Starting change management early in the process will ensure your HR transformation takes flight.
Many organizations are pursuing complete transformation of their HR function. They desire to capture operational efficiencies and reinvest those savings in developing a more strategic function closely aligned with the needs of the underlying business units. Many of these same organizations turn to outsourcing, which allows them to transform more quickly with lower levels of capital investment.
Merely identifying a partner and negotiating a contract is not nearly sufficient to guarantee the success of the HR transformation effort. Organizations seeking to transform their HR function via outsourcing need to incorporate their service provider selection process into an integrated and holistic change management strategy to ensure the success of the transformation. But many organizations become so absorbed in the difficult process of identifying, assessing, and selecting a provider, they tend to forego sufficient attention to other business needs.
A Challenging Scenario
Consider the client company that has identified the opportunity to outsource most of its delivery activities throughout HR. Based on the results of a feasibility study, it estimates that 200 out of 300 current HR professionals may be directly affected by the outsourcing. The client moves forward with its selection process and identifies the preferred provider. Suddenly, some 200 HR employees find themselves wondering what this means for them. Many organizations that find themselves at this critical juncture are forced to react and then begin to develop their retention and transition programs. This lack of preparation leaves them open to losing some of the key resources that will be required to support the transition–distracting many HR resources from the outsourcing implementation as they work to develop the necessary internal communications and transition plans.
Planning for change management early in the process, in our experience, takes a considerable amount of discipline, as it requires the identification of individuals who may be affected by outsourcing. Most companies shy away from the difficult work of planning because they have not yet decided to outsource. But procrastinating on this workstream is almost certain to result in loss of credibility and support for the outsourcing project later in the process.
Planning is the Solution
Explicitly incorporate your change management planning in parallel with your vendor selection process. In particular, a model of the entire HR staff function should be created as part of the initial business case for outsourcing, potentially affected positions should be identified, and then individual retention and/or severance plans should be developed for each affected position. Forcing this planning to the individual employee level will help to identify critical resources required to support the transition of services. It will also facilitate the early identification and design of the transition support team and perhaps the post-outsourcing governance function.
Better still, getting an early start on the change management process will allow some thought about how the positions retained after outsourcing will be affected. In many cases, the bulk of the work that was performed by the HR generalists is moved to either an internal shared-services center or to an external outsourcing organization. The work that remains tends to be more consultative and strategic in nature, such as managing employee relations issues or facilitating the development of new compensation strategies required to support the needs of the business. This may represent a different skill set than was required of the HR generalist in the past. Therefore, even the positions that are not eliminated through the outsourcing implementation may need to be restructured, reclassified, and perhaps even restaffed. This might require training and an internal posting process for the new positions, often called “business partners.”
Leave yourself enough time to contemplate how your newly transformed HR organization will work with the rest of the business. Will certain tasks be transferred to line management as part of a manager self-service initiative? How will the business unit management functions interact with their new business partners? And what has to take place to wean line management away from their historical reliance on local HR generalists?
Take time to consider, resolve, and communicate all these questions. The new lines of communication need to be established before the outsourcing relationship can ultimately flourish. The sooner HR gets a jump on these additional requirements, the more likely the entire organization will consider the outsourcing project a success. Good change management requires forethought, planning, insight, and communication before real change can succeed.