Hewitt Associates
Encyclopedia
Hewitt Associates based in Lincolnshire
, Illinois
, United States
was a global human resources
(HR) outsourcing
and consulting
firm delivering a complete range of integrated services to help companies manage their total HR and employee costs, enhance HR services, and improve their workforces.
Hewitt was founded in 1940 and ceased to exist as an independent entity at the completion of its purchase by the Aon Corporation in October 2010. Hewitt's operations were merged at that time with some elements of Aon's consulting arm to become a new subsidiary of the Aon Group called Aon Hewitt.
By the 1960s the Hewitt firm continued to expand its pension and benefit plans, creating more sophisticated programs for its clients. During the decade the firm revolutionized employee benefit packages once again, as the first company to design pension and benefit plans tied to a corporation's revenue and growth projections. While such a practice became commonplace in the pension and employee benefits of larger corporations, it was another in Hewitt's growing list of industry firsts. Hewitt was so respected for its work in the field that it was the only company asked by the U.S. government to consult on the Federal Interagency Task Force from 1964 to 1968. The Task Force was responsible for the design and implementation of the new Employee Retirement Income Security Act.
In the next decade Hewitt began offering its clients an increasing number of innovative products, including its trademarked Benefit Index to track the performance of benefit programs. The Benefit Index was another industry first and soon became the standard to which all aspired. Hewitt also offered its clients several flexible investment strategies for employee benefit packages, which led to the formation of a new consulting firm, the Hewitt Investment Group, in 1974.
The use of computers had finally begun to take hold in larger businesses, as Hewitt found automated benefit programs had increased remarkably from 1986 to 1988. In a survey detailed in PC Week (November 6, 1989), Hewitt had surveyed 700 companies to find 71 percent had become either fully or partially automated in their administration of benefits plans, up from 48 percent two years before. Hewitt responded to the expanding use of technology by designing computerized benefit programs and software so companies could manage their benefit plans. Hewitt Technologies was created in 1988 to monitor and respond to the industry's rapidly changing technological needs.
By the beginning of the 1990s Hewitt had ventured abroad and offered tailored benefit programs to corporations in the United Kingdom. The firm had brought in more than $250 million in revenues for 1990 and was ranked the fourth largest benefit management and consulting firm in the world, according to Business Insurance magazine. Yet many of Hewitt's clients were feeling the pinch of a struggling economy and inflation. As companies began looking for ways to bolster the bottom line, benefits were often the first place executives looked for a quick fix. In a time when few received raises and those who did received only cost-of-living increases, Hewitt started retooling retirement packages and healthcare benefits to keep its customers from making drastic changes. Of particular interest were retirement programs since few seniors could withstand the effects of inflation and soaring healthcare costs. Hewitt also researched other benefit additions such as flextime scheduling, child- and elder-care benefits, and HMOs (health management organizations) versus PPOs (preferred provider organizations).
By 1997 more than 100 large companies outsourced their benefit programs to Hewitt, covering about nine million worldwide employees. Hewitt not only managed these HR services but provided both the companies and their employees with the opportunity to view their benefits with ease. The company ran into controversy, however, when it secured lucrative incentives to open a new benefits management center in Orlando, Florida. Public officials decried the incentives, believing that Hewitt was favored over other firms that could have offered more jobs and revenue for the city. Despite the furor, the new office opened in Orlando in 1997, during a fiscal year (ending in September) in which Hewitt's revenues reached close to $700 million.
In 1998 Hewitt partnered with the California-based Financial Engines, an online investment firm, to offer its clients financial advice over the burgeoning "information superhighway
" or Internet. Hewitt clients were among the first to view nearly every facet of their company's benefit programs with a few simple keystrokes, and could seek online investment advice and make changes in real-time. Such advancements, along with being the first HR industry firm to launch a corporate web site, landed Hewitt among PC Week's Top Ten Most Technologically Innovative Companies. Hewitt also continued its in-depth surveys, developing the Health Value Initiative in 1999 to measure the effectiveness and quality of more than 2,000 healthcare programs worldwide. The Initiative's findings led to testimony for the government and various agencies in an attempt to reform the U.S. healthcare industry.
As the decade closed, Hewitt was poised for further growth both domestically and abroad. Not only was the company broadening the scope of its operations, but it offered clients advanced tools to outdistance their competitors. Hewitt's HR management services had become known for their cutting-edge technology and the company's ongoing commitment to offer newer, faster, and more comprehensive programs would take it to the top of the industry in the next century.
In 2001 Hewitt formally announced its intention to become a publicly traded company after nearly six decades as a private firm. Under the ticker symbol HEW on the New York Stock Exchange, Hewitt went public on June 27, 2002, with an initial offering of 11 million shares (at $19 per share). Share prices rose as high as $23 the following day. Hewitt wasted little time in putting its new funds to work, paying off debt, purchasing France's Finance Arbitage, an investment consultancy firm, and spearheading expansion plans for the United Kingdom and China.
In 2003 Hewitt took over the Cork, Ireland-based Becketts, a benefits consultancy, and bought the software programs and payroll services of Cyborg Worldwide Inc. These moves, along with several others, prompted the Chicago-based Crain's Chicago Business to name Hewitt one of the area's fastest growing public firms, with fiscal revenues topping $1.9 billion for the year. In 2004 Hewitt announced the purchase/merger of Irvine, California's Exult Inc., another HR and consulting firm. The deal was valued at close to $700 million and was expected to bring in combined revenues of more than $3 billion by the following fiscal year.
For 2004 Hewitt reached revenues of $2.2 billion and the firm sustained its 43rd consecutive year of growth. Employees numbered more than 22,000 in nearly three dozen countries (including Brazil, China, France, India, Ireland, The Netherlands, Puerto Rico, Singapore, and Switzerland) serving more than 18 million employees for its corporate clients. In addition, the company was named one of America's Most Admired Companies in 2004 by Fortune magazine, ranked as one of the 100 Best Places to Work for the fourth consecutive year by Computer World, and had become the United States' largest and the world's second largest benefits outsourcing company, according to Business Insurance magazine.
By early 2005 Hewitt clinched several significant business processing outsourcing (BPO) contracts, signing publisher Thomson Corporation, Sun Microsystems, hospitality leader Marriott International, beverage giant PepsiCo Inc., Wachovia Corporation, and others to a roster of more than 2,500 international clients. As the year came to a close, Hewitt had fallen a bit short of its $3 billion goal, bringing in revenues of $2.8 billion. With analysts believing the business outsourcing market would top $33 billion or more in 2006, Hewitt continued to dominate the U.S. benefits industry and aimed to be the world's top provider of outsourced business processing.
On July 12, 2010, Chicago-based insurance broker, Aon Corp.
, announced that it had agreed to buy Hewitt Associates for $4.9 billion in cash and stock. The purchase was complete as of October 1, 2010 and Hewitt's stock ticker (HEW) was removed from the NYSE.
On October 14, Aon said 1500 to 1800 jobs would be cut.
In June 2003, Hewitt announced the completion of the acquisition of Northern Trust Retirement Consulting, L.L.C., expanding its portfolio of outsourcing clients. Later in 2003, Hewitt acquired Cyborg Worldwide, Inc., expanding outsourcing capabilities to include payroll services.
On October 1, 2004, Hewitt completed the acquisition of Irvine, CA - based Exult Inc.
, a company specializing in Human Resources Business Process Outsourcing or HR BPO
. This move was to ensure Hewitt would remain competitive within the HR Consulting and Outsourcing space, in which HRBPO was a rapidly growing area.
As of early 2010, Hewitt had approximately 2,600 clients, making it the world's largest provider of multi-service HR business process outsourcing (BPO), and it claimed to be the only firm fully integrated HR outsourcing and HR consulting. Hewitt's clients included over half the Fortune 500
and a third of the Fortune Global 500
. Hewitt had 86 offices in 37 countries and employed over 27,000 employees.
would be stepping down. The announcement was made in the face of Hewitt's declining stock performance and market worries about the entire BPO sector, but Gifford, who has served as chief executive officer since 1992, indicated the decision was his own, and that he planned to retire.
Just after the closing of the stock market on Thursday, August 10, 2006, the company announced the appointment of the fourth CEO of Hewitt Associates, Russell P. Fradin
, whose tenure commenced on September 5, 2006. On December 12, 2009 Hewitt announced that Robert A. Schriesehim would be joining the company effective January 4, 2010 as SVP and CFO from Lawson Software, where he had been serving as CFO and a board member.
Russ Fradin continued on as the CEO of the Aon Hewitt subsidiary after Aon Corporation's purchase of Hewitt was completed in November 2010.
Lincolnshire, Illinois
Lincolnshire is a village in the Vernon Township region of Lake County, in the U.S. state of Illinois. The village is a suburb of Chicago, a city in the adjacent Cook County. Its population was 6,108 at the time of the 2000 census. Lincolnshire was incorporated on August 5, 1957, from the...
, Illinois
Illinois
Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...
, United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
was a global human resources
Human resources
Human resources is a term used to describe the individuals who make up the workforce of an organization, although it is also applied in labor economics to, for example, business sectors or even whole nations...
(HR) outsourcing
Outsourcing
Outsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
and consulting
Human resource consulting
Human resource consulting is an $18.4 billion industry that has emerged from management consulting, asclients' needs have become more complex and specialized, widening the gap between HR needs and work force capabilities, and thus accentuating the ability of HR management consulting firms to fill...
firm delivering a complete range of integrated services to help companies manage their total HR and employee costs, enhance HR services, and improve their workforces.
Hewitt was founded in 1940 and ceased to exist as an independent entity at the completion of its purchase by the Aon Corporation in October 2010. Hewitt's operations were merged at that time with some elements of Aon's consulting arm to become a new subsidiary of the Aon Group called Aon Hewitt.
History
- Founded: 1940 as Edwin Shields Hewitt and Associates
- NAIC: 541214 Payroll Services; 541612 Human Resources and Executive Search Consulting Services; 561310 Employment Placement Services; 561320 Temporary Help Services; 561330 Professional Employer Organizations
- SIC: 7361 Employment Agencies; 7363 Help Supply Services
- Aon bought Hewitt, renamed to AON Hewitt .
1940s–70s
Edwin "Ted" Hewitt founded Edwin Shields Hewitt and Associates on October 1, 1940, as a brokerage house focusing on insurance and personal financial services. During and after the war, Hewitt's particular expertise became immensely valuable when the government instituted "pay-as-you-go" income taxes in 1943 and the U.S. cost of living increased more than 25 percent in 1945. Once the war and its rationing ended, Americans returned to work and the economy recovered. Hewitt's clients, many of whom had manufactured goods for the war effort, returned to their customary businesses and thrived. Hewitt began offering its clients statements to track their employee benefits and had pioneered the use of specific financial goals for company investments. Hewitt's programs were the first of their kind to be approved by the Internal Revenue Service; they were so cutting edge the U.S. Department of Labor asked the firm to create forms for the welfare and pension programs of the 1950s.By the 1960s the Hewitt firm continued to expand its pension and benefit plans, creating more sophisticated programs for its clients. During the decade the firm revolutionized employee benefit packages once again, as the first company to design pension and benefit plans tied to a corporation's revenue and growth projections. While such a practice became commonplace in the pension and employee benefits of larger corporations, it was another in Hewitt's growing list of industry firsts. Hewitt was so respected for its work in the field that it was the only company asked by the U.S. government to consult on the Federal Interagency Task Force from 1964 to 1968. The Task Force was responsible for the design and implementation of the new Employee Retirement Income Security Act.
In the next decade Hewitt began offering its clients an increasing number of innovative products, including its trademarked Benefit Index to track the performance of benefit programs. The Benefit Index was another industry first and soon became the standard to which all aspired. Hewitt also offered its clients several flexible investment strategies for employee benefit packages, which led to the formation of a new consulting firm, the Hewitt Investment Group, in 1974.
1980s and 1990s
Hewitt continually sought to better its programs. The company began to conduct in-depth surveys to find out which benefit programs worked best and which ones needed improvement. In the 1980s Hewitt researched numerous issues and began issuing its findings industry-wide on subjects such as offering benefits to part-time employees, full versus partial hospital reimbursement, fluctuating profit-sharing percentages, mental health benefits, 401(k) programs, and rising health plan deductibles. Another topical issue was computer use for automated benefit calculations.The use of computers had finally begun to take hold in larger businesses, as Hewitt found automated benefit programs had increased remarkably from 1986 to 1988. In a survey detailed in PC Week (November 6, 1989), Hewitt had surveyed 700 companies to find 71 percent had become either fully or partially automated in their administration of benefits plans, up from 48 percent two years before. Hewitt responded to the expanding use of technology by designing computerized benefit programs and software so companies could manage their benefit plans. Hewitt Technologies was created in 1988 to monitor and respond to the industry's rapidly changing technological needs.
By the beginning of the 1990s Hewitt had ventured abroad and offered tailored benefit programs to corporations in the United Kingdom. The firm had brought in more than $250 million in revenues for 1990 and was ranked the fourth largest benefit management and consulting firm in the world, according to Business Insurance magazine. Yet many of Hewitt's clients were feeling the pinch of a struggling economy and inflation. As companies began looking for ways to bolster the bottom line, benefits were often the first place executives looked for a quick fix. In a time when few received raises and those who did received only cost-of-living increases, Hewitt started retooling retirement packages and healthcare benefits to keep its customers from making drastic changes. Of particular interest were retirement programs since few seniors could withstand the effects of inflation and soaring healthcare costs. Hewitt also researched other benefit additions such as flextime scheduling, child- and elder-care benefits, and HMOs (health management organizations) versus PPOs (preferred provider organizations).
By 1997 more than 100 large companies outsourced their benefit programs to Hewitt, covering about nine million worldwide employees. Hewitt not only managed these HR services but provided both the companies and their employees with the opportunity to view their benefits with ease. The company ran into controversy, however, when it secured lucrative incentives to open a new benefits management center in Orlando, Florida. Public officials decried the incentives, believing that Hewitt was favored over other firms that could have offered more jobs and revenue for the city. Despite the furor, the new office opened in Orlando in 1997, during a fiscal year (ending in September) in which Hewitt's revenues reached close to $700 million.
In 1998 Hewitt partnered with the California-based Financial Engines, an online investment firm, to offer its clients financial advice over the burgeoning "information superhighway
Information superhighway
The information superhighway or infobahnwas a popular term used through the 1990s to refer to digital communication systems and the Internet telecommunications network. It is associated with United States Senator and later Vice-President Al Gore....
" or Internet. Hewitt clients were among the first to view nearly every facet of their company's benefit programs with a few simple keystrokes, and could seek online investment advice and make changes in real-time. Such advancements, along with being the first HR industry firm to launch a corporate web site, landed Hewitt among PC Week's Top Ten Most Technologically Innovative Companies. Hewitt also continued its in-depth surveys, developing the Health Value Initiative in 1999 to measure the effectiveness and quality of more than 2,000 healthcare programs worldwide. The Initiative's findings led to testimony for the government and various agencies in an attempt to reform the U.S. healthcare industry.
As the decade closed, Hewitt was poised for further growth both domestically and abroad. Not only was the company broadening the scope of its operations, but it offered clients advanced tools to outdistance their competitors. Hewitt's HR management services had become known for their cutting-edge technology and the company's ongoing commitment to offer newer, faster, and more comprehensive programs would take it to the top of the industry in the next century.
2000 onward
By early 2000 Hewitt's expansion moved forward with new offices near Houston, Texas, and an increased presence in Asia with a new office in Kuala Lumpur, Malaysia. The company also announced the merger of its British and Irish operations with the United Kingdom's Bacon & Woodrow, a leading retirement and HR management consulting firm. Hewitt also unveiled plans for Sageo, a comprehensive online service where participants could compare, choose, and enroll in benefit programs. Sageo was designed for retirees and companies with numerous older employees, to offer this growing population the same benefits provided to Hewitt's 150 corporate clients and their 15 million worldwide employees. Hewitt hoped that Sageo's online format would not only simplify the benefits process but lower employer costs as well. Within a few months of its debut, Sageo had enrolled nearly a dozen companies representing 500,000 individuals. However, Sageo never made money and was dismantled shortly thereafter.In 2001 Hewitt formally announced its intention to become a publicly traded company after nearly six decades as a private firm. Under the ticker symbol HEW on the New York Stock Exchange, Hewitt went public on June 27, 2002, with an initial offering of 11 million shares (at $19 per share). Share prices rose as high as $23 the following day. Hewitt wasted little time in putting its new funds to work, paying off debt, purchasing France's Finance Arbitage, an investment consultancy firm, and spearheading expansion plans for the United Kingdom and China.
In 2003 Hewitt took over the Cork, Ireland-based Becketts, a benefits consultancy, and bought the software programs and payroll services of Cyborg Worldwide Inc. These moves, along with several others, prompted the Chicago-based Crain's Chicago Business to name Hewitt one of the area's fastest growing public firms, with fiscal revenues topping $1.9 billion for the year. In 2004 Hewitt announced the purchase/merger of Irvine, California's Exult Inc., another HR and consulting firm. The deal was valued at close to $700 million and was expected to bring in combined revenues of more than $3 billion by the following fiscal year.
For 2004 Hewitt reached revenues of $2.2 billion and the firm sustained its 43rd consecutive year of growth. Employees numbered more than 22,000 in nearly three dozen countries (including Brazil, China, France, India, Ireland, The Netherlands, Puerto Rico, Singapore, and Switzerland) serving more than 18 million employees for its corporate clients. In addition, the company was named one of America's Most Admired Companies in 2004 by Fortune magazine, ranked as one of the 100 Best Places to Work for the fourth consecutive year by Computer World, and had become the United States' largest and the world's second largest benefits outsourcing company, according to Business Insurance magazine.
By early 2005 Hewitt clinched several significant business processing outsourcing (BPO) contracts, signing publisher Thomson Corporation, Sun Microsystems, hospitality leader Marriott International, beverage giant PepsiCo Inc., Wachovia Corporation, and others to a roster of more than 2,500 international clients. As the year came to a close, Hewitt had fallen a bit short of its $3 billion goal, bringing in revenues of $2.8 billion. With analysts believing the business outsourcing market would top $33 billion or more in 2006, Hewitt continued to dominate the U.S. benefits industry and aimed to be the world's top provider of outsourced business processing.
On July 12, 2010, Chicago-based insurance broker, Aon Corp.
Aon Corp.
Aon Corporation is an American public multinational corporation headquartered in Chicago, Illinois, USA that provides risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting...
, announced that it had agreed to buy Hewitt Associates for $4.9 billion in cash and stock. The purchase was complete as of October 1, 2010 and Hewitt's stock ticker (HEW) was removed from the NYSE.
On October 14, Aon said 1500 to 1800 jobs would be cut.
Growth strategy
Prior to 2000, most of Hewitt's growth was organic. Acquisitions of and joint ventures with very small boutique firms, primarily defined benefit plan actuaries and human resources consultancies, were typical. In 2000, Hewitt began growing through larger mergers and acquisitions. The first of these was the announcement, in late 2000, of a plan to integrate its UK and Ireland business with Bacon & Woodrow, a leading retirement and financial management consultancy in the UK.In June 2003, Hewitt announced the completion of the acquisition of Northern Trust Retirement Consulting, L.L.C., expanding its portfolio of outsourcing clients. Later in 2003, Hewitt acquired Cyborg Worldwide, Inc., expanding outsourcing capabilities to include payroll services.
On October 1, 2004, Hewitt completed the acquisition of Irvine, CA - based Exult Inc.
Exult Inc.
Exult Inc. was a company, headquartered in Irvine, California that provided business services related to Human Resources ) and Business Process Outsourcing .Exult was created in 1998 and originally operated under the name of BPO US, Inc...
, a company specializing in Human Resources Business Process Outsourcing or HR BPO
Business process outsourcing
Business process outsourcing is a subset of outsourcing that involves the contracting of the operations and responsibilities of specific business functions to a third-party service provider. Originally, this was associated with manufacturing firms, such as Coca Cola that outsourced large segments...
. This move was to ensure Hewitt would remain competitive within the HR Consulting and Outsourcing space, in which HRBPO was a rapidly growing area.
As of early 2010, Hewitt had approximately 2,600 clients, making it the world's largest provider of multi-service HR business process outsourcing (BPO), and it claimed to be the only firm fully integrated HR outsourcing and HR consulting. Hewitt's clients included over half the Fortune 500
Fortune 500
The Fortune 500 is an annual list compiled and published by Fortune magazine that ranks the top 500 U.S. closely held and public corporations as ranked by their gross revenue after adjustments made by Fortune to exclude the impact of excise taxes companies collect. The list includes publicly and...
and a third of the Fortune Global 500
Fortune Global 500
The Fortune Global 500 is a ranking of the top 500 corporations worldwide as measured by revenue. The list is compiled and published annually by Fortune magazine....
. Hewitt had 86 offices in 37 countries and employed over 27,000 employees.
Leadership changes
On Thursday, June 15, 2006, it was announced that CEO and Chairman Dale L. GiffordDale L. Gifford
Dale L. Gifford was Hewitt Associates Chief Executive Officer from 1992 and Chairman of the Board of Directors between March 2002 and his retirement in October 2006. Prior to those roles, Gifford managed Hewitt's Southwest and Midwest U.S. Market Groups, international operations, and their...
would be stepping down. The announcement was made in the face of Hewitt's declining stock performance and market worries about the entire BPO sector, but Gifford, who has served as chief executive officer since 1992, indicated the decision was his own, and that he planned to retire.
Just after the closing of the stock market on Thursday, August 10, 2006, the company announced the appointment of the fourth CEO of Hewitt Associates, Russell P. Fradin
Russell P. Fradin
Russell P. Fradin is an American businessman.On May 16, 2011, it was announced that Russell P. Fradin will be leaving AonHewitt to take a position at SunGard, a software and technology services company....
, whose tenure commenced on September 5, 2006. On December 12, 2009 Hewitt announced that Robert A. Schriesehim would be joining the company effective January 4, 2010 as SVP and CFO from Lawson Software, where he had been serving as CFO and a board member.
Russ Fradin continued on as the CEO of the Aon Hewitt subsidiary after Aon Corporation's purchase of Hewitt was completed in November 2010.