for career advancement? And what challenges will be faced by the HR professionals who take these positions?
For HR professionals who view outsourcing with trepidation, the experiences of their peers who have already made the transition may serve as a useful guide.
No Typical Day
When asked to describe a typical day in his new life, Genovese is quick to respond: There isn’t one, and that’s just the way he likes it. “Because my particular role in Kenexa stretches me across different business groups, I may spend part of the day talking about manufacturing issues with one client, quality assurance with another, and something related to research and development with a third.”
That variation makes his job for the outsourcing vendor markedly different from a traditional HR position, notes Genovese. “In-house, your day is a little more fixed. You can end up doing the same thing day after day, and for the most part you’re only dealing with that company’s market space.”
He also discovered a steeper learning curve, coupled with a shorter period of time in which to climb it. “Within the first couple of weeks, I was already on board with multiple client engagements,” says Genovese. Being in-house at “one of the large organizations, you’re not as involved so early on.”
For HR professionals who are about to make the shift from traditional HR to outsourcing, Genovese has some advice: Be prepared for a fast-paced environment and a whole lot of multitasking. “You really have to keep a good handle on your project outlines. If you understand budgets and time lines and pay attention to your deliverables, you’ll be fine. But you have to stay in tune on a daily basis. This is not the kind of world where you can wait until the day before the deliverable [is due],” he says.
But while Genovese sings with excitement when describing his work life, Clark cautions that working for an outsourcing vendor may not be for everyone. Because vendors often service clients across the country—or even the world—employees may be required to travel extensively. And with multiple clients, at times representing various industries, HR professionals like Genovese no longer have the opportunity to know everything there is to know about a single employer.
“It’s a different relationship between client and vendor,” adds Clark. “With the outsourcing vendor, you may not have the same force of voice that you had as part of the internal HR group. You can’t just go off and start an initiative.”
Wanted: HR Generalists
While life on the front lines of HR outsourcing may necessitate the ability to juggle responsibilities effectively, it also requires a different set of skills, say some HR professionals.
“In the new world of HR, it is necessary to be a generalist, or at least to have a good understanding of other areas within HR beyond what you focus on on a daily basis,” says Kevie Mikus, SPHR, senior human resources consultant with The HR Group LLC in Brentwood, Tenn. (For more information on the skills needed to be an effective HR generalist, see “Raising the Bar” in the March 2003 issue of HR Magazine.)
Mikus began her HR career straight out of college more than a decade ago, taking a position with the HR department at Vanderbilt University in Nashville, Tenn. But it didn’t take her long to realize that the recruiting role wasn’t for her. “There were certain areas where you were expected to specialize,” Mikus recalls. “I wanted a role that would allow me to be more of a generalist.” When an HR consulting position with The HR Group opened up, she leapt at the opportunity. Today, Mikus oversees all of the vendor’s HR consulting activity and prides herself on staying on top of the complex—and ever-evolving—world of workplace regulations.
“I may be in front of a client who wants to know about health savings accounts,” says Mikus. “I don’t need to be an expert, but it’s critical for us as HR consultants and outsourcing vendors to establish credibility. We all have to speak intelligently on things that we may not practice in everyday life.”
To that end, The HR Group regularly brings together its consultants for cross training via informal seminars on topics from the Family and Medical Leave Act to the latest court cases that could affect employee benefits. Mikus insists that her experience, far from being unique, is rapidly becoming the norm as outsourcing vendors, with their emphasis on providing multiple services to multiple clients, reshape the HR landscape. The relatively fast progression of Mikus’ career—she was promoted to senior consultant after five years with The HR Group and again in July to vice president of client services—is far from unusual in the outsourcing world. The career paths of HR professionals are being quickly—and radically—reconfigured by the outsourcing experience, says Clark. Why? Greater opportunities for advancement.
“If you work in an insourced environment, there are one or two leadership positions you can get. An outsourcing vendor may have 10 different directors for its various clients. The glass ceiling in the traditional HR world doesn’t apply here,” concludes Clark.
More Responsibility, Added Value
Staying abreast of topics ranging from labor law to workers’ compensation can be challenging, concede HR professionals such as Mikus, but the payoff for their hard work is often significant.
Jackie Breslin, SPHR, has no trouble summing up the differences between the last job she held—overseeing the HR department of a hospital with 300 employees—and her current position as HR manager at TriNet, an HR outsourcing vendor based in San Leandro, Calif., that provides HR payroll and benefits assistance to companies across the United States.
“Here, I only do human resources,” says Breslin, who moved to TriNet four years ago. “When I was in-house, I was always getting stuck with things that weren’t HR-related. You end up being the receptionist or taking minutes at a meeting. Here, I’m an HR person all day long.” (For more information, see “Looking Ahead—and Moving Back,” above.)
But while her job description may have narrowed in some senses—she no longer manages employees, for example—it has expanded and deepened in others, says Breslin. “When you are an HR manager with an outsourcing company, you have varied responsibilities so that you don’t specialize. You have to tap into every piece of the HR spectrum: compensation, recruiting, sexual harassment,” to name a few, she says.
It’s not just that her job is structured differently—through TriNet, Breslin functions as the HR manager for 40 different companies in California’s Bay Area—but also that the outsourcing vendor values the service she provides differently, she says. The client often places high value on outsourced services as well. “It may just be psychological, but there’s a sense that by outsourcing, the company has brought in a team of experts. Of course, they should feel the same way about the function when it’s done in-house, but they don’t,” she says.
Experts say there may be more than psychology to the notion that HR professionals who work for outsourcing vendors are valued above their colleagues in traditional HR departments: They also earn more. “HR professionals who work for outsourcing vendors typically earn higher compensation than their corporate counterparts,” says Chris Fusco, SPHR, compensation consultant at Salary.com in Needham, Mass.
He notes that while current compensation surveys are of corporate HR positions—such studies are typically about two to three years behind the current state of the industry—it isn’t too soon to conclude that the two kinds of positions are compensated differently. “HR professionals who work for outsourcing vendors tend to earn a premium above [15 percent to 20 percent more] what their counterparts in traditional HR earn,” says Fusco. “They’re billing their time to clients, and that time translates into revenue for the firms that employ them.”
Mike Henninger, a client services manager at Denver-based Recruiting Solutions International (RSI), a division of Ceridian, confirms Fusco’s observations about compensation. The recruiting specialist, who moved to his current post from an in-house position filling management and technology vacancies at a call center, notes that his job at RSI pays more (he estimates one-third more), but that more is expected of him. “You’re getting paid more, but expectations are higher for the person doing the outsourced job,” says Henninger.
The difference has to do with volume, Henninger explains. An in-house recruiter is paid to fill positions for a single company, whereas the outsourced HR professional may be recruiting for dozens of companies. Henninger acknowledges that he appreciates the pay spike, but he sounds almost melancholy when describing the job he left behind. “I became part of the family,” he says. “When you’re hiring people in-house, you’re going to be working right next to them. On the outsourced side, we’re here to fill positions.”
While Henninger has moved on emotionally—he says he wouldn’t consider going back to his in-house job—some HR professionals find it difficult, if not impossible, to recover from their loss of connection with a single group of employees. “In this role, while you have a lot of exposure to different employee groups, you’re not making long-term connections with the rank and file within one particular company,” says The HR Group’s Mikus.
She tells the story of a consultant who joined The HR Group in search of a change and a challenge, but missed the intimacy of the in-house experience so much that she left after little more than a year. “Her motivating factor was that she loved the day-to-day interaction with the employee base. She really missed that direct interaction and exchange. She was grateful for the experience here, but there was something missing for her.” Today, Mikus’ former co-worker is back in-house, in an employee relations role for a large company. “She’s happy as a clam,” says Mikus.
Making the Change
For HR professionals who have switched to a position at an outsourcing vendor after having held a traditional HR job, it’s often the wealth of experience gleaned from the latter that enables them to succeed in their new capacity. For example, Sue Anne McGorty, sales support specialist at Genesys since 2000, says she couldn’t begin to do her job for the Methuen, Mass., outsourcing vendor were it not for the nine years she spent working as an HR manager for a mid-size manufacturer.
“As an HR generalist, I did all of the different functions from recruiting to benefits and compensation,” she says. “But my background in payroll has helped the most. I talk the same talk as the clients that are buying our automated payroll applications.”
Once McGorty has done the due diligence on the needs of her clients, who have anywhere from 50 to 150,000 employees, she often travels to do an on-site product demonstration. “If I didn’t have that earlier HR experience, it would be much harder for me to assist my clients. I understand the process, the workflows. That helps me to really be able to define what the customer is looking for and tailor the system to their needs.”
For now, HR demographics mean that most of the professionals making the move to outsourcing vendors are following McGorty’s route, changing over from a traditional HR position to one with a vendor. But as HR outsourcing becomes even more established and a new generation of employees enters the HR job market, many professionals will no doubt skirt the traditional jobs entirely, experts say.
Accenture’s Shelgren maintains that, regardless of the path that professionals take to get there, employees who accept the outsourcing challenge can expect more dynamic career growth than in the past. “These employees are becoming part of organizations where HR is a core competency, not just a support function,” she says. “Because of the nature of the relationship with their clients, these people will be able to pick up new skill sets that go beyond traditional HR support jobs.”
Clark predicts that even as the outsourcing trend continues to pick up steam, HR professionals will move back and forth between the two kinds of positions, an exchange that will likely have an impact on both job descriptions. “The world isn’t going to go completely to the way of outsourcing,” he says. “We’ve had a number of people leave Kenexa and go back inside.”
And whether they cut their teeth on outsourcing or are returning to the traditional HR world, Clark believes that professionals who have worked for vendors bring with them a unique perspective on outsourcing. “They take with them a different kind of business discipline based on the idea that if we don’t perform better than the insourced, we can’t survive. They’ve got deep tactical experience.”
Jennifer C. Berkshire is a Boston-based freelance journalist specializing in business and labor issues, and an adjunct professor of Labor and the Media at the University of Massachusetts at Amherst.