Getting everyone to buy into outsourcing is unrealistic; win your battle through demonstrated successes early on.
Change management might be regarded as optimistic when applied to HR transformation. Although it serves as a catch-all warning to the unwary that change involved in HRO cannot be left to its own devices, the notion that something affecting so many people can somehow be managed is not too far removed from the idea that the tide can be managed.
Despite exhortations to ensure stakeholder buy-in and get senior management commitment, the reality is that stakeholders will change. Equally likely is that after the first shuddering crack of broken eggs required for the omelette is noticed, the desire of some senior managers to return to the good old days will emerge with a vengeance. Avenues for retrenchment that one thought were closed will open up like six-lane highways, and the most insidious of all—those who never believed in it to begin with—will maneuver to assert their “told you so” rights.
This is not a surprise; it’s human nature, and no change management in the world can do away with it. In fact, it may be more helpful to think of “coping” with HRO change rather than “managing” it. Coping does not assume that non-believers can be converted or that order can be brought to the process of transforming an organization. One therefore focuses on coping with the change-resistant drivers buried in the solution design, the financial case, and the implementation.
As the solution design determines the size of change that the organization will experience, change management rightly begins at this point. On a continuum ranging from “employees will volunteer a drop in pay to receive this HR service” to “any manager or employee would prefer open heart surgery,” one should pick a solution design with which the organization can cope, rather than pick the latter and trust a change management strategy.
After the solution, the reliability of the base financial case and the allocation of the costs within the business are, within management circles, arguably the most influential change-coping mechanisms. Few things are more toxic for successful change management than expected savings not materializing or the allocation of costs being counter to the performance objectives of stakeholders responsible for particular parts of the business.
Equally, in the pricing arrangements of service contracts, many costs are hidden, notably systems deployments; and unfortunately, the utility of global HR platforms so valued by the department is not always so transparent to sales or production divisions. Therefore, embedding such costs in the pricing may be detrimental to coping with the subsequent change. HR leaders can find themselves burdened with tens of millions of IT deployment costs in the base charges of an HRO deal that previously would have been accounted for in the IT budget.
When it comes to implementation, the most welcomed addendum to the change management portfolio would be a floorless execution. To this end, one pitfall to avoid is an extended period of explaining future benefits without the benefits being experienced, so, early implementation of beneficial services should be encouraged. Another is moving too quickly into implementation mode without a sustained planning period. Extensive HROs are extremly complex planning exercises and a key to coping with change is being able to articulate a robust plan well.
Another well-known change management pillar is the measurement of progress. Wherever possible, simple performance metrics should be kept in front of stakeholders constantly. However, an aspect of performance measurement sometimes overlooked in HRO is the need for the measurement to reflect the customer experience.
For example, it is possible for employees to think that their overtime is never right while the provider reports that overtime payments are 100 percent right. The difference between the two perceptions arises from the fact that when a supervisor submits overtime instructions too late for payroll cut-off, the employee will receive incorrect overtime, and the provider will have paid correctly against the instructions given.
None of the above replaces typical change management interventions and need for communication and training. In particular, communication to stakeholders should take the form of active and tireless representation. Absolutely ensure senior manager buy-in, but at the same time absolutely don’t rely on it sticking around. Altogether, when designing the solution, bear in mind that the loudness of most organizations’ devotion to risk is eclipsed only by their aversion to it when confronted with reality.