When moving HR operations offshore, ‘change management’ must start long before the deal in order to diffuse internal resistance, manage organizational politics and acclimate stakeholders, thus ensuring a smooth transition of HR service delivery.
In a normal day, the human resources function is a little like background music—you know it’s there, but it may not have your full attention. But as soon as you mention HR outsourcing (HRO), the volume goes up. Throw in an offshoring component and the music becomes deafening. “Egad … you mean our employees have to talk to someone in India about their dental plans? We can’t have our people calling Costa Rica about their pensions!”
It’s critical to manage stakeholders through the entire lifecycle of any outsourcing initiative, be it domestic, nearshore or offshore. But effective change management is even more important in HR offshoring because the HR function, by its very nature, has the organization’s employees as its “customers,” and manages many of the employees’ most personal issues.
Change management can be viewed in three phases:
When it comes to gaining support for outsourcing, it’s important to understand the political cachet in an organization, how it can help or hurt the case for outsourcing, and the need to educate senior executives on the economic realities and the benefits of the new model (the business or change imperative).
Getting people on board can be especially challenging for multinational companies with many fiefdoms, each operating like a mini-business that may have its own agenda, and thus not be supportive. To begin the process of securing buy-in and a feeling of ownership in the offshoring solution, one client began by hosting strategy sessions in which all the HR executives discussed their vision for the future organization. Their up-front involvement in the planning helped mitigate their critiquing the decision later.
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Getting people on board can be especially challenging
for multinational companies with many fiefdoms.
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Especially contentious is the fear of losing the human touchpoint, when in fact an offshore HRO service center can quite effectively deliver customer-facing services. In response to the perennial concern about undecipherable accents and cultural disconnects in offshore call centers, an increasingly popular alternative is a nearshore service center.
Another way to mitigate concerns about accents and culture is the growing trend of outsourcing the transactional part of a call center to an offshore location, while retaining the touchpoint at a domestic center.
One U.S. client met significant internal resistance when it proposed outsourcing pension calculations to a call center in India. So the organization resolved instead to outsource the call center to Tulsa, Okla., where English-speaking operators fielded calls and generated work requests. The work requests were then sent to a service center in the Philippines that ran the calculations and piped them back to Tulsa, which delivered the information to the customer.
These kinds of alternatives can make for an easier sell to internal stakeholders, depending on how far you are willing to go in managing the political dimension.
In the contracting phase, your change management focus turns to the people who will be directly affected. In determining your strategies for severance and retention, think broader than retention bonuses.
The difficulty with retention bonuses, other than the expense, is that offering them to some employees, but not others, can be a hard process to manage as it fuels perceptions of unfairness. As a result, companies may give bonuses to all employees, causing the expense to significantly increase.
Thinking in broader terms involves identifying roles and responsibilities that, if un-staffed, create business continuity issues and defining alternative staffing approaches. For example, does your service provider have someone who could fill in? Can you go elsewhere for a short-term resource to fill the gap until the services are transitioned? Considering alternative staffing strategies during the transition can help manage the process.
Knowledge transfer is a critical factor for offshoring. The method of “job-shadowing,” whereby a worker from an offshore service center learns his new job by shadowing a soon-to-be-displaced employee at his workstation, has been met with mixed results. Training your replacement is inevitably unnerving, and culture and language issues only add to the difficulties, with some clients emphatically refusing to put their people through this process.
As an alternative, consider asking employees to document their processes, and then convert that knowledge into a training session for service-center workers. Additionally, look to subject- matter experts in your organization who can conduct training sessions for the service provider staff.
It’s imperative to plan communication strategies for all audiences; thus, you must work with communications counsel to determine what the company wants to say, to whom, and how to say it.
Among employees, consider how you’ll answer the inevitable, “Are some jobs going overseas?” and consider what employees will do with the information you provide, lest you awake tomorrow to a front-page announcement that 200 jobs are going offshore.
Some clients, rather than answering yes or no, have conceded that, “Our service provider has a global network of service centers, and they’ll deliver our services in the most effective way.”
Expect similar questions from the press. Some CEOs are quite comfortable saying it like it is, “I’m getting this price point for the same if not better level of service. That frees up our capital to invest in our core business, and that improves shareholder value.”
On the other hand, one of our clients told the service provider they would not consider an offshore solution, because communications simply would be too difficult and the political fallout too great.
An organization that works with labor unions can be particularly susceptible to backlash during a move toward outsourcing. Even if unionized workers aren’t affected, it’s not unlikely for unions to send picketers to your business to protest on behalf of their “brethren workers.” This kind of scenario can be mitigated with strategic labor relations and communications plans.
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An organization that works with labor unions can be
particularly susceptible to backlash.
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After the contract is signed, focus your change management on ensuring that the service provider is ready to take over a process, and likewise, that the organization is prepared to accept services from an offshore provider.
On the first part of the equation, outsourcers who have managed the transition so far may have a tendency to abdicate to the service provider, “Well, I’m glad that’s over; now the service provider can take it from here.”
To the contrary, the organization must stay in the driver’s seat, managing risk by ensuring that the provider can take responsibility for the delivery. The best approach is to define acceptance criteria and track the service provider’s performance against those criteria. For example, as it relates to knowledge transfer, have all service provider staff members attained high proficiency in their tasks?
On process understanding, have all processes been documented accurately and understood in detail? This type of definition and tracking will help prevent, for example, an influx of e-mails from disgruntled employees or retirees, or duplicate transactions such as, both you and the service provider paying third-party contracts.
The second part of readiness is ensuring that the organization is able to let go of some processes in order to focus on work that’s more strategic to the business. The transition doesn’t require much of an acclimation if the scope is limited to back-office transactions. However, if the provider is delivering human touch points, be sure to clearly define how the internal customers will access services—by calling Bob for benefits and Sally for paychecks.
Beware that some constituents may perceive value leakage if Sally now works for a service provider at a different location. Since they can no longer walk down the hall to ask Sally a question or make use of her handy reporting or data-access skills, they may try to hire someone (if not Sally) to provide these services as part of their own P&L.
Avert such value leakage (often called shadow organizations) by preparing the organization in advance for what the new structure will look like. In addition to involving business leadership in the process and ensuring they are informed of the details and parameters of the relationship, there are a number of methods available to prevent these difficult behaviors, such as linking success to incentive compensation.
Another part of ensuring organizational readiness is confirming that the leadership teams on both sides of the deal are equipped to address problems, which can mature into crises if not addressed early on. An organization that discovers a problem, for example, with an error-checking engine that bridges its U.S. and India teams may opt for a temporary fix by assigning cheap labor to perform manual checks. But if the technical problem goes unresolved, as the process grows, those three or four workers will turn into 30 people in India checking for errors—which will become a nightmare to manage.
Ensure that the delivery managers in the United States are in constant communication with delivery managers at the offshore location, and travel budget is set aside for frequent face-to-face meetings—which our clients have found far superior to long-distance communications. Make timely problem-solving a priority to avoid ingrained inefficiency.
Sometimes a service provider’s chain of command doesn’t give offshore centers the authority to make necessary process changes, and that scenario can bury your business in a service provider’s red tape. Make it part of due diligence to ensure that the reporting structure of your offshore transition team allows for fluidity in managing exceptions.
Likewise, due diligence should include establishing a governance structure—one that is present at each service center, not one that attempts to oversee a global network from Great Falls, Mont.
Finally, it almost goes without saying that part of managing the transition to an offshore provider is attuning to a different culture. This adaptation goes beyond getting used to accents; keep in mind that colloquialisms and frames of reference can prevent things from getting done. Without clarification, your request for a service provider in San Jose, Costa Rica, may be fulfilled in two or three weeks when you expected it to be done right away—simply because of a difference in business culture.
To prevent misinterpretations that can derail day-to-day work, seek training on cultural orientation in order to understand the business culture from the beginning.
Change management is really about managing stakeholders and outcomes, ultimately ensuring a smooth transition of HR service delivery. But the very DNA of HR, the fact that it’s a people business, makes management of the transition all the more vital— maybe even volatile!
Aligning the business with the new model, or managing the political dimension, is key—from the development of the initial strategy to contracting with the service provider. From there, take care to communicate with all stakeholders and manage affected employees, remembering particularly that job-shadowing and offshoring are difficult to manage. And after the contract is signed and you are ready to go, resist the temptation to throw your process over the fence to a service provider. Ongoing transition and relationship management ensure long-term success.
This article is adapted with permission from EquaTerra, a multi-national outsourcing and insourcing advisory firm. Jeff Cartwright is practice leader at EquaTerra for change management, communications and people transition. Cliff Justice is practice leader at EquaTerra for multi-shore delivery.
© (2006) EquaTerra. All Rights Reserved. Reposted with Permission.
