Ch. 13 Outsourcing, 7 q's on exam

Question 1

Outsourcing definition

Answer 1

a contractual relationship for the provision of business services by an external provider

Question 2

_____ firms are more likely to outsource all HR functions opposed to _____ firms who retain the critical components

Answer 2

small, large

Question 3

Core competencies definition

Answer 3

resources and capabilities that serve as a firms competitive advantage, distinguishes a company competitively and reflects its personality.

Question 4

HRoffshoring definition

Answer 4

HR activities are being outsourced to other countries in order to lower costs/improve quality

Question 5

Request for proposal definition

Answer 5

describes the responsibilities to be outsourced and invites potential providers to present their proposal for carrying out the job.

Question 6

Activities that are most likely to be outsourced because they are … ?

Answer 6

• Rule based
  
  • Repetitive
  • Frequently undertaken
  • Predictable
  • Able to be fully/partly automated by technology
  • Able to be delivered by remote sites

Question 7

Hr functions most likely to be outsourced:

Answer 7

• Temporary staffing
  
  • Payroll
  • Training
  • Recruiting
  • Benefits administration

Question 8

Compensation activities that are outsourced

Answer 8

• Payroll
  
  • Benefits
  • Compensation
  • Pension

Question 9

R & S activities that are outsourced

Answer 9

• Advertisements
  
  • Screening of applications
  • Testing
  • Reference checking
  • Preliminary interviews
  • Executive salary negotiations
  • Exit interviews

Question 10

Training activities that are outsourced

Answer 10

• Program delivery
  
  • Program design/development
  • Training consulting
  • Training needs analysis
  • Program evaluation
  • Strategic planning
  • Administration
  • Training policies

Question 11

Health and Safety that are outsourced

Answer 11

• Employee assistance programs

* Wellness programs

Question 12

Legal service activities that are outsourced

Answer 12

• Contracts
  
  • Terminations
  • Non-compete ag.
  • NDA’s

Question 13

6 major reasons for Outsourcing

Answer 13

1. Financial savings
   
   2. Strategic focus
   3. Access to advanced technology
   4. Improved service levels
   5. Access to specialized expertise
   6. Organizational politics

Question 14

Reason to outsource: Financial savings,

why ?

Answer 14

• Economic of scale from specialized outsourcers who are more efficient
  
  • Cost control
  • Decreased capital commitments

Question 15

Reason to outsource: Strategic focus,

why ?

Answer 15

• Decide to focus on specific core competencies ex. Customer service, innovation
  
  • Core work is transformational and adds value to employee/customers
  • Move secondary functions to firms that do it well

Question 16

Reason to outsource:Access to Advanced Technology,

why ?

Answer 16

• It is the main driver for outsourcing
  
  • If a company cannot find technical talent, and/or need quick reliable access to technology
  • enables a company to reduce transaction time

Question 17

Reason to outsource:Access to specialized expertise,

why ?

Answer 17

• Experts understand the complex law and regulations required in HR
  
  • Reduces the risk and liabilities
  • Access to best practices

Question 18

Reason to outsource:Organizational politics,

why ?

Answer 18

• Outsourced function is not as visible as in house department performing the same tasks
  
  • Outsource get rid of a troublesome department (ee’s who are underperforming)
  • Reduces head count

Question 19

Risk and Limitations; some questions to be considered:

4

Answer 19

• Are the anticipated benefits realized ?
  
  • What are the risks to service levels ?
  • What is the effect on employee morale ?
  • Does outsourcing reduce the value of the organization ?

Question 20

areas of Risk and limitations of outsourcing

Answer 20

• The actual benefits
  
  • Service risks
  • Employee morale
  • Security risks
  • Reduced value

Question 21

Project benefits vs. The actual benefits of outsourcing

Answer 21

• Not as cost effective and problem free as expected

* Incompatible systems and client demands are the reason for excessive costs

Question 22

____ % found that it was more expensive to outsource

Answer 22

50

Question 23

___ % of outsourcing contracts are not renewed

Answer 23

30

Question 24

Service risks

Answer 24

• Contractual arrangements dictate which services will be provided
  
  • Flexibility is compromised to add new features or change service levels
  • Disruption of service could pose challenges from potential labour relations problems with outsourced organization

Question 25

Employee morale | risks

Answer 25

• restructuring can create displaced, resentful, alienated, and anxious employees Potential backlash

Question 26

1/3 of HR professionals resist outsourcing because they worry about ...?

Answer 26

○ Losing their jobs ○ Being forced to work for a vendor ○ Fear that management believes outsiders are more competent

Question 27

reduced value risks

Answer 27

* Extreme levels of outsourcing hollow out a company * An organization experiences a reduced capacity to generate profits or innovate * The internal image of HR functions ultimately are brought back in house

Question 28

Management of Outsourcing: how will outsourcing be managed?

Answer 28

* Selecting the vendor * Negotiating the contract * Monitoring the arrangement

Question 29

Tasks that need to be done when Selecting a vendor

Answer 29

1. Select an organization 2. Inform staff of the affected function 3. Prepare a request for proposal 4. Invite internal/external bids 5. Establish a team to evaluate these bids

Question 30

Tasks that need to be done when negotiating the contract

Answer 30

• Customize and negotiate outsourcing contract • Set performance standards, penalties clauses • Establish benchmarks for service expectations ○ Response time ○ Response cost ○ Customer satisfaction ratings

Question 31

Tasks that need to be done when monitoring the arrangement

Answer 31

* Establish a relationship to ensure outsourcers act in the best interest of the org. and has knowledge of the org * Check references of outsourcing company * Demand frequent/accurate reporting * Conduct internal/external satisfaction surveys

Question 32

Most frequent causes of outsourcing problems

Answer 32

* Poor service definition | * Weak management processes