Reality HR: A conversation with Phil Wilson, SVP of HR, CIBC

-HR is constantly vying for "a seat at the table" and outsourcing is one of the tactics it's using to realize this goal. Outsourcing the administrative function allows HR to focus its attention on consulting, a much more strategic and value-added service. HR.com sat down with Phil Wilson to discuss how CIBC handled their outsourcing project and the impact it has had on their business.

Shifting Focus: Making The Transition from Administration to Consulting

HR is constantly vying for "a seat at the table" and outsourcing is one of the tactics it's using to realize this goal. Outsourcing the administrative function allows HR to focus its attention on consulting, a much more strategic and value-added service. HR.com sat down with Phil Wilson to discuss how CIBC handled their outsourcing project and the impact it has had on their business.

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HR.com: When did you make the decision to outsource your administrative HR function?

PW: We made the decision to outsource a lot of our administrative HR functions, such as payroll, benefits administration, pension administration and call centers, in 2001. It was a pretty extensive outsourcing. When we outsourced these functions to EDS, we also transferred about 200 of our employees over to EDS. This decision was beneficial because these employees knew our company and our systems.

HR.com: What was the driving force behind your decision to outsource?

PW: The typical HR model is pyramid shaped with HR administration at the bottom and HR delivery and consulting services at the top. The problem with this model is that it means that HR is spending most of its time focused on what I call personnel activities, which are of very little value to the client. At CIBC, we wanted to move to an HR-client services model that would enable us to focus our attention on consulting where we could provide the most value to our clients. Simply delivering on HR operations, administration, and payroll won´t get you a seat at the table because delivering in these areas is seen as a given. HR has to prove that it is driven toward operational excellence.

We felt we had driven out all the efficiencies that we could and while our HR department functioned very well we knew that to get to the next level we had to develop a partnership with a world-class third-party service provider.

HR.com: How did you decide which vendor was right for your organization?

PW: We developed a very thorough RFP and sent it out to a number of HR Outsourcing vendors. It was a very extensive process. In the end, EDS was the clear leader. They wanted to create a revenue generating business and were prepared to invest in that business and the technology, which was a big plus for us because it allowed CIBC to use our own capital to expand and develop our own core businesses - rather than to expand our internal HR infrastructure. The potential capital cost avoidance was in the tens of millions of dollars based on our assessment of the cost of integrating all of our internal systems. Instead, part of our deal with EDS was that they would implement the new Web-based version of PeopleSoft 8. EDS entered the HR Outsourcing business with a major client and CIBC was able to focus on other priorities - It was really a win-win situation for both of us.

HR.com: When will the implementation be complete?

PW: The first elements of our web-based e-HR System were delivered in the Fall of 2001. And, in 2002 we implemented a new HR Portal - one which employees could customize and which would allow us to authenticate identity. We have also implemented our first major Direct Access application - our on-line performance and compensation system. All of these were home-run successes. We will finish the complete e-HR framework at the end of this summer when we launch a comprehensive range of Web pages, which will allow manager and employee self-service for almost all of our HR transactions. With our full Direct Access HR environment in place, we are now focused on the execution of the delivery and, more importantly, on the consulting aspects of the business.

We are taking a more active role in change management projects, integrating and supporting organizational activities such as mergers, acquisitions, and divestitures. We are very focused on providing value to our business clients through talent management and leadership initiatives.

Our e-HR strategy is more than just electronic HR administration. We have both an e-learning and an e-recruiting strategy in place. We already have an RMS (Recruiting Management System) in place, which is available to our practitioners and managers across the organization.

HR.com: What have you had to do to make your outsourcing relationship work on an ongoing basis?

PW: There are several factors that you have to focus on to ensure that the outsourcing process runs smoothly. First, is predictability. We have a contract based on fixed dollars - which declines over time. Since CIBC charges back HR costs to our constituent business unit, our business leaders can now count on a fixed cost for calculating their HR benefits and payroll costs across the organization.

Secondly, we have negotiated a gain-sharing program, so we will see our costs go down as EDS takes on other customers.

More important than cost management, however, is ensuring that we get the results we signed up for. Therefore, a good service level agreement is key to any outsourcing relationship. We made sure that the terms were outlined clearly in the contract. The SLA should cover things like what you expect of your partner in terms of deliverables. We meet every month to review the performance against those service level agreements so that we can promptly identify any areas in the contract that need to be altered. To ensure we are successful, we have involved participation from senior business leaders throughout the CIBC group of companies. We work with EDS on a daily basis. We want them to be successful because if they are successful, we are successful. They have been able to deliver the services at higher standards than we were able to do when we managed them. They have really delivered a set of values.

HR.com: How did you develop your SLA?

PW: We worked very closely with our internal HR, legal and sourcing teams. Our sourcing group really had a solid understanding of how to build an SLA, but we also consulted human resources externally. We looked at other deals and how they were set up, and talked with consultants to determine where the potential pitfalls were and how to avoid them.

This is being viewed as a landmark deal and we have had a number of organizations come in to talk to us. In fact, Western´s MBA program is using our story as a case study.

HR.com: Do you think we are going to hit a point where everyone will outsource their HR admin function?

PW: I think that depends on the business and what the core competencies of that business are. There is a lot of outsourcing in the financial services industry because things like IT and check processing are already happening in the financial environment, so they are more open to the outsourcing concept. In many respects, HR is leading the infrastructure organizations within CIBC in terms of this deal. For example, we had 535 employees in HR but we outsourced 200 of them to EDS. We have enhanced the delivery of services to the business, yet we have less people servicing the business. We have more technology and access to all of our customers, whether that is employees, managers or regulators.

With the implementation of PeopleSoft this summer - the last element of our e-HR strategy - we will have integrated into our new Direct Access HR environment over 30 legacy HR systems. In preparation for this integration, we have been aligning our HR policies, practices and processes. We are keeping customization to a minimum and have re-engineered our processes to the PeopleSoft program as much as possible. To accomplish this, we really had to look at developing an approach that would work across the entire organization on a global basis.

HR.com: In closing, do you have any advice for HR managers who are thinking about outsourcing?

PW: HR is a prime area where we should be seriously looking at the HR outsourcing market. HR business process outsourcing is embryonic right now, especially in Canada. It is growing in the U.S. market and there are more and more entrants into market place. My advice is to find a partner that you feel very comfortable with and put your best people on this project. Also, early entry into this market is a good idea because you can leverage your costs. As far as I am concerned, HR needs to focus much more on the business partnership and use our skills and capabilities to change the focus of the HR team from tactical administration to strategic consulting function.

Today, HR Leaders have the opportunity to be leaders and pioneers in the whole area of outsourcing of HR and other infrastructure business processes.

 


 Phil has gained twenty years of progressively responsible experience in the Human Resources field. He graduated in 1979 from McGill University with a degree in Industrial Relations. He is currently responsible for Central Services, Human Resources Division. For the past 3 years Phil has lead a global multi functional team of professionals that are responsible for Employment Relations & Practices, CIBC Knowledge Network, Organizational Initiatives, Executive Resourcing, Global Recruitment, Employee Communications and the Alliance Management Team. Prior to that he was responsible for Human Resources in Canada with World Markets. He was key sponsor of the successful implementation of PeopleSoft.

Prior to joining CIBC World Markets in 1994, Philip spent eleven years with Northern Telecom in strategic and operational HR roles within Canada and Europe. His last position held at Northern Telecom was Director Organizational Development. Phil also worked in Human Resources with CAE Electronics in Montreal in a Resourcing capacity.

 


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