Outsourcing and Workforce Reductions - Annotated Bibliography Example

Annotated Bibliography (outsourcing, human resource management) Annotated Bibliography (outsourcing, human resource management) The need to outsource human resource management Benson, J., & Littler, C, 2002, Outsourcing and Workforce Reductions: An Empirical Study of Australian Organizations, Retrieved August 31, 2012, from Asia Pacific Business Review: http://www.sagepub.com Outsourcing, human resource is a strategic move by organizations to improve the flexibility and quality of their workforce, while at the same time improving on the company’s capability, to accommodate impending change and stay way ahead of market forces (Benson & Littler 2002). Currently, a lot of organizations are outsourcing their various human personnel functions. The need to outsource affects not only employees, but also owners, human resource managers and executives. It includes benefits to access top skilled professionals, cost savings, and also advanced technology. This in the long run leads to a competitive advantage. Moreover, according to the authors, HRO will go a long way in improving an employee’s productivity and ultimate dedication to the organization (Benson & Littler 2002). HRO helps in improving the worker’s satisfaction; a number of workers get tired of being under the constant watch of their employers, and they cannot wait to be able to take charge of their lives. The workers want to create a balance between their life and work. Southwestairlines, 2011, 2011 Southwest Airlines Annual Report, Southwest Airlines, 64-70. In this annual report by southwest airlines, the airline was able to save costs running into millions of dollars from Human Resource Outsourcing. Not only has the firm been effective in its daily operations but has been fast in improving its activities. According to the statement by the Chief Executive Officer, Human Resource Outsourcing has been one of the primary areas that the company has been able to raise more money (Southwest Airlines 2011, p.68). The other benefit has managed to obtain through outsourcing, according to the author is an efficient HR system leading to soft cost savings. The Human Resource Outsourcing organization takes over a number of tiresome administrative duties relating to employment (Southwest Airlines 2011, p.68). According to the CEO, these duties include; responding to different inquiries by the employees, tax filing and payments, unemployment claims administration, workers health and benefits administration, and streamlining the Human Resource activities for an employee’s entire life cycle. Relieved from these non productive processes, management can now focus their resources on other revenue generating activities. He also states that the management should be at all times aware of the continuously changing employment legislation in HR, tax laws and benefits. Effect of company size on HR outsourcing Gupta, U. G., & Gupta, A, 1992, Outsourcing the IS function, Information Systems Management, 9(3), 44-50. The article talks in detail on how the size of an organization plays a leading role in HR outsourcing. The size can influence the critical decision for a firm to embark on HR outsourcing. The authors in the researches they have undertaken argue that small companies have a higher need of external expertise because of their limited scale (Gupta & Gupta 1992, p.44). True to that, small companies often lack the necessary economies of scale to create an effective Human Resource mechanism using its internal mechanisms. Unlike large companies that can afford to design, develop and implement complex HR process in the organization, smaller companies with minimal resources become faced with many costs if they follow suit. According to the authors, researchers argue that small companies will outsource their Human Resource functions for them to acquire the needed expertise (Gupta & Gupta 1992, p.50). Nevertheless, outsourcing is more common in large companies that would want to reduce their organizational costs to within their functional processes. ZenithServices, 2006, Retrieved August 29, 2012, from http://siva-my.jobstreet.com/_profile/previewProfile.asp?advertiser_id=9427 From the article, it has become established that many leading corporations outsource more than the smaller organizations. In the author’s view, small companies are extremely flexible and nimble; they are skilled specialists in whatever they do since they do it with a lot of passion (Zenith Services 2006). They only outsource when driven by the lack of technical knowhow, technology, economies of scale, capital and a number of other resources that the large companies enjoy. The strength of outsourcing to these small companies is not majorly in reorganizing or redefining processes for efficiency and speed, as it is in allowing them possess added leverage for what they are already best at in doing (Zenith Services 2006). Nevertheless, according to the author, large companies outsource their Human Resource in order to improve on their speed and efficiency. Large companies, therefore, outsource their human resource more than the small companies. Need for HR expertise Legare, T. L, 1998, The Human Side of Mergers and Acquisitions: Understanding and managing the human resource integration issues, Human Resource Planning Vol. 21, 32-41. The chapter in this book talks in details about reasons for HR expertise and the human side of such a process. According to author, a number of internal processes in the Human Resource functions are not main businesses and could be permanently or temporarily outsourced (Legare 1998, p.34). As an example, recruitment of workers is the popular human resource process to become outsourced. Specialists dealing in recruitment have many complex techniques like; web sites, multiple sourcing views, and the recruitment software’s that can locate thousands of applicants, increasing the chances that the best person suitable for a job becomes found. He further claims that the widely increased levels of complexity and information turnover in Human Resource region are under the management of external experts (Legare 1998, p.38). Human resource information systems (HRIS) and other, different Human Resource software’s play leading roles in managing people. Patry, M., Tremblay, M., Lanoie, P., & Lacombe, M, 2000, Why Firms Outsource Their Human Resource Activity: An Empirical Analysis, Retrieved August 29, 2012, from http://www.ciraano.qc.ca/pdf/publication/99s-27.pdf This article by Patry, Lanoie, & Lacombe talks on the reason as to why companies outsource their human resource functions. The authors claim that companies continue to understand the importance of human resource expertise (Patry et al 2000). As HR perspectives in management change from administrative and operational, to more strategic, human resource gets aligned with a number of company’s goals and strategies. This has improved the main focus of human resource outsourcing (Patry et al 2000). Outsourcing of the Human Resource function is a monumental milestone in the contemporary Human Resource strategy. The author states that by isolating the Human resource management function, companies can have an added advantage over its competitors. Outsourcing the Human Resource process has had an impact on the company’s performance. In the authors view, outsourcing the training and payroll leads to an increased propensity company’s innovation. Outsourcing the training activity leads to an increased stakeholder performance and an added ability to bring more value to the stakeholders. Benefits of Outsourcing Armstrong, M, 2003, A hand book of human resource management practice, London: Kogan Page Limited. Armstrong in his book talks about the benefits executive and managers get from outsourcing, human resources. According to him, one of the benefits is the reduced expenses related to employment (Armstrong 2003, p. 20). While there exists hundreds of ways of reducing costs, labor costs is one of them. Above tax overhead and payroll, there are still other expenses such as; recruiting fees, legal fees, and payroll processing. Human Resource Outsourcing brings together thousands of workers under a single roof and offers them small or midsized business commonly found in a number of corporations. According to the author, by consolidating a number of vendors, organizations can effectively streamline their operations and reduce the overhead costs (Armstrong 2003, p. 20). Engaging in Human Resource Outsourcing brings a number of financial benefits in different sectors such as; Health insurance costs, legal fees, and human resource systems and infrastructure. The other benefit the author talks about is the minimization of Employment Risks. Studies carried out indicate that there exists a direct relationship to a rise in the employment related lawsuits and hard economic times. Joined with the complex Human resource laws, a lot of employees find it hard to comply with the always changing employment legislation (Armstrong 2003, p. 23). Delmotte, J., & Sels, L., 2008. HR outsourcing: threat or opportunity? Personnel Review, Vol. 37 No.5 pp. 543 - 563. This article by Delmotte and Sels (2008) touches on two constraining views regarding HR outsourcing. The article first views HR outsourcing in terms of a cost cutting exercise and secondly as a prospect. In the article, some argue that outsourcing remains advantageous since it saves time plus resources, provides strategic outlook and ensures better focus on the key business goals (Delmotte & Sels 2008, p. 546). However, those opposing outsourcing argue that it often leads to corporate downsizing, and even reducing staff work strength. The various factors get examined through the use of previous research plus application of statistical methods or surveying data. Hence, from the article, outsourcing is seen to relate to organization’s size, concluding that large companies provided larger outsourcing. In conclusion, the article favors outsourcing being beneficial in respect to HRM strategy (Delmotte & Sels 2008, p. 562). Therefore, the paper proves helpful to my report as it provides extensive information regarding previous researches plus provides a high academic value to management students and HRM researchers. Patry, M., Tremblay, M., Lanoie, P., & Lacombe, M, 2000, Why Firms Outsource Their Human Resource Activity: An Empirical Analysis, Retrieved August 29, 2012, from http://www.ciraano.qc.ca/pdf/publication/99s-27.pdf The article talks about the benefits employees can receive from the process of outsourcing Human Resource. Such benefits include; Health Insurance Benefits; as the economy continues to rise, employers are searching for different ways of incentivizing and motivating their staff. According to the authors, Human Resource Outsourcing Company gives small employers an opportunity to provide their employees a number of comprehensive employee benefits that get mostly associated with large companies (Patry et al 2000). These benefits vary from significant medical plans and other benefit offerings. Examples of insurance benefits included in the article are; Flexible Spending Accounts, 401(k) Retirement plan, credit union and other financial services, employee assistance programs, a wide range of medical plans such as; life insurance, dental insurance, vision insurance and disability and alternative insurance. Also, away from the benefits in insurance, employers identify the needs of their staff in a rapidly changing market environment (Patry et al 2000). In the article, many organizations are accepting the idea of allowing their staff immense flexibility in their employment relationship. From telecommuting to flex time, managers are increasingly becoming aware of the significance of giving employees some work hours out of the office environment. Gupta, U. G., & Gupta, A, 1992, Outsourcing the IS function, Information Systems Management, 9(3), 44-50. In this article by Gupta & Gupta, outsourcing of both human resources and information systems will lead to improved performances (Gupta & Gupta 1992, p.46). Through the experience, they develop from working with thousands of employees having different backgrounds and job industries, HR outsourcing company can create a career guidance way and development to enable employees develop in their present positions (Gupta & Gupta 1992, p.48). The authors state that it is through high standard performance review, and well documented job descriptions, works will obtain the direction they require to excel in their fields. In addition, workers become provided with an online access to their personal anniversary, pay roll, vacation schedule, all increasing their confidence and trust in their employer. This eventually leads to more job satisfaction, lower turnover and improved performance. Their main role is assisting employer respect the Federal and State laws, and to give them additional support in case of an employment lawsuit. Organization Perspective on HR Outsourcing Carnal, C. A, 1990, Managing changes in organizations, Hempstead: Prentice Hall International. According to Carnal’s book, to many organizations the objective of outsourcing is to improve the company’s financial competitiveness, majorly through reduction of costs. The author argues that, companies that specialize in various support functions work cheaper since they benefit from various scale of economies, use the latest technology and expert knowledge. Service contracts with external suppliers provide the opportunity to buy services in relation to the firm’s needs (Carnal 1990, p.10). This can also lead to save operational costs. The other organizational perspective is to prevent replacement costs when workers retire or resign from their job industry. Human Resource Outsourcing firms provide various management and workers courses in training to keep the staff on the right path. Whether it becomes viewed as harassment training and safety compliance, or ways of handling a tough employee, a compact management training program is always and will still remain a must for every company. Dawson, P, 1994, Organizational change: A Processual Approach, London: Paul Chapman Publishing. Dawson argues in his book that a number of organizations make the decisions to outsource mainly since they want to try and focus on their key competencies, and check minimal value in creating in house processes out of these main competencies (Dawson 1994, p. 18). Human resource outsourcing helps in reducing the overall work load of the present Human Resource staff. According to him, this gives the firm an opportunity to focus on its strategic decision making process, and development of the major competencies. Outsourcing HR processes can provide managers with an opportunity to pay close attention to their main businesses, instead of spending their valuable time on different HR processes, which are constantly turning out to be complex and more advanced (Dawson 1994, p. 18). HRO reduces attrition; losing an indispensable employee can cost the management tens if not hundreds of thousands. In The United States alone, the annual cost of an employer turnover is close to $5 trillion (Dawson 1994, p. 18). HR Outsourcing Concerns Elmuti, D., & Kathawala, Y, 2000, The effects of global outsourcing strategies on participants attitudes and organizational effectiveness, Retrieved August 31, 2012, from International Journal of man power: http://mc.manuscriptcentral.com/ijm. In the article by Elmuti & Kathawala, the main reason that companies should not participate in outsourcing is because it can be incompatible with the firm’s business activities (Elmuti & Kathawala 2000). This can be due to the complex nature of the engagements involved in outsourcing that could lead many mangers to avoid making rushed decisions concerning the matter. In the authors view, consideration of the cost is another reason why companies fail to have external vendors do their Human Resource functions. According to the authors, outsourcing of human resource functions is not the effective way to cost savings, especially if the firm already has an effective HR functions in existence (Elmuti & Kathawala 2000). While outsourcing can be the best option to a number of companies, it is appropriate for firms to try and come up with their own unique Human Resource activities before proceeding to Human Resource outsourcing. The authors state that an investment in internal Human Resource processes can also raise cost effective benefits to organizations as well. Bibliography Armstrong, M 2003, A hand book of human resource management practice, London: Kogan Page Limited. Benson, J & Littler C 2002, Outsourcing and Workforce Reductions: An Empirical Study of Australian Organization, Retrieved August 31, 2012, from Asia Pacific Business Review: http://www.sagepub.com Carnal, C A 1990, Managing changes in organizations, Hempstead: Prentice Hall International. Dawson, P 1994, Organizational change: A Processual Approach, London: Paul Chapman Publishing. Delmotte, J., & Sels, L., 2008. HR outsourcing: threat or opportunity? Personnel Review, Vol. 37 No.5 pp. 543 - 563 Elmuti, D & Kathawala, Y 2000, The effects of global outsourcing strategies on participants attitudes and organizational effectiveness, Retrieved August 31, 2012, from International Journal of man power: http://mc.manuscriptcentral.com/ijm. Gupta, U G & Gupta, A 1992, Outsourcing the IS function, Information Systems Management, 9(3), 44-50. Legare, T L 1998, The Human Side of Mergers and Acquisitions: Understanding and managing the human resource integration issues, Human Resource Planning Vol. 21, 32-41. Patry M, Tremblay M, Lanoie, P & Lacombe, M 2000, Why Firms Outsource Their Human Resource Activity: An Empirical Analysis, Retrieved August 29, 2012, from http://www.ciraano.qc.ca/pdf/publication/99s-27.pdf Southwestairlines 2011, Southwest Airlines Annual Report, Southwest Airlines, 64- 70. ZenithServices 2006, Retrieved August 29, 2012, from http://siva- my.jobstreet.com/_profile/previewProfile.asp?advertiser_id=9427 Read More