Rant: Outsourcing Core Business Factors Is Dubious

Sure you can outsource human resources… some would argue completely. But why? Line managers, no matter how well we train, will never have time to gain experience with the vast range of complex situations needed to get an overall handle on things that may, and inevitably do, pop up unexpectedly.

Some will face human rights, some unions, some leave and temporary replacement and many, many more highly specific issues. We want line managers concentrating on business and day-to-day management of people, with some sensitivity to complicated HR items, but not to try to be expert in all of them. We don't even want them tied up for long worrying about where to find the right sort of expert for the challenge they're suddenly facing. For them to be able to turn to someone with more overall knowledge about what's possible and who knows the internal culture seems totally logical.

The more we can automate and outsource details and "transactional" stuff (HR systems, payroll, benefits, even parts of recruiting and substantial parts of training) the better, but to suggest we outsource all of HR is just plain dopey in virtually every case.

In fact, a big beef with in-house HR professionals is that even they don't have complete experience and expertise with the vast range of challenges that can arise. But at least they know where to look fo what's available, what pitfalls to avoid until expertise is engaged and, if they're any good, how that expertise needs to adapt to fit the in-house culture.

Hardly a week goes by without another "expert" threatening the possibility that Human Resources in organizations will become totally irrelevant and be totally outsourced. Stop already! The latest article is by a former Toronto senior human resource executive (who shall remain nameless) who helped outsource a major chunk of his company's HR operations and is now himself providing outsourced services to others. Frequently it is outsourcers who write this stuff.

Here's a question - how do these outsourcing companies (some of which are now huge) do their own HR for their own people? Do they outsource it? If their in-house people can do it effectively (is it by calling on subject experts in-house on each piece of HR?) what makes other companies' in-house HR people so unable to achieve the same skill?

No one would argue that every in-house HR person is fully knowledgeable or even knowledgeable enough on all that is available today. But that's the nature of virtually every profession - constant learning. My beef is with HR people who think they know it all, not with the concept that HR contributes value when done well and when decisions about what resources are needed, internal or external, are made with good, logical judgment. Today, many of the know-it-all HR types are not those inside organizations.

Handling people effectively is at least as core a business function as handling money effectively. Regardless of what portion is farmed out, doesn't it make sense to have an expert or two in-house to coordinate issues that arise every single day in virtually every organization? Is that best done by line managers who already have busy workloads and over-worked brains?

Comments

[Darren Dasburg]

On the outsourcing point of view the key question for me is what is the return on the asset and people unfortunately are assets in a company. If I'm in banking my assets are money and financial minds tat create retrurns. If my business is commercial real estate then my assets are property, buildings and people who know a good deal from a bad one. If I'm an HR outsourcer then my assets are HR savvy people who others are willing to buy expertise from. If I'm a multinational pharma company or software company then I'm afraid I don't see much return from an HR person.

It's all about following the money.