What do our customers value? If you accept that our customers expect, but don’t value, payroll being right or the carrier invoice getting paid then it must be something else. Things like:

Excellent customer service. So when they do call with a problem that needs to be solved, there is a sharp person on the other end of the phone that actually answers and solves the problem in one event.
Advice on real business matters like how the Heath Care Reform Act will impact my business.
New products and services to complement what they buy from you. They love one-stop shopping.
These are business people building their futures and busy people looking for real help and service with a smile for an attractive price.

Consider the flat screen TV for a moment. Did the price go down or up as customers accepted it as the standard? Can we invent 3-D HR? No!

Like it or not, our customers view our traditional product set no different than winter wheat, and they want it better, faster and cheaper. Why do you think QuickBooks bought a payroll company? People want options.

The path to differentiation is right there in front of you, and your clients are telling you what they want. Eventually someone else will provide it to them.

A BPO partner can allow you to take the same resources you have today and focus them on new products, increased customer service and more consultative interactions with paying customers.

You have to view your own service set in a parallel path with your consumer. If importing time sheets and preparing benefit reconciliation is not valued by your client then you should explore ways to lower the cost of that commoditized transaction and focus on being good at what they want.

Companies like ours can bring added process skills to the table (ISO 9001) to ensure that your quality is the same or better. We can bring hard-dollar cost savings to the table, right where your customers demand it and free up your best to be their best.

Come see us at www.cognethro.com and see the collaborative business model that we have built for you. We join both worlds, and the intersection is you.

Sure, you can buy Siebel from our friends at Oracle to run your sales and customer service divisions for a whole lot of cash, or you can consider Sugar CRM or ZoHo with a 30-day free trial and pay by the month with no IT department following behind.

Each choice comes with a different list of good and bad, but given the price point, the differences in good vs. bad list are shrinking. You can run your General Ledger on Intacct just as well and at considerably less expense than Lawson, if you can put aside the name brand for a moment.

Disruptive technology doesn’t have to be off the shelf, it can be developed to solve a problem you have in common with your competition but owned by you. You can make your processes disruptive and lower price, increase quality and wield it against your nemesis.

Cognet is a provider that can help you disrupt when you consider the following facts:

Our owners and operators have been in your business and have hands-on knowledge of the problems you are trying to solve.
We have a presence in the largest pool of technology talent in the world.
That means that we can apply our understanding of your problem to develop a custom software or technology solution that makes your service model disruptive. We know there are opportunities today in your processes that don’t have an “off-the-shelf” software solution.

Make yourself a disruptive force in your space today by combining process and tools that you won’t find on Google.

For those that do believe, we offer you a year-end treat, which is honestly our Green Monday offer most of the year.

We also believe in making it possible to explore what BPO can do for you, so here’s how we do it:

Work with us on documenting a single process. We will mutually agree upon a baseline of units, cost and time invested today.
If the numbers and way we do business appeals to you, then do a trial with us for 90 days, which is how long we usually take to get from start to finish on a process successfully.
We charge you by the hour with no set-up fee, so the financial risk is minimal.
If the elves don’t deliver, then you gained some process expertise, and if you ripped that paper off like a dog on a bone, we are happy to work on anything you want at your pace.

Remember, Santa has helpers too, and ours are the best in process, accounting and technology you can find in the HR Services space.

Happy Holidays from Cognet!

Please use the link below or visit our web site at www.cognethro.com to view a one-minute example of exactly how BPO can save you money, make your more productive, and let you focus on sales and service.

Unlike the restaurant business where it is all about location, the actual location doesn’t matter in BPO; the location can be anywhere in the world.

So, let’s stick with our crazy and simple ways and consider that in the HR Services industry, a desk with a computer, Internet connection, and access to the systems and tools required to do the job are all you need.

They are the location, no matter where in the world that may be. The location could be an existing employee working from home, an executive at the Starbucks in the airport or even someone 10,000 miles away.

In our Benefits Reconciliation example in the article “BPO for HRO Simplified”, the common requirements to do the job are:

Access to carrier billing and enrollment systems.
Access to a HRMS or payroll system.
Access to any paper records or support to find differences.
A cheap scanner with Excel and Google Chrome on top and you are in business from anywhere in the world.

Think of your BPO as very remote workers.

The key is being realistic about the skill and number of workers at your disposal. Can you find a line of process experts with both accounting and benefit skills in sufficient numbers to get the job done? Will the carriers cut you some slack or take your money?

Where location does matter is where you find a large number of highly educated and skilled workers who have a computer in front of them.

Even better, now you are doing business with a vendor with known economics that lets you get what you pay for, and not worry about overtime or the challenges of employment. You have a contract with agreed upon base line measurements, cost, turnaround time and error rates.

BPOs are experts at finding the right location to hire, train and offer you the best workers for the job, without any of the headache.

They’ve got the location covered. You get to solve your customer’s real problems and help them with the new ones. Not a bad gig.

Everything in a business, specifically for a Human Resource Services company, is a process. We may not have all our processes documented or completely understand each process, but there are people (a.k.a. Process Performers) across departments and all other kinds of space and time who can work together to create an output.

The best way to understand most things, at least for us reformed Finance people, is by using a great example that crosses both Operations and Accounting like the dreaded Benefit Reconciliation.

So, here is how it goes and what BPO can do for you.

Today, your process has five steps:

Get carrier bills and run payroll reports.
Build a recon, probably in Excel, and find differences.
Research those differences and identify adjustments.
Adjust the bills and update the payroll deductions.
Pay the bill on time, correctly, and with adjustments included.
The trick is that these steps can be categorized in two categories:

High value-add with client or employee contact.
Low value-add or transactional and repeatable.
When you do business with an excellent BPO, you own the process. You and the BPO sit down to mutually agree on which of the two categories those five steps belong in. There should be no emotion in the use of high and low, just a realistic understanding of how your client sees them.

So, if we are honest with our collective selves we decide the following:

Gathering invoices, running reports, building Excel models, finding an easy adjustment like a terminated employee, providing adjustments, and changing deductions are seen by your client as a transactional part of your job. Kind of like getting a C on a math exam. These are low value-add.

Talking to your customer about a tricky situation where an employee may have made a bad choice or how you just got them $5,000 back from Aetna is what we would call high value-add.

Without getting fancy and using terms like “swim lane”, we have basically figured out what tasks your BPO should do for you (low) and the ones you should focus your best people on (high). You take the high road, your BPO takes the low road, and all of the sudden you found a way to get to your destination faster and cheaper.

What do you get by doing this? Well, typically we find that you get three things :

Cost savings of about 60 percent on the Benefit Reconciliation process.
Productivity gain of about 20 percent as transactional tasks are at the BPO.
A greater focus on sales and service, not spreadsheets.

This is true of any process, just in different units and flow charts, but the same structure. Learn more at cognethro.com. When you are ready, we will put numbers to this bad boy and set the expectations of what you can expect to the penny and minute.

A PEO is an interesting beast. It includes all of the facets and products of the entire Human Resource Services business in one package for the small and medium sized businesses to enjoy. Our owners (me) and many of our team grew up supporting the industry, which means we learned the entire spectrum of what a HR Services provider could possibly offer.

Here are a few interesting observations we heard this year – and more than once:

Margin compression is here to stay, with the arbitrage (short-term by definition) in State Unemployment long gone, most have given up on any substantial hardening of the workers’ compensation market.
We all tightened the belt operationally, but it wasn’t nearly enough and our best people are stressed.
Consolidation will only continue, and even if the multiples aren’t great, the deals are happening and the end result will probably be lower administrative fees to boot.
It isn’t all bad, and many believe that the combination of health care reform and possible federal legislation could bring credibility and new customers to the PEO fold.

However, something remains slightly askew.

We tell our clients to buy our product to outsource “transactional” HR. Put it all with one vendor and spend your time worrying about bigger and better things like new revenue and customer service, not 401(k) plans or paying taxes.

Yet at the same time, we don’t eat our own cooking.

A PEO should be a client-facing business focused on sales and service. Our best people should be empowered to turn their productivity towards customers, not busy work. Want better retention? Then you need to give your clients that extra effort and help their business problems, not just cut a paycheck. Like it or not, they see payroll as a commodity, not a core competency. So why don’t we?

The global economy allows you access to the resources you need to achieve that goal. Turn your focus to the people that pay your bills. Get your best and brightest talking to your customers about finding, motivating and retaining their best and brightest.

To do so, you have to find a partner who knows your business inside and out, and has operated “hands on” in a global setting. Cognet is that rare breed. Rather than managing more transactions, with Cognet you can get:

Guaranteed Cost Savings, in writing and in a contract. You save in process cost per unit and hard dollars.
Increased Productivity on both sides. Your people take on high value added tasks while we assume responsibility for exceeding your current productivity with some room to spare.
More Focus on Clients is the result. We let you talk to clients about more important stuff, we make sure the rest runs smoothly.
So, if you want to recover those hard-fought-for earnings that have trickled away the past few years, talk to us. No capital required, just bottom line savings in your pocket and more time to get and keep customers.

Not to sound like a complete nerd or enter into any sphere of politics, but economist Paul Krugman knows a thing or two, and the missing piece of most conversations regarding jobs or competition is almost always Productivity.

We sell productivity to our customers, and in such a highly competitive and transactional business as HR Services, it is the only competitive advantage. Now, let us introduce a similar and slightly better concept of Comparative Advantage and discover what that has to do with productivity in your business.

Productivity is simple, do more with less. Imagine buying tube socks without the invention of the cotton gin. I mean, we all know that Wal-Mart is good, but they surely wouldn’t be selling socks for $1.99 for a half dozen if they were still made by hand. Productivity can be increased by more than one factor. The impetus can be a technological advance or a simple improvement of management and process, but is usually a combination of the two.

The concept of Comparative Advantage was introduced in 1817 to look at trade between Portugal and England, but the evolution of the global marketplace has brought it from a theory in a book to reality.

What the heck does that have to do with my HR Services business? Everything!

Take any two parties, whether they be countries, companies or playmates. Now add products or services they trade in relation to each other, knowing of course that we all aren’t the best at everything.

Let’s bring back a blast from the past with NAFTA for an example, and there are two goods being produced but not traded between the U.S. and Canada, and those could be oil and whiskey.

In the U.S. it takes 10 hours of labor to make a barrel of Texas Tea, and 15 hours to make a barrel of fine Tennessee whiskey.
In Canada it takes 15 hours to get oil out of the cold hard ground, and 20 hours to make whiskey due to the short summers.
So far so good, but the trick is to decide if there is any advantage to trading.

The answer is much easier than crossing the border and all based on math.

In the U.S. it takes 1.5 more hours to get a barrel of whiskey than it does to fill that oil drum, but it takes 2/3 the time to get oil versus whiskey.
In Canada it takes 1.33 more hours to get a barrel of whiskey than it does to get some heating oil, but it takes 3/4 the time to get oil versus whiskey.
What does that all mean, eh? If all other things are equal (wages, inflation, taxes etc.) then:

Canada can produce more barrels of oil per hour than whiskey (75% vs. 67%), they have the crude Competitive Advantage with oil.
U.S. can produce more barrels of whiskey per hour than oil (1.5 vs. 1.33) then it should return the favor to our neighbors and send some whiskey to the Great White North.
The bottom line is that one party/country/company is better at something than another and has an advantage, and the great equalizer isn’t always foreign exchange rates or taxes, but productivity. When that exists in balance, like the example, both parties trade and win.

Again, what in tarnation does that have to do with HR Services?

Easy, we can become trading partners. You focus on your sales and service and do what the U.S. economy is good at, service. We trade highly productive and cost efficient labor to make you look good.

That means that you now have the Comparative Advantage over your competition.

You will see an announcement of our Benefits Administration Product very soon. Real simple, we bring world-class technology that hooks up to your payroll engine along with our experts pushing all the files and doing client set up, you just take the phone calls and the money.

Voila, you have a value add product for your payroll clients and an answer to your large competitors who have a broad collection of services.

Look forward to talking to many of you, and not just our fine payroll friends.

Incogneto (a.k.a. John)

Dianna Sheppard is one of those gurus who invested years in the HR Services space, from building Ceridian into one of the largest human resource providers in the world, to CEO and President of Advantec. We won’t get into defining years here, but suffice it to say she knows her stuff and is ready to help you build a better business.

Dianna brings 28 years of just that to Cognet, with her extensive leadership in the executive suite and her passion for hands-on problem solving, in several capacities she is a great investor for the stage of our company today.

In fact, she liked our service so much she is doing a Victor Kiam impression and “bought” the company, well at least part of it.

At Ceridian, Dianna filled critical roles in sales and operational leadership roles, including payroll, benefits administration, EAP, time and attendance and tax filing. At Advantec she brought an expanded product suite, new technology, black belt process and operational excellence to support the planned sale of the company.

We have and continue to build a team that has experience in your industry, and in the global economy. It’s the double threat! You get executives in your space who know how to help you construct a global operations platform to let you focus on sales, service and high value added activities.

Our partners have eons of HRO/PEO/ASO and all kinds of acronyms under our belt, and not just in your market, but all over the globe. We want to share that with our select clients who wish to build a better business model and pick our brains, and most importantly learn from our experience.

We are able to support all facets of your HR business or agency, from operations to finance and technology, and have the people in our ownership group and team to get you global without leaving your desk.

Thanks for joining us Dianna!

Please visit our new web site to read more about Dianna’s new role at Cognet and what Cognet can do for you.