How to manage outsourcing partnerships

Richard
Houghton explains why an outsourcing partnership could be just what you’re
looking for

Over
the past couple of years, there has been a fair amount of disagreement about
the benefits of outsourcing the HR function.

Some
in the HR community are resistant to hand over their ‘bread and butter’ to a
third party. However, many organisations taking the outsourcing option have
seen greater innovation, reduced costs and tighter controls.

It
all seems far too difficult to me. Why should I bother?

Three
reasons: cost, service and strategy. The pressures on companies to reduce costs
and keep reducing them are growing day by day. This is being matched by a
greater demand for improvement in service levels and technology.

Add
to this the need for HR to become more involved in strategy, to take a
proactive role in planning what skills are needed, to maximise its use of
resources, and to support senior management in their attempts to attract,
develop and retain top talent, and you have a challenging environment.

Why
is outsourcing a solution?

Placing
the management of utility tasks in the hands of outsourcing professionals means
that HR managers can focus on strategic challenges.

The
most effective outsourcing relationship is a partnership, with the partner
shouldering some of the financial risk by sharing costs. An outsourcing partner
will inject key skills and manage implementation, provide state-of-the-art
technology and be fully accountable for top class service provision.

Is
there an alternative?

Do-it-yourself.
But it’s not all plain sailing. You want to make radical improvements to the
service you provide to staff – which means you need to make fundamental changes
to your HR procedures and the people that manage them.

Typically,
you’ll encounter resistance and dissent from those you work with day in, day
out. Change is more acceptable when introduced from outside; DIY falters when
there is no party with an external vantage point to manage change effectively
and for the long-term.

As
service providers themselves, the outsourcers instil a service mentality among
the HR workforce, a key factor in creating a ‘best in class’ function. Plus,
there’s someone to bear the cost of technological investment and skills
enhancement.

Where
do I start?

Be
honest: About your HR operation’s current capabilities and the issues your
organisation is facing. Remember, firms of any size can benefit from the
expertise of an outsourcing service.

Be
realistic: The transactional parts of the HR function can be managed in new,
smarter ways. But some benefits will take longer to come through than others.
Don’t saddle yourself with unrealistic expectations.

Do
your research: Speak to your peers, professional bodies and other business
contacts, and read the HR press to find out who has the best reputation for
excellent outsource service provision. Talk to their clients to find out how
the relationship works in practice.

Focus
on the future: Set out what you want to achieve in the long-term as a business
and as a department. Choose a partner who can meet and adapt to your needs as
they change over time.

Build
the business case: Any outsourcer worth their salt will help you build the
business case to get the support of both senior management and your own
workforce. They should also work with you on a joint definition of key
performance criteria and service levels.

Commit
to good management, co-operation and interdependence from day one, and you’ll
reap the rewards.

Richard
Houghton is managing director of Xchanging HR Services

Comments are closed.