If You Outsource, Remember This…

For many human resource departments, reacting to rapid changes in the economyand keeping up with technology have become full-time jobs. Then there are suchadded issues as the global shortage of qualified workers. It isn’t difficult tosee why outsourcing has started to make a lot of sense.

    Yet what makes sense to HR management doesn’t always resonate with employees,and employee buy-in is essential to the success of any outsourcing arrangement.When Bank of America decided to form an alliance with Exult, Inc., an agreementthat included a significant outsourcing component, Bank of America employeeswere taken aback.

    Mary Lou Cagle, business transformation and benefits executive for the bank,says there was a lot of anxiety. “We spent 45 days talking with associates,some individually and some in small groups. We explained the Exult businessmodel and talked to them about the kind of alliance we were creating. Whenemployees saw that Exult-not Bank of America-would make the investments intechnology necessary to streamline their HR jobs and enable Web processes, theyoverwhelmingly accepted the change.

    “We’ve had 100 percent of our senior leadership and 97 percent of ourassociates accept the offer to go to Exult,” Cagle says. “We worked atit.”

    That buy-in is crucial, says Joan Caruso, managing director of The AyersGroup, a human resource consulting firm in New York City. Once you decide tooutsource HR functions-whether it’s all or part of your functionality-you givethat department some stretch. “Especially when you’re being asked to domore with fewer people,” she says.

    Andy Kindler, a partner at Oak Consulting in Lisle, Illinois, whichspecializes in outsourcing senior HR functions for small companies, saysoutsourcing done wrong isn’t always a money saver and, worse, can cause problemsinternally. “I’ve seen it where outsourcing is not good for employeerelations, and actually created problems because the service provider could onlyprovide answers that appear on their computer screen,” he says. If you’reconsidering outsourcing HR, Caruso and Kindler suggest keeping the followingpoints in mind:

• If possible, keep the employee relations functions in-house. Then employeesknow that if they have an issue of concern, there’s a live human being in thecompany they can consult.

• Use technology. The Bank of America/Exult deal utilizes the Web and othertechnology, allowing employees to self-serve many HR tasks. It’s a way toeliminate administrative work and give employees more control.

• Delegate but don’t abdicate. The exporting of tasks can get so far removedthat information doesn’t come back into the company. You can delegate theresponsibility for certain functions, but you have to hang on to accountability.”There is something to be said for touching the work that allows you tostay on top of what’s going on,” Caruso says. “When you farm this outand have someone else do the job, they still need to report in to you.”

• Put a regular reporting system in place and establish what you need to knowimmediately, and what can wait. “Don’t assume the outsourced company knowswhat to report — they don’t know what your threshold is for strange ornormal,” Caruso says.

• Assume responsibility for all HR functions, even those you’re outsourcing.“When I coach, executives often recall giving tasks away and that’sit,” Caruso says. “When something goes wrong, they are quick to pointtheir finger at the outside company. But it should be just like outsourcingpayroll. If your employees aren’t getting paid, someone’s head internally isgoing to be on the block.”

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