Deals & People May 16, 2011

Fradin Departs Aon Hewitt

Aon Corporation has announced several key leadership changes at the consulting giant. 
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The provider of risk management and human resource consulting and outsourcing announced that two members of Aon Hewitt’s senior leadership: Kristi Savacool, chief executive officer of Benefits Administration, and Baljit Dail, chief executive officer of Consulting, will become co-chief executive officers of Aon Hewitt, effective immediately.They will serve as members of the Aon executive committee and report to Greg Case, president and chief executive officer of Aon. 

The pair was announced as a replacement for Russ Fradin, who is leaving to become chief executive officer of SunGard, upon the completion of his transition from Aon. Fradin had served as chairman and chief executive officer since the merger in 2010 (see “Hewitt Associates, Inc. to Merge with Aon Corporation“) and as chairman and chief executive officer of Hewitt Associates since 2006 (see “Hewitt Names BISYS Leader as CEO and Chairman“). 

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Joining Hewitt in 2005, Savacool previously had responsibility for all benefits client delivery on Hewitt’s Total Benefit Administration platform worldwide. Prior to that, she had responsibility for providing a broad range of technology and business services to Hewitt’s global clients. Savacool holds a Master of Science degree in industrial management from Lille University in Lille, France. 

Dail has been the chief executive officer of Aon Consulting’s international businesses and global practices. Since joining Aon in 2005, he has served in several senior leadership roles, including chief operating officer for Aon Benfield, where the firm notes he played an integral role in the 2008 acquisition of Benfield Group, and as chief operating officer of Aon Consulting. Dail received a Bachelor of Science honors degree in computer science from the University of Warwick, U.K. 

(Cont...)

Regarding the departure of Fradin, Case added, "We want to thank Russ for his many contributions to our firm since the merger of Aon Consulting and Hewitt Associates. Our clients already are seeing the benefit of increased capabilities from this strategic combination, and our colleagues are beginning to realize greater opportunities for growth. We wish Russ all the best in his new position." 

Case said, "Kristi and Bal, serving as co-CEOs, will enhance efforts to unite our leading human resource consulting and outsourcing expertise, providing more integrated solutions for our clients' health, retirement, talent and human resource strategic and operational challenges. 

Fradin said, "I am very proud to have served with such an outstanding team at Hewitt and now Aon Hewitt. There is an extremely capable leadership team already in place that understands the mission of serving clients and providing the distinctive value that its clients deserve."  

According to the announcement, as CEO of Benefits Administration, Savacool and her team deliver defined benefit, defined contribution, and health and welfare services to more than 22 million global participants. Dail, as CEO of Consulting, leads a global consulting organization that provides health and benefits, talent and rewards, and retirement strategies and solutions to clients in more than 90 countries.  

Jim Konieczny will continue in his role as chief executive officer of Human Resources Business Process Outsourcing (HR BPO). 

IMHO May 16, 2011

IMHO: Change Parse

Three things every adviser (and provider) wishes plan sponsors understood about recordkeeping conversions: 

 

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1. Everybody wants to change providers on January 1.  Everybody can’t. 

If your plan year end is December 31 (and it is, for the vast majority of plans), there are some real benefits to making a provider change at that point in time.  Plan reporting—both participant and regulatory (Form 5500)—is quite simply neater when you finish the reporting year at the same time you conclude your arrangements with a provider.  Anything else is going to require someone somewhere to “splice” together reports at some point.  Doing so doesn’t have to be a big deal—but it can be “awkward.”   

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There are some reasons not to make those kinds of changes at year-end, of course.  First off, there’s generally quite a queue wanting to do so.  You may well be able to get in that queue, but your new provider will likely have their hands full with a lot of plans just like yours.  More significantly, your soon-to-be-ex provider likely will as well—and guess who is likely to get the most/best attention? 

Bear in mind also that a 1/1 change means that a lot of the preparation, review, and/or testing—not to mention participant communications—will happen during a time of the year when people are generally more inclined to be worrying about other things. 

2. Your provider search will take longer than you think. 

Human beings are, generally speaking, poor judges of time requirements, particularly on things they don’t have a lot experience with (like provider searches) and that require the involvement/input of committees (like provider searches).  We tend to assume that we’ll have more time available for such things than actually winds up being the case, and we tend to assume that such things will take less time than they actually do.  We also tend to make those types of assumptions about the participation of other members of the team.  It’s not just that those assumptions tend to be optimistic, it’s that, all too frequently, they are wildly optimistic. 

Your provider and/or adviser will likely make a good faith effort to provide a timetable of events, and will likely take pains to emphasize to you the amount of time it will take to actually conduct this process.  Doubtless they will remind you—and remind you more than once—just how important it is that you make the time commitment—and deadlines—noted in that timetable.   

My advice: Take whatever timetable they give you—and double it. 

3. A big part of the reason your provider search will take longer than you think…is you. 

Conversions generally involve providers—both new and soon-to-be-ex—and frequently involve an adviser in addition to the members of the employer team.  Every one of these parties is, generally speaking, highly motivated to see the conversion take place.  Now, one could argue that you, the plan sponsor, who set all this in motion, has as much motivation as anyone.  However, the reality is that, unless you have some SERIOUS servicing issues, your motivation for change is probably somewhat less than the others. 

Change, after all, is generally disruptive.  A change of providers inevitably brings with it additional work, greater time commitments, and what sometimes feels like an incessant series of questions about things to which you never previously gave much thought.  Moreover, you’ll have to think about how to communicate this change to your participants—and deal with the inevitable flurry of questions from THEM about how to do things to which THEY never previously gave much thought. 

However, these realities are generally not top of mind when we enter into discussions about making a provider change.  So, while the search is generally set forth on a wave of optimism and hope, it can, before long, find itself bogged down in the inevitable administrative minutia that consumes so much of a plan sponsor’s time.  And the longer it takes, the worse it can become. 

 

So, considering those issues, what should a plan sponsor thinking about making a provider change do?  Well, I would suggest you start early, allow plenty of time for slippage in schedule, and be open to the possibility of making a mid-year change instead. 

 

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