Outsourcing,
restructuring, corporate acquisition and consolidation usually spell
dislocation for the workforce. This presents HR professionals with a great challenge.
Sara Bean reports on how one of Europe’s largest computer service companies
copes with constant change
The
legal and practical considerations of organisational change often present the
greatest challenge to an HR professional. How do you ensure a smooth transition
while managing both corporate needs and those of the individuals affected by the
change, and negotiating numerous legal hurdles including Tupe, information and
consultation laws and contractual matters?
HR
specialists at EDS grapple with the question every day. The US-based global
company pioneered the IT services industry back in the 1960s, and now supplies
e-business and information technology services to client organisations in 46
countries. But when EDS takes over the running of the IT department of a
blue-chip client, it also assumes responsibility for the people who work there.
Although the company has a high graduate intake (over 600 graduates in the UK
alone in 2000 and 2001), just over 40 per cent of its 38,000 employees in
Europe joined the company by transferring from a client organisation.
Managing
the needs not only of the client, but of EDS and the transferring employees is
a daunting brief. The company’s rate of growth is way ahead of the market rate
– since 1984 it has made around 400 outsourcing deals throughout Europe.
"It’s
a massive challenge," says Graeme Simms, EDS HR director for Europe.
"There may be a lot of technology around supporting change, but seamless
transition is a difficult goal. In fact, I spend 90 per cent of my time
managing the change drivers needed to integrate thousands of new people into
the organisation."
And,
explains Simms, "When you get a global organisation wanting to outsource
in more than one country, you cannot isolate those countries in the way you
treat the workforce."
Because
many of the organisations that enter an outsourcing relationship operate
internationally, EDS often has to navigate its way through the legal, political
and socio-economic mores of a number of countries simultaneously. For example,
in 2001, the company signed a contract with the Swedish-based engineering firm SKF,
which entailed the transfer of some 700 people across 39 countries. Not
surprisingly, the company relies heavily on the services of its solicitors,
Allen & Overy, who not only advise on the legal aspects of a transition,
but also work in close partnership to satisfy the business requirements of many
projects.
Pension
protection
Dr
Neil Bentley, employee relations specialist for EDS Europe, says the company’s
mantra is always to stay legally compliant when people transfer. The firm aims to
offer the same terms and conditions overall as the outgoing employer, including
pensions rights. This is more generous than the current Tupe position, which
does not require the pensions of transferring employees to be protected –
although that may change under the Government’s review of the regulations.
However, explains Bentley, it is just as important to minimise the apprehension
of incoming employees who find they are now working for an entirely different
organisation from the one they chose to join.
EDS
places emphasis on good communications throughout a transition programme which,
because it can take around 18 months to complete, can be a time of anxiety for
those involved in the move. Says Bentley, "People are our focus, and that
sort of change can be traumatic. Few people like change. We try and alleviate
that stress and address those fears. We aim to be the employer of choice,
offering all our staff the best opportunities."
The
company has found that the legal requirement for works councils in many
European countries is a useful reference point when dealing with, and
reassuring, nervous transferees. The firm’s European Works Council, with
representatives from 17 countries, and the domestic works councils in 12
countries, are closely involved with transition projects; many of the current
representatives are able to offer experience of moving from one company to
another with new recruits.
Their
motivation, says Bentley, is that the employee representatives see themselves
as having a positive role to play in company development. "They understand
the need to be able to cope with the business changes. There is a trust between
management and works council representatives which works both ways. For that
reason, the works councils are there to tell the truth, to give their honest
opinion on their experiences of working for EDS."
Consultation
process
A
typical transition programme operates in three phases. During the
pre-transition period, EDS and the outgoing company will discuss the employee
benefits, terms and conditions, and cultural and organisational details
involved in the move. The two companies will also enter into consultation with
the employees themselves, either with an employee representative group set up
especially for the transition, an incumbent works council or a trades union.
This
process also applies to the UK, where there have been 120 outsourcing deals
since the company was established in 1984, 102 of which have taken place since
1994. In fact, over the last five years the firm’s UK base has doubled in size,
its ranks swelled by new recruits such as the Inland Revenue, the London
Borough of Brent, Rolls Royce, the DVLA, the Royal Bank of Scotland and Xerox.
In
the UK, explains Lance Williams, HR director, the union is often very much part
of the transition process. "Of the 120 transfers into EDS in the UK, a
third of them have involved trade unions. The UK does not currently have a
mature works council infrastructure, so much of our work has been with trade
unions. We find that moving people from the public to the private sector
usually involves a union."
And
although Williams agrees that the eventual introduction of the European
directive on informing and consulting employees in the UK will invariably mean
that more become involved in outsourcing programmes, he says, "I think
that the trade unions will continue to make a significant contribution in the
overall employee relations arena."
During
the pre-transition period EDS will also develop a transition and acclimation
plan for all the new employees, and give them the opportunity to meet with EDS
representatives to discuss the implications of the move.
The
second phase of the transition process is the transfer itself, the effects of
which, explains Williams, the firm likes to keep to a minimum. "Our main
aim is to ensure that day one in EDS is just like the previous day in the old
organisation so that we are able to take the employees with us through change."
Importance
of communication
By
the time the transfer takes place, a full communication programme will be
underway with details of all new personnel set up in the administration system.
Company managers will be on site to answer queries. New recruits are gradually
assimilated into the company. According to Williams, labour attrition rates are
low, with an average turnover of only around four per cent among people who
have transferred, compared with an industry average of 15 per cent. The company
avoids relocating staff where possible, preferring to keep employees at the
original site through development of the existing business.
The
company is a plural society because of this, explains Williams. It harbours a
common set of values and practice overlaid with a culturally sensitive approach
to each client and market place, he says.
For
example, the staff at the DVLA, embedded into EDS seven years ago, will be more
integrated than those who came in via the ITSA deal with the Department of
Social Security last year (see case study).
But
ultimately, says Williams "we’re committed to growing each account and
usually increase opportunities, not deplete them".
"We’re
careful not to eliminate the best practice that comes across, but build upon it
with our additional expertise and knowledge, while adding a greater opportunity
for training and development."
Case
study – ITSA
In
a major deal with the Department of Social Security (now the Department for
Work and Pensions) last August, EDS took over the management of the
department’s IT operations.
The
agreement involved the transfer of 1,550 staff from the DSS’ Information
Technology Services Agency (ITSA) to EDS. The company established a three-way
consultation process between the Public and Commercial Services union (which
had a collective agreement covering the entire workforce), the outgoing employer
and EDS to discuss all aspects of the transfer from Tupe to pay and conditions.
Because the collective agreement between the existing employer and union still
applied at that point, the company got in as early as possible to address
concerns and inform the trade union of any operational changes envisaged.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
Once
the administrative changes had been agreed, the company issued a "measures
statement" that outlined processes that might change for employees as part
of their transfer from a public to a private company. This dialogue was
conducted as a three way process all the way through to the point of transfer.
This
article first appeared in the February 2002 edition of Employers’ Law. To subscribe click here
