I’m not talking about the highly transactional stuff like payroll, benefits, or technology. In general, there’s a huge return on some of the administrative and transactional processes. What we’re really talking about are the strategic activities, but even that gets a bit gray, as I personally think that just about anything can be outsourced.
Take for example compensation planning. At the lowest level of job definition, a job which is done by compensation analysts today, the market pricing of a job is clearly an activity that determines how well positioned an employer is in recruiting and retaining employees. However, once some basic instruction has been given, how an HRO organization loads, ages, and compares different market pricing data for jobs is a fairly straightforward affair.
HR managers provide constant advise to senior managers on different issues of internal management of the organisation. Effective execution of this role requires continued understanding of the business environment-organisational priorities-HR system linkages. Very few outsiders would be able to establish such linkages on a sustained basis. Outsourcing agencies, at best, can suggest interventions that are problem-specific. The outsourcing of advisory role will generate increasing dependence on external agencies which is likely to prove expensive and less effective. ((Maheshwari, Sunil, July 17, 2006. “Some HR functions should never be outsourced.” Retrieved from http://www.financialexpress.com/fe_full_story.php?content_id=134176 on July 31, 2006.))
Finally, the outsourcing of ‘change management’ activities can only be partial where the agencies could be consulted to develop appropriate strategies for change management at different stages. Day-to-day change management efforts require intense interaction of HR managers with line managers and others. It would be extremely difficult and is unlikely to be effective if change management activities are outsourced.
First of all, let me agree with Mr. Maheshwari: In general, HR managers provide an excellent understanding of the business environment and how the approach of HR effects the business, or how it must be changed to advantageously effect the business. However, in every outsourcing deal I’ve ever seen, there is either a strong retained organization to accomplish this task, or the retained organization is acquired by the outsourcer. In no circumstance have I ever seen an HRO implementation leave a client without on-site HR support. While the point is taken that on-site HR managers provide extreme value, the idea that this should not be outsourced is non-sensible to me.
The second paragraph addresses the outsourcing of change management. In my opinion, this is an area that should be outsourced 80% of the time. Except in the most unusual organizations (usually large, complex, and quite mature) change management practitioners often do not have the staff or ability to actively manage complex, ongoing change. Consultancies often bring in the right amount of expertise and headcount to actually help effect change in the organization. They also have an understanding of true change management that goes to the behavioral level, as opposed to sending out communications and training materials.
What’s critical in the outsourcing decision is that each component should be thoughtfully measured for impact and the ability to improve effectiveness. Today there is very little that some company somewhere won’t take on. What should not get outsourced at your organization depends on the current capabilities, effectiveness and cost. If either of the first 2 are low, or the last is comparatively high, it really doesn’t matter where on the transactional – strategic spectrum the task is at.
2 responses to “Some Things Should Never Be Outsourced?”
[…] Some Things Should Never Be Outsourced? HR/HCM Radar I’m not talking about the highly transactional stuff like payroll, benefits, or technology. In general, there’s a huge return on some of the administrative and transactional processes. What we’re really talking about are the strategic activities, but even that gets a bit gray, as I personally think that just about anything can be […] Read more… I’m not talking about the highly transactional stuff like payroll, benefits, or technology. In general, there’s a huge return on some of the administrative and transactional processes. What we’re really talking about are the strategic activities, but even that gets a bit gray, as I personally think that just about anything can be outsourced.Take for example compensation planning. At the lowest level of job definition, a job which is done by compensation analysts today, the market pricing of a job is clearly an activity that determines how well positioned an employer is in recruiting and retaining employees. However, once some basic instruction has been given, how an HRO organization loads, ages, and compares different market pricing data for jobs is a fairly straightforward affair. HR managers provide constant advise to senior managers on different issues of internal management of the organisation. Effective execution of this role requires continued understanding of the business environment-organisational priorities-HR system linkages. Very few outsiders would be able to establish such linkages on a sustained basis. Outsourcing agencies, at best, can suggest interventions that are problem-specific. The outsourcing of advisory role will generate increasing dependence on external agencies which is likely to prove expensive and less effective. 1Finally, the … By systematicHR Tags: talent management hr outsourcing hcm hro E-mail | PDF | Save | Blog this! | Related stories: | Bookmark: | Follow: 11/06/2006 03:05:00 AM […]
[…] Interesting post by DD.Except in the most unusual organizations (usually large, complex, and quite mature) change management practitioners often do not have the staff or ability to actively manage complex, ongoing change. Consultancies often bring in the right amount of expertise and headcount to actually help effect change in the organization. They also have an understanding of true change management that goes to the behavioral level, as opposed to sending out communications and training materials.I believe that traditional HR within organizations outsource both the very low end work as well as the very high end work.Change Management outsourcing is a reality as organizations strive for objectivity and hiring an external consultant helps in maintaining that perception, no matter how impartial the HR head is.There are some advice that are followed just because real money has been paid to get it.It’s all about perceived value.Or as the Hindi saying puts it pithily “Ghar ki murgi daal barabar” Add to Technorati faves | Digg This post | Buzz It! […]