During a recent one-day Hackett group conference, executives from leading companies such as Accenture, KPMG, FedEx and others discussed shared services, outsourcing and offshoring. Executives offered an exceptional array of insights based on their experiences with alternative sourcing options. According to executives at the conference, the formula for reaping real benefits by improving business process sourcing is much more complex than simply cutting costs by moving work to an offshore outsourcer.
One key element to success is to analyze end-to-end business processes carefully and consider a range of possible sourcing options before deciding if one or several implemented in combination will best serve the company´s needs.
Several speakers also emphasized the importance of understanding core competencies and suggested that companies should make sure they keep activities relating to their core business value in-house as they consider sourcing options.
In addition, they emphasized the importance of building a comprehensive business case and strategic implementation plan that takes into account issues far beyond cost. These are issues that include senior executive buy-in, governance and how to build a truly cooperative relationship with a business partner.
According to Hackett´s Chief Research Officer, Richard T. Roth, "Companies that reap the most benefits from making changes in business process sourcing do it by breaking down organizational silos and looking across their company to determine how best to structure an end-to-end process, whether it's procure-to-pay or IT network management, within their enterprise. They determine what the right sourcing choice is for each individual business process. The answer is often a mix, with some processes handled by the business unit, some doneonshore, some offshore, and perhaps some work being simply eliminated as unnecessary."
Key points from the conference included the following: if it´s not core in your business, outsource it and the cost savings from making business process sourcing changes can be significant; and cost is far from the only factor to consider when making business process sourcing decisions. When looking for a partner in a business, you must make sure you´ve got a good culture fit.
Managed Health Network
Managed Health Network (MHN), which is a subsidiary of Health Net Inc., announced in mid-January that it had designed an EAP calculator to measure the Return on Investment (ROI) of effective EAP programs. The calculator is based on a recent MHN study that examined the treatment outcome data on more than 10,000 employees with depression to determine the likely ROI associated with effective treatment through an EAP. The study will be published in the "Journal of Employee Assistance and Workplace Behavioral Health" (vol.19).
Depression was chosen as the target disorder because it is the most common mental health problem in the workplace, with the greatest overall impact on job performance. An average of 1 in 20 employees is depressed, and it is estimated that by the year 2020 depression will be the second most prevalent cause of disability in the world. The study demonstrated that EAP programs play a significant impact on this issue. Research shows that 2/3 of employees reported at least moderate symptoms of depression at the time of intake, and approximately half of the treated employees showed no such symptoms after treatment.
The study data was combined with research on the lost productive job time (LPT) associated with depressive disorders. The combined data was used to design the calculator based on LPT and showed significant cost savings associated with the EAP treatment of depression. The calculator helps employers make the leap from intuitive value to quantifiable value, which makes it easier for Benefits VPs and CFOs to see the real benefit of the EAP program. MHN is currently working on developing an ROI calculator for return-to-work programs.
Return-to-Work Programs
An effective return-to-work program can reduce the total payout to an employee under the temporary disability program. There are new incentives under SV 899 for permanent disability. If an employer offers regular, modified or alternative work within 60 days of an injured worker becoming "permanent and stationary," the injured worker´s permanent disability payment is reduced by 15% from the date of the offer. The reduction occurs whether or not the employee accepts or rejects the offer. If an employer fails to provide an offer of regular, modified or alternative work, the permanent disability payment will increase by 15%.
These incentives apply only to employers with 50 or more employees and who offer sustained employment. To avoid disability payment increases, employers have to be careful and track all the dates of permanent and stationary status. Permanent and stationary status represents the maximum medical improvement that the employee is likely to experience concerning the present claim or injury. This status also signals a movement from temporary to permanent disability.
Injured workers can return to work with a range of options that are pretty common to employers: regular work, modified work or alternative work. Regular work is the usual occupation or position of the employee, which offers compensation at pre-injury wages. Modified work is defined as a position or job modified to meet the employee´s medical restrictions and enables the employee to perform all of the functions of the job. Modified work offers compensation that is at least 85% of the pre-injury wages or salary. Alternative work is work the employee has the ability to perform and must be compensated at a rate of at least 85% of wages paid to the employee at the time of injury.
The positions offered must also be within a reasonable commuting distance from the employee´s residence.
Lean Thinking
Lean thinking is a hot issue in the industry right now. Lean businesses make an effort to eliminate elements of wastes that are typically invisible but have a negative impact on the productivity and quality of the products and services of a company. The reason why lean thinking has become so successful for so many companies is because it has taught them to see invisible waste. There are many stories, however, of how companies have failed attempting lean thinking. These failures are usually due to poor implementation, poor interpretation of the principles and lack of self-discipline.
Lean thinking is defined as "processing just what is needed, when it is needed, with a minimal amount of steps, space, labor, time and material resources required."
It can be difficult to ask people to apply the principles of lean thinking without it appearing as though it is going to be more work for them. Employees that have been with a company for long times are particularly reluctant to engage in lean thinking as they are already comfortable with the existing processes. Employees are much more likely to listen to the right message when lean is defined as a strategy that is going to make their jobs easier. It is a proven fact that sustained lean implementations happen when employees can see the immediate value of the program.
Lean thinking has been known to be addictive. It can cause employees to continuously improve their work processes, increase profits, shorten cycle time and provide fundamental improvements in the quality of products and services.
Metabolic syndrome has been added as a core chronic condition managed through health management corporations´ healthy returns disease management program. By treating metabolic syndrome, which includes obesity, hyperlipidemia and hypertension, employers can impact larger portions of their populations. It is expected that this addition will lead to better overall spending and a reduction in medical spending.
Other identified core chronic conditions include asthma, diabetes, coronary artery disease, congestive heart failure, chronic obstructive pulmonary disease, depression and low back pain.
According to Sherri Miller, HMC, "Metabolic syndrome affects 47 million adults in the United States and is a precursor to future health problems, including heart disease, stroke, peripheral vascular/artery disease, diabetes and renal disease."
Super Bowl Sickies
A recent survey estimated that 1.4 million men between the ages of 25 and 44 call in sick the day after the Super Bowl.
Almost 40% of employees who have called in sick during the past year have used sick time for reasons other than being ill. According to the survey almost 64% of employees have a disciplinary attendance policy at work, yet 48% said it was not enforced consistently.
The top three reasons people take off sick days when they are not ill are because they need a mental health day (53%), they want a day off from work (50%) or they need to take care of a sick child or parent (38%).