Wald RT2C W2D1
Time Is Money, or Is It?
Different organizations in the same industry often end up in different locations along the outsourcing continuum. It is logical to assume that the running shoe industry, for example, would converge to one model and level of outsourcing. Since this logical conclusion is erroneous, think about the differential roles played by the HR departments in different athletic shoe companies.
Nike pioneered the use of outsourcing in the shoe industry, moving most of its production work to Asia. Adidas likewise once handled its own manufacturing, but also adopted the use of outsourcing in the 1990s. Consider why Adidas made the transition to this business model.
In contrast to Nike and Adidas, New Balance continues to maintain a manufacturing presence in the U.S. and the U.K. One consequence is that New Balance shoes tend to be more expensive, but the cost is addressed in marketing strategies. Consider why three major retailers in the athletic shoe industry would differ significantly in the ways that they view partnering or outsourcing.
The Krell article in your Required Resources argues that, in terms of human resource outsourcing, saving time is now generally more important than saving money. Based on your research, does this indeed appear to be the trend? Using information from articles, such as Woodhall, et al., “Making the Decision to Outsource Human Resources,” (2009), in your Required Resources, explain how decisions to outsource HR functions are typically made.
To prepare for this Discussion ,
Review this week’s Learning Resources, especially:
· Sprint inks $5B network outsourcing deal with Ericsson | Fierce Wireless
· Making to outsource human resources – See pdf
· Influences on Business – See pdf
· Focus In to Farm Out– See pdf
· IS sourcing – See pdf
Assignment:
Respond two of your colleagues’ postings in one or more of the following ways:
· Ask a probing question.
· Share an insight from having read your colleagues’ postings.
· Offer and support an opinion.
· Validate an idea with your own experience.
· Make a suggestion.
· Expand on your colleagues’ postings.
· APA citing
· No plagiarism
1st Colleague - Natasha Mills
Time Is Money, or Is It?
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Time is Money, or is it?
Outsourcing is the shift from using internal resources to provide goods and services to using an external provider of the same goods and services (Foogooa, 2008). Many factors underlie the decision to outsource in the contemporary business environment, as opposed to when organizations first came to adopt the concept with the primary intention of saving on costs. Krell. (2011) identifies the primary reason for outsourcing today as the desire to increase the value of an organization’s function. According to the author, even when the decision to outsource involves maintaining or reducing costs, it must be tied to the element of value. This paper explores these dimensions of outsourcing, as well as who is involved in such processes.
Consequences of Outsourcing for HR Functions
Krell (2011) identify the potential for two organizations involved in outsourcing, the vendor and buyer, to work together toward addressing challenges and earning mutual benefits as a key component of the decision to outsource. Therefore, successful outsourcing processes realize a high potential to work together and attain positive consequences, such as an increase in value, which is the cardinal goal of outsourcing. Other consequences of outsourcing are reduced costs of outsourced functions and improved customer perceptions of the quality of provided goods and services (Abdul-Halim et al., 2009).
Saving on time is also an important consequence of outsourcing (Abdul-Halim et al., 2009). These different consequences are evident in the outsourcing decisions of the major players in the running shoe industry; Nike, Adidas, and New Balance. Regardless of the outsourcing decision each of the three athletic shoe companies makes, as described in the case study, the desired consequence is to increase the value of their products. New Balance, for example, is not concerned about the costs of production hence its decision to not outsource. This choice can be attributed to the perceptions the company wants its customers to have about its products. The same goal applies to the other two companies that opted for outsourcing.
How Decisions to Outsource HR Functions are Made
Business strategy is the core determinant of the decision to outsource HR functions. Abdul-Halim et al. (2009) describe business strategy as an evaluation of the organization’s adaptation to the business environment, as well as its distinctive competencies in that environment. Business strategies can be quality-based, reactive, proactive, and breadth-based (Abdul-Halim et al., 2009). An organization with a breadth-based strategy is characterized by many product lines. Differentiation and innovation of products are the features of proactive strategies. As the name suggests, a quality-based strategy focuses on producing high-quality products and services. Lastly, a reactive business strategy focuses on producing goods and services at reduced costs. Each of these business strategies requires a different outsourcing approach. Quality-based and proactive business strategies rely heavily on outsourcing their functions (Abdul-Halim et al., 2009). On the other hand, breadth-based and reactive strategies will reduce an organization’s reliance on outsourcing its functions.
Positive and Negative Consequences of Outsourcing HR Functions
The positive consequence of outsourcing HR functions is improved HR performance (Abdul-Halim et al., 2009). One of the main indicators of this outcome is reduced costs within the HR department. Other indicators of this improved performance are lower turnover, as well as employee satisfaction and morale. Woodall et al. (2009) refer to this consequence as HR excellence. A negative consequence concerns the challenges experienced in neatly aligning the HR function after outsourcing (Woodall et al., 2009). Cost implications are another negative consequence of outsourcing the HR function, which impedes the process's effectiveness and efficiency (Woodall et al., 2009).
Important Factors to Consider Other than Time and Cost
Understanding the function being outsourced is a critical factor besides time and cost savings. Woodall et al. (2009) advise against outsourcing what one does not understand. This advice stems from the findings of a study showing that many decision-makers during the outsourcing process do not fully understand the implications. As a result, they become vulnerable to loss of quality and control, which is an outcome that contradicts the anticipated enhancement of core competencies. Hence, a full grasp of the outsourcing process is needed.
Who is Involved in Outsourcing and the Role HR play in the Process
The senior executives of an organization take up the outsourcing role. This is because they are responsible for an organization’s strategic alignment or management. Foogooa (2008) defines strategic management as the formulation, analysis, and implementation of business strategy. These tasks are usually carried out by an organization’s senior leadership, leading to the assumption that they are responsible for outsourcing decisions. HR executives form a part of this senior leadership that takes on the strategic alignment and management of business strategies. Their role is to analyze and assess the competencies of the organization they outsource their functions to, making their role in such decisions crucial.
In conclusion, while widely adopted by businesses today, outsourcing is a complex concept that even organizations involved in the processes are yet to understand fully. Nonetheless, it has remarkable benefits if implemented efficiently.
Abdul‐Halim, H., Che‐Ha, N., & Geare, A. (2009). The influence of business strategy on the decision to outsource human resource activities: a study of Malaysian manufacturing organizations. Journal of Human Resource Costing & Accounting.
Foogooa, R. (2008). IS outsourcing–a strategic perspective. Business Process Management Journal.
Krell, E. (2011). OUTSOURCING-Focus In to Farm Out-Deciding what HR functions to outsource is more than a financial decision. HR Magazine-Alexandria, 56(7), 47.
Woodall, J., Scott‐Jackson, W., Newham, T., & Gurney, M. (2009). Making the decision to outsource human resources. Personnel Review.
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2nd Colleague - Tylecia Westbrook
RE: Discussion - Week 2
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When a firm outsources its operations and divisions, it seems that the corporation is essentially admitting that it cannot manage these employees successfully. Even while outsourcing might save money and time, companies risk losing control of the outsourced services. Another difficulty is locating skilled and economical suppliers. Eventually, a firm that outsources more and more tasks will no longer be considered a genuine company since these choices will be made by someone who has no knowledge of the company's culture or the role they seek to fill (Abdul‐Halim, Che‐Ha & Geare, 2009).
Consider how well-equipped HR is to support the company's transition to outsourcing before deciding whether or not to outsource HR. HR procedures and operations must be thoroughly inspected in order to identify any potential shortcomings. The outsourcing sector and its trends should be researched by employers, and their companies should assess how developments in the industry might affect their businesses as well. Consider whether or not it's the right moment to outsource HR operations for the company. To answer that, outside consultants should examine data, financial predictions, and the proposed conditions of any contract.
There are both advantages and disadvantages to outsourcing. In addition to cost savings, productivity improvements, and greater access to technology and people, there are several more advantages. Cons include, but are not limited to, labor concerns, standard monitoring, and a deterioration of internal capability (Foogooa, 2008). Different business strategies are motivated by the advantages of outsourcing. It may provide a firm with a significant edge over its rivals in the marketplace.
Besides considering time and cost, it is also important to consider factors such as the firm's reputation you're contemplating working with the risk involved, innovation, and communication/collaboration before choosing which outsourcing company to work with (Woodall et al., 2009). In outsourcing, a corporation hires a third-party provider to do tasks formerly performed by its own employees and staff. Human Resources (HR) provides both parties with knowledge about their rights and duties. In addition, it monitors and evaluates the performance of the outsourcing provider on an annual basis to verify that it satisfies the organization's compliance needs.
Abdul‐Halim, H., Che‐Ha, N., & Geare, A. (2009). The influence of business strategy on the decision to outsource human resource activities: a study of Malaysian manufacturing organisations. Journal of Human Resource Costing & Accounting.
Foogooa, R. (2008). IS outsourcing–a strategic perspective. Business Process Management Journal.
Woodall, J., Scott‐Jackson, W., Newham, T., & Gurney, M. (2009). Making the decision to outsource human resources. Personnel Review.
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