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Benefits and Pensions MonitorHR Outsourcing At BDCThe Business Development Bank of Canada (BDC) is a financial institution wholly owned by the government of Canada. It traces its beginning to September 1944, when the Canadian parliament proclaimed the creation of the Industrial Development Bank (IDB) as an arm of the Bank of Canada. It focused initially on ‘industrial enterprises’ engaged, for the most part, in manufacturing. Today it has 1,500 employees across Canada and it plays a leadership role in delivering financial, investment and consulting services to Canadian small businesses, with a particular focus on the technology and export sectors of the economy. Robert Yuzwa, director HR, discusses BDC’s experience with outsourced HR administration.
BDC is a federal crown corporation with approximately 1,500 employees located in all provinces and territories. Relatively speaking, we are a small, but geographically dispersed organization. Like many organizations, over the years we’ve outsourced various parts of our HR administration including benefits, pensions, employee relocation, our learning systems, EAP, recognition, etc. The common thread in each of these outsourcing arrangements is that they are all transaction- based activities. Need To Upgrade There are a number of reasons why BDC decided to outsource certain functions. Looking at our decision to outsource our flexible benefits administration as an example, first and foremost, technology was a huge factor in the decision. The need to upgrade enterprise systems is relentless. Our IT strategy for human resources, generally speaking, has been to adopt a bolt-on solution as opposed to customizing the ERP. Since our flex program was fairly customized, it would have required the kind of customization that was not an option for us. Another aspect for BDC is that we have a highly standardized software offering within the organization with extensive firewalls. This was not conducive to the kind of 24/7 access that we wanted employees to have for the flex program. Outsourcing has enabled us to do things that would not otherwise have been possible. For example, we can now provide external access to the flex site and formatting the site was easier under this kind of an arrangement. Choosing to buy and implement the flex solution within our ERP, although possible, would have been costly in time, effort, and dollars. We still would have had the ongoing issue of maintenance and upgrades. Frankly, outsourcing has really allowed BDC to focus its IT efforts where they belong and that is on the business itself. It also has allowed HR to take advantage of the economies of scale that just wouldn’t be possible for us otherwise in the area of benefits. War For Talent The second major perspective for us was the war for talent. We have found that hiring and retaining qualified benefits and pension administration staff, for example, has become more and more of a challenge. The risk of discontinuity was too high, at least for our organization. At best, we might be able to devote a single employee to this kind of activity. In this case staffing for peaks or even time-off would be a challenge. We don’t have to worry about that since we have outsourced. The third reason behind our decision to outsource was cost. The cost of managing a program internally often appears, at least on the surface, to be less than the outsourcing fees that we’re paying. However, I am convinced that we are doing the job more efficiently, cost effectively, and probably in a far more disciplined manner than we could have ever achieved doing it ourselves. Since the implementation of our enterprise system and the outsourcing that we’ve undertaken, we’ve reduced the size of our HR department significantly and also have avoided the need for additional systems staff to support in-house applications. As for lessons learned about outsourcing, the first is the importance of integration of information. In each of our arrangements, we’ve chosen and have actually been able to consolidate design, implementation, communication, and administration under a single roof. This has definitely simplified our job and probably provides a level of continuity that is not achievable internally. Full Accountability Nevertheless, it is extremely important for the organization to maintain or retain full accountability for the end product. That means having an in-house resource knowledgeable enough to manage the relationship. We typically take a very active interest in the content and the quality of the program delivery. Our final key learning at BDC with regard to outsourcing is the importance of relationships. It is essential to view each relationship as a true partnership, where we support each other. For the outsourcing arrangement to be successful, we must see the relationship as a team effort that includes internal as well as external staff, who are simply an extension of ourselves. With patience and persistence, outsourcing can work well for an organization. For BDC, our outsourcing experience has been very, positive. |
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