In a normal day, the human-resources function is a little like background music — you know it’s there, but it may not have your full attention. But as soon as you mention Human Resources Outsourcing (HRO), the volume goes up. Throw in an offshoring component and the music becomes deafening. “Egad…you mean our employees have to talk to someone in India about their dental plans? We can’t have our people calling Costa Rica about their pensions!” It’s critical to manage stakeholders through the entire lifecycle of any outsourcing initiative, be it domestic, nearshore or offshore. But effective change management is even more important in HR offshoring, because the HR function, by its very nature, has the organization’s employees as its “customers,” and manages many of the employees’ most personal issues.
Change management can be viewed in three phases. It begins long before the deal, in the form of defusing internal resistance and managing organizational politics. It continues through the announcement of the decision and negotiations with the service provider, and finally shifts to ongoing transition management after the contract is signed.
The Political Dimension
When it comes to gaining support for outsourcing, it’s important to understand the political cachet in an organization, how it can help or hurt the case for outsourcing, and the need to educate senior executives on the economic realities and the benefits of the new model (the business or change imperative). Getting people on board can be especially challenging for multinational companies with many fiefdoms, each operating like a mini-business that may have its own agenda, and thus not be supportive. To begin the process of securing buy-in and a feeling of ownership in the offshoring solution, one client began by hosting strategy sessions in which all the HR executives discussed their vision for the future organization. Their up-front involvement in the planning helped mitigate their critiquing the decision later.
Especially contentious is the fear of losing the human touchpoint, when in fact, an offshore HRO service center can quite effectively deliver customer-facing services. In response to the perennial concern about undecipherable accents and cultural disconnects in offshore call centers, an increasingly popular alternative is a nearshore service center. Another way to mitigate concerns about accents and culture is the growing trend of outsourcing the transactional part of a call center to an offshore location, while retaining the touchpoint at a domestic center. One U.S. client met significant internal resistance when it proposed outsourcing pension calculations to a call center in India. So the organization resolved instead to outsource the call center to Tulsa, where English-speaking operators fielded calls and generated work requests. The work requests were then sent to a service center in the Philippines that ran the calculations and piped them back to Tulsa, which delivered the information to the customer.
These kind of alternatives can make for an easier sell to internal stakeholders, depending on how far you are willing to go in managing the political dimension.
Labor Relations and Communications
In the contracting phase, your change-management focus turns to the people who will be directly affected. In determining your strategies for severance and retention, think broader than retention bonuses. The difficulty with retention bonuses, other than the expense, is that offering them to some employees, but not others, can be a hard process to manage as it fuels perceptions of unfairness. As a result, companies may give bonuses to all employees, causing the expense to significantly increase. Thinking in broader terms involves identifying roles and responsibilities that, if un-staffed, create business continuity issues and defining alternative staffing approaches. For example, does your service provider have someone who could fill in? Can you go elsewhere for a short-term resource to fill the gap until the services are transitioned? Considering alternative staffing strategies during the transition can help manage the process.
Knowledge transfer is a critical factor for offshoring. The method of “job-shadowing,” whereby a worker from an offshore service center learns his new job by shadowing a soon-to-be-displaced employee at his workstation, has been met with mixed results. Training your replacement is inevitably unnerving, and culture and language issues only add to the difficulties, with some clients emphatically refusing to put their people through this process. As an alternative, consider asking employees to document their processes, and then convert that knowledge into a training session for service-center workers. Additionally, look to subject- matter experts in your organization who can conduct training sessions for the service-provider staff.
It’s imperative to plan communication strategies for all audiences; thus, you must work with communications counsel to determine what the company wants to say, to whom, and how to say it. Among employees, consider how you’ll answer the inevitable, “Are some jobs going overseas?” and consider what employees will do with the information you provide, lest you awake tomorrow to a front-page announcement that 200 jobs are going offshore. Some clients, rather than answering yes or no, have conceded that, “Our service provider has a global network of service centers, and they’ll deliver our services in the most effective way.” Expect similar questions from the press. Some CEOs are quite comfortable saying it like it is, “I’m getting this price-point for the same if not better level of service. That frees up our capital to invest in our core business, and that improves shareholder value.” On the other hand, one of our clients told the service provider they would not consider an offshore solution, because communications simply would be too difficult and the political fallout too great.
An organization that works with labor unions can be particularly susceptible to backlash during a move toward outsourcing. Even if unionized workers aren’t affected, it’s not unlikely for unions to send picketers to your business to protest on behalf of their “brethren workers.” This kind of scenario can be mitigated with strategic labor relations and communications plans.
