Aon Hewitt, the field changes for Mercer, ADP, Kenexa

My wife and I watched the full collection of West Wing episodes not to long ago and I couldn’t help but recall the conversation President Bartlet had with his Joint Chiefs about the virtue of a proportional response as I read this mornings news.  I was greeted with news that consulting giant Aon, Inc. has announced it’s acquisition of Hewitt Associates.  Looking back over the year, I have to wonder, if this the icing on the cake for Aon or just another course in the meal?

We know Aon as a global player in the risk management, reinsurance and Human Capital consulting space, but as a benefit provider?  You bet.  Aon has been in the HR Outsourcing market for quite a while and officially launched its seemingly successful and growing Benefits solution practice in November of 2008. They’ll now happily handle your employee life cycle from hire to retire and then some.

Interestingly though, the last several months have seen Aon picked up the pace in growing its benefit and HRO offerings and making several high-profile hires.  Let’s take a look.

Back in February, Aon promoted Bob Mongia as the VP of development for the global consulting organization and the Benefits Solution Practice.  Later that month, Aon announced that with adding 13 new benefits clients they’d passed the 100 client mark with over 1.5million participants within 14 months of launching the service.  At this point, Aon Shaka Maharajh, Senior VP and Client Solutions Leader said, “The improvements in our technology have been critical to our growth”.  File that quote away for later.

In March, Aon entered into an agreement to acquire J.P. Morgan Compensation and Benefit Strategies Division.  Then Aon picked up a small contract to provide benefits and human capital solutions services.  It was for the U.S. Army with a 5 year contract for $1.27 billion.

April saw the hiring of a new VP of development for the Recruitment Process Outsourcing in the central and west regions and Richard Kantor as a senior VP responsible for development and implementation of the total rewards service line as well as the global benefits and strategic human capital consulting opportunities.  Also in May, Aon issued a press release about the success of their Benefits SolutionsTM as a Canadian pioneer.  Again they mention the solutions that they have built.

In May it was announced that Jim Causey was to be another VP for the RPO practice and Kirby Bosley was brought on as the senior VP and H&B practice leader for the west region.

On June 3^rd, Aon released an announcement calling out awards released by Risk & Insurance and HR Executive magazines in which 6 of their consultants were declared “Employee Benefits Power Brokers”.

June 29^th, Aon sold of their subrogation business unit to Praxis , reducing their food-print in the reinsurance space.

And as you know, today, Aon acquired Hewitt, who incidentally joined forces with Salary.com back in May.

So, as the dust settles, there is a new business unit at Aon call Aon Hewitt.  Good news for current Hewitt clients in that Hewitt chairman and CEO Russ Fradin who will report directly to the CEO of Aon.  Aon is now a marked leader in the Benefit administration arena having picked up Hewitt’s over 3000 clients.

Hewitt representatives are reeling from the announcement too and today are telling clients that their technology will prevail as it is much better than Aon’s, so clients need not worry about any impacts to them.  Is Aon really going to dump all that technology that they’ve invested in the past 18 months to build the Benefits business as they have?

Aon now has a fairly comprehensive product and services offing too – From its Recruitment Process Outsourcing to Benefits Admin, to Payroll and Talent Management, there is now less of a delta between them and other major employer services companies like ADP and solution providers like Kenexa and Taleo.

I don’t think we’ve seen the end of this yet.  My guess is that we’ll soon see some realignment within Aon between existing and new products and services and a cross selling which will make them a major player in some of these spaces they are just starting to dangle their feet into.

Will Mercer respond by moving another leg in the coming months?

Change management from a coral’s perspective

One of my hobbies is tending to salt water aquariums. I presently am running two, a 55 gallon and a 75 gallon.  My wife is now letting me get a 200 gallon tank and has agreed to my taking over the dinning room with it. To put it in context it will end up being a set up that is 8 ft tall, 7 ft wide, 2 ft deep and weigh in at a bit over 3500 lbs.

Getting ready for such a thing is no small undertaking and involves everything from plumbing the tanks to reinforcing the structure of the house where this will sit. The first step though was to relocate the other two aquariums.

Working with salt water is a bit more complicated than fresh. You don’t only have to worry about the temperature of the water when you introduce something, but you also have to be concerned about the salinity, PH, water hardness, calcium levels.  Many corals are particularly sensitive to the change and can be harmed or killed by a rapid change in the water. I have it set up so that water continually circulates between the two current tanks and the sump so in theory, there shouldn’t be any difference in the water quality from one tank to the other, which makes it easier when you relocate things as I had to do.

As I started to move things from one tank to the other, I drained the water back to the sump and started catching fish and removing corals as the water level decreased in the tank to be moved.  As it got lower, a lot of sediment was stirred up and the water became pretty murky.  One the level was low enough, I pulled out the largest of my corals, which is also the most sensitive, and moved it to the other tank.  The goal was to keep it in the water as long as possible and moved as quickly as I could so that he wouldn’t be impacted.

That happened 3 days ago and he’s still not adjusting well. I don’t know if it was the mess that was stirred up just before the transition or if it was the transition itself. Maybe the new environment wasn’t as ready as I thought It was.

As I was looking at him this morning, I thought about a recent conversation I had about Self-Service with one of my key stakeholders.  He’s very excited to introduce ESS and MSS to the business because of the efficiencies it will introduce and the money it will save.  However, he recognizes that we have to take it slow and acclimate the business to it first otherwise it won’t be adopted.  If we introduce small changes and improvements over time though, they will be using Self-Service before they know it.

We’ve all heard about the frog in a boiling pot of water, but I don’t think we realize how often we are just like that.  We will push back against sudden change, but if it’s done gradually and we are given time to adjust before we realize it, we’ve adopted the change without even knowing it.  Without out adoption from the organization, even the best of solutions will won’t succeed.

Putting a man on the moon proves easier than California payroll

There are two things that I’ve learned over the years of working in and around payroll.

First, the hardest part of most any project is justifying the cost of major projects to the executive suite in order to get funding.  It can require persistence and a great deal of creativity, and sometime just dumb luck to get the planets to align in the right way.

Secondly, California is my least favorite state.  Sure, I love the weather in San Diego many of the exports we get from our 3^rd largest state, but I have to say, with it comes their employment, labor and payroll tax laws, they can keep ‘em.  I can’t tell you how many times I’ve had to develop special processes or solutions to address the California regulatory issues.

You’ve no idea what I’m talking with what I’m talking about?  Allow me to give you an example.  Most are familiar with the basic rules around FLSA overtime calculation, even if you don’t know it.  With a few exceptions, time worked over 40 hours in a work week is paid at time and a half.  This is what is used in most states.  Now, take a look at the multiple pages of rules, exceptions and flaming hoops of death that a payroll system has to not only able to jump through, but know when to jump through them in California.

I could pull out many other examples of what I call the ‘except California’ rules, but I won’t try to confuse you any further.  Suffice to say, their laws have resulted in many of my bills being paid as a consultant.

This morning as I was scanning the news headlines, I came across a wire piece from Associated Press with the headline “California minimum wage fight heads back to court”.  Preparing to grab my bottle of Advil and go talk to my payroll queen, I open the link to see what new head-ache we were in for.

In the article, I learned that the state legislature and the Governator are at odds over the state budget. With the last fiscal years budget having run out on June 30^th, Governor Schwarzenegger is looking for a way to apply some political pressure and to limit the State’s exposure.  He proposed, and through a court battle, has won the right to temporarily reduce the pay of non-union state employees to the Federal minimum wage until the budget is approved. Once the budget is approved, all employees will get back pay. An interesting tactic I have to admit.

I started to chuckle though when I got to the reason he was heading back to court again.  It turns out that the state controller, the guy responsible for payroll for the state, says that their payroll system can’t do it.  The article claims that the limitation is due to the system being more than 60 years old and not having a redesign since 1970.  More than 60 years ago puts you to the 1940’s – remembering that ENIAC was completed in 1946.  Assuming that in 1970 when it was rewritten, it used current technology, which means that it was most likely created using technology similar to what got Neil Armstrong to the moon on July 20, 1969.

Since then, the state hasn’t done any major enhancements or upgrades, which makes me wonder if the laws aren’t just created to legalize their software glitches.  Now, their track record for complex legislation and not investing in technology seems to be catching up with them, since, after years of trying, they finally came up with a rule that is harder to implement than putting a man on the moon.

It seems that the controller may have justification for that replacement project now.  Sometimes, the only way to get the funding you need is to fall flat on your face.  What do you want to bet that a system replacement project makes it into the next budget?