Staff issues

When should you inform your staff of the potential outsourcing?

The usual answer to this question is to make the announcement as soon as you possibly can. Nevertheless, some common sense must be applied.

The process of outsourcing complex non-core functions like IT and finance can take a very long time. The time taken from outsourcing first being considered as a serious option to the actual transfer date has been known to take a year or so, with the average being at least six months. These days at least 90 per cent of organizations which decide that outsourcing is the preferred option for IT, will outsource the function within a nine to eighteen month period. With other functions like finance and HR there is a greater chance that the client management will change its mind at some stage prior to signing a contract.

In circumstances where the process is likely to take many months and is by no means certain to result in an outsourcing, the subject of when to inform the staff likely to be transferred is worthy of considerable thought. Although it may be morally correct for an organization to inform its employees of major lifestyle changes as soon as it is aware of them, this ought to be balanced against the uncertainty and dissatisfaction that a long period of waiting will create in the mind of the average employee.

Those in favour of giving as much notice as possible will quote instances where junior staff have not been told that an outsourcing project was in progress and unfortunately made decisions to buy local property. Obviously anyone taking such a decision only to find that within months they had to relocate if they wanted to keep their job is likely to be upset. Those against, point to instances where all staff were told of the outsourcing possibility almost as soon as this option was first considered, but because it took many months to choose the provider a great many of them took the opportunity to change jobs. Once the outsourcing option is raised, the identity, management and management style of the successful service provider is going to assume great importance to the functions employees. It follows, then, that as soon as the successful service provider is known, its management should be introduced to the client’s staff to allay their fears as quickly as possible.

Sometimes it is deemed necessary for the provider’s consultants to visit the client’s premises in order to carry out some work that is essential to the outsourcing proceeding. The presence of a service provider’s consultants on the client’s premises might be disguised in the first instance as a normal consultancy assignment but it would add to any feelings of betrayal if it later became obvious that the consultancy had been the start of the outsourcing exercise.

Logically, then, in most instances it makes sense not to inform the staff likely to be transferred until a preferred supplier has been chosen. If a competitive situation between service providers exists for any length of time and the client needs to allow access to senior staff in order to enhance this competition, then it is important that these meetings take place off-site.

The importance of prompt briefing and comforting of staff

From the moment that outsourcing becomes the preferred option, the client should immediately start working on the detail necessary to inform the staff and bring about a smooth transition. In this the client can and should look for assistance from the short-listed providers because previous experience of transitions will be invaluable.

In any outsourcing, the main factor in securing a successful service delivery will be the attitude of the staff, both those retained and those to be transferred. It is, therefore, important to maintain goodwill between the two groups of staff and reduce the worry and uncertainty time to an absolute minimum. Whatever efforts are made to inform and comfort those concerned, strong feelings of resentment and betrayal will linger with all staff, particularly those who are being made redundant, unless something special is done to compensate.

It is extremely important not just to inform the employees, but to treat and help them to an extent that has probably not been deemed necessary before. Looking at it purely from the client’s and provider’s points of view, it is of paramount importance to provide first rate assistance to any staff who are immediately being made redundant. Ignoring the moral grounds for treating staff well, it is essential to be seen to be concerned, both because the people being transferred may judge their own future treatment on what they see and hear during this time, and because some of those being made redundant may be required to work on during the transition period on a contract or incentive basis.

Given the tension that the employees will experience it is advisable at least to consider the following steps and actions.

The client should outline its own strategy from the time outsourcing becomes the preferred option. ’How would I both expect and wish to be treated?’ is a good starting point. The client and successful provider must agree a strategy for dealing with the staff, particularly those who will be transferred, and this will ideally be done prior to the announcement. It is important for the successful provider to meet with the client’s human resource management to understand the issues that will need to be addressed quickly in respect of group and individual terms and conditions, trade union involvement, etc. It will be important to bring together all the necessary information to be able to agree each individual’s future terms and conditions as soon as possible to avoid unnecessary arguments later. As soon as the initial announcement has been made, firm dates should be given to each affected employee as to when they will receive one to one and probably group opportunities to communicate with representatives of both existing and future employers. These meetings should be carried out as quickly as possible. The period immediately following the announcement will be an uncomfortable and traumatic time for the employees and it is likely that each person to be transferred will initially seek to direct most questions at their existing management, but gradually they will become more interested in talking to their future employers. In order to answer employees’ questions to the satisfaction of all concerned, it will be desirable for the provider’s representatives to be aware of sensitive information such as terms and employment conditions, even though the contract will not be in place. In view of the emotional stress likely in the short term, both parties must make themselves available whenever possible, and commit as much information as possible to writing so that unnecessary problems do not arise. For example, after the announcement of an impending outsourcing, rumours often start to spread that a relocation or further relocation will be required in the short term. Therefore, if this is not contemplated, it would be advisable to counter any possible concerns by the provider putting in writing its intentions regarding the location issue. Most of the large service providers claim that they view their initial contact with their new employees with such concern that they use well trained and sensitive human resource specialists in these first interviews, which are treated as counselling sessions. The concerned client would be advised to get an early indication of exactly what the provider is going to do in this area. Most providers will wish to introduce their own general terms and conditions of employment into the discussions as early as practicable in these initial counselling sessions. Experience indicates that the sooner this area of uncertainty is removed, the better the employees’ reaction will be. However, the service provider may not wish to finalize individual terms during a first meeting. This may be due to uncertainty about the individual, or the group terms may not have been finalized. The client should either ’sit in’ on the provider’s discussions with staff to be transferred, or counsel selected members of the staff immediately after they have been involved in one to one sessions with the provider. If the client feels that the provider has not done enough to allay unnecessary fears then it should push for additional action on this point to be taken as quickly as possible. Client management should be aware that they are likely to be blamed for all problems that occur prior to the transition being completed. After all, they decided to outsource. In further (probably group) sessions, the provider will wish to go into more detail regarding initial induction training (to explain operating systems and working practices), further individual and group training plans, career development and personnel policies. Again, it is in the client’s interest to make sure all these actions take place.

A first class service provider’s overall aims during these initial contacts will include:

• gaining an understanding of each individual’s personal aims and aspirations and the ’culture’ they will be moving from in order to minimize the prospect of these issues being badly handled and resulting in a reduced service;

• creating the impression that by moving to the new organization, the employees’ skills, experience and expertise are more closely related to the core activities than was previously the case, and that consequently opportunities for career development and enhancement will be markedly increased;

• the settlement of all employee matters as quickly as possible, particularly with the managers who will be transferring, as they will have a key role to play if the new service is to meet expectations; and

• creating an atmosphere whereby the transferred staff are pleased that the transfer is about to take place and are looking forward to this new stage in their careers.

The important thing to remember is that despite the very best intentions and support from senior management, the outsourcing will not be a success if there is not a reasonable degree of support from the staff. It will be important to communicate the benefits of outsourcing from both the organization’s and the employees’ point of view. One further point is worth making on the subject of counselling staff. Some client organizations have been known to stress the benefits of outsourcing too strongly, with the result that staff the client intended to retain in house have ’jumped ship’ either to the provider or some third party.

Should you allow the internal staff to make a competitive bid?

Clearly, if an internal team is going to be allowed to bid then they should probably be given some advance notice to compensate for the lack of experience in mounting such competitive bids. However, it should not be too advanced, as there is a chance that the time will be used to block the competition and the external providers must feel that they have a reasonable chance of success. Apart from this extra time, it is essential that as far as possible, all bidders believe they are performing on a reasonably level playing field.