Outsourcing, if not managed correctly, can be a major disaster.
There seems to be a perception that outsourcing is a euphemism for “out of sight out of mind”.
How wrong this is, as we have seen recently in relation to some government outsourcing. In 2016, the ABC program 4-Corners reported on the government outsourcing of some tertiary TAFE level education courses and more recently, on residential care for displaced children. It showed that the lack of diligent and planned oversight of these programmes has cost the government dearly, but the price paid by the recipients of these services may last a lifetime.
Why do government and private sector agencies implement so many outsourcings, privatisations and sub-contracting while neglecting even the most basic checks and balances? If the alleged neglect and routing of the system shown on 4-Corners has gone undetected for long periods – even years – then the required organisational checks and balances are quite obviously not in place. Unfortunately, we see the same lack of monitoring and control in the private sector and not-for-profits.
“Recipe” approach vs. “outcome” approach
In many cases, the problem is a tendency to focus on process over results; providing the “recipe” which lays out how things should be done, rather than define the outcome which specifies what the end result should be. An outcome-based approach empowers the deliverer, encourages initiative and innovation, while ensuring those involved get what is needed at the standard required. The recipe approach is prescriptive and often provides an opportunity for the contractor/deliverer to interpret the recipe in a way that suits them. This enables people to manipulate the system in their favour and make excuses for results: “but I just followed your instructions”.
The outcome approach makes it much easier to be specific, especially regarding the inclusion of quantifiable checks and balances as an assurance of the delivery.
Does the Human Resources department have a responsibility when their organisation decides to outsource or sub contract services?
In a word; yes. The HR department has a responsibility to ensure the checks and balances are in place, whether the services are in-house or outsourced. While the responsibility for outsourced services may seem to be more remote, they cannot be ignored: these services are contributing to the organisations core purpose and reputation.
Human Resource departments should play a key role in providing guidance and support in the development of monitoring and controlling mechanisms within the organisation:
- HR policies and procedures, together with monitoring, is clearly a HR responsibility. However HR has a wider responsibility for overseeing the development and maintenance of the organisation’s policy and procedure framework;
- This is where a performance management system comes in; it monitors the organisation’s success in delivering the strategic direction and operational plans for the project.
One component of the performance measures deals with the “proof of compliance” to procedures and processes. This proof of compliance will involve operational audits that measure the compliance to the policies, procedures and processes.
The organisation’s performance management systems rely on the policies, procedures and proof of compliance (sometimes referred to as the “three P’s”), together with the financial and operational delivery measures. These operational audits play a key role in providing components of the proof of compliance and outcome standard.
In Conclusion
The HR department has a responsibility in that the outsourced service needs to be managed as well as, if not better than, when it is delivered in-house. This responsibility then carries through to the monitoring and controlling of the outsourced service.
Therefore the HR departments in the cases that the ABC 4-Corners investigation highlighted should have taken a degree of responsibility for the disasters and impact on the “clients”, especially as these services were largely people-based services.