Whether they are just starting to outsource or reevaluating their existing level of outsourced service, business and HR leaders tend to underestimate the changes that the practice brings to the retained HR function. If anything, outsourcing creates a ripple effect across most, if not all, aspects of HR. And when the nuts and bolts of HR change, work happens in different ways, especially in day-to-day processes and operations.

And so, in our engagements with global companies, we recognize first and foremost that people—those in HR and those served by HR—will need to adjust to new processes. Regardless of the scale of the outsourced HR arrangement, relationships and internal networks remain important. Think about it: Getting the right answers and responding to individual circumstances in matters of employee benefits, policies, and programs used to depend on employees knowing the right people in HR. But many of those personal connections are eliminated or significantly altered with outsourcing.

It’s no longer merely a matter of talking to one’s trusted HR representative down the hall; now, employees must handle tasks themselves through technology or by calling an outside provider’s contact center to address many HR-related needs. Thus, the expectations of employees and HR leaders might require a reset. For employees, the organization needs to clarify the new reality so that there’s no confusion about who will provide which services and how.

HR leaders, meanwhile, might expect outsourcing to deliver on unrealistic hopes and expectations. For example, it is not realistic to assume that data problems will be solved immediately with outsourcing. The larger truth, of course, is that solving everything from unrealistic expectations to nitty-gritty data problems requires real collaboration and communication among all the stakeholders, from employees and managers all the way to the outsourcing partner.

Critical Questions

The key, then, to managing this ripple effect of HR outsourcing is to achieve strategic clarity. It’s a matter of acknowledging that, while outsourcing is supposed to free HR staff from day-to-day administrative and transactional work in order to perform more strategic or high-value activities, some critical questions remain. For starters: What, exactly, does it mean to be strategic? What do people actually do when their former work is gone? Do we have the right skills within HR to be strategic and accomplish the higher-value work?

Strategic clarity requires us to know that certain roles will have moved to the outsourcer and that the skills and competencies needed in the retained HR function will be quite different due to the outsourcing. Thus, the remaining HR staff might not have the right skills for HR’s new role. But organizations shouldn’t wait to address this mismatch. Critical time—and credibility—will be lost while the retained HR function struggles to get its bearings and make the tough choices about whether to train or hire staff to secure the necessary skills.

Instead, when any part of HR is outsourced, the company needs to know how its retained HR function should be reorganized, structured, and managed. The right outsourcing provider will enable—not obscure—this strategic clarity. Ideally, outsourcing gives HR a fresh start and the opportunity to rethink its mission and priorities. And while it might eliminate some roles within HR, it also creates new roles, such as vendor management, to oversee outsourcing relationships and service levels, and to ensure that the company is getting a good return on its outsourcing investments. In an outsourced environment, HR might require an entirely new business model and organizational design, and it’s important that this be part of the outsourcing conversation from the outset.

Measuring Impact and Transitioning

Another ripple effect of outsourcing on HR processes has to do with measurement—again, an area that calls for clarity. Before the implementation of an outsourcing arrangement, HR most likely measured and tracked such activities as how many people changed elections in open enrollment, how long it took, and how satisfied employees were with the process. Implicitly, HR looked for approval from its customers. After outsourcing, HR must still look at these factors but must also be able to understand and analyze additional metrics—such as return on investment, cost stability, quality, and service levels. These new metrics reflect business impact, not simply customer approval and satisfaction.

Ultimately, an outsourcing provider should be able to help an organization manage these ripple effects by providing strategic clarity in the transition to HR outsourcing. This begins in the pre-implementation stage and continues as the outsourcing implementation begins. It’s a sensitive passage, after all, and organizations need their providers to help with such obvious tasks as identifying the current staff activities that will be transitioning to an outsourced arrangement, as well as analyze the less obvious interactions and interdependencies that exist in current job roles. It’s then time to document the necessary interactions and integration points in the outsourcing service delivery model.

These can be complex tasks—for example, developing new process flows for revised work procedures; identifying ongoing staffing requirements; defining new roles and responsibilities for current staff and aligning their training with an implementation timeline; and developing change management initiatives for the retained staff. Is it any wonder that organizations can feel at sea when faced with the myriad implications of an HR outsourcing implementation? Achieving success means seeing through the fog of change. As outsourcers, we must do all we can to help our clients see clearly.

Source: HRO