Chapter 13 - AN Flashcards
Characteristics of functions that may be outsourced HR functions that are typically outsourced* Reasons for outsourcing Risks of outsourcing* Managing outsourcing*
What is outsourcing?
A contractual relationship for the provision of business services by an external provider
HR Offshoring (HRO)?
When outsourcing is done in a foreign country
Characteristics of Potential Outsourcing functions
Rule Based Repetitive Frequently Undertaken Predictable Able to fully or partly automated with technology Able to be delivered by remote sites See HR Planning
Potential Outsourced HR Functions
Mid-term short answer
Compensation
Recruitment and Selection
Training
Health and Safety
Aspects of Compensation for Outsourcing
related to mid-term short answer
Compensation: Payroll, benefits, compensation administration, pension
Aspects of Recruitment and Selection for Outsourcing
related to mid-term short answer
Recruitment and Selection: Advertisements, Screening and applications, Testing, Reference checking, Preliminary Interviews, Executive Salary Negotiations, Exit Interviews
Aspects of Training for Outsourcing
related to mid-term short answer
Program delivery, program design and development, training consulting, training needs analysis, program evaluation, strategic planning, administration, training policies
Aspects of Health and Safety for Outsourcing
related to mid-term short answer
Employee Assistance programs, wellness programs
What are the six major reasons for outsourcing?
1) Financial Savings
2) Strategic Focus
3) Access to advanced technology
4) Improved service levels
5) Access to specialized expertise
6) Organizational politics
Six major reasons for outsourcing: Financial Savings
Cost reduction is typically 10 to 20 percent
Economies of scale from specialized outsourcers who are more efficient
Cost control
decreased capital commitment
Six major reasons for outsourcing: Strategic Focus
Decision to focus on specific core competencies (i.e. customer service or innovation)
Core work is transformational and adds value to employees or customers
Move secondary functions (or non-core work), like benefits admin to firms that do these things well (core competencies for these organizations
Four meanings for core work
1) Activities traditionally performed internally
2) Activities critical to business success- core work contributes directly to the bottom line; non-core work doesn’t
3) Activities creating current or potential competitive advantage
4) Activities that will influence future growth or rejuvenation
Six major reasons for outsourcing: Advanced Technology
Technology has been a main driver of outsourcing
organizations want to improve technical service but cannot find the talent
Technology enables a company to reduce transaction time ( the time it takes to handle a request)
Six major reasons for outsourcing: Improved Service
Quality improvement
Outsource to those who are excellent performers
More flexibility in hiring and rewarding employees
Improved response time, performance and confidentiality
Six major reasons for outsourcing: Specialized expertise
Outsource to organizations that specialize in the service and can do it better than you (best practices), use of experts reduces risks and liabilities
Six major reasons for outsourcing: Organizational Politics
Outsourced function not as visable as an in-house department would be
Outsource to get rid of troublesome department (undeperformers)
Outsource to reduce headcount
What are the 5 Risks and Limitations to Outsourcing
mid-term short answer
Costs Service Risks Employee Morale Security Risks Reduced Value
Risks and Limitations to Outsourcing: Costs
related to mid-term short answer
May not be as cost-effective as anticipated, may be duplication, about 30 percent of outsourcing contracts are not renewed
Risks and Limitations to Outsourcing: Service Risks
related to mid-term short answer
contractual arrangements dictate provision of service, oess flexibility, potential labour relations problems, perceived decrease in customer service, less personal relationships
Risks and Limitations to Outsourcing: Employee Morale
related to mid-term short answer
Outsourcing is a form of restructuring that can create displaced, resentful, alienated and anxious employees- resulting in backlash
Risks and Limitations to Outsourcing: Security Risks
related to mid-term short answer
Increased potential for leaks (particularly for software development), and confidential employee info
Risks and Limitations to Outsourcing: Reduced Value
related to mid-term short answer
Extreme levels of outsourcing hollow out a company, reduced capacity to generate profits or innovate
Up to 20 percent of outsourced HR functions are brought back in-house
What are 3 aspects of managing outsourcing ?
mid-term short answer
1) Selecting the Vendor
2) Negotiating the Contract
3) Monitoring the arrangement
Once outsourcing has been decided the organization needs to do the following activities associated with selecting the vendor):
(Managing outsourcing: Selecting the Vendor)
related to mid-term short answer
1) inform staff of affected function
2) Prepare a request for proposal
3) Invite internal and external bids
4) Establish a team to evaluate bids
