Outsourcing/off-shoring represents a critical revolution of human resources management to match the strategic goals of organizations and the changing business environments. It refers to the delegation of business processes or functions to independent organizations and purchasing them as services as against performing them internally. While it presents huge opportunities for cost cuts amidst rising competition, it also presents practical and strategic difficulties in balancing employee needs and the needs of the shareholders. Purchasing of business functions and processes, or pooling resources such as call centers helps multiple companies to cut back on the transaction costs of individually carrying processes. In addition, outsourcing removes unnecessary role duplications, ensures consistency in human resources approaches and a responsive and customer responsive and focused strategic decision-making. A further advantage derives from the ease of performance appraisal as well as the dehumanization of problems, which allows objective decision-making. However, outsourcing causes multiple structural problems including potential losses in business and local knowledge, coupled with the creation of low-level administrative tasks that reduce career development opportunities for employees. It also creates an obsession with performance appraisal and other efficiency measurements at the expense of quality service delivery.
Outsourcing id critical in the assessment of the value of HR through service level and multiple performance indicators, and if managed correctly, it can result in both quality improvement as well as cost reductions. However, these advantages are often not realizable in the short term, not least because it takes considerable time and resources to establish relationships with service providers. In addition, outsourcing important functions reduces management’s control and responsibility over them, effectively exposing the company to potential financial, practical and economic difficulties facing the service provider. Successful outsourcing requires the determination of the extent of outsourcing, quality assurance, personal touch and strategic importance of the move, coupled with the need to cater for the needs of the existing employees, boost morale and long term competitiveness of the firm.
Outsourcing holds an important strategic importance, if the processes/functions that are outsourced are carefully chosen, and the partners are equally complementary to the business, ensure quality and reliability. In addition, it is critical for HR and other managers to retain a measure of control over service providers, ensure performance appraisal and perhaps most crucially promote and built lasting relationships with providers to ensure long term competitiveness. However, in order to avoid adverse consequences, outsourcing must be to a small scale, to ensure a personal touch, high employee morale and redundancy levels.
Redundancy
Tough economic and market conditions force a cutback in demand for a business’ products, which in turn reduces business activity and causes extreme measures by employers, including a reduction in working hours, pay freezes and even redundancy in order to remain business. Redundancy stems from the cessation or reduction of work and cessation of business at the employee’s site. Employees are often on the receiving end of redundancies, with up to 75% in pay cuts and reductions in the number of hours worked, which reduces their productivity and incomes. However, employee rights are protected under several UK laws, including the Trade Union & Labor Relations (1992), Employement Rights Act (1996), The Collective Redundancies and the Transfer of Undertakings Regulations (1999) and the Collective Redundancies (Amendment) Regulations (2006) among others.
Redundancies help a firm to remain afloat, by cutting excess labor costs and increasing the marginal returns. It also allows disposal of poor performing employees and facilitating strategic re-alignment of the business. The disadvantages include legal, practical challenges and losses in employee morale. There are also indirect costs resulting from redundancies, including the losses in crucial talent, employee loyalty and possible loss of competitive advantages in the long term. It is critical that employers take all necessary measures to avoid employee redundancies. However, owing to the unpredictable nature of market conditions, redundancies may become inevitable at some point in the life of a business, and it is crucial to plan and manage the process to ensure it is legal, non-discriminatory and minimizes the adverse effects that may be suffered by the firm both in the short and long term.
In order to ensure these goals are attained, firms should prioritize volunteers, involve employees in decision-making, identify a selection pool and carefully select the employees to be rendered redundant. In addition, compensation and placement of affected employees in other jobs, coupled with the provision of counseling and other support to the employees. Firms must explain to employees the reasons for dismissals, the employees affected, selection criteria, ample warning and the number of employees affected by the redundancies. Collective, procedural employee consultations must legally commence at least a month prior to the redundancy notification for 20-99 employees, coupled with the award of reasonable compensation, failure to which employers become liable for up to 90 days’ pay. In addition, the selection criteria must be non-discriminatory and reasonable, coupled with reasonable notifications of the affected parties.
References List
Southermpton Solent University. Managing Redundancy. Southermpton Solent University.
Southermpton Solent University. Strategic HR and Outsourcing & Offshoring. Southermpton
Solent University.
