Why Hewitt Acquired LCG

Posted By on Apr 29, 2008

Absence CartoonHewitt announced this morning that they have acquired the assets of the LewisCo Group (LCG) as a means of creating a comprehensive, end-to-end solution for absence management. According to the release, the combination of Hewitt’s existing leave administration solution with LCG’s absence management suite will serve approximately 60 clients and over 2.3 million individuals.

This is a very significant acquisition and will have a cascading effect on the HR industry. In my opinion, Hewitt has effectively boxed out both EAP and HRO providers from potentially leveraging LCG’s Nucleus technology platform and other value-added services. What remains to be seen is if Hewitt continues to offer distribution and access services to its former outsourcing foes as part of a wisely morphed (and highly focused) transition to be “all-things-benefits” in the HR industry. I applaud Hewitt for seeing the value in the particular subsegment.

So why all the hubbub? According to the most recent CCH Unscheduled Absence Survey, while 34% of employees call in sick at the last minute due to “personal illness”, 66% of those are actually dealing with personal or family issues. Said CCH Employment Law Analyst Pamela Wolf:

“Unscheduled absenteeism is a problem that no organization can afford to ignore either from a cost or productivity standpoint. With the appropriate programs in place, businesses can significantly reduce the number of last minute no-shows, improve the work environment for all employees and realize substantial savings.”

And the LCG/Hewitt combination addresses much more than just unscheduled absences. Said the announcement:

“With solutions including administration and management of all forms of absence, Web-based data integration and reporting, root cause analysis, and innovative return-to-work programs, LCG’s approach identifies and addresses the fundamental causes of unplanned absence to help employers better manage costs and maintain compliance. The combination of Hewitt’s rich health plan usage data and expertise in absence management consulting, coupled with LCG’s absence and clinical information, will allow Hewitt to identify the unique patterns linking health and absenteeism that, when addressed proactively, can lead to improved workforce productivity.”

Having personally seen the LCG system in action, I will say that this is a tremendous value-add to the Hewitt portfolio. So who else is left in the market? Most of the major HRMS/HRIS systems have basic absence management capabilities, but they lack significant depth in features and functionality. Absentys is also on the market and had announced a distribution relationship with ACS/Buck in July of last year. In my opinion, this will continue to be a hot sub-market with tremendous potential ROI.

Let’s keep the conversation going.

1 Comment

  1. Great post Mark. I agree completely that this space is untapped and will continue to both innovate and transform over the upcoming 3 years or so. Huge potential savings in both absentee costs as well as automation. Thanks for following so closely and posting.

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