what is outsourcing? the performance by outside parties, on a recurring basis, of tasks that would...

What is Outsourcing?

The performance by outside parties, on a recurring basis, of tasks that would otherwise be performed in-house.

Other Definitions

: In-sourcing: Off-shoring: Co-sourcing: Geo-sourcing: Outplacement

Types of Outsourcing1

: Business Process Outsourcing: Information Technology - 28%: Human Resources – 16%: Sales & Marketing – 15%: Finance – 11%: Administrative – 9%: All Others – 22%

How Common is HRO?: 58% of companies outsource some HR

function2

: 91% of companies with $1 billion+ annual revenues are now considering HRO3

: HRO grew 28% from second half of 2004 to first half of 20054

5 Most Commonly Outsourced HR Services7

1. Background Checks – 73%2. Employee Assistance/Counseling – 66%3. Administration – 67%4. Healthcare Benefits Administration – 60%

Other Types of HR Outsourcing7

: Pension Benefits Administration – 55%: Temporary Staffing – 54%: Retirement Benefits Administration – 47%: Payroll & Software Services – 48% : Recruiting, Staffing & Search– Non-executives - 30% – Executives - 29%

Other Types of HR Outsourcing7

: Employee Relocation – 29%: Training and Development – 21%: Incentives – 19%: HRIS & Web-based Services – 15%: Reference Che: Sourcing Consultants & Legal Services: Screening & Workplace Security: Process, Project, and Systems Management

Least Commonly Outsourced Functions7

: Performance Management 3%: Strategic Business Planning – 4%: Policy Development/Implementation – 4%: Employee Communication Plans – 10%

Why Outsource?: Allow HR to focus on core competencies: Creates strategic opportunities for HR

professionals: Improve quality, efficiency, and effectiveness: Relief from administrative burdens: Reduce operating costs

Other Benefits to HRO: Access to outside HR expertise: Greater diversity of HR services: Leverage vendor investments in technology

rarely available to HR organization: audit, and litigation risks and liabilities: Upgrade level of customer service: Ease time pressure demands:“Better, faster, cheaper”

Risks: Over promise and under deliver: Nonperformance of key function: Cost: Loss of institutional knowledge: Difficulty managing vendor relationship: Change in provider’s business or financial

stability: Lack of fit with company culture: Organizational resistance or unreadiness

When to Outsource: High HR service delivery costs: No further investment in technology: End administration of transactions and focus

on strategic work: Improve quality of HR services : Strong business case : Other business reasons

Impact on Companies

: Employee reactions: HR executives taking part in operational and

strategic decisions: Elimination of bureaucracy: Customer service improvements

Impact on Companies (cont’d)

: Growth of self-service platform: Slimming down staff: Cost savings: Model will serve to guide other organizational

functions (IT, accounting)

Impact on HR Profession

: Internal HR at significant disadvantage in cost per transaction

: Loss of control of key processes: Enhanced credibility: Strategic focus: Decentralized structure: Internal politics – HR as business partner: Move to customer service culture

Impact on HR Profession (cont’d)

: Management and Organizational Development – big picture view

: New roles – consultant and HR strategist: Develop competencies to remain valuable: HR is exposed and more visible as

organizational function: HR is far more measurable : Align HR strategy with corporate goals

• 1. Managing relationship• In the outsourcing business, as the employees’ have to

deal with people from other cultures, the communication, language, etc poses a great threat to the employees.

• Understanding the culture and managing the relationship with the vendor as well as the end customer is a big challenge. Training on these aspects is necessary. .

• Cross cultural understanding with emphasis on language is one of the main areas of training that has to be imparted.

2. Managing process

• The process that is being outsourced may be a complicated process which has to be understood by the vendor as well as by the service provider.

• As the information flow is through many channels, it poses a challenge to the service provider.

• Understanding the new process and accustoming the new process is essential for a successful outsourcing.

• 3. Self Identity• As in some cases the client needs the service in his

native touch, the service provider• has to change his or her language, accent, mannerism,

and some times name to serve the• customer. This leads to the situation of self-identify

confusions. After the service, the• employee is in confusion whether to be in the native

culture or to be in the other culture. In• recent days this has become a social issue.

• 4. Vendor Selection• The business is being selected taking many criteria in to account. Even

after doing• many analysis some times the vendor selection proves to be a costly

fault. Hence caution• should be taken in the choice of vendors.• 5. Change management• There is a lot of change that has happened in the field of outsourcing.

The working• rules are being changed on daily basis. No more restrictions on work

timings. Outsourcing• has made the work timings so flexible in such a way that according to

the client need the

• work hours are being fixed. As the client changes the work hours of the employee is being

• changed. Similarly, the wage component has also changed because of outsourcing. The

• average age of the employees in the organizations where outsourcing is the main business,

• keeps on coming down. Managing the young workers is also a problem.

• 6. Structuring of Contract• International contracts are bound by many legal

restrictions. The contract between the vendor and the service provider must be drafted in such a way that it takes of care of even the unexpected occurrences, otherwise one or both the parties have to incur loses.

• As many of the vendors are US based, the unexpected fall or rise in the dollar value can be

• dealt with care while structuring the contract.

• challenges of HR manager during mergers and acquisitions

• 1. Restructuring• We are all aware of both the opportunities and obstacles inherent in the

strategic• restructuring process in Mergers and acquisitions. Any significant structural

transition will• impact the people at all levels of the organization. As a result, a particular area of• consideration that holds both promise and peril is that of human resources, or

HR. A highly• integrative restructuring - anything from a joint venture to a merger - is all about

transitions,• and the needs, perceptions, concerns, fears and possibilities of people all

become magnified• during transitions. Thus while these concepts are applicable to all forms of

strategic• restructuring, it is more important for the HR managers.

• 2. Change Agent• An effective HR function with developed expertise should provide the guidance and• the process skills necessary to maneuver the challenges of a merger. The biggest

challenge• is that the HR function tends to be underdeveloped in relation to the programmatic

and• finance functions in many organizations. HR has typically evolved out of the finance

office,• and is given the mandate of keeping things legal, keeping the records, and meeting

the• increasing external demands. HR in order to have real impact must be able to take

the lead• in proposing, creating, and integrating best practices with regard to people, culture,

rewards• and performance.

• 3. Creating Culture• Overlooking the differences between organizational culture of the partners, and• spending insufficient time on creating a new, integrated culture is the biggest

challenge for• the HR managers in international mergers and acquisitions. Cultural integration is

critical• for the success of merger and acquisition. Aspects of cultural integration include:

respect• what was, keep the best, create what you want, address fears; deal with neutral-

zone• issues etc. Replicating in the new organizations the processes and functions that

existed in• the previous entities by the employees is a main issue that has to be addressed

while• working on a cultural integration.

• 4. Communication• Many mergers and acquisition fail because of the lack of communication. During• M&A the biggest challenge is fear of, and resistance to change from the part of employees.• Accurate communications exacerbates this fear and the associated resistance. Not knowing• the role to be played in the newer organization, not sure of compensation benefits. If the

• communication process takes time the organization will loose competent employees. Multiple• communication approach would be the most effective and lowest risk strategy during M &• A. Plans and processes are to be communicated to the employees. Also it is important to• make the employees know how they could help themselves, and what help they could• expect from the company. Workshops for managers and a program of people management• workshops can be put in place to support the communication of the new processes. The• core merger has to be understood at group level, accommodated in the form of regional• plans and then communicated in a meaningful way - so there could be no room for• miscomprehension or error at any level.

5. Winning hearts and minds

• What is important is to try and reach the hearts and minds of the staff and to realize that this would be the single hardest part of the entire exercise. Employee surveys can be used for this process. The surveys will help to identify how people are feeling and to gauge general sentiment and morale. Survey also helps to know how effective the strategy is and which elements need more work. The survey findings can be fed into the next stage to develop a new career path together with a full coaching and mentoring program which an form the basis of Performance Management System (PMS), which allows individuals to understand which skills and training they need to follow a certain career stream.

6. Framing policies and practices

The merger will present an opportunity to undertake an objective review of HR policy and services across the newly created business and establish the best practice.

More importantly, it provides a chance to implement HR initiatives that would enable motivational and productive working environments across all operations, regardless of location.

7. Bigger work force

• Because of the merger and acquisitions, the organizations grow big and thereby the work force increases, which is a big challenge to be addressed. Beyond the undisputed logic of the merger lay the pragmatic challenge of integrating and managing people across the world.

• Retaining and developing those skills which were the strengths of the organizations before merger was a key priority. Retaining and recruiting is critical to the future performance of the new (merged) organization.

• 9. Quick Reaction• It was also acknowledged that failure to act quickly and create a new organization• and structure that every employee could identify with, could have detrimental

effects on• the company’s long-term vision.• 10. Setting key priorities• Underpinning all of the activities undertaken at the time of M & A and identifying a

set• of key priorities which allows everyone involved to focus their energies and efforts

on the• right areas is a challenge for HR managers. These priorities included:• ∗ Building a new ethos and culture for the company which staff could connect with;• ∗ Speed and clarity of communication;• ∗ Establishing a common framework; and• ∗ Ensuring equality and openness.

• Repatriation• Repatriation means return to one’s home

country from an overseas management• assignment. Few expatriates remain overseas

for the duration of their stay with the firm.

• MULTI CULTURAL organasation

Copyright © by Houghton Mifflin Company. All rights reserved. 36

Global Workforce Diversity• In Canada:– Minorities are the fastest-growing segment of the

population and the workforce.– Women make up two-thirds of the growth in the

Canadian workforce.• In Europe:– After the opening of borders, more than two million

Europeans are now working in another European country.

• In Asia:– Companies in Asia are also encountering increasing

diversity.

DIVERSITY AND GLOBAL CULTURES

Diversity In The Workplace

MODULE GUIDE 6.1

• People of color increasing percent of workforce • Hispanics fastest-growing minority group in workforce • Minorities highly represented in lower-wage service-sector jobs • More workers from nontraditional families • Average age of workers rising • Religious diversity of workers increasing • More women working • There is a business case for diversity. • Inclusive organizational cultures value and support diversity. • Organizational subcultures can create diversity challenges. • Minorities and women suffer diversity bias in many situations. • Managing diversity should be top leadership priority.

DIVERSITY IN THE WORKPLACE

Organizational Culture

• Inclusivity– How open the organization is to someone who can do the job

• Culture– A shared set of beliefs, values and patterns of behavior common to

group of people• Multicultural Organization

– Organization based on pluralism and operates with respect for diversity

• Organizational Subcultures – Groupings of people based on shared demographics and job

identities• Ethnocentrism

– The belief that one’s sub-cultural group or membership is superior to all others

DIVERSITY IN THE WORKPLACE

Organizational Culture

• Characteristics of a Multicultural Organization – Pluralism

• Members of minority and majority cultures influence key values and policies.

– Structural integration • Minority-culture members are well represented at all levels and in all

responsibilities. – Informal network integration

• Mentoring and support groups assist career development of minority-culture members.

– Absence of prejudice and discrimination • Training and task force activities support goal of eliminating culture-

group biases. – Minimum inter-group conflict

• Members of minority and majority cultures avoid destructive conflicts.


Managing the Multicultural Organization

• Managerial Behavior Across Cultures– Variations due to cultural background in individual

beliefs about authority, power, and the purpose of organizational structures shape manager-employee relationships.

• Multicultural Organization as Competitive Advantage– Since the workforce is becoming more diverse, the

companies that value and integrate diverse employees the fastest and the best will reap the most benefits.


Six Ways That Managing Diversity Can Create Competitive Advantage, Table 3.3


Creating the Multicultural Organization• Pluralism– A pluralistic organization is one that has mixed membership

and takes steps to fully involve all people who differ from the dominant group.

• Full Structural Integration– When an organization has minority group members serving

at all levels, performing all functions, and working in all work groups, we say it has achieved full structural integration.

• Integration of Informal Networks– Mentoring programs, special social events, and support

groups for minorities can foster integration in informal networks.


Creating the Multicultural Organization [continued]

• Absence of Prejudice– Equal opportunity seminars, in-house focus groups,

and bias reduction training can help facilitate an absence of prejudice and discrimination in an organization.

• Equal Identification with Goals– When members of different groups participate fully

in determining the organization’s direction and deciding how to meet its goals, they better understand the organization and their places in it.


Creating the Multicultural Organization [continued]

• Minimal Intergroup Conflict– Conflict based on cultural differences that divides

employees along cultural lines is usually considered unhealthy and detrimental to the multicultural organization.


Table 3.4 Creating the Multicultural Organization

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