Platt Perspective on Business and Technology

When and if it might make sense to outsource Human Resources 4

Posted in HR and personnel, outsourcing and globalization by Timothy Platt on January 24, 2013

This is my fourth installment in a series in which I discuss issues and considerations that would go into determining whether Human Resources functions and processes should be retained in-house, or whether they should be outsourced to third party providers – and if so for which services (see HR and Personnel, postings 134 and loosely following for Parts 1-3.)

I said at the end of Part 3 that I would turn to discuss the issues of in-house versus outsourced Human Resources from the employee and manager perspective in this posting and I begin doing so by grouping all employees – with and without management responsibilities in their job descriptions and responsibilities, into one group of constituent stakeholders. And I bring their experience and needs into focus with an example that generically would be familiar to most any reader of this posting: calling a phone system customer help or support desk and particularly during off-hours.

I am writing explicitly about HR support and its availability and effectiveness, but cite a more widely experienced working example that would include help desk support in general, as outsourced HR help desk and phone based support carries with it essentially all of the same strengths and weaknesses as are found when consumers call for retail business or manufacturer customer support. All of these are third party provided from the caller perspective and both can involve connecting with people who are very distantly located and who are primarily if not exclusively reading from scripts, for any actual answers provided. And they can be badly written and inflexible scripts and read through the barriers of language and culture differences.

I have a lot of colleagues who I really respect professionally in places like Mumbai and Chennai, India (formally known as Bombay and Madras, respectively) and in businesses that provide third party help desk support. They and their competitors, collectively comprising a minor growth industry, have come to play an increasingly significant and pervasive element to the help desk and customer support system and for a tremendous range of commercial enterprises. And I add that some of my own best experiences in reaching out for help desk support as a consumer and business professional have come from distantly located professionals who spoke expertly and with concern for the customer. But I have to add that some of my most difficult and frustrating experiences have come from having to deal with poorly trained help desk and support personnel, reading from badly drafted scripts who did not have anyone to escalate a call to that they could not handle. And it is the bad experiences that we remember and talk about.

When an employee seeks help from a distant third party Human Resources center, chances at that they are calling about an issue or a problem that is very significant to them. This holds with equal force for lower level employees and for senior managers, or for anyone in-between. And when a business brings onboard a third party HR provider that comes to be seen from shared negative stories, as being more of a problem itself than an answer to problems, that raises questions about the competence of the business’ leaders in general. If they cannot run their own business for its internal functioning and in ways that are supportive of the people who work there, what can they do right?

• This creates problems for rank and file employees and for their managers as they have to deal with members of their teams who are distracted and upset.
• This can negatively impact upon overall business productivity.
• This type of challenge can and does negatively impact on staff retention and particularly for employees who are most difficult to replace with special combinations of skills and experience – that other businesses would be eager to hire away. Bad workplace experiences can in effect help lead your most valuable employees toward the exit.
• And I have to add that when communications disconnects and related problems stemming from poorly outsourced HR cause breakdowns in addressing issues such as discrimination or harassment challenges, that leads to very high level risks for the business as a whole and with potential consequences that can become very severe and very quickly.
• And once a Human Resources capability that was in-house is outsourced and dismantled, it can be difficult and expensive to recreate it back in-house again if outsourcing this area of business functionality has not worked out. Outsourcing is not irrevocable or nonreversible but doing so carries with it at least a short term costs-barrier that would have to be accepted and dealt with and that can be significantly large.

I write of this as a set of due diligence and risk identification and remediation issues, and outsourcing or keeping in-house an area of business functionality is always at least in significant part exactly that. From an employee perspective, outsourcing HR can be risky and with risks that outweigh benefits if it is not done effectively or if the wrong HR functions are shipped out.

I am going to turn next to consider Human Resources in the multinational corporation setting, and where centralization or dispersed localization, or some combination thereof would make more sense – think of this as a discussion of where “in-house outsourcing” might make sense, where that is how a business’ employees would see this. Meanwhile, you can find this and related postings at HR and Personnel and also at Outsourcing and Globalization.

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