|
||||||||||
Free Download
‘To Outsource or Not to Outsource. That is the Question?'
Issue 1 - October 03
 printer friendly version |
Choosing to outsource a core business process is a complicated but important decision for any business. The first hurdle or barrier for many companies is the realisation that changes need to be made in their current service requirements. For many, the decision to remain competitive and reduce costs drives the initial research. Alternative approaches, such as hiring or transferring staff, can provide temporary solutions, but the need to have experienced staff and experts means outsourcing is a growing trend.
For Novo Nordisk, the interest in outsourcing their HR function grew from a reorganisation of the company and the creation of a ‘Europe North’ division of its business. The healthcare and pharmaceutical company already outsourced some of its payroll functions but decided to go a step further following its internal reorganisation. Outsourcing its HR services and administration for the UK and Ireland has helped the company through its transition period and beyond. All of its HR support services, administrative operation, employment legislation advice and performance management work is outsourced and this approach has helped the business to focus on strategy.
The benefits of embracing an outsourcing model are vast. Henrik Juuel, Operations and Finance Director at Novo Nordisk comments, “From my perspective the value of the relationship is twofold: we have managed to reduce the spend on HR quite significantly, and we have access to a very professional service. Another benefit of getting professionals to deal with the administrative side of HR is that our own staff have more time to deal with strategic activity that directly benefits the business.”
So what are the key issues to consider in relation to HR outsourcing? Here are some of the steps Novo Nordisk took.
1. Recognise the Need
The first crucial step is to realise there is an issue to be resolved. Typically, companies may find themselves asking questions such as, “Why are we spending lots of money recruiting staff who don’t stay?” or “Why are our wages bills so high?” Such questions may signal a need to review a company’s HR function.
2. Research
There are a variety of sources of information that can inform a company about options available for improving an HR function. Typically, companies will approach the Charted Institute of Personnel Development (CIPD), or an HR consultancy as a starting point.
3. Choose the HR Outsourcing Service Provider
Once you are satisfied that outsourcing part or all of the HR function is a realistic business solution, a variety of issues should be investigated thoroughly to influence the choice of partner. Identifying which HR functions to outsource; the level of service required; the impact on current HR employees; direct cost savings and overall business impact should all be carefully considered.
4. HR Audit
An essential task at the start of entering into a partnership arrangement is undertaking an HR audit. As a result of the audit, the company will have a detailed record of where it stands in the provision of effective HR practices.
5. Contract and Service Level Agreement
The contract will outline the legal agreement, and the service level agreement should clearly lay out how the relationship will work, including roles, responsibilities and timescales. This will ensure that agreed delivery targets are met.
6. Service Delivery
Typically, an HR outsourcing provider will spend the first one to three months getting to know a company, their people, policies and strategies.
7. Reviews
Regular reviews should be planned into the contract and take place to ensure HR is fully aligned with the business goals. This is to check that the service provided is meeting expectations from both parties.
RELATED TOPICS
For more information and related articles about outsourcing, please see the ‘Golden Rules of Outsourcing’ article which focuses on top tips for outsourcing success.
For more information click here for the Novo Nordisk case study.
To request a Guide to HR Outsourcing click here.