To complete this Assignment, respond to the following in a 3- to 4-page paper:
To complete this Assignment, respond to the following in a 3- to 4-page paper:
- Analyze organizational influences on outsourcing HR functions.
- Describe influences that lead organizations to outsource.
- How does the outsourcing of HR functions address organizational issues?
- What are the positive and negative ramifications for HR professionals in organizations that outsource some HR functions?
- What implications are there for the career paths of HR professionals in this situation?
- How can HR professionals maintain viability in this situation?
- Might some HR professionals thrive in this situation? Explain how that could happen.
- Describe influences that lead organizations to outsource.
- Evaluate the impact of company size on organizational outsourcing decisions.
- Is there a clear pattern to how large organizations handle HR functions compared to small organizations related to outsourcing HR functions?
- How does the size of an organization factor into how these decisions are made?
- From your research, what factor do you think is the most influential? Support your reasoning.
The influence of business strategyon the decision to outsourcehuman resource activitiesA study of Malaysian manufacturingorganisationsHasliza Abdul-Halim and Norbani Che-HaFaculty of Business and Accountancy, University of Malaya, Kuala Lumpur,Malaysia, andAlan GeareDepartment of Management, University of Otago, Dunedin, New ZealandAbstractPurpose– This paper seeks to examine whether the decision to outsource human resource (HR)activities and the performance of the HR department are influenced by the particular business strategyespoused by the organisation. Four distinct strategies are considered: quality-based, proactive,breadth, and reactive.Design/methodology/approach– The data for the study were obtained from survey responsesfrom 232 organisations, of which 113 were engaged in HR outsourcing.Findings– The findings suggest that there is a significant relationship between organisations withproactive strategies and the decision to outsource both traditional and transactional HR functions.Breadth strategies demonstrate a negative significant relationship with outsourcing of traditionalfunctions. Outsourcing of both functions has a significant relationship with HR performance –traditional with a positive impact and transactional with a negative impact.Research limitations/implications– The paper focuses on the perceptions, knowledge andexperience of senior HR managers. Therefore there are understandable limitations in respect ofgeneralisation. In addition, the impact of HR outsourcing on the performance of the HR departmentfocuses only on the reduction of the number of HR employees from the department.Practical implications– The results indicate that HR outsourcing has the potential to empower HRmanagers, allowing them to focus on strategic activities that add more value to their organisation.Also, the results show that HR reduces actual HR labour costs.Originality/value– The study applies to a very under-researched area.KeywordsHuman resource management, Outsourcing, Management strategy,Performance managementPaper typeResearch paper1. IntroductionContemporary emphasis on cost, quality, service, and speed has forced manyorganisations to scrutinise and restructure fundamental business processes. In thissearch for more efficient organizational designs, organisations resort to an array ofapproaches that include quality management, business process reengineering,rightsizing and downsizing. Almost invariably, however, there remains the potentialfor increased efficiency. In recent years, more organizations have attempted to achieveThe current issue and full text archive of this journal is available atwww.emeraldinsight.com/1401-338X.htmJHRCA13,4274Journal of Human Resource Costing &AccountingVol. 13 No. 4, 2009pp. 274-293qEmerald Group Publishing Limited1401-338XDOI 10.1108/14013381011010132
efficiency by transferring processes, together with the associated operational activitiesand responsibilities, to an outside service provider. This process of outsourcing allowsmanagement to refocus scarce resources on core business activities while improvingcustomers’ perceptions of quality and reducing the cost of outsourced functions(Marinaccio, 1994). By outsourcing, organizations strive to deploy their limited resourcesand significantly improve operations to function more effectively in a highly competitive,consumer-oriented market place (Lever, 1997; Insinga and Werle, 2000; Arbaugh, 2003).The trend towards outsourcing is widely practised in manufacturing operations(Wahrenburget al., 2006), and indeed in some areas of business, outsourcing has beengoing on for some time. In fact, before the information technology revolution, manyorganisations in the US had already outsourced their manufacturing operations tocountries such as Canada, Mexico and South America in order to reduce costs (Gilleyet al., 2004). In contrast, the outsourcing of HR functions is a more recent development,but the practice is growing (Stewart, 1996; Jamroget al., 1997). Despite the increase inHR outsourcing practices by organisations, research on the subject is not extensive(Leibleinet al., 2002) and research on the effect of HR outsourcing on performance isstill at the seminal stage. Intuitively, an organisation will decide to outsource its HRfunction if the opportunity with an outside provider is there, and the perceived benefitsof outsourcing exceed the perceived costs. In reality the situation is not sostraightforward. Many organisations have no idea how much their HR services cost todeliver (Woodallet al., 2009), so clearly a cost-benefit analysis is beyond them. Thispaper is concerned with whether the particular business strategy adopted by theorganisation is significantly related to the decision to outsource (Lepaket al., 2005).The issues on HR outsourcing are related to many of the broader “make” and “buy”issues addressed in transaction cost economics (TCE) (Williamson, 1996; Dickmann andTyson, 2005). According to TCE, HR outsourcing may be viewed as relying on marketcontracting as a form of organisation structure as opposed to depending on organisationalhierarchy. In such a way, TCE encourages the organisation to evaluate whether it is moreefficient to provide a service in-house or to buy it from the market. Outsourcing isappropriate when the organisation achieves lower cost by transacting with externalvendors rather than building the internal capacity for a service (Williamson, 1996).Another theory of significance to HR outsourcing is the resource-based view. Thissuggests that an organisation should focus on those activities that constitute the corecompetencies and outsource the more peripheral activities (Prahalad and Hamel, 1990;Quinn and Hilmer, 1994). This perspective helps to predict the relationship betweenstrategic types and the decision to outsource HR functions. The reasoning here is thatorganisations with differentiation or quality based strategies, for instance, shouldsharpen their focus on activities generating competitive advantage by outsourcingnon-core and peripheral activities with low added value (Cookeet al., 2005). Byoutsourcing these activities, an organisation can direct a greater level of resources tomore proactive and strategic roles (Adler, 2003; Delmotte and Sels, 2008).Given that an organisation’s strategic types will likely affect the costs and benefitsassociated with market contracting, this study employs both the TCE perspective andthe resource-based view to develop hypotheses concerned with the relationshipbetween business strategy and the outsourcing of HR functions.The paper continues with a discussion on the concept of HR outsourcing, businessstrategy, and HR performance, in the course of which a number of research hypothesesare formulated. Section three includes brief details of the method, sample and measuresused in the study. The results are presented as section 4. The paper concludes with aInfluence ofbusinessstrategy275
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