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Q-and-A: The evolution of HRO 3.0

3 min read


Mike Ettling is the CEO of NorthGateArinso, a provider of human resources business solutions through technology, outsourcing and consulting. Recently, SmartBrief asked Ettling about HRO 3.0 and how it can help companies get more out of their HR departments. An edited version of his responses follows.

What is HRO 3.0?

HRO 3.0 is the latest evolution in human resources outsourcing. It integrates HR administration, payroll, analytics and talent management into a single, cloud-based delivery system.

It’s easiest to understand HRO 3.0 by looking at previous evolutions of HRO. Starting in 1998, HRO 1.0 was the first attempt to outsource HR processes to outside parties. Often referred to as the “lift and shift” approach, HRO 1.0 was characterized by vendors assuming responsibility for a customer’s existing HR processes and landscapes. While beneficial in some regards, this approach did not address needs related to process alignment, technology streamlining, global complexities or privacy standards.

Gaining popularity around 2005, HRO 2.0 sought to answer many of the shortcomings of HRO 1.0 through the introduction of process mapping, transition plans, system audits and service-level agreements. It centered on the belief that HR professionals and managers should be empowered to collaborate on HR issues; a greater integration of processes coupled with a focus on user experience helped make this a reality. However, for all of the advancements of HRO 2.0, issues still arose as companies looked to translate technologies globally, standardize processes and scale technologies.

HRO 3.0 is different from earlier generations in that it puts the user at the heart of HR. It encourage managers, HR executives and organizations to use HR analytics to make more strategic decisions. HRO 3.0 is standardized but highly configurable, empowering companies to explore various deployment options and choose which functions should be outsourced.

How does HRO 3.0 help innovation?

HRO 3.0 empowers innovation in two important ways: It creates efficiency and provides visibility. Through the adoption of HRO 3.0, HR executives are freed from managing the transactional aspects of HR and are able to spend more time leveraging HR’s strategic value for the benefit of the company. With time no longer spent on tasks such as payroll administration, HR leaders can focus on aligning HR goals with business goals. The ability to play a more strategic role in the organization is further bolstered by the deeper analytics and metrics offered by HRO 3.0. Because it is an integrated system that can be deployed globally, HRO 3.0 presents HR executives with greater visibility into the needs, challenges and opportunities of the workforce – helping to drive greater innovation.

What are some common mistakes companies make when trying to implement HRO 3.0 solutions?

Failure to align with the information technology department is one common mistake when implementing HRO 3.0 solutions. HR executives need to gain an understanding of how the solution will be used and how the IT department can support these technologies. It is important to find a solution that addresses the needs of HR and the parameters and capabilities of IT.

A failure to focus solely on HR is another common mistake. While it might be tempting to try to lump several business areas into one outsourcing project, resist the urge. HR — especially when addressed in a global fashion — is increasingly complex and needs its own attention and focus in regards to outsourcing.

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