Boeing Company, a leader in the aerospace industry, outsourced its health and welfare administration and retiree medical services to Hewitt Associates January 1999. Pati Robinson, Director of Benefit Operations for Boeing, says the company outsourced these functions as a strategy for keeping up with the latest technological innovations. "The demands of our 401k participants were changing," she remembers. "They wanted Boeing to increase services to look more like what they could obtain in the retail market." There was little time to revamp their existing software and no good software packages to purchase at that time that would enable them to do it in-house, so the aircraft company turned to Hewitt Associates.
Robinson says they liked Hewitt's professionalism and that the supplier would not be selling a "plain vanilla product." Boeing also needed a flexible supplier that would be willing to invest in the success of the relationship. Boeing has diverse business lines and produces commercial aircraft, military aircraft and products such as helicopters, space communications (such as satellites) and other eCommerce and high-tech projects. It's a very large company with a very complex business, and it has been through a lot of industry and marketplace transition for several years.
Still in the process of conversions, acquisitions and divestitures, Robinson says Boeing's goals in outsourcing HR included moving to a single-source provider and lowering transaction costs. Of vital concern, though, was the willingness of the chosen supplier to apply Boeing's across-the-board business objectives into an HR context. As an example, Robinson says a Boeing objective for its manufacturing division was to reduce cycle time. "On the production side, if you are building equipment as expensive as a 747, you obviously want to manufacture it as fast as you can," she explains. "We took that to Hewitt and said we wanted them to work on the cycle time for benefits communications that are mailed."
As of early fall in 2000, around 200,000 employees had been converted to the Hewitt plan, and progress was underway to convert the remaining quarter of the Boeing population to its outsourcing partner. With its frequent acquisitions and divestitures, they almost needed a jumbo jet with a wide on-off passenger ramp.
Boeing required a very quick transition, and Hewitt pulled through and implemented an 18-month project within six months. "It was incredible that they did it," says Robinson. "But when you do an implementation as fast as that, there are usually some issues that you need to resolve post-implementation." Hewitt and Boeing worked together to develop processes and procedures for working through those challenges, and Hewitt also responded by providing extra staff and support to ensure Boeing's needs were met.
Boeing has also been impressed with the high-level customer service training that Hewitt provides for all of its customer service representatives. "While we went through all of this conversion, nobody said anybody was rude or they had not been treated with respect. Hewitt's training really pays off, and I have less worry and concern that our employees will get treated properly."
An even bigger surprise to Boeing was Hewitt's ability to streamline Boeing processes and help the company to work better. Although it was a hoped-for outcome, it has been an "unexpected value as to how much they really are concerned about our process and the success of our business overall. They are in tune with what our company objectives are, and they are trying to meet those."
Gliding with Flying Colors
Satisfaction surveys are not unique to outsourcing relationships, but Boeing and Hewitt have taken that strategy further. Robinson says that Boeing has implemented a survey that queries Hewitt as to what the supplier thinks about how the buyer's organization is doing. "That opens up a whole different world of communication," she says. It's another demonstration of their partnership approach. They share a focus - ensuring that Boeing is able to execute its business strategies.
They proved the depth of their shared focus early in 2000, when Boeing was subject to a major white-collar labor strike by its engineering and technical employees in the Puget Sound area. The partners worked closely together to battle the challenges. "We had to ensure that we executed the requirements in a very short period of time while, at the same time, ensuring that we continued to provide quality services to all Boeing stakeholders and that we did not compromise the integrity of the system and our processes going forward." A tall order - which they handled successfully.
Shortly after the labor dispute was settled, Boeing threw its HR partner another curve when it announced the elimination of medical contributions for all non-union salaried full-time employees (about 80,000 people). It would become effective the next pay period after the announcement, and the speed in which it needed to be supported by Boeing Benefits and Hewitt was unprecedented in the HR world. It required tremendous cooperation and dedication from both teams. "At all points along the way, our teams were open with one another about the expectations and risks inherent in executing a change of this magnitude in such a short period of time," Robinson says. It's the manner in which they work together every day.
Working together, they are successful on all fronts.
Lessons from the Outsourcing Primer:
- When a buyer organization is experiencing acquisitions and divestitures, it's necessary to choose a supplier that is flexible and provides services that are scalable.
- If you do a quick transition and implementation, you need to develop processes and procedures to work through the challenges that will inevitably need to be solved post-implementation.
- In an HR process, look for a supplier that trains its customer service reps CSR reps to be especially focused on treating the buyer's employees with respect.