Marissa Hedengren has a great vantage point. From the start of Prudential’s sweeping contract with Exult six years ago, she was there. And she was there in the early days of the HR Buyers’ Advisory Group, now a time-tested forum for colleagues in the industry to bounce ideas off each other. Today she is a member of its leadership committee.
Prudential Financial’s decision to outsource—resulting in one of the oldest comprehensive outsourcing deals in the industry —came about during a period of process reengineering when the company was examining ways to drive down costs. At the time, Exult (now Hewitt Associates) was the only player offering full-service outsourcing, and Prudential placed a high premium on having a single provider. The 10-year contract has stayed much the same since the signing, a reflection of its success with only recruitment having been returned in house.
Hedengren in part can be credited with how well the deal has performed. Before the signing, she was responsible for Prudential’s HR service centers. She then helped to oversee implementation of the HRO contract and is now accountable for its execution. Because she was a pioneer in the industry, she recalled having had to perform ground-breaking work.
“At that time, there wasn’t a blueprint on how to do this,” said Hedengren, vice president of HR technology and service delivery. “This deal was new in an industry that was completely immature, so we had to figure out exactly what we needed to do. I had to define roles and find people so we could manage this outsourced relationship.”
Indeed, at the time of Prudential’s HRO signing, the industry was still in its infancy, with many of the larger enterprise providers still trying to build out their delivery models. Buyers such as Prudential, Procter & Gamble, Best Buy, and others were all facing a market that posed potentially great risk and rewards because of this immaturity. Additionally, the value proposition for outsourcing wasn’t as clear or easily defined as today. And, as Hedengren pointed out, there were few successful predecessors whose track record could serve as a compass from which Prudential could follow.
Hedengren and the Prudential team soon realized then that what they needed was a complex set of skills rarely possessed by HR professionals. “We had to build it from scratch and determine what kinds of skills we needed—operations knowledge and technology knowledge but also people who had strong consulting skills, risk-management skills, communication skills, and project-management skills. We had to find people who could do all that.”
But Hedengren had those skills. A graduate of Cornell University and NYU’s Stern School of Business, she had a long career in banking before joining Prudential in 1998. She trained in operations management at Chase Manhattan and landed in HR services before moving onto other businesses throughout the bank, including treasury, private banking, global security, and mergers and acquisitions. As the company was going public and looking for ways to cut costs, outsourcing emerged as a solution. “I really honed my operations skills,” she said. “Risk management, project management and people leadership are key skills, no matter what business, that you need now.”
Over time, Hedengren’s role has evolved from focusing on day-to-day operations to looking at “broader Hewitt account issues and solutions and planning on how we take this to the next level.”
That includes new initiatives, she said, like transitioning some benefits programs to Hewitt and larger strategic questions such as: “How do we continue to have strong performance around the work that’s being outsourced and how do we really take up a notch the customer service we’re delivering to our retirees and the HR community? Throughout the work we do on the account, we’re always looking at, ‘Are we where we want to be in the next two to three years as Hewitt and Prudential continue to evolve and change?’ We continue to ask ourselves ‘How can we get the most value from their knowledge and expertise in the industry?’”
As for Hewitt and other suppliers, Hedengren believes it’s important for them to make sure they understand their clients’ culture. In Prudential’s case, she said, “We have a strong HR generalist population. We need to make sure they have support so they can best deliver HR. So, we really put the focus on making sure we’re servicing them in a way that’s easy so they have a single point of contact at Hewitt rather than going through a call center. It’s about really knowing what those unique needs are in your company and making sure you have solutions for them.”
Having gained extensive knowledge of HRO practices, Hedengren has been generous in sharing it with others through the Buyers’ Group. Her understanding and insight into the industry grow as new members join, bringing with them new approaches. As for the networking value, “it can’t be understated,” she said. “They tap into me probably on a weekly basis. I get reach-outs, and I tap into them as well.”
Hedengren is one in a string of HR executives at Prudential who have provided their expertise and support to the HRO industry. For instance, Senior Vice President of HR Sharon Taylor served as the founding chairman of the HRO Association, and Sekhar Ramaswamy, vice president of HR planning and administrative services, was one of the founding members of the Buyers’ Group and actively contributed to its growth and how it evolved as an industry resource. And now Hedengren is spearheading those efforts, offering her insights as an HR and operational guru to a new generation of buyers. From her experience, she said she sees a lot of change has occurred in outsourcing practices during the past decade from both sides of an evolving market.
She added that both buyers and suppliers are much more educated today than they were when the industry was in its early stages, thanks to forums such as the Buyers’ Group, which helps members make informed decisions and avoid “overcommitting under a certain set of assumptions that maybe didn’t make sense.”
As a result, suppliers have a better sense of their core capabilities and what they can deliver rather than trying to be all things to all people. They know what works and what doesn’t work. “That’s valuable both to suppliers and buyers because they know what’s realistic versus far-reaching ideas that have never been tested,” Hedengren said.
She also stressed the importance of establishing a strong working partnership and said suppliers have made an effort to be more transparent, so buyers have a better understanding of how the providers operate and what they need to be profitable.
“I’m not sure all buyers who do this work look at their suppliers as their key partners. I think one principle we’ve established and really held true to is we have a strong partnership with Hewitt even in the early days with Exult. The way we are both successful is we find solutions so both organizations can win, so both can meet their objectives. It doesn’t really serve us if we have a supplier who can’t deliver in a way that makes business sense for them. We’ve found it works to really focus on performance results for both companies and build a partnership around that.”
As for the future, she said, there’s a healthy tension between providers who need to offer standardized solution and buyers who need customized solutions, and the two sides need to reconcile the difference to better the value of outsourcing.
Another challenge will be finding enough people with the right skills and training, which most HR employees still don’t have. “They need that broader skill to be successful. There isn’t the breadth and depth of people in the industry. There are a lot of skilled p