Outsourcing has traditionally focused on administrative or lower-grade HR
functions, but increasingly companies are turning to outsourcers to handle
disciplinary cases and grievances, too.
“It’s a reflection of how complex HR legislation has become,” says Anthony
Fincham, employment partner at lawyers CMS Cameron McKenna. “It’s no longer
a field for amateurs. HR can also be caught in the middle between the
management and the workforce, and it’s difficult to retain the trust of both
when there are tough decisions to be made.”
But outsourcing HR problems is not an easy task. “You need to think about how
to measure the outsourcing – it’s much easier to outsource functions that
are less subjective, such as payroll administration,” says Margaret Harvey,
a partner at law firm Addleshaw Goddard. “Those functions are easier to
define, and it is much easier to set service standards.”
When it comes to handling employee relationships that have gone sour, it’s
harder to set up a long-term outside deal. Clearly, a company might want to
call in a specialist legal team if an unfair dismissal or discrimination
case gets to court, but in such cases the team is likely to consist of
traditional consultants or even project managers rather than outsourcers.
“HR legislation is daunting for employers, and many managers are fearful of
employment law,” says Campbell Ritchie, managing director of HR Advantage,
an HR service for employers. “They are frightened by the complexity of the
procedures and concerned about potential costs and compensation claims. A
large part of our job is to give managers more confidence by coaching them
or even role-playing a situation.”
Again, such work is not really outsourcing as much as it is training. David
Liddle, director of Total Conflict Management, a mediation firm, says the
two areas often overlap. “We get calls asking for help on a specific
problem, to resolve a dispute, but then the organisation will start to look
at how to prevent disputes in the future.
“I’m a strong advocate of mediation skills being embedded in the organisation.
Many people have the skills – they do it every day with the children round
the kitchen table – but everything in the workplace today is so formalised,
and managers are scared of talking to their staff, of asking them how they
feel.”
Such behaviour is not good for an organisation, believes Mike Emmott, employee
relations adviser at the Chartered Institute of Personnel and Development.
“You can’t outsource disciplinary processes – they have to be handled by
line managers,” he says. “A line manager’s job is to make sure the team is
performing, and any issue is in the first instance for the line manager to
deal with. Some parts of HR are very difficult to outsource, and discipline
is one. Dealing with a problem at work is all about trust, and it’s up to
the organisation to decide how to deal with the problem.” Of course,
companies can outsource their entire HR function, and many small or
medium-sized firms have no choice but to do so. But the splitting of HR into
its many functions can lead to HR problems. Get your recruitment outsourcing
wrong, for example, and you’re more likely to need the services of a
mediator or a lawyer later.
“It’s about how you build the deal,” says Martyn Hart, chairman of the National
Outsourcing Association. “Unfortunately you can’t write a contract that
says, ‘Recruit the right sort of person for our company, someone that fits
in.’ You have to go back to the beginning and ask the question: why you are
outsourcing? What is the business reason? There’s no reason why outsourcing
shouldn’t help in all HR functions, but you have to understand what you want
and articulate it.”
David Parry, a partner in the people and change practice at business advisory
group Deloitte, agrees. “Lots of organisations don’t think through what role
they want their business partners to play. You need robust processes to
build up the decision on what should be outsourced. And, remember, it is in
the interests of the vendor to outsource as much as possible - HR is
traditionally not very good at vendor management.”
Cost, such a common reason for outsourcing other areas of HR, is rarely the
focus when it comes to dealing with staff problems. However, technology
could be. A well-built IT system that ensures a proper audit trail could be
extremely valuable if a case escalates. A lack of skills is a good reason to
turn to outsourcers, but even here it pays to think long and hard about who
is doing what: there still needs to be a strong strategic element in the
firm’s thinking.
“Somebody has to decide if a grievance is well founded,” says John Evason,
employment law partner at law firm Baker & McKenzie. “Who makes that
decision – the employer or the outsourcer? I suspect many employment
tribunals would react badly if an outsourcer had made disciplinary
decisions; there is a lot of subjectivity in this. You also want to be sure
you are making consistent decisions. The key is to be clear about what you
want from the outsourcer, and ensure their knowledge of your company allows
them to do their job.”
Bringing in outsiders can be useful in specific cases. If, for example, there
is a grievance against a member of the HR team, the need to be seen as
independent would be important. Or a company might benefit from an
independent outsider after a dispute has been settled, to ensure the issue
is finally laid to rest and that it does not become corrosive.
“The vast majority of our work is restorative,” says Liddle. “There is a real
cost to not resolving issues, and organisations need to be at fighting
strength; we bring a level of neutrality to the proceedings. But the HR
professional is the custodian of the HR contract - HR represents the
employer.”
Ultimately, says Harvey, “you can’t outsource your legal responsibility as an
employer. If you remove the employer-employee relationship, it is a
different business model, using consultants or freelancers”.
24/7 helpline
WHEN the Orchid Group bought 290 pubs in April 2006, it went from having four
staff to more than 8,000 overnight – the fifth-largest managed pub company
in the UK.
“The job of our managers is to run the pubs on a day-to-day basis, and we need
to support them with advice on every aspect of employee relations,” says
Marie Wheatley, above, personnel director at Orchid. “With up to 28
employees to manage, they need to be able to talk on the phone to someone at
any time - including Christmas Day.”
Orchid chose Lancashire-based First Business Support, a specialist adviser on
legal issues, to provide a 24/7 phone helpline for managers. It offers
support and know-how on issues ranging from family-friendly policies to
disciplinary action.
“First Business will ask what evidence the manager has for disciplining an
employee - how do you know something is wrong? Have you seen something on
CCTV? Have you done a locker-room check?” says Wheatley.
“We have policies and procedures to follow, and it’s important not to jump to
conclusions. If we ended up not following the correct procedure, we would be
risking an employment tribunal. First Business has helped us to avoid those
pitfalls.”
