CHAPTER 13 Outsourcing DISCUSSION QUESTIONS 1. We buy the cheap T-shirts and television sets and also worry about all the job losses in Canada. The outsourcing of jobs to other countries (offshoring) results in positive and negative consequences for Canadians. In groups, prepare lists of the consequences of outsourcing. Answer: Employer Perspective • Poor company reputation, e.g., Joe Fresh. • Lawsuits for health and safety, i.e., pet food, baby formula. • Fines from original country. • Lost money due to accidents, e.g., lost customers, productivity, from workers with lower-level skills. Union Perspective: • Unions rarely agree with management “obsession with efficiency and flexibility,” creating a climate of uncertainty and insecurity. • During workplace change both threats and opportunities for unions exist. • Waves of downsizing in large private-sector corporations and in the public sector, the emphasis on outsourcing, and the use of temporary and part-time workers are eroding the organizational and bargaining strength of unions. • Growing employer demands for concessions in wages, benefits, and work rules are straining the ability of unions to effectively represent members; defend and advance their rights; and promote social justice, equity, and fairness in employment. • Union involvement in change has the potential to expand their independent role and functions in the workplace and to gain influence at the strategic levels of business decision making. • Thus, regulating the pace and nature of workplace change has emerged as one of the greatest challenges facing unions and their survival. 2. Canadians have experienced several strikes over outsourcing. Identify them and focus on a recent strike. Analyze the media reports, and consult the employer and union websites to determine the perspectives of each on the issue of outsourcing. Have one team prepare the arguments against outsourcing from the union perspective; have another group prepare the arguments for outsourcing from the employer’s perspective. Have each group write a two-page message to be given to the media. Answer: College Faculty Strike Union • Wanted more part-time jobs made into full-time roles. • Wanted more control over course and classroom issues. • Desired less precarious temporary work. Employer • Colleges wanted to maintain management decisions and restrict salary increases. One difference between private employers, and public ones is the right of government to get involved in strikes. After 5 weeks the provincial government enacted legislation for faculty to return to work. In some situations, students were reimbursed their term tuition fees. For more information go to: http://www.cbc.ca/news/canada/toronto/college-strike-legislation-1.4406239 3. Martyn Hart, Chair of the National Outsourcing Association, has stated, “One of the most notable aspects of outsourcing is that people rarely like to talk about success stories. The truth is, thousands of companies outsource successfully each year, but it’s worth remembering that each and every outsourcing deal is only as good as the planning that proceeds it.” Outline the steps that an organization should follow when deciding to outsource an HR activity. Answer: The following are important for employers to do before outsourcing: • Reduce staffing in order to integrate new technologies and reduce costs. There is limited evidence of the purported “best practice” or “high performance” models. • Bargaining power is reported to have weakened over the three years preceding the survey. Unilateral implementation was also associated with moderate to significant increases in union–management conflicts. CASE STUDY: Outsourcing at Texas Instruments Canada Questions 1. If you were Dawn, what decision would you make and why? Answer: Dawn should terminate the existing agreement with the external provider and search for a new one. It is the most cost-effective solution. Dawn should address the fact that perhaps there was no monitoring in place, that the contract was poorly negotiated, and that vendor selection was done carelessly and quickly. 2. What are the advantages and disadvantages of the decision that you made? Answer: Disadvantages of Dawn’s decision to start a fresh new contract with a different supplier would be that the new supplier would not have information about the company so Dawn would be starting a new training process. If she renegotiated a new contract with the existing payroll provider, it would have experience with Dawn’s company, and be familiar with recent errors. The payroll provider could use this knowledge base to improve procedures and results without starting from the beginning, but ensure it implemented clear expectations and deadlines. ADDITIONAL SUGGESTED EXERCISES A. Go to www.peoplesoft.com to examine some of the tools that are used to conduct a needs analysis and a means to calculate a return on investment. Develop a needs assessment and ROI for one HR function that could be outsourced. Answer: To conduct a needs analysis and calculate ROI for an HR function that could be outsourced, let's consider the recruitment process as an example. 1. Needs Analysis: • Current State Assessment: Review the current recruitment process, including time taken to fill positions, cost per hire, quality of hires, and satisfaction of hiring managers and candidates. • Identify Gaps: Identify areas where the current process is inefficient or lacking, such as high turnover rates, lengthy time-to-fill periods, or low candidate quality. • Stakeholder Input: Gather feedback from HR, hiring managers, and candidates to understand pain points and improvement areas. • Benchmarking: Compare the current process against industry best practices and benchmarks to identify areas for improvement. 2. Proposed Solution: • Outsourcing Partner: Identify a reputable outsourcing partner that specializes in recruitment services. • Service Level Agreement (SLA): Define the scope of services, including sourcing, screening, and interviewing candidates, and specify metrics for performance evaluation. • Cost-Benefit Analysis: Calculate the cost savings and benefits of outsourcing compared to the current in-house process. Consider factors such as reduced time-to-fill, improved candidate quality, and lower administrative costs. 3. Return on Investment (ROI) Calculation: • Cost Savings: Calculate the total cost of outsourcing the recruitment process, including fees paid to the outsourcing partner. • Benefits: Estimate the benefits of outsourcing, such as reduced time-to-fill and improved candidate quality. ROI Formula: ROI = (Benefits - Costs) / Costs * 100 • Example Calculation: If outsourcing reduces the cost per hire from $5,000 to $3,000 and improves time-to-fill from 60 to 45 days, the ROI can be calculated as follows: • Cost Savings = ($5,000 - $3,000) + (60 - 45 days) * Cost per day • ROI = (Cost Savings - Outsourcing Costs) / Outsourcing Costs * 100 4. Implementation Plan: • Transition Plan: Develop a plan for transitioning recruitment activities to the outsourcing partner, including timelines and communication strategies. • Training and Support: Provide training and support to internal stakeholders to ensure a smooth transition and effective collaboration with the outsourcing partner. • Monitoring and Evaluation: Monitor the performance of the outsourcing partner against SLA metrics and adjust the agreement as needed to optimize outcomes. By following these steps, you can conduct a needs analysis and calculate ROI for outsourcing the recruitment process, demonstrating the potential benefits and cost savings to your organization. B. Do a web search to compile a list of major outsourcing firms. Examine and describe which HR functions they are managing. Answer: Here is a list of major outsourcing firms known for managing various HR functions: 1. Accenture: Accenture offers HR outsourcing services such as payroll processing, benefits administration, talent acquisition, and employee relations. 2. ADP (Automatic Data Processing): ADP provides HR outsourcing solutions for payroll, tax and compliance management, benefits administration, and workforce management. 3. IBM: IBM offers HR outsourcing services including talent acquisition, employee benefits administration, learning and development, and HR technology solutions. 4. Infosys: Infosys provides HR outsourcing services such as payroll processing, workforce administration, talent management, and HR analytics. 5. Randstad: Randstad offers HR outsourcing solutions for recruitment process outsourcing (RPO), payroll processing, workforce management, and HR consulting. 6. Aon Hewitt: Aon Hewitt provides HR outsourcing services for benefits administration, retirement planning, talent acquisition, and HR technology solutions. 7. Capgemini: Capgemini offers HR outsourcing solutions for payroll processing, workforce management, talent acquisition, and HR analytics. 8. Cognizant: Cognizant provides HR outsourcing services including payroll processing, benefits administration, workforce management, and HR technology solutions. 9. Deloitte: Deloitte offers HR outsourcing services for talent acquisition, workforce management, benefits administration, and HR consulting. 10. Mercer: Mercer provides HR outsourcing solutions for benefits administration, talent management, HR consulting, and HR technology solutions. These outsourcing firms manage a range of HR functions, from payroll and benefits administration to talent acquisition and HR technology solutions, helping organizations streamline their HR processes and improve efficiency. CHAPTER 14 HR Assessment and Analytics DISCUSSION QUESTIONS 1. Your HR director has asked you to determine whether your organization (a group of about 50 non-unionized, full-time managers and professionals working in scientific services in Alberta) has an absenteeism problem. You go to the Statistics Canada website and search for absenteeism data from the Labour Force Survey, where you are happy to discover that the average absenteeism rate in Canada (in 2011. is 9.3 days, and the employees in your organizations take an average of 9 days per year. Therefore, you do not have an absenteeism problem. Your manager tells you to “drill down.” In other words, she wants data on the absenteeism rates by sector, by occupation, and so on. Does your organization have an absenteeism problem? Answer: The organization’s absenteeism rate is still good compared to absenteeism rates by occupation, and by public sector—with slightly higher rate than the private sector general rate. By occupation, the company’s rate of 9.3% annually is better than the highest rates by occupation, for health care workers which is 15.2% annually. By sector, the company’s rate of 9.3% is slightly higher than the annual private sector rate of 8.4%. 2. A company wishes to increase the sales performance of its staff. It has been determined that for each $15 product sold, the company makes $5 in profit. Currently, employees who are paid $20 an hour sell an average of four products an hour. A consultant is persuading the company to purchase a four-hour training course. The consultant guarantees that sales capacity will increase by 25% and that the effect will last one year (50 weeks of selling time, assuming an eight-hour day). The cost of the course is $400 per employee. Should the company buy the training course for its 10 sales representatives? Conduct a cost-benefit analysis to determine the answer. Answer: It is beneficial for the company to pay for the training program at $400 each, per employee multiplied 10 employees; $4,000. The expectation is that for at least 1 year after training, each representative will bring in $25 per hour in sales ($1,000) per week, an increase from $800 a week before the training. That increase is (25 × 8 × 5. × 52; $52,000 per employee, with the previous sales subtracted ($41,600 a year) which equals an increase of $10,400 yearly. Even after paying the cost of training; $400 per employee—the benefit is still $10,000 for the year, making the sales representative team increase $100,000 even after the cost of $4,000 for the course. 3. The Canada HR Centre provides a turnover calculator for estimating the costs of an employee quitting. In groups, choose a real job (for which you have compensation information) and calculate the cost of turnover for this position. Answer: To calculate the cost of turnover for a real job, let's consider the position of a Customer Service Representative (CSR) at a hypothetical company. We'll use the turnover calculator provided by the Canada HR Centre to estimate the costs associated with an employee quitting this position. Compensation Information: • Average Annual Salary of a CSR: $40,000 • Average Cost of Benefits (20% of Salary): $8,000 • Cost of Recruiting and Hiring (15% of Salary): $6,000 • Training Costs (10% of Salary): $4,000 • Total Compensation Package: $58,000 Calculation: 1. Calculate Annual Turnover Rate: • Assume the annual turnover rate for CSR position is 15%. 2. Calculate the Number of Employees Leaving Annually: • Number of CSRs: 50 • Number of Employees Leaving Annually: 50 * 15% = 7.5 ≈ 8 employees 3. Calculate Total Turnover Costs: • Total Turnover Costs = Number of Employees Leaving Annually * Total Compensation Package • Total Turnover Costs = 8 * $58,000 = $464,000 Estimated Cost of Turnover for the CSR Position: $464,000 annually This calculation provides an estimate of the total cost incurred by the company due to turnover in the Customer Service Representative position. It includes the costs of recruiting, hiring, training, and the value of lost productivity during the transition period. SUGGESTED ANSWER TO EXERCISES You are the HR manager of a retail organization with 10,000 employees across Canada. The executive team and the board of directors want you to prepare an annual HR report. Choose 10 measures that you want to include in the report. Explain why you chose them, how you will measure them, and why this information will be useful for the executives and directors to know. Managing Talent • Turnover rates/employee commitment—Low rates indicate employee satisfaction, high rates of turnover indicate low employee satisfaction. • Employee satisfaction/employee engagement—A satisfied and engaged workforce is a motivated workforce. • Absenteeism rates. • Alignment to company goals and objectives. • Enhanced levels of innovation and creativity in response to business challenges. World-Class Leadership • Succession management and effective development of succession candidates to ensure leadership continuity. • Satisfaction with leadership training and development initiatives. • Numbers of employees interested and ready for leadership positions—measured through performance management and development plans. Customer Service and Integration • Client or stakeholder perceptions of the HR department. • The client’s perception of how well HR aligns itself with the achievement of business goals. • Assessing unmet client needs. • Client satisfaction with current HR service levels. HR Capability • Financial measures—ROI and ROE measures. • Measures of managerial perceptions of effectiveness. • Student recruitment (numbers of applicants to George Brown’s programs). • Student retention (numbers of students who remain in their program of study until completion). • Graduation rate (number of students who successfully graduate from their program of study). • Employment rate (number of students who successfully obtain program-related employment within six months of graduation). • Student satisfaction with services such as Counselling, Career Services, Library Services, Testing Services, Athletics, and so on. CASE STUDY 1 TALENT MANAGEMENT AND WORKFORCE ANALYTICS AT FRITO-LAY Questions: 1. What methods were used in this case to identify the causes of high turnover and low productivity? What other methods could have been used to obtain better data? Answer: Frito-Lay could have used workforce analytics to assess absenteeism among RSRs and analyze causes including those besides low morale, e.g., illness trends, particular days of the week or shifts, influence of particular managers, addictions, working conditions. 2. Though their efforts resulted in improved retention and productivity, what is missing from this case? Answer: They can assess productivity through analysis of: • Current sales reports. • Historical sales and productivity reports. • Time reports, i.e., time per client visit. Nothing has been mentioned in Frito-Lay’s efforts to get information through: • Clients on RSR productivity. • Conducting employee surveys to determine their opinions on how tasks are being completed, their level of knowledge, and how they meet goals. • Asking RSRs what training/refreshers and product knowledge they believe would improve productivity. • Creating training programs, then re-assessing absenteeism and productivity (comparing to a control group if possible). CASE STUDY 2 MEASURING CULTURE TO SUPPORT GROWTH AT CMA Questions: 1. If you were the manager of HR, how would you rationalize to your members investing in a culture audit? Answer: • CMAs are costing experts and they understand the importance of providing costing information that is not typically on financial statements. • CMA members in Ontario are both the stakeholders and customers for whom CMAO must satisfy needs. • The stakeholders are the CMAs who have already achieved their designations. • The customers are the CMA students who are working on their designations. • Both groups need growth from effective employees employed at CMAO. • It appears that CMAO is doing a lot of things right to go from the bottom 10% to the top 10% of surveyed companies in the employee climate survey. • It is important for CMAO to continue this momentum and not fall back with employee morale. • It is a great time to benchmark the best practices that CMAO is utilizing and to continue to use these benchmarks in the future to develop new employee initiatives that will demonstrate CMAO’s commitment to its organizational culture. • There would be a need for providing a plan first from which a cultural audit can be conducted. 2. What additional measures would you use to show the value of investing? Answer: • Correlation between employee morale and customer satisfaction (existing CMAs and CMA students). • Employee data—levels of engagement, absenteeism, turnover, retention and attrition, job satisfaction and commitment. • Measures for employee perceptions of management, CMAO, i.e. what do employees think about management and how does this compare to the reality of management results? For instance, employees may believe they are underpaid compared to workers in their industry; however, when medical benefits are considered, they may be paid in the top 25 percent of workers in their industry. • Measures of managerial perceptions of effectiveness. • Student recruitment (numbers of applicants to CMAO). • Student retention (numbers of students who remain in the CMA program until completion). • Graduation rate (number of students who successfully graduate from the CMA program). • Employment rate (number of students who successfully obtain employment within six months or one year of graduation). • CMA student satisfaction with services such as Career Services, Library Services, and Testing Services. ADDITIONAL SUGGESTED RESOURCES 1. Web Links • Canadian HR associations have published a detailed list of HR metrics, including definitions and formula for calculation, at HR Metrics Service: http://www.hrmetricsservice.org/metrics • John Sullivan, a noted expert on HR, also publishes a list of the best metrics for a large organization at https://www.ere.net/what-are-the-best-hr-metrics-for-a-large-organization • For more information on evidence-based decision making, consult the website of the Centre for Evidence-based Management https://www.cebma.org • Log on to www.surveyconsole.com/console/showLibrary.do?mode=1&categoryID52 and browse through the different employee satisfaction and evaluation survey templates. Answer: The suggested resources provide valuable insights into HR metrics, evidence-based decision-making, and employee satisfaction and evaluation surveys: 1. HR Metrics Service: Canadian HR associations offer a comprehensive list of HR metrics with detailed definitions and formulas for calculation. This resource is valuable for organizations looking to measure and track various aspects of their human resources. 2. John Sullivan's HR Metrics for Large Organizations: John Sullivan, a renowned HR expert, provides a curated list of the best HR metrics specifically tailored for large organizations. This resource can be particularly beneficial for organizations seeking to optimize their HR practices on a larger scale. 3. Centre for Evidence-based Management: The Centre for Evidence-based Management offers insights and resources on evidence-based decision-making in HR. This resource is valuable for organizations looking to base their HR strategies and decisions on solid evidence and research. 4. SurveyConsole's Employee Satisfaction and Evaluation Survey Templates: SurveyConsole provides a range of templates for employee satisfaction and evaluation surveys. These templates can be used by organizations to gather feedback from employees and assess various aspects of employee satisfaction and engagement. In conclusion, these resources offer valuable tools and insights for organizations looking to enhance their HR assessment and analytics capabilities, ultimately leading to more informed and strategic HR decision-making. 2. When you are working in HR, it is important to address client/employee needs. Is it possible to have 100% satisfaction? If yes, how? If no, why not? Answer: In the field of human resources, achieving 100% satisfaction among clients or employees is a challenging goal due to several reasons: 1. Diverse Needs: Individuals have diverse needs, preferences, and expectations. It is difficult to meet all these varied requirements simultaneously, making it unlikely to achieve universal satisfaction. 2. Changing Expectations: Expectations and needs can change over time, influenced by various factors such as personal experiences, market trends, and organizational changes. Keeping up with these changes for every individual is practically unfeasible. 3. Resource Constraints: Organizations operate within resource constraints, including time, budget, and manpower. Allocating resources to address every individual's needs comprehensively may not be feasible. 4. Subjectivity: Satisfaction is often subjective and can vary based on individual perceptions and experiences. What satisfies one person may not necessarily satisfy another. However, while achieving 100% satisfaction may be unrealistic, organizations can strive to maximize satisfaction by: 1. Understanding Needs: Conducting regular surveys and feedback sessions to understand the needs and preferences of clients and employees. 2. Tailoring Solutions: Developing flexible and customized solutions that cater to the diverse needs of individuals. 3. Continuous Improvement: Implementing a culture of continuous improvement to adapt to changing needs and expectations. 4. Communication: Maintaining open and transparent communication to manage expectations and address concerns promptly. While achieving 100% satisfaction may not be feasible, organizations can focus on creating a positive and supportive environment that maximizes satisfaction and engagement among clients and employees. 3. Review the “Required Professional Capabilities (RPCs)” identified in the textbook. What competencies do HR professionals require in relation to evaluation and measurement? Answer: The "Required Professional Capabilities (RPCs)" for HR professionals related to evaluation and measurement encompass a range of competencies essential for effective HR assessment and analytics. These competencies include: 1. Data Analysis Skills: HR professionals need to be proficient in analyzing data related to HR metrics, employee performance, and organizational trends. This includes the ability to interpret data, identify patterns, and draw meaningful conclusions. 2. Quantitative Skills: A solid foundation in quantitative methods is essential for HR professionals to effectively measure and evaluate various HR processes and initiatives. This includes skills in statistical analysis and data modeling. 3. HR Metrics Knowledge: HR professionals should have a deep understanding of HR metrics and key performance indicators (KPIs) relevant to their organization. This includes knowing which metrics are most important to track and how to use them to drive strategic decision-making. 4. Evaluation Techniques: HR professionals should be familiar with various evaluation techniques, such as surveys, interviews, and focus groups, to assess the effectiveness of HR programs and initiatives. 5. Technology Proficiency: Given the increasing use of HR technology and analytics tools, HR professionals should be proficient in using technology to gather, analyze, and present HR data. 6. Business Acumen: HR professionals need to have a strong understanding of their organization's business goals and objectives. This enables them to align HR initiatives with broader organizational strategies and demonstrate the impact of HR programs on business outcomes. 7. Communication Skills: Effective communication skills are crucial for HR professionals to convey complex data and analysis findings to stakeholders in a clear and understandable manner. This includes the ability to present data visually and tell a compelling story with data. 8. Continuous Learning: Given the evolving nature of HR practices and technologies, HR professionals should be committed to continuous learning and professional development to stay current with best practices and trends in HR evaluation and measurement. By possessing these competencies, HR professionals can effectively evaluate and measure the impact of HR programs and initiatives, thereby contributing to organizational success. 4. The Nova Scotia Public Service Commission (NSPSC) has published its HR strategic plan at http://gov.ns.ca/psc/about/overview. In groups, prepare a list of measures that will help the government leaders know if the strategic initiatives have been successful. • Since the NSPSC wants to establish itself as a preferred employer that contributes to best practice, then human capital measures should be used; e.g., human capital index. • Since the NSPSC is customer oriented, it could develop a balanced scorecard and the four types of measures for customers, financial markets, operational excellence, and learning; e.g., measures for client satisfaction, ROI, ROE, training opportunities, taxpayer perceptions of the Nova Scotia government. Answer: To evaluate the success of the Nova Scotia Public Service Commission's (NSPSC) strategic initiatives, the following measures can be considered: 1. Human Capital Index: This measure can assess the quality and effectiveness of the workforce within the NSPSC. It can include metrics such as employee engagement, turnover rates, and skills development. 2. Client Satisfaction: Measure the satisfaction levels of clients who interact with the NSPSC's services. This can be done through surveys and feedback mechanisms to gauge the effectiveness and quality of services provided. 3. Return on Investment (ROI): Evaluate the financial impact of the NSPSC's initiatives. This measure can assess the efficiency and effectiveness of resource allocation and expenditure. 4. Return on Equity (ROE): Measure the return generated for the equity invested in the NSPSC's initiatives. This can provide insights into the organization's financial performance and value creation. 5. Training Opportunities: Assess the availability and utilization of training and development programs within the NSPSC. This can indicate the organization's commitment to employee growth and development. 6. Taxpayer Perceptions: Measure the perceptions of taxpayers towards the Nova Scotia government and its services. This can provide insights into the public's trust and confidence in the government's operations. 7. Operational Excellence: Develop measures to assess the efficiency and effectiveness of the NSPSC's operations. This can include metrics such as process improvement initiatives, cost savings, and productivity gains. 8. Balanced Scorecard: Develop a balanced scorecard that includes measures for customers, financial markets, operational excellence, and learning. This can provide a holistic view of the NSPSC's performance across various dimensions. By implementing these measures, the NSPSC can track the progress and impact of its strategic initiatives, identify areas for improvement, and ensure alignment with its goals of becoming a preferred employer and delivering excellent customer service. Solution Manual for Strategic Human Resources Planning Monica Belcourt 9780176798086, 9780176570309
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