Monday, 20 August 2007

HR operations vs. strategy

On IQCatalyst , Scott Golas notes that one of the difficulties inherent in HR outsourcing (HRO) is that the practice of separating HR operations and HR strategy is more difficult than the theory implies:

"One of the key arguments in favor of HR outsourcing is that by outsourcing the operational aspects, HR professionals will be freed up to engage in more strategic issues. This is far from true. Many of the employees’ problems do not present themselves in neat and discrete ‘operational’ packets. The solutions to many issues are quite complex and often require the involvement of one or more managers, assessment of the potential impact of decisions on peers, judgment about making exceptions based on special considerations and so on."

I agree that making the separation work is a lot harder than many organisations believe it is going to be but I don't believe the theory is the problem. Organisations can separate ownership of strategy and operations and still make the two work seamlessly together to make judgments and decisions and provide solutions to problems.

The problem is that organisations forget to plan ahead for the higher engagement in strategic issues (adding and creating value) as well as increased efficiency in operational issues (value for money).

This was also the conclusion reached in a Buck Consultants survey, Retained HR After Outsourcing: Optimising Performance, conducted in 2006.

The results of this survey showed that, after implementing HRO, retained HR staff become significantly more involved in consultative and decision support. What's more, companies reporting the greatest success from HRO plan ahead for these new roles and invest more in training and change management

In fact, high-performing organizations planned ahead 48% more often than other respondents for the new roles of retained HR staff.

We concluded: "Business value, not just cost reduction, should be the objective of every HRO initiative."

I am currently working with colleagues from Buck and ACS on GSK's HR outsourcing, and look forward to seeing how how well this results in transformational as well as cost saving benefits to them.