Change managementOn 18 Apr 2000 in Personnel Today Related posts:No related photos. Outsourcing is set to change the nature of the personnel profession, with ashift in focus from service provision to partnership nurturing. But what kindof skills will professionals need to succeed in this brave new world of HRShivers went through the HR world at the recent news that BP Amoco isoutsourcing virtually the whole of its personnel function, involving thetransfer of up to 350 staff. The £370m five-year deal – by far the biggest ofits kind – is a gamble both for the company and US provider Exult, which nowhas little more than a year to start showing results.That is a tall order for a new entrant to the market with no track record.But through an aggressive use of web technology, which long-established UKoutsourcing companies have been slower to take advantage of, BP Amoco isbetting it will succeed in yielding significant cost savings and serviceimprovements.In that case the scepticism employers have traditionally felt aboutoutsourcing could dissipate and other companies would be encouraged to followsuit. BP Amoco is only one of at least half a dozen major concerns said to haveplans in that direction, and a trend also shows signs of developing in thepublic sector, with Lincolnshire local authority following Westminster byoutsourcing its entire HR function last year.But if deals of this size become common, where does that leave HR as aprofession? Concerns have been voiced that when training, recruitment, legal advice andother mainstream personnel activities come to be treated on the same level aspayroll and pensions, the function will be fatally downgraded. Far frombecoming ever more central to a business, as many have been urging, the averageHR professional will eventually be marginalised.Not so, say many experts, who argue that the need for HR in organisations isin no way diminished by outsourcing administration functions. On the contrary,the more of the day-to-day tasks that can be handled by third parties, theeasier it will be for HR to provide the kind of strategic advice organisationsneed to work effectively. Meanwhile, those who work for outsourcing companieswill enjoy varied challenges and opportunities for development that are notalways available in the HR departments of large organisations.In effect, outsourcing can be seen as cementing a split between these twoarms of HR. “It could change the nature of the profession,” declaresMarta White, managing director of search firm DS Wolf International.”Administration can be 80 per cent of the burden and without that hasslethere will be opportunities for those who are more strategically oriented tobring their expertise to organisations.”She adds, however, that HR departments will increasingly be charged withmanaging outsourcing contracts, a role which many think will require new skillsand competencies.David Koch, European leader for HR sourcing at PricewaterhouseCoopers, says,”You are establishing a partnership with the organisation, not a service,so you will need a different kind of person, someone who is focused on managingrelationships rather than handling transactions. It doesn’t take a lot of thosesorts of people but it needs to be someone with clout.” Koch says he often hears stories of chief executives asking why they need anHR department at all, but argues that there still has to be someone in thecompany who understands its culture and internal workings. To deliver services effectively,the outsourcing partner will often need internal change to take place in theclient organisation – something it is not equipped to handle.”If we are having difficulty delivering services, we need to sit downwith the client to learn what issues they are facing and how we can help themmeet those needs,” he says. “There also has to be someone in theorganisation who knows where to go for talent and understands where the bestperformers come from. That is something the outsourcing organisation will takeyears to understand.”At Penna HR Consulting, chief executive Suzie Mummé believes that in thefuture there will be more competition for fewer HR roles. “HR will have toidentify the best companies to work for, with enlightened CEOs who see them asa partner not as a processor,” she says. “Then they will have todevelop an ability to manage strategic initiatives in such areas as resourceplanning, operational excellence, and leadership issues.”Be selectiveInstead of outsourcing non-core competencies to a variety of specialistagencies, Mummé sees the HR professional of the future developing strongrelationships with just a few, who themselves will have fewer clients. Butthese experts will be unlikely to understand the culture of the organisation,so HR will need to adopt a partnership mentality, being more open to get thebest out of them. Influencing and conflict management skills will be importantas well, which means developing gravitas and credibility.To be useful as strategic advisers, Mummé says HR professionals also need tospend time studying trends and best practice, for instance, by picking up thelatest thinking from gurus, establishing networks with peer groups andresearching the market for the best providers.To the board of a company, outsourcing might seem an attractive way ofachieving cost savings, quality and flexibility. The ideal is a deliveryservice that can be ramped up quickly and then turned off when the requirementis satisfied. But the need to have HR controlling and monitoring the deliveryof strategic objectives will always remain.For instance, an HR director who is closely in touch with the provider of anemployee assistance programme might learn a lot about the effects of changesbeing carried out in the organisation, information not necessarily availablefrom other sources, points out Philip Sanders, managing director of EAPprovider PPC.”A company that is downsizing or regionalising faces a huge potentialimpact,” Sanders says. “We would monitor the phone calls comingthrough and advise HR if we are getting significant numbers of complaintsconcerning the effects on employees’ health as a consequence of thesechanges.”Contract management, however, is a competence most HR departments lack,argues Colin Carmichael, partner at Organisation Consulting Partnership.”That’s a real issue for companies, because unless they can managethird-party providers they will have big problems in the future,” he says.”They need to be careful at the outset that they don’t find themselves ina contract that ultimately delivers more benefit to the provider than to thecompany doing the outsourcing.”HR will also have to work to convince other departments in the organisationthat it has something to offer, Carmichael believes. “A lot of linemanagers want the basics done well and may not have an expectation of muchbeyond that. The personal credibility of senior players in HR is to add valueto the company, and outsourcing will help by giving them the space they need tobe strategic.”If outsourcing becomes the norm, one major effect will be that HRprofessionals will be less likely to follow careers in organisations operatingin specific sectors. Instead they will be employed by outsourcing providers,handling a range of different accounts.That may be a cause for concern for some, but from the perspective ofoutsourcers themselves there are obvious advantages. Alison Humphries, directorof Barkers Norman Broadbent (BNB) Outsourcing, says, “It provides muchgreater opportunities. With an outsourcing partner the role of HR professionalsbecomes central rather than peripheral. Instead of being regarded as being ofdoubtful value they will find themselves an essential fee-earning part of theirbusiness.”Nor need HR staff being transferred to another company necessarily feel theyare being dumped, Humphries says. In her experience, employers putting out totender are usually keen to ensure that the outsourcing partner can provideoutgoing staff with good career development opportunities.Similarly, at Rebus HR Services, personnel services director Michelle Walkerpoints out that outsourcing gives HR professionals a more varied andchallenging agenda. “We are servicing more than 110 clients for personnelservices across a range of services, including financial services, educationand manufacturing. My staff act more as consultants, which gives them thechance to become much more rounded in their skills. And when they choose toprogress, their CVs will be much broader as a result.”Get wiredTechnology is a major element in managing outsourcing relationships andthose who use it effectively are likely to gain an advantage. A key factor inthe BP Amoco deal with Exult is the provider’s emphasis on the Internet andcompany intranets as a communication channel for employees. Systems that enablestaff and managers to enter data automatically reduce labour and makeoutsourcing easier.This focus has been less evident in the UK but the potential is beginning tobe recognised. For instance, Collinson Grant Consultants offers an”extranet” service where the HR director can log on to a privatenetwork and look at all the phone traffic between outsourcing consultants andcompany managers. CEO Andrew Collinson says, “They might want to see howmany tribunals are on the go and then look at the results, analysing sites bythe number of calls. They can also see the notes typed by consultants duringthe conversations. That enables them to get a feel for all the issues.”The effective use of such methods is an area HR must seek to develop, arguesTerence Brake, president of TMA. He believes the profession will continue to bedriven by the traditional competencies of handling people and talent, but willtake a big leap when these are interfaced with technology.”The real breakthrough will come when there is a far strongerpartnership between HR and IT,” he says. “Some say these should bethe top two objectives of any organisation. I would take that further by sayingthey should not be separate objectives – the focal point must be on globalcompetitiveness, and the interface with IT people is essential to achievingthat.”Brake continues, “I believe there will be a big shakedown in the HRcommunity, and those who remain will be those who have the thinking agility tounderstand the business issues.”People who come into HR will be quite different. The trend tooutsourcing will continue but at the same time business executives will beaware of much clearer value propositions from what remains in HR. And it willbe up to HR professionals to define very clearly what that is in eachindividual company.”Gain flexibilityAt the strategic level a key HR role will be to strive for flexibility andadaptability, Brake believes. He cites the case of Intel, which suffereddamaging delays over bringing a much-heralded new chip to market last year andrealised it had lost sight of its customers.”Intel understood that it had fallen into the trap of spending too muchtime fine-tuning products and forgetting about its customers” needs,”Brake says. “An outsourcing agency cannot address that because it doesn’tknow your business like you do. The HR person has to be the one that spots theproblem and says we must quickly shift to a new mindset.”But that change of strategy can be on a day-to-day basis and HR directorshave to stay alert, he says. Brake remembers visiting the museum in Mount StHelens in Oregon, where a volcano erupted spectacularly in 1980. There he cameacross a quote from the local sheriff, who said the authorities were totallyunprepared for a disaster on that scale.”The sheriff said they had to act as though they were trying to build aboat and row it at the same time,” says Brake. “With the pace ofchange as fast as it is, that is the kind of situation HR people willincreasingly find themselves in.” Previous Article Next Article Comments are closed.