Chapter 06 2006 Design of Work System

  Exhibit 6-1 Exhibit 6-1

  Model for Design of Work Systems Model for Design of Work Systems

  Exhibit 6-1 Exhibit 6-1

  Model for Design of Work Systems Model for Design of Work Systems

• Job Specialization
• Job Specialization
• – Creates jobs with very narrow task (activity) assignments
• – Creates jobs with very narrow task (activity) assignments
• – Resulted in high efficiency, quickly achieved job competency, low
• –

  Resulted in high efficiency, quickly achieved job competency, low

• Job Enlargement
• Job Enlargement
• – An increase in task variety to relieve boredom
• – An increase in task variety to relieve boredom
• Job Rotation
• Job Rotation
• – Employees moved across different specialized positions
• – Employees moved across different specialized positions
• – Enlargement and rotation add variety, but not necessarily responsibility
• – Enlargement and rotation add variety, but not necessarily responsibility

  Enlargement and rotation add variety, but not necessarily responsibility

  Employees moved across different specialized positions

  Job Rotation

  An increase in task variety to relieve boredom

  Job Enlargement

  Resulted in high efficiency, quickly achieved job competency, low training costs, but created monotonous jobs training costs, but created monotonous jobs

  Creates jobs with very narrow task (activity) assignments

  Job Specialization

  Employees moved across different specialized positions

  

Design of Work Systems

Design of Work Systems

  Job Rotation

  An increase in task variety to relieve boredom

  Job Enlargement

  

Resulted in high efficiency, quickly achieved job competency, low

training costs, but created monotonous jobs training costs, but created monotonous jobs

  Creates jobs with very narrow task (activity) assignments

  Job Specialization

  Design of Work Systems Design of Work Systems

  Enlargement and rotation add variety, but not necessarily responsibility

  

Design of Work Systems

Design of Work Systems

  Design of Work Systems Design of Work Systems

• Job Enrichment
• Job Enrichment
• – Increasing amount of responsibility for quality and productivity
• – Increasing amount of responsibility for quality and productivity
• Vertical Loading
• Vertical Loading
• –

  Reassignment of job responsibility formerly delegated to

• – Reassignment of job responsibility formerly delegated to

  Job Enrichment

  Increasing amount of responsibility for quality and productivity that employees have for their own work that employees have for their own work

  Vertical Loading

  Reassignment of job responsibility formerly delegated to supervisor to the employee supervisor to the employee

  Job Enrichment

  Increasing amount of responsibility for quality and productivity that employees have for their own work that employees have for their own work

  Vertical Loading

  

Reassignment of job responsibility formerly delegated to

supervisor to the employee supervisor to the employee

• Skill variety
• Autonomy
• Skill variety
• Autonomy
• – Extent to which work allows
• – Extent to which employee is able
• – Extent to which work allows
• – Extent to which employee is able
• Task identity
• Task identity
• Feedback
• – Extent to which work allows
• Feedback
• – Extent to which work allows
• – Extent to which work allows
• – Extent to which work allows
• Task significance
• Task significance
• – Extent to which employee
• – Extent to which employee

  Extent to which work allows employee to complete whole or employee to complete whole or identifiable piece of work identifiable piece of work

  Feedback

  Extent to which employee is able to work and determine work to work and determine work procedure at own discretion procedure at own discretion

  Autonomy

  Extent to which work allows employee to gain sense of how employee to gain sense of how well job responsibilities are met well job responsibilities are met

  Feedback

  Extent to which employee is able to work and determine work to work and determine work procedure at own discretion procedure at own discretion

  Autonomy

  Extent to which employee perceives that work is important perceives that work is important and meaningful to those inside or and meaningful to those inside or outside organization outside organization

  Task significance

  Task identity

  

Five Core Job Characteristics

Five Core Job Characteristics

  Extent to which work allows employee to use variety of skills employee to use variety of skills

  Skill variety

  Extent to which employee perceives that work is important perceives that work is important and meaningful to those inside or and meaningful to those inside or outside organization outside organization

  Task significance

  Extent to which work allows employee to complete whole or employee to complete whole or identifiable piece of work identifiable piece of work

  Task identity

  Extent to which work allows employee to use variety of skills employee to use variety of skills

  Skill variety

  Five Core Job Characteristics Five Core Job Characteristics

  Extent to which work allows employee to gain sense of how employee to gain sense of how well job responsibilities are met well job responsibilities are met

  Exhibit 6-2 Exhibit 6-2

  Job Characteristics Model Job Characteristics Model

  Exhibit 6-2 Exhibit 6-2

  Job Characteristics Model Job Characteristics Model

• Changing demographics
• Employee needs
• Changing demographics
• Employee needs
• – Worker needs vary by age,
• – Workers want to be involved
• – Worker needs vary by age,
• – Workers want to be involved
• Employee concerns about
• Employee concerns about
• Employee needs for work/
• Employee needs for work/
• – Workers want safe, hazard-
• – Workers want safe, hazard-
• – Workers less committed to
• – Workers less committed to
• – Also suffer from burnout and
• – Also suffer from burnout and Also suffer from burnout and lower performance lower performance

  Workers less committed to organizations today organizations today

  Employee concerns about safety in workplace safety in workplace

  Workers want to be involved in work-related issues, and in work-related issues, and expect organization to listen expect organization to listen to concerns to concerns

  Employee needs representation (“voice”) representation (“voice”)

  Workers want safe, hazard- free working environment free working environment

  Employee concerns about safety in workplace safety in workplace

  Workers want to be involved in work-related issues, and in work-related issues, and expect organization to listen expect organization to listen to concerns to concerns

  Employee needs representation (“voice”) representation (“voice”)

  Also suffer from burnout and lower performance lower performance

  Employee needs for work/ life balance life balance

  

What Workers Need

What Workers Need

  Worker needs vary by age, gender, race, religion, gender, race, religion, physical abilities, sexual physical abilities, sexual orientation, and marital and orientation, and marital and family status family status

  & life styles

  Changing demographics & life styles

  Workers less committed to organizations today organizations today

  Employee needs for work/ life balance life balance

  Worker needs vary by age, gender, race, religion, gender, race, religion, physical abilities, sexual physical abilities, sexual orientation, and marital and orientation, and marital and family status family status

  & life styles

  Changing demographics & life styles

  What Workers Need What Workers Need

  Workers want safe, hazard- free working environment free working environment

• Pooled interdependence
• Reciprocal
• Pooled interdependence
• Reciprocal
• – Individual employees work
• – Individual employees work
• – Workflow is random
• – Workflow is random
• – Responds to immediate
• – Responds to immediate
• Sequential
• – Employees have joint and
• Sequential
• – Employees have joint and
• – Work in process flow is linear,
• – Work in process flow is linear,
• Higher levels of
• Higher levels of
• – One individual depends on
• – One individual depends on
• Current and future work systems more broadly

  One individual depends on timely completion of quality timely completion of quality work from another coworker work from another coworker

  Employees have joint and shared responsibilities for shared responsibilities for work work

  Responds to immediate situation situation

  Workflow is random

  Reciprocal interdependence interdependence

  Higher levels of interdependence require interdependence require higher levels of higher levels of coordination and attention coordination and attention

  Employees have joint and shared responsibilities for shared responsibilities for work work

  Responds to immediate situation situation

  Workflow is random

  Reciprocal interdependence interdependence

  Work in process flow is linear, from one individual to another from one individual to another

  

Types of Task Interdependence

Types of Task Interdependence

  Sequential interdependence interdependence

  Individual employees work independently of each other in independently of each other in performing tasks but utilize performing tasks but utilize coordination of activities coordination of activities

  Pooled interdependence

  One individual depends on timely completion of quality timely completion of quality work from another coworker work from another coworker

  Work in process flow is linear, from one individual to another from one individual to another

  Sequential interdependence interdependence

  Individual employees work independently of each other in independently of each other in performing tasks but utilize performing tasks but utilize coordination of activities coordination of activities

  Pooled interdependence

  Types of Task Interdependence Types of Task Interdependence

  Higher levels of interdependence require interdependence require higher levels of higher levels of coordination and attention coordination and attention

• Current and future work systems more broadly

  defined, and more closely related to strategic

  training to be effective team members

  

Employees raised in individualistic cultures need

  Also create challenges in effectively managing themselves

  Cross-function teams strategically beneficial

  reengineering of jobs

  reengineering of jobs

  Workers becoming more involved in design and

  choices

  choices

  defined, and more closely related to strategic

  Current and future work systems more broadly

• Workers becoming more involved in design and
• Cross-function teams strategically beneficial
• Cross-function teams strategically beneficial
• – Also create challenges in effectively managing themselves
• – Also create challenges in effectively managing themselves

  Employees raised in individualistic cultures need training to be effective team members training to be effective team members

  Also create challenges in effectively managing themselves

  Cross-function teams strategically beneficial

  Workers becoming more involved in design and reengineering of jobs reengineering of jobs

  Current and future work systems more broadly defined, and more closely related to strategic defined, and more closely related to strategic choices choices

  Redesign of Work Systems Redesign of Work Systems

  

Redesign of Work Systems

Redesign of Work Systems

• Workers becoming more involved in design and

• Employees raised in individualistic cultures need
• Employees raised in individualistic cultures need

  training to be effective team members

• Involves contracting out some of organization’s

• Involves contracting out some of organization’s

  noncore work activities to outside specialists

• – Can do work more effectively

• – Often for less than cost of doing work in-house
• – Often for less than cost of doing work in-house
• Areas frequently outsourced:
• Areas frequently outsourced:
• – Payroll
• – Payroll
• – Benefits
• – Benefits
• – Technological support
• – Technological support
• More than 75% of organizations outsource at least
• More than 75% of organizations outsource at least

  one HR function

  

More than 75% of organizations outsource at least

  Technological support

  Benefits

  Payroll

  Areas frequently outsourced:

  Often for less than cost of doing work in-house

  Can do work more effectively

  noncore work activities to outside specialists

• – Can do work more effectively

  Technological support

  Involves contracting out some of organization’s

  More than 75% of organizations outsource at least one HR function one HR function

  Benefits

  Payroll

  Areas frequently outsourced:

  Often for less than cost of doing work in-house

  Can do work more effectively

  Involves contracting out some of organization’s noncore work activities to outside specialists noncore work activities to outside specialists

  Outsourcing Outsourcing

  

Outsourcing

Outsourcing

  one HR function

• Can free up HR staff to focus on more
• Can free up HR staff to focus on more
• Considerations:
• Considerations:
• – Cost savings
• – Cost savings
• – Whether contractor can deliver
• – Whether contractor can deliver
• – Compliance with laws
• – Compliance with laws
• – Impacts on employees whose jobs might be lost
• – Impacts on employees whose jobs might be lost
• – Impacts on morale of remaining employees
• – Impacts on morale of remaining employees
• Involves exporting tasks and jobs to countries

  Impacts on morale of remaining employees

  

Impacts on employees whose jobs might be lost

  Compliance with laws

  Whether contractor can deliver

  Cost savings

  Considerations:

  Can free up HR staff to focus on more strategic issues strategic issues

  Impacts on employees whose jobs might be lost

  

Outsourcing

Outsourcing

  Compliance with laws

  Whether contractor can deliver

  Cost savings

  Considerations:

  Can free up HR staff to focus on more strategic issues strategic issues

  Outsourcing Outsourcing

  Impacts on morale of remaining employees

• Involves exporting tasks and jobs to countries
• India remains largest market

  where labor costs are significantly less than in the

• Wages approximately 10% of those paid in U.S.
• Wages approximately 10% of those paid in U.S.
• – Often considered good by local standards
• – Often considered good by local standards
• Challenge of managing virtual global teams
• Challenge of managing virtual global teams
• Need for tight organizational and operational
• Need for tight organizational and operational

  control to ensure coordination and communication

  Need for tight organizational and operational

  Challenge of managing virtual global teams

  Often considered good by local standards

  Wages approximately 10% of those paid in U.S.

  India remains largest market

  

where labor costs are significantly less than in the

U.S.

• India remains largest market

  Need for tight organizational and operational control to ensure coordination and communication control to ensure coordination and communication

  Involves exporting tasks and jobs to countries

  Challenge of managing virtual global teams

  Often considered good by local standards

  Wages approximately 10% of those paid in U.S.

  India remains largest market

  Involves exporting tasks and jobs to countries where labor costs are significantly less than in the where labor costs are significantly less than in the U.S. U.S.

  Offshoring Offshoring

  

Offshoring

Offshoring

  

control to ensure coordination and communication

• Advantages
• Disadvantages
• Advantages
• Disadvantages
• – Cost savings
• – Loss of domestic
• – Loss of domestic

• – Cost savings

• – Extend work day to
• – Extend work day to
• – Transfer of technical

  concerns

  Public image/loyalty

  knowledge

  knowledge

  Transfer of technical

  jobs

  jobs

  Loss of domestic

  Disadvantages

  Public image/loyalty concerns concerns

  Transfer of technical knowledge knowledge

  Loss of domestic jobs jobs

  24 hours

  Disadvantages

  24 hours

  Extend work day to

  Cost savings

  Advantages

  24 hours

  Extend work day to 24 hours

  Cost savings

  Advantages

  Offshoring Offshoring

  

Offshoring

Offshoring

• – Transfer of technical

• – Public image/loyalty
• – Public image/loyalty

  concerns

• Mergers pursued for a variety of reasons:
• Mergers pursued for a variety of reasons:
• – Economies of scale in operations

  Economies of scale in operations

• – Economies of scale in operations

• – Consolidation in saturated markets
• – Consolidation in saturated markets
• – Improving competitive position through larger asset
• – Improving competitive position through larger asset
• Two thirds of mergers fail
• Two thirds of mergers fail
• – Largely because of inability to merge cultural and
• – Largely because of inability to merge cultural and

  other human factors

  Largely because of inability to merge cultural and

  Two thirds of mergers fail

  base

  base

  Improving competitive position through larger asset

  Consolidation in saturated markets

  Largely because of inability to merge cultural and other human factors other human factors

  Mergers pursued for a variety of reasons:

  Two thirds of mergers fail

  Improving competitive position through larger asset base base

  Consolidation in saturated markets

  Economies of scale in operations

  Mergers pursued for a variety of reasons:

  Mergers and Acquisitions Mergers and Acquisitions

  

Mergers and Acquisitions

Mergers and Acquisitions

  other human factors

• Disrupting status quo may be met with
• Disrupting status quo may be met with

  undermine change initiatives

  undermine change initiatives

  Poor coordination and communication can

  improvements

  improvements

  Risk and uncertainty; no guarantee of

  See benefits from change

  Perceive need to change

  Employees will resist change unless they

  Costs and reallocation of resources

  by both employees and managers

  by both employees and managers

  resistance

  resistance

  Disrupting status quo may be met with

  Poor coordination and communication can undermine change initiatives undermine change initiatives

  Risk and uncertainty; no guarantee of improvements improvements

  See benefits from change

  Perceive need to change

  Employees will resist change unless they

  Costs and reallocation of resources

  Disrupting status quo may be met with resistance resistance by both employees and managers by both employees and managers

  Barriers to Change Barriers to Change

  

Barriers to Change

Barriers to Change

• Costs and reallocation of resources

• Costs and reallocation of resources
• Employees will resist change unless they
• Employees will resist change unless they
• – Perceive need to change
• – Perceive need to change

• – See benefits from change
• – See benefits from change
• Risk and uncertainty; no guarantee of
• Risk and uncertainty; no guarantee of
• Poor coordination and communication can
• Poor coordination and communication can

• Promote and implement change so it provides
• Promote and implement change so it provides
• Involve employees in change process to increase

  benefits to those impacted

• Involve employees in change process to increase

• Open, two-way communication
• Open, two-way communication
• – Early, before change decisions are made
• – Early, before change decisions are made
• – Dispel rumors
• – Dispel rumors
• – Increase trust and acceptance of change by keeping

  Dispel rumors

  Early, before change decisions are made

  Open, two-way communication

  their commitment to change

  their commitment to change

  Involve employees in change process to increase

  benefits to those impacted

• – Increase trust and acceptance of change by keeping
• Reasons for using teams in organizations:

  Increase trust and acceptance of change by keeping employees informed and asking for input employees informed and asking for input

  Promote and implement change so it provides

  Dispel rumors

  Early, before change decisions are made

  Open, two-way communication

  Involve employees in change process to increase their commitment to change their commitment to change

  Promote and implement change so it provides benefits to those impacted benefits to those impacted

  To Overcome Resistance to Change To Overcome Resistance to Change

  

To Overcome Resistance to Change

To Overcome Resistance to Change

  Increase trust and acceptance of change by keeping employees informed and asking for input employees informed and asking for input

  Reasons for using teams in organizations:

• Reasons for using teams in organizations:

• – Unlikely one individual will have all of the knowledge

• – Teams provide more “buy-in” to decisions
• – Teams provide more “buy-in” to decisions
• – Managers believe teams enhance motivation and
• – Managers believe teams enhance motivation and
• – Facilitate acquisition and sharing of information vital
• – Facilitate acquisition and sharing of information vital
• – Facilitate variety of internal quality control initiatives

  to organizational growth and flexibility

  to organizational growth and flexibility

  Facilitate acquisition and sharing of information vital

  productivity

  productivity

  Managers believe teams enhance motivation and

  Teams provide more “buy-in” to decisions

  and information needed to make complex decisions

  and information needed to make complex decisions

  Unlikely one individual will have all of the knowledge

• – Unlikely one individual will have all of the knowledge

  Facilitate acquisition and sharing of information vital to organizational growth and flexibility to organizational growth and flexibility

  Facilitate variety of internal quality control initiatives

  Managers believe teams enhance motivation and productivity productivity

  Teams provide more “buy-in” to decisions

  Unlikely one individual will have all of the knowledge and information needed to make complex decisions and information needed to make complex decisions

  

Reasons for using teams in organizations:

  

Restructuring Teams for Re-engineered Organizations

  Restructuring Teams for Re-engineered Organizations

  

Reading 6.1 (Nahavandi & Aranda)

Reading 6.1 (Nahavandi & Aranda)

  Restructuring Teams for Re-engineered Organizations Restructuring Teams for Re-engineered Organizations

  

Reading 6.1 (Nahavandi & Aranda)

Reading 6.1 (Nahavandi & Aranda)

  Facilitate variety of internal quality control initiatives

• – Facilitate variety of internal quality control initiatives
• Problems with teams

  Problems with teams

• Problems with teams
• – May fail without proper training and support

• – Often poorly integrated into organization’s hierarchy
• – Often poorly integrated into organization’s hierarchy
• – Individuals often feel their team contributions dilute
• – Individuals often feel their team contributions dilute
• – Few teams have found effective means to deal with
• – Few teams have found effective means to deal with
• – Usually not represented at top levels of organizations,
• – Usually not represented at top levels of organizations,

  sending a mixed message about their importance

  Usually not represented at top levels of organizations,

  “freeloaders”

  “freeloaders”

  Few teams have found effective means to deal with

  personal success

  personal success

  Individuals often feel their team contributions dilute

  Often poorly integrated into organization’s hierarchy

  May fail without proper training and support

• – May fail without proper training and support

  “freeloaders”

  Usually not represented at top levels of organizations, sending a mixed message about their importance sending a mixed message about their importance

  Few teams have found effective means to deal with “freeloaders”

  Individuals often feel their team contributions dilute personal success personal success

  Often poorly integrated into organization’s hierarchy

  May fail without proper training and support

  Problems with teams

  

Restructuring Teams for Re-engineered Organizations

  Restructuring Teams for Re-engineered Organizations

  

Reading 6.1

Reading 6.1

  Restructuring Teams for Re-engineered Organizations Restructuring Teams for Re-engineered Organizations

  

Reading 6.1

Reading 6.1

  

sending a mixed message about their importance

  

Reading 6.1

Reading 6.1

  Restructuring Teams for Re-engineered Organizations Restructuring Teams for Re-engineered Organizations

  

Reading 6.1

Reading 6.1

  Restructuring Teams for Re-engineered Organizations

  

Restructuring Teams for Re-engineered Organizations

• Three keys to successful teams
• Three keys to successful teams
• – Value and endorse dissent
• – Value and endorse dissent
• – Encourage fluidity of membership
• – Encourage fluidity of membership
• – Enable teams to make decisions
• – Enable teams to make decisions

  Three keys to successful teams

  Value and endorse dissent

  Encourage fluidity of membership

  Enable teams to make decisions

  Three keys to successful teams

  Value and endorse dissent

  Encourage fluidity of membership

  Enable teams to make decisions

  Figure 1 Figure 1

  Figure 1 Figure 1

  Three Key Elements for Success of US Teams

  Three Key Elements for Success of US Teams Three Key Elements for Success of US Teams

  Three Key Elements for Success of US Teams

  Figure 2 Figure 2

  Team Development Model Team Development Model

  Figure 2 Figure 2

  Team Development Model Team Development Model Communication not significant not significant not significant not significant

• – Team structure
• – Team structure
• – Team spirit
• – Team spirit
• – Social support
• – Social support
• – Workload sharing
• – Workload sharing
• – Communication
• – Communication

  Social support strong positive strong positive negative negative

  Social support strong positive strong positive negative negative

  Team spirit strong positive strong positive strong positive strong positive

  Team structure positive positive strong positive strong positive

  Grade Grade

  Satisfaction Satisfaction

  What predicts the performance of student teams? What predicts the performance of student teams?

  Communication not significant not significant not significant not significant

  Workload sharing positive positive not significant not significant

  Team spirit strong positive strong positive strong positive strong positive

  

Supplement to Reading 6.1 (Werner & Lester, 2001)

Supplement to Reading 6.1 (Werner & Lester, 2001)

  Team structure positive positive strong positive strong positive

  Grade

  Satisfaction Grade

  What predicts the performance of student teams? Satisfaction

  Research on Student Case Teams What predicts the performance of student teams?

  Research on Student Case Teams

  Supplement to Reading 6.1 (Werner & Lester, 2001) Supplement to Reading 6.1 (Werner & Lester, 2001)

  Research on Student Case Teams Research on Student Case Teams

  Workload sharing positive positive not significant not significant

• Five competitive forces driving
• Five competitive forces driving
• – Downsizing
• – Downsizing
• – Rapid growth or decline
• – Rapid growth or decline
• – Globalization
• – Globalization
• – Increased competition
• – Increased competition
• – Restructuring
• – Restructuring
• Operational rationales for outsourcing

  Increased competition

  Increased competition

  Globalization

  Rapid growth or decline

  Downsizing

  Five competitive forces driving organizations to outsource HR activities: organizations to outsource HR activities:

  Restructuring

  Globalization

  

Reading 6.2 (Greer et al.)

Reading 6.2 (Greer et al.)

  Rapid growth or decline

  Downsizing

  Five competitive forces driving organizations to outsource HR activities: organizations to outsource HR activities:

  HRM Outsourcing: Make or Buy Decision HRM Outsourcing: Make or Buy Decision

  Reading 6.2 (Greer et al.) Reading 6.2 (Greer et al.)

  

HRM Outsourcing: Make or Buy Decision

HRM Outsourcing: Make or Buy Decision

  Restructuring

  Operational rationales for outsourcing

• Operational rationales for outsourcing

• – Small firms lack resources; large firms gain
• – Small firms lack resources; large firms gain
• – Specialized HR expertise and objectivity
• – Specialized HR expertise and objectivity
• Reduced liability and risk in legally sensitive HR
• Reduced liability and risk in legally sensitive HR
• – Innovations and economies of scale in HRIS
• – Innovations and economies of scale in HRIS
• Simplify transactions
• Simplify transactions
• Reduce HR costs

  Simplify transactions

  technology used by outside vendors

  technology used by outside vendors

  Innovations and economies of scale in HRIS

  Reduced liability and risk in legally sensitive HR areas areas

  Specialized HR expertise and objectivity

  economies of scale

  economies of scale

  Small firms lack resources; large firms gain

  Simplify transactions

• Reduce HR costs
• Operational rationales for outsourcing

  Reduce HR costs

  Innovations and economies of scale in HRIS technology used by outside vendors technology used by outside vendors

  Reduced liability and risk in legally sensitive HR areas areas

  Specialized HR expertise and objectivity

  Small firms lack resources; large firms gain economies of scale economies of scale

  Operational rationales for outsourcing

  HRM Outsourcing: Make or Buy Decision HRM Outsourcing: Make or Buy Decision

  Reading 6.2 Reading 6.2

  

HRM Outsourcing: Make or Buy Decision

HRM Outsourcing: Make or Buy Decision

  

Reading 6.2

Reading 6.2

  Reduce HR costs

• Operational rationales for outsourcing

• – Time-sensitive issues better handled by outsourcing
• – Time-sensitive issues better handled by outsourcing
• – Temporary or cyclical increases in HR needs
• – Temporary or cyclical increases in HR needs
• – Efficient vendor management practices drive costs
• – Efficient vendor management practices drive costs
• – Specialized vendors offer activities as their core
• – Specialized vendors offer activities as their core

  business and strategic focus

  

Specialized vendors offer activities as their core

  down more than economies of scale

  down more than economies of scale

  Efficient vendor management practices drive costs

  Temporary or cyclical increases in HR needs

  Time-sensitive issues better handled by outsourcing

  (continued):

  Operational rationales for outsourcing (continued):

  Specialized vendors offer activities as their core business and strategic focus business and strategic focus

  Efficient vendor management practices drive costs down more than economies of scale down more than economies of scale

  Temporary or cyclical increases in HR needs

  Time-sensitive issues better handled by outsourcing

  (continued):

  Operational rationales for outsourcing (continued):

  HRM Outsourcing: Make or Buy Decision HRM Outsourcing: Make or Buy Decision

  Reading 6.2 Reading 6.2

  

HRM Outsourcing: Make or Buy Decision

HRM Outsourcing: Make or Buy Decision

  

Reading 6.2

Reading 6.2

  business and strategic focus

• Strategic rationales for outsourcing:

• Strategic rationales for outsourcing:
• – Outsourcing nonstrategic activities permits HR to

  

Outsourcing nonstrategic activities permits HR to

• – Outsourcing nonstrategic activities permits HR to

• – Decentralization of HR function through
• – Decentralization of HR function through
• – Develop less bureaucratic HR departments
• – Develop less bureaucratic HR departments
• – Downsizing may require HR to reduce staff,
• – Downsizing may require HR to reduce staff,
• – Outsourcing provides “big picture” perspective

  eliminating specialized in-house expertise

  eliminating specialized in-house expertise

  Downsizing may require HR to reduce staff,

  Develop less bureaucratic HR departments

  redeployment of some of assets to operating units

  redeployment of some of assets to operating units

  Decentralization of HR function through

  move away from administration toward strategic role

  move away from administration toward strategic role

  Downsizing may require HR to reduce staff, eliminating specialized in-house expertise eliminating specialized in-house expertise

  Strategic rationales for outsourcing:

  Outsourcing provides “big picture” perspective

  Develop less bureaucratic HR departments

  Decentralization of HR function through redeployment of some of assets to operating units redeployment of some of assets to operating units

  Outsourcing nonstrategic activities permits HR to move away from administration toward strategic role move away from administration toward strategic role

  Strategic rationales for outsourcing:

  HRM Outsourcing: Make or Buy Decision HRM Outsourcing: Make or Buy Decision

  Reading 6.2 Reading 6.2

  

HRM Outsourcing: Make or Buy Decision

HRM Outsourcing: Make or Buy Decision

  

Reading 6.2

Reading 6.2

  Outsourcing provides “big picture” perspective

• – Outsourcing provides “big picture” perspective

• Positive outcomes
• Positive outcomes
• – Lower HR costs
• – Lower HR costs
• – Higher service quality
• – Higher service quality
• – Realignment or redeployment of internal HR
• – Realignment or redeployment of internal HR
• – Development of negotiation and broker skills
• – Development of negotiation and broker skills
• – Enhanced credibility of HR function
• – Enhanced credibility of HR function
• – Risk and uncertainty absorption by HR vendor
• – Risk and uncertainty absorption by HR vendor

  Risk and uncertainty absorption by HR vendor

  Enhanced credibility of HR function

  Development of negotiation and broker skills

  expertise

  expertise

  Realignment or redeployment of internal HR

  Higher service quality

  Lower HR costs

  Positive outcomes

  Enhanced credibility of HR function

  Reading 6.2 Reading 6.2

  Development of negotiation and broker skills

  Realignment or redeployment of internal HR expertise expertise

  Higher service quality

  Lower HR costs

  Positive outcomes

  HRM Outsourcing: Make or Buy Decision HRM Outsourcing: Make or Buy Decision

  Reading 6.2 Reading 6.2

  

HRM Outsourcing: Make or Buy Decision

HRM Outsourcing: Make or Buy Decision

  Risk and uncertainty absorption by HR vendor

• Negative outcomes
• Negative outcomes
• – Significant cost savings not always
• – Significant cost savings not always
• – Vendor switching costs
• – Vendor switching costs
• – Long-term vendor contracts
• – Long-term vendor contracts
• – Disruption of firm’s culture
• – Disruption of firm’s culture
• – Removal or distancing of HR function from
• – Removal or distancing of HR function from
Morale often plummets

  Disruption of firm’s culture

  Disruption of firm’s culture

  Long-term vendor contracts

  Vendor switching costs

  Significant cost savings not always experienced experienced

  Negative outcomes

  Removal or distancing of HR function from employees employees

  Long-term vendor contracts

  Reading 6.2 Reading 6.2

  Vendor switching costs

  Significant cost savings not always experienced experienced

  Negative outcomes

  HRM Outsourcing: Make or Buy Decision HRM Outsourcing: Make or Buy Decision

  Reading 6.2 Reading 6.2

  

HRM Outsourcing: Make or Buy Decision