Line Managers in HR Function - Assignment Example

Line managers in HR function – is outsourcing justified Background Management of human resources is considered an activity which is carried out by all managers. Recently line managers have been extensively involved in the HR functions as they are supposed to have close interactions with the employees. It has also been observed that these two groups do not work in harmony with each other, which can negatively impact the organization. Various firms outsource the HR functions on the grounds of concentrating on core and strategic issues. The decision to outsource or keep HR functions in-house itself is a strategic issue and requires deliberation. With the devolvement of line managers in HR functions, this research would try to assess to what extent outsourcing HR functions is deemed necessary. 2. Literature Review Due to downsizing and devolution of HRM responsibilities, the line managers have assumed key positions by virtue of having knowledge that enables then to influence both strategic and operational organizational priorities (MacNeil, 2003). Added to this are introduction of sophisticated software and the development of smart computer systems, which have further reduced the workload on the HR freeing the key personnel to concentrate on the change agent and strategic partner roles (Larsen & Brewster, 2003). The line managers are not competent in HR work and need to regularly reflect and be critical about their work. They attempt to increase the speed of decision making by wanting to by-pass procedures, which demonstrates that HR should not be outsourced but the HR functions should be expanded (Renwick, 2003). New forms of working have developed in the UK which includes outsourcing. Outsourcing of HR functions has consistently been increasing and this requires that HRM professionals look more closely at employees’ perspectives on outsourcing, says Richbell (2001). Sako and Tierney (2005) state that Business Transformation Outsourcing (BTO) is an emerging segment, which focuses on improving the effectiveness of an entire corporate function like the HR. The rationale is to outsource administrative tasks leaving the personnel to focus on strategy formulation using their competencies (Sako & Tierney) and to experience greater flexibility in allocating resources, and greater cost efficiencies (Jones & Finlayson, 1999) but Khatri and Budhwar (2002) cite many scholars who argue that human resource can be a source of sustainable competitive advantage for an organization. This implies that all functions related to human resources should be dealt in-house. Research suggests that HR outsourcing is a fad and that would pass. Organizational culture is a major deterrent to outsourcing HR activities. Training has to involve the environment, the people and the structure of the organization. The most effective method is when managers train their own people, which also reinforces that they understand the principles of TQM (Spenley, 1992, cited by Vermeulen & Crous). Outsourcing training would leave a gap as they do not interact with culture of the organization. Delegating selected business functions to external providers allows organisations to concentrate on their core business activities, utilising external expertise and reducing costs (Jones & Finlayson, 1999). Their change role is expected to bring about innovation, quality enhancement and cost-reduction. Economies of scale can be built through consolidation; offshore benefits like cheap labour and infrastructure can be reaped through captive shared-service centers or through join ventures and process expertise acquired through external help, say Bloch and Spang (2003). Thus, before outsourcing HR functions, priority should be given to organizational culture along with strategic issues for sustained success (Ferreira de Sousa, 2003). The HR department should be involved in the outsourcing process and they should also be sensitive to employees’ needs, skills and rights during transfers as according to Rubery, Carroll, Cooke, Grugulis, and Earnshaw (2004) within fragmented and decentralized organizations the effective management of human resources has been increasingly seen as dependent upon a strong organizational culture. 3. Research aim and objectives The existing literature gives diverse opinions of the issue of outsourcing HR functions but not much of literature is available taking into consideration the devolution of line managers taken on responsibility of HR functions but there is no strong empirical evidence to allow the organization to take a definite decision. Knowledge is fragmented and disorganized. Knowledge on HR outsourcing is not specifically connected to issue of line managers and technology advancement, which aids the HR department. Studies do not highlight the overall impact on the organization. The research would attempt to find how justified it is to outsource HR functions in the light of above. This would aim to find whether the claims of benefits of outsourcing bear significance in the light of the fact that devolution of responsibilities of HR functions to line managers can extensively be found. Besides, sophisticated software tools have also reduced the burden of routine tasks. Downsizing has reduced responsibilities. The objective of the research is as follows: 1. To assess the importance of outsourcing HR functions against keeping the services in-house as a result of increased involvement of line managers in HR functions. 2. To determine and present the circumstances under which outsourcing of HR functions can be undertaken or avoided. 3. To assess the competency levels of the service providers. 4. Research Methodology 4.1 Research Philosophy Any decision is based on a body of knowledge. This body of knowledge is produced through research. By applying the appropriate methodologies and the research method, the body of knowledge can be established and advanced with confidence. While research is considered important there is no consensus on how it should be defined because research means differently to different people. Research is basically a systematic method of investigation which increases knowledge. Research relies on facts and experience, data, concepts and constructs, hypotheses and conjectures, and principles and laws (Amaratunga, Baldry, Sarshar, & Newton, 2002). Research methodology is the procedural framework within which the research is conducted. The methodology would depend upon the topic to be researched and the specific research questions are the primary drivers. The ultimate purpose of this research is to add knowledge to the already existing body of knowledge, which would facilitate the right decision as far as outsourcing of HR functions are concerned. Attempts will be made to reach a suitable conclusion to the objectives. 4.2 Research Approach – induction vs. deduction Research philosophy highlights two different schools of thought on the how to conduct research. Arguments should be evaluated in different ways because primarily arguments have different roles and purposes and people assess according to the purpose in their mind. At times arguments provide useful information depending on one’s knowledge of how the world works. In a different setting, one can take an abstract approach and ask what follows from a given set of information and then decide on the outcome. Arguments can be evaluated in two qualitatively different ways – in terms of their deductive correctness or in terms of inductive strength (Rips, 2001). Logical positivism employs the quantitative and experimental methods to test deductive generalizations (Amaratunga et al.,). This requires independence of the observer from the subject being observed. Hypotheses have to be formulated in advance for subsequent verification. The explanations in this method are reduced to the simplest possible elements in order to facilitate analysis. The phenomenological method uses qualitative and naturalistic approaches to inductively and holistically understand human experience in specific settings. This approach tries to understand and explain a phenomenon rather than search for external causes or fundamental laws. They do not agree with the positivists’ belief that objects of experience are atomic independent events. According to some others, both correctness and strength are functions of an argument’s position on a single psychological continuum. A deductively correct argument has the maximum value on this continuum while a strong argument has a high value. Arguments usually range from worthless ones to ones to which there can be no doubts raised. Evaluating an argument is a matter of assessing its argument strength. If one argument is found to be deductively correct and the second is not, it implies the first is stronger than the second. An argument is deductively correct if its conclusion is true, whatever may be the premises; an argument is inductively strong if its premises support its conclusion. Both these approaches cannot be used simultaneously because that would comparison difficult. Degree of confidence can be ascertained through the deductive method as participants’ opinion or judgment could be either ‘valid’ or ‘not valid’. Relying on one method would make the results immune to variations in the way the different groups of participants use the ratings scale. Besides, deducticism claims that generalizations can be made from a set of events in that past and future decisions can be taken accordingly. These suggest that research can either be quantitative (deductive) or qualitative (inductive). The inductive method concentrates on words and observations to describe people in natural situations. The quantitative approach places great stress on numbers that represent opinions or concepts. Both the methods have strengths and weaknesses and hence selection of the methodology is difficult. There is no ideal solution but mere compromise. 4.3 Research Strategies Amaratunga et al., suggest that research strategy should be chosen as a function of the research situation. Each strategy has its own approach to collect and interpret data and hence its strategy has its own advantages and disadvantages. Some even suggest a mixed or balanced approach. At the same time, there are certain overlapping parameters which make the strategy selection a difficult task. The strategy selection should depend upon the behavioral elements, the degree of focus on past events and the conditions or setting. As far as this research is concerned, the qualitative method or the inductive method of research is preferable because a lot of literature is available, with diverse opinions and it is essential to understand what is happening. Besides, topic, theory and methodology are closely interrelated. The deductive method would not bring to light the deeper, underlying meanings and explanations of the data collected. Taking large samples would be impractical and small studies over a period of time would help establish facts. It would enable to understand the totality of the situation and multiple methods can be used to establish different views of the phenomena. As studies can be conducted over a period of time, it would give a realistic view of the change process of over time. This makes it powerful for studying any process. This method has been established to be best strategy for discovery, exploring a new idea or developing hypothesis. The results would then help organizations adjust as the ideas from the research emerge. The final result would contribute to theory generation. The main disadvantage in this is that data collection, analysis and interpretation can be tedious and difficult. The research would be carried out across different industries. 4.4 Data collection and analysis methods The most widely used data collection method for the inductive approach is interviews as it is a highly flexible method, can be used almost anywhere and has the potential to produce data of great depth. The research topic has to be seen from the perspective of the interviewee. Apart from this, it is essential to discuss with the employees of the organization and collect their responses to the issue of outsourcing of HR functions. Hence participant observation would be an added advantage. This would have to be categorized into several divisions - 1. Those that have outsourced HR functions and are continuing with it. 2. Those that had outsourced and have brought it back in-house. 3. Those that had outsourced but are unsatisfied and unable to bring it back in-house. 4. Those that are planning to outsource in the near future. 5. Those that have decided not to outsource Hr functions. The data thus collected would again have to be segregated based on which organizations have devolved responsibilities to the line managers, which use e-HR and which use technology to reduce the work load. Since the parameters are varies, samples across each variable cannot be large, which justifies the adoption of the inductive method of research. Besides, this has to be periodically conducted, which would bring forth the true picture of outsourcing. This data would have to be collected from employees, stakeholders, the top management, line managers and the HR department. Another method of data collection could be using case studies of firms that have outsourced and are facing problems or express dissatisfaction. Analysis and interpretation is the major part of the research process. Data analysis can be done by the means of innovative software packages like Ethnograph, NUDIST and Metamorph (Carson, & Coviello, 1996). A combination of this software would help retrieve keywords, manage the text base, code and retrieve data, build theory and develop conceptual networks. These would also assist in coding, linking, search and retrieval, and development of data displays. Before using this software, it is essential the researcher has a thorough knowledge of using then for data analysis. Data analysis consists of data reduction (this starts early in the analysis), data display and conclusion drawing and verification (Miles & Huberman 1994 cited by Weerd-Nederhof, 2001). Data display is a visual format that would display the data systematically so that the user can draw valid conclusions and take appropriate decisions. Better displays lead to qualitative analysis. Display should have the sequence of building the format, entering data, drawing conclusions, writing analytical text, and cycling onward to revised or new displays. For drawing conclusions patterns have to be formed, contrasts would have to be looked into, which would clarify relationships and make the understanding coherent. Once the constructs are measured and relationships verified hypotheses can be shaped. 5. Contribution and expected outcomes This research will bring clarity to the existing knowledge or the body of literature that already exists. The existing literature suggests there is discontentment amongst the firms that have outsourced because the decision was based on basically two factors – cost reductions and concentration on strategic issues by key personnel. The research is expected to bring a solution, which would suggest that each setting, corporate and business environment differs. There can be no ideal solution which can be applied across organizations. This itself is a strategic decision and it would depend on various factors like the size of the firm, nature of work, competition and government regulations. Hence the basis of decision would have a shift from the existing factors. It would need thorough analysis before a firm decides to outsource HR functions keeping in mind that line managers today are more actively involved in it. 6. Limitations There is no unique research method and each method has its own difficulties. Qualitative research method is known to have constraints as it tends to neglect the social and cultural construction of the variables studied. The categories listed for research may not be comprehensive or may require further sub-categories. Besides, it is difficult to predict how many organizations would be willing to participate in the first place, and then how many would register true opinions. Very often, firms tend to conceal the true picture especially when their strategies fail. This research is proposed to be carried over a period of time and it is possible the same personnel may not be available for the second round of data collection thereby the opinions reflected may differ. People may not want to disagree with the top management and want to be seen as a part of the team. All the employees may not be able to be present at a time. References: Amaratunga, D., Baldry, D., Sarshar, M., & Newton, R., (2002), Quantitative and Qualitative Research in the built environment: application of mixed research approach, Work Study, Vol. 15 No. 1 2002, pp. 17-31 Bloch, M., & Spang, S., (2003), Reaping the benefits of business-process outsourcing, 17 Jan 2007 Carson, D., & Coviello, N., (1996), Qualitative research issues at the marketing/ entrepreneurship interface, Marketing Intelligence & Planning 14/6 [1996] 51–58 Ferreira de Sousa, J. O., (2003), The Human Side of Business Process Outsourcing, 17 Jan 2007 Jones, G., & Finlayson, K., (1999), ‘Buy or Lease’? ‘Outsourcing’ as a Strategic Decision in Human Resource Management in Tertiary, 17 Jan 2007 Khatri, N. & Budhwar, P. S., (2002), A Study of Strategic HR issues in the Asian context, Personnel Review, Vol. 31 No. 2 2002 pp. 166-188 Larsen, H. H., & Brewster, C., (2003), Line management responsibility for HRM: what is happening in Europe? Employee Relations Vol. 25 No. 3, 2003 pp. 228-244 MacNeil, C. M., (2003), Line managers: facilitators of knowledge sharing in teams, Employee Relations Vol. 25 No. 3, 2003 pp. 294-307 Renwick, D., (2003), Line manager involvement in HRM: an inside view, Employee Relations Vol. 25 No. 3, 2003 pp. 262-280 Richbell, S., (2001), Trends and emerging values in human resource management, International Journal of Manpower Vol. 22 No. 3, 2001, pp. 261-268 Rips, L. J., (2001), Two Kinds of Reasoning, American Psychological Society, Vol. 12 No . 2 pp. 129-134 17 Jan 2007 Rubery, J., Carroll, M., Cooke, F. L., Grugulis, I., & Earnshaw, J., (2004), Human Resource Management and the Permeable Organization: The Case of the Multi-Client Call Centre, Journal of Management Studies 41:7 November 2004 Sako, M., & Tierney, A., (2005), Sustainability of Business Service Outsourcing: the Case of Human Resource Outsourcing (HRO), 17 Jan 2007 Vermeulen W & Crous M J (2000), Managing Service Quality, Vol 10, No. 1, 2000 pp. 61-67 Weerd-Nederhof, P., (2001), Qualitative Case Study Research: The case of a PhD Research Project on organising and managing new product development systems, Management Decision, 39/7 (2001) 513-538 Read More