Les 4

Question 1

Outsourcing

Answer 1

A consultant advises the implementation of specific HR practices or a fir takes over entire HR processes. The use of EXTERNAL agents to perform one or more organizational activities.

Question 2

Operational reasons for HR outsourcing

Answer 2

• Cost saving (economy of scale, economy of scope, economy of skill)
• Saving on labor “head count”
• Buffer against ups-and-downs (e.g. Selection)
• Insufficient resources (e.g. Assessment)
• Developments in HR-technology
• Imitating others

Question 3

Strategic reasons for HR outsourcing

Answer 3

• Focus on core value creating activities
• Increase innovation capabilities
• Increase financial flexibility (& risk spreading)
• Need for specialized knowledge

Question 4

Risks of outsourcing

Answer 4

• Loss of control
• Dependance on the supplier
• Hidden costs
• Loss of expertise and knowledge
• Negative influence on employees
• Irreversabilty
• Risk of opportunistic partners
• Risk of information leaks
• Cultural differences and conflicts
• Intensive management of the relationship

Question 5

outsourcing decision matrix

Answer 5

Is the activity interdependent and is it of strategic importance?

Question 6

Results of study on outsourcing by Delmotte and Sels

Answer 6

• Strong relation between the degree of strategic anchoring of HR and the degree of HR-outsourcing (in line with hypothesis 1)
• No relation between degree of outsourcing and focus on cost reduction in HRM (opposed to hypothesis 2)

Question 7

The effect of outsourcing on organizational performance

Answer 7

One study showed no direct effect between outsourcing and organizational performance. They did find a moderating effect: outsourcing leads to positive results when the company pursues a cost leadership strategy. Results also showed that outsourcing perpherical activities was good for a more innovation-differentiation strategy.
A second study showed that the outsourcing of training and payroll was associated with more innovativeness and outsourcing training lead to more stakeholder performance. They also did not find a relationship with financial performance.

Question 8

Criteria for make or buy

Answer 8

• Core activity?
• Standardized?
• Company Specific?
• Need for internal presence?
• Dependant on other HR-activities?
• Confidential Information?
• Contract?

Question 9

7 deadly sins of outsourcing

Answer 9

1. Outsourcing activities that should not be outsourced
2. Selecting the wrong vendor
3. Writing a poor contract
4. Overlooking personnel issues
5. Losing control over the outsourced activity
6. Overlooking the hidden cost of outsourcing
7. Failing to plan an exit strategy

Question 10

Survey phases

Answer 10

1. Preparation phase (pooling resources)
2. Design and development
3. Communication
4. Survey administration
5. Analysis and interpretation
6. Presenting
7. (transfer & action planning)