The last few months of 2008 have witnessed world financial markets fluctuating wildly and the ripple effects being seen in redundancies and general belt tightening. Never before has the choice of HR service provider been more important. Not only are HR professionals coming under renewed pressure to justify spend but they are also being forced to reconsider their outsourcing partnerships. In times like these it can be service that makes or breaks a relationship.

Now into its second year, the Human Capital Top 5 HR Service Provider Awards provides an insightful snapshot of who is exceeding client expectations. As a 'people's choice' award, voted by the loyal readers of HC, these awards have special resonance.

Over the following pages, read about the future of HR outsourcing, the impact of the global economic downturn and what the latest trends are. Human Capital also talks to some of the winners across six key fields: recruitment services, HR technology & software, career development & training, teambuilding & incentive providers, online job boards and migration & mobility.

Preferred career development & training providers

Why are they so good?

• "Successium do outstanding work and deliver it on time and within budget. They are incredibly professional and flexible and really listen to what I want"
• "We received so much more than Project Management Training from AIM. The trainer encouraged staff to think critically about managing their workload and to be more communicative with management. Long lasting improvements to processes have been made in addition to learning core skills"

Organisations that slash their L&D budgets will pay the price. If that sounds like an attention-grabbing headline it's meant to: L&D is about more than training and impacts upon the performance of an organisation from the ground up. It has the potential to positively impact business and leadership sustainability, productivity and effectiveness, customer satisfaction levels, innovation and change management, and employee engagement and satisfaction. 

David McMurdo, director of Gold winner rogenSi, survived in the learning industry during the last major economic downturn in 1992. He notes that, true to form, the first areas to be cut were marketing/PR spend and training. Despite the current downturn still being in early days, McMurdo notes that even in industries like investment banking in the US, companies might not be spending as much (because they have smaller teams) but they are still doing some crucial development of key people. "In 1992 they got rid of people and got rid of training. Now they're downsizing but still investing in key people - and in many cases in their leaders which I think is crucial," he says.

There's no doubt that tough economic times place unique pressures on leaders. Leadership sustainability might be something of a buzz word but if it can be created it can be translated into organisational sustainability, which Liz Green, principal consultant at Silver winner Successium, believes creates  a "winning pitch" for organisations to operate from.

How are Australian organisations doing when it comes to leadership sustainability? "We're getting there," Green says. "There was a lot of talk about succession planning five years ago and I think it was all talk. Only now are organisations starting to see how it all might work. I don't think anyone's got it perfect yet. Companies are also starting to realise it's not just top jobs but right down to frontline management."

One of the key drivers of succession implementation is largely immune to economic conditions - the continuing exodus of Baby Boomers from the workforce. As a demographic reality it is a major issue for business sustainability: once these workers are gone, so too is their knowledge. Green cites one of her clients, Qantas, as a company that has implemented a frontline leadership course to stem the flow. "So many of their frontline leaders are older people and they needed to work out how to upskill those beneath them. As the older workers haven't moved out of their roles yet, how do the younger ones move up and develop those skills? Formal courses are required, and then coaching and mentoring," she says.

The teaching methods of corporate learning have also changed. Green says many corporates are now following the 70:20:10 principal. That is, 70% learning on the job, 20% coaching and 10% in the classroom. McMurdo adds that clients now expect to see more innovative blended learning solutions than the workshop-style solutions of old. "It might kick off with a conference, followed by some pre-reading online, followed by a series of workshops which could be very interactive and very different to the old chalk and talk stuff, through to a lot more contribution from their own leaders and supported by some online learning and embedding work after the event," he says.

Another focus is coaching the leaders to support the training after the event. "The leaders not only go through the training but also learn how to coach and support it. We've given them training packs and they can then run mini sessions in their team meetings to reinforce it afterwards," McMurdo says.

Part of this is about ensuring training effectiveness or 'stickiness'. McMurdo notes that in a downturn, clients will expect L&D vendors to deliver relevant material that adds direct value to the organisation. "If they can't see a very direct return through measurements like staff morale, sales, helping them manage cost, getting the most from their assets - ie their people - from a pretty short-term perspective, why would they engage you when the pressure is on?"

Preferred recruitment agencies

Why are they so good?

• "The Next Step has a good appreciation of the business needs, they are genuinely interested in people and you get the sense that unlike other agencies, their consultants are not being remunerated on the number of times they ring and bug you!"
• "Hudson are very professional and timely"
• "They [HR Partners] have been able to provide candidates that match both the culture and the technical experience required"

The recruitment industry is a good barometer for the state of the economy as its rise and fall is naturally so closely aligned with unemployment figures. Since the mid 1990s, life has been good for recruiters. Record low levels of unemployment encouraged the growth of the sector - particularly boutique specialists - as employers scrambled to find talent. The next 18 months will be a different story as unemployment rises. Employers may enjoy - ever so slightly - a return to the days of old when there were more candidates to choose from.

Craig Mason, founder of HR recruitment specialists (and Gold winner) The Next Step, says the global economy will certainly have an impact but that impact will not be felt across the board. "A year or two ago there was consistency and every sector was struggling to fill positions. Now it's going to be oriented around what market segment you happen to find yourself in. It's a game of musical chairs. If you're focused on the banking sector, for example, you might be thinking long and hard about what 2009 looks like," he says.

Regardless of the sector, Mason joins the general consensus of those interviewed for this feature that said the HR market should be relatively safe from cutbacks. "In terms of the HR market there are three things to consider. Firstly, you need HR capability when you're moving up the growth curve and also when you're contracting.  Secondly, most HR functions are thin already; the days of large HR functions is long gone so to carve out more numbers will seriously impact capability. Thirdly, managing directors understand that to do that is a short-term view," he says.

Moving into 2009, Catherine Klestov, consultant at Highly Recommended winner Michael Page Human Resources, says there will be a continued shift towards temporary and contract recruitment as multinationals face permanent headcount restrictions imposed by their headquarters in the US or UK. Klestov believes the tendency for candidates to change jobs for a salary increase is also becoming less common and now candidates are evaluating their options more carefully before moving.

"While we expect a general slowdown in employment growth for the remainder of 2008, particularly in the banking and financial services industry, many of our clients are indicating that they plan to employ new staff once stability returns to the market. For example, industries like construction and engineering are buoyant with Australian government and private enterprise investing billions of dollars into infrastructure projects nationally over the next 10 years," she adds.

Mason predicts there will also be a closer look at the transactional side of recruitment, and how this is handled by employers. At present, he notes, there are two ways of covering off the transactional aspects: a costly RPO model and a costly in-house team model.

"Both models are fixed costs. The alternative is the variable costs of working purely with the outsource marketplace. I think over the next 12 months businesses will be looking at it and saying 'when we had the variable spend we were spending X amount of money during high demand times and therefore a fixed price cheaper model looked attractive. Now that the market has taken a downturn and we're not recruiting as much, our fixed costs are going to exceed the variable model'," he says.

"There has been plenty of people talk up their story, the RPO providers particularly, but in reality for clients it's a costly fixed price model in a declining market, and that fixed cost will invariably be looked at," he concludes.

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Preferred online job boards

Why are they so good?

• "SEEK is easy to use, it's the first thing that comes to my mind, and I assume prospective candidates' mind"
• "CareerOne has good market information, especially salaries, etc"
• "MyCareer is easy to use and updated regularly"

With a second consecutive Gold in a row there seems to be no stopping the powerhouse of Seek. The stats around Seek's dominance of the Australian job board market are staggering: in terms of 'eyeball minutes' (measured by Nielsen), Seek has a 73% market share. It attracts 2.5 to three million jobseekers every month. Ask the average person on the street which employment site they know about and the answer will inevitably be Seek.

The main competition in the industry is between CareerOne and MyCareer, which both hold approximately 12% of the market. Smaller job boards hold only 1%.

"In 2008 we've seen 13 or 14 new technological business models come through the market - and most have come and gone very quickly," says Carey Eaton, CIO, Seek.

Eaton claims there are two simple reasons why Seek is so dominant: they have focused on just one thing, whereas the competitors have to deal with newspaper cannibalisation. Secondly, Seek has a strong brand - more people put the word 'Seek' into Google than the word 'jobs' - so the name is inextricably tied with job hunting.

Eaton also points out that while others have seen technology as being the silver bullet for the industry, the gateway to even greener pastures, Seek has taken a more cautious approach. "A lot of people made the mistake in the late 1990s of saying that technology has a role in influencing the decisions that jobseekers make. It's not about that; it's about the job. Candidates want job information, and information technology is about information more than technology. Technology has played a role but that has mainly been about moving from print to online, which is a much better medium for distribution of that information. We've not seen anything to change the game or change the way jobseekers want to look for work or how recruiters and employers want to receive information about jobseekers," he says.

Although there were no technological breakthroughs in 2008, late last year Seek introduced video job ads, which Eaton admits has been an "interesting experiment". Although the take up has not been as rapid as anticipated, Eaton says of all the clients who have trialled video ads, none have said it's not for them, and the site has posted 15-20,000 video ads since it launched.

More interesting for HR professionals is the fact that video job ads have opened up something of a war between HR and marketing over who owns the content of the ads. "Sometimes HR wins, sometimes marketing wins - I believe HR should probably win. HR people understand the need to communicate the EVP and employer brand - marketing understand that too but perhaps not to the same extent in terms of the impact of it - for hiring and maintaining staff," he says.

Video job ads have also been effective for remote locations and cross-border recruitment - simply because a much more detailed and richer message can be sent via video than straight text.

Eaton remains optimistic about the job market and says the reality of the big picture of ongoing skills shortages, particularly in certain industries, will keep HR and recruiters on their toes. "It's all about hiring confidence - a lot of what we hear from our clients is uncertainty but I don't think anyone is going to know the full impact until next year. Keep an eye on the far horizon - sure we're in uncertain times but the outlook for Australia is not going to change much over time as the population ages," he says.

As for Seek's appeal for HR professionals, Eaton believes it's straightforward: it gets them candidates at a cheap price compared to other sources and channels. "The traffic to the site means that we have all the active and all the passive candidates as well - so although not everyone applies for the jobs, one in three Australian workers is on the site every month," he says.

For an HR manager desperate to fill a role, that's tough to beat; for an HR manager trying to retain workers, that's simply disturbing.

Preferred incentive/teambuilding providers

Why are they so good?

• "Accumulate are very innovative, they can easily adapt incentives for appropriate target markets, they provide fantastic customer service and support and are always willing to help whichever way they can"
• "The RedBalloon team have an incredible and infectious energy and their days and experiences are memorable"

Sales are critical in an economic downturn, yet it becomes that much harder to drum up new business and keep existing clients on the books, and almost impossible to up-sell those existing clients when times are tough. Not only that - staff morale in general can take a battering as employers are forced to downsize and remaining staff pick up the slack. Adrian Finlayson, CEO of Gold winner Accumulate, believes that during such times, those companies that take their foot off the incentive peddle will struggle. "You need to reward all staff, but really concentrate specifically and carefully on sales activity. That means sophisticated, well run incentive solutions," he says.

The same applies to recognition programs for all staff as everyone needs to stay motivated in bad times. "It's very likely that companies will start pulling back on bonuses, salary increases and benefits to employees," Finlayson says. "In those cases organisations are going to have to come up with other means to retaining and motivating staff - which recognition solutions can provide. We've seen clear cut cases where recognition can boost morale in situations where there has been staff redundancies."

It's not surprising that recognition and incentive providers are thinking outside the square to keep clients (and their employees) engaged. Alongside increasingly 'out there' experiential rewards, Sue Jackson, MD of Silver winner Solterbeck, says a new development is debit cards, which have been introduced to cater to the 'cash side' of the incentive market. Cash has traditionally been a popular form of reward but is now losing favour because it can be difficult to tie cash bonuses and commissions to behaviour and these are now considered part of the salary package. Once cash is deposited into an employee's account it effectively gets 'lost' and loses any meaning or significance.

"The debit cards help to tie some recognition back into that cash element. Now the cash goes onto the debit card and the employee can spend it anywhere in the world, and they can still spend it exactly how they want but it's now like a billboard for the company. Every time they reach for that reloadable card it's branded with 'XYZ Company' and it's a reminder that the employee is being enabled to buy that product or service because of the great work they did for their company," Jackson explains.

Given that Accumulate has been voted the best in its field, it's interesting to note that Finlayson believes the secret of a good client partnership is integrity. He feels the recognition and incentive industry has been tarnished by operators who claim they can do a lot of things but when push comes to shove they cannot deliver. "You need to establish that the firm you're talking to is credible, that they can do what they say they can and then deliver on that," he says.

Secondly, Finlayson believes it's necessary to find a supplier that understands your business problems. "If suppliers try to sell you a recognition and incentive solution that's really not going to meet your business needs then ultimately that program will fail. Usually there's only one opportunity to get R&R opportunities right," he says.

Thirdly, Finlayson says the provider needs to tick the functional boxes. Do they have the intellectual property required to help your business? Do they have the necessary technology? What are their own incentives to help your organisation?

"My advice to HR teams looking to make a statement is to make sure they capture the holistic ROI of incentive programs. By that I mean take into account perceived value or recognition and also the lower turnover rates, lower recruitment costs, and so on, otherwise they'll get a skewed view of the ROI," Finlayson concludes.

Preferred migration & mobility service providers

Why are they so good?

• "KPMG - their migration lawyers are fantastic"
• "We have a number of employees on assignment overseas and we need up to date information on migration law changes and prompt attention when we have a question, which we receive from Fragomen"

We live in a truly global world. The quota for those people taking out permanent residence in Australia for the 2008/09 financial year has been set at 197,000 people - the largest intake since the Second World War. Although that figure is likely to be cut back over the coming months, it's an indication of how vibrant migration to Australia is. Demand for migration agents has never been higher and will only increase in the next 12 months.

The Rudd government will also be introducing new legislation which will have direct impact on corporate sponsorship of overseas workers. At present, notes Karen Waller, executive director, migration middle market advisory at Gold winners KPMG, it's a wait and see situation. "There was initially expectation that new legislation would be out in the Spring sittings of parliament but with the credit crunch I expect we'll be waiting some time and the exact nature of that legislation is still not clear. I do know there is more consulting going on with interest groups including the unions," she says.

Since April this year, a number of reviews and panels that have been set up by government to review the temporary business long stay 457 visa program. The most significant review is the 457 integrity report, co-ordinated by industrial relations commissioner Barbara Deegan. This will examine particular aspects of the program, including exploitation of workers, salary levels and English language requirements.

The government has also introduced a bill into parliament called the Worker
Protection Bill which will likely provide a new framework for employers around sponsorship obligations and civil and criminal penalties for non compliance. New regulations and rules would then be introduced following the enactment of that piece of legislation.

If the outcome of proposed legislative tweaks remains somewhat hazy, one thing is certain: the Department of Immigration & Citizenship will no longer be a 'toothless tiger' but will instead have significant powers to censure employers who are not meeting their obligations towards foreign workers. "In the past, corporations were monitored by a unit within the business section of the Department of Immigration. That function has now moved to the compliance section of the department and there are definitely more resources in place to test employers to ensure they are being compliant with their obligations. We've seen a number of companies being sanctioned or receiving breach notices for being non-compliant," explains Teresa Liu, partner at Silver winner Fragomen.

Although employers need to be aware of their obligations, both Liu and Waller note that any legislative changes are unlikely to alter the reality that the workforce is global. Despite the economic downturn, people will continue to move around the world for job opportunities. Waller sees this as being compounded by generational issues: not only are Gen Y eager to gain global experience (and will factor this into their overall career paths) but Baby Boomer retirement in the Western world is opening up opportunities for workers from developing nations who did not witness the Baby Boomer phenomenon.

"We've got and will continue to have skilled employment shortages and this will not be helped by an ageing population. The Western world in particular has an ageing population and also has the Boomers reaching retirement. The rest of the world does not necessarily have that problem," Waller says. "Nations like China and India will continue to expand and workers from those nations could be tapped to move into countries dealing with the Boomer exodus from the workforce. It's interesting to forecast where the future workforce will potentially come from."

Liu agrees, and notes that although her clients' preference is always to look for talent locally, often there is no choice but to look overseas. "There are still large numbers of people who want to come to Australia but there are equally large numbers of young Australians looking to work overseas. I don't think that will change," she says. "As such, we're seeing an increasing trend for clients seeking high-end advisory services, not only regarding the management of their foreign workforce but ensuring that they are aware and compliant with the various obligations that attach to them."

Preferred HR technology & software providers

Why are they so good?

• "EmployeeConnect produces an easy to use program for HR professionals & employees that encompasses many HR practices"
• "Frontier provides the total package - there's no need for additional add ons"
• SageMicropay have a great, user-friendly system"

Imagine using Excel as your sole tool for keeping track of performance management, L&D initiatives and recruitment priorities. Not long ago this was the case. In short, it was an impossible task. Of all areas of business technology, perhaps the area that has undertaken the biggest leaps and bounds is HR technology. From origins in simple payroll solutions, HR technology vendors now provide all-encompassing software suites that cover the employee lifecycle, from recruitment to exit interviews.

Ari Kopoulos, national sales and marketing manager at Silver winner EmployeeConnect, believes the technological developments mirror the development of HR from an administrative or transactional function to strategic decision makers.

"We're definitely seeing a shift from away from the administrative and transactional systems traditionally found in employee self-service [ESS] and payroll/hr type systems. Companies are starting to realise the real value is in the data and its ability to assist with informed decisions. As such, the HR department is looking beyond cost saving, focussing on the strategic value of human capital," he says.

By using the data-analysis tools, managers across the organisation can track trends, spot weaknesses and take corrective action before situations are out of control. Taking this further is the use of middleware that can extract, transform and load data from other sources into HR reports and Dashboards. "This is the real promise of HR technology - the ability to think and act strategically through better decisions in order to improve efficiency and increase productivity," Kopoulos says.

Nick Southcombe, GM of second time Gold winner Frontier Software, says organisations are now looking for tools that are going to help them gain the most from their workforce - and technology plays a crucial role. Southcombe cites performance reviews as an example of the way technology can help reduce operating expenses and streamline processes. "In a performance appraisal you might identify certain training needs with staff. Now you can identify skills gaps, and automatically link training needs to courses that the company supports and offers. The employee can even select the L&D avenue they wish to explore. In the past you would have had to do that manually, leaving a messy paper trail," he says.

Not only are paper based processes eliminated, but consolidating HR data into a single database lessens the chances of data duplication and conflicts, allowing for easier and more accurate information sharing across departments. In addition, with a geographically dispersed workforce now commonplace in many organisations, Kopoulos adds that HR technology is "location agnostic". It can connect the workforce by offering online access that allows employees and managers to access critical data anytime, anywhere.

As always, ROI is crucial to getting technology initiatives off the ground. Although Kopoulos notes that any technology closely tied to the financial health of a business will be more closely scrutinised, there is a clear value proposition in HR technology that is linked to financial success. "I'm not expecting a shift away from HR technology spending. In fact, I expect just the opposite. There will be a renewed focus on investment in human capital by developing strategies that retain, measure and develop top performers. That is building a competency framework that's linked to positions, people, performance, learning and remuneration," he says.

Despite the economic doom and gloom, Frontier Software and EmployeeConnect are yet to see much downturn - however, Southcombe warns it's perhaps too early to tell what the future holds. He acknowledges the upfront costs of implanting new technology can be expensive (despite the financing options available) and says that another option may be outsourcing. There will still be some upfront costs but it operates essentially as 'pay as you use'. "There could be organisations out there that do need to upgrade their technology but can't afford to do so due to economic circumstances, and outsourcing to them would be an attractive option," he says.

Regardless, Southcombe believes the key to vendor/client success is maintaining an ongoing relationship. "Client needs and business objectives change over time, so keeping touch with clients and making sure the tools, services and processes are continually adapted to the changing business requirements is vital," he says.

About the survey
The Human Capital Top HR Service Provider Survey asked our readers for their opinion on who's the best service provider across six categories. Phone polls were conducted with 348 senior HR professionals, CEOs and MDs from organisations employing 80+ staff. In addition, the survey was completed online by a further 483 respondents over a period of three months. Gold, Silver and Bronze awards have been awarded based on the number of votes received, while two runners-up in each category received Highly Recommended awards.