Outsourcing of any function introduces a new relationship and a new culture into an organisation. No matter how positive both parties feel at the beginning of the process, unless specific steps are taken at the outset to properly manage the transition of the agreement and the transferring of employees, the inevitable challenges that will be encountered during the first year will slowly creep in and have the potential to become highly emotional issues that could destroy the relationship.
In any outsourcing deal, the first inclination is to look at the contract, focus on processes, tools, technology and SLA’s before turning to more emotional topics, we have all done it. However, it is those emotional factors that will in all likelihood jeopardise the intended outcome. Put simply, Human nature doesn’t like change.
Outsourcing is not new, in fact it has existed for thousands of years in one form or another. For example, people have outsourced their money management to banks for centuries, companies have relied on local governments to manage city infrastructures and very few people today supply their own energy. If outsourcing has existed for so long, why has it suddenly become so controversial today? It is not unusual to read about resistance to outsourcing initiatives even at a local level let alone through the #outsourcingmustfall campaign. Outsourcing has matured during the past 20 years however the likely answer to the resistance is based on emotions and the impact that outsourcing has on the individual.
If both the Client organisation and the new service provider are unable to reassure their respective organisations by anticipating and responding to such concerns, the outsourcing is unlikely to deliver the transformation required and indeed is at risk of significant losses in productivity, market share and project expenses and potential failure at a great cost to both the Client and service provider.
People buy People
Outsourcing affects individuals whether the activity is shifted next door or around the world. Most developed countries have comprehensive legislation in place (TUPE or Section 197 or the Labour Relations Act here in South Africa) to protect the rights of transferring workers but these are Human beings and they have concerns and emotions. Despite the legal protection, individuals fear losing their job and people in this situation will find it difficult to contribute to the success of the project if they believe that the success will result in their unemployment.
It would be simple to say these individuals need reassurance that their position will not disappear but this is to oversimplify the situation and to underestimate the change process. Change management initiatives conceived and conducted inside an organisation where staff are aware of the need and have an understanding of the vision, objectives and have built a level of trust with the organisation are difficult enough, but in this instance we are dealing with individuals who have no connection or relationship with the incoming service provider and are probably sceptical if not outright scared of the motives behind the change.
as I alluded to in an earlier post 6 Reasons to Outsource your Facilities Management for Radical Productivity the process of transferring employees has been used and abused by both suppliers and clients alike over the years. I once had a global client who shortly after the transfer of her team to my organisation, demanded that we terminate the large majority of the transferring employees for incompetency, this despite being under her management for the past 5 years. In a moment of weakness she admitted that she knew that this was at the very least immoral but that she didn’t care because this was her agenda behind the outsourcing all along. On being challenged, she confessed to me that she knew this was against the law and that this was potentially damaging to her company’s brand, but and that she had failed to adequately motivate or discipline the team all the time that they had been under her management. This is an extreme example but the outsourcing of a troubled function to satisfy an otherwise failed management agenda is not uncommon.
The situation with regard to competitive tendering does not assist in the harmonious transfer of employees either. Price dominated competitive tendering in an outsourcing context is akin to a medieval slave market, auctioning off the transferring staff to the lowest bidder. This course of action is fraught with dangers, both in terms of securing the ongoing rights of the labour force as well as the reputation of the customer for the insensitive behaviour with which it treats its staff. None of this gives the business of outsourcing a good name.
Regardless of the terms under which they may have been transferred an employer of choice has a moral obligation to their staff to ensure their ongoing needs are met by and that their potential future careers are advanced with a reputable organisation.
A recent article in the FM-World entitled Schools of Thought raises the issue of the potential career path differences between in and in-house operation as opposed to an outsourced operation. It is an interesting debate and perhaps unsurprisingly I side with the argument that from a professional development perspective, outsourced entities have a better track record of investing in and developing their people as they are core to their business. Unfortunately in-house non-core personnel tend to be last in the queue for the ever decreasing training budget.
In the outsourcing scenario it is critical for a successful transformation that the incoming service provider gets to collaborate in a pre-contract situation with the transferring management and employees in creating the new outsourced entity. By working shoulder to shoulder with these people, who are aware of the current conditions and issues in delivering a service to the customer, the new service provider is better able create an enhanced performance based solution against which there is a substantial reduction in the risk of service interruptions and there can be no excuses for non-performance.
If one acknowledges that ‘people buy people’ then authentic engagement with the transferring staff is in the Clients best interest. The process facilitates collaboration, ownership and commitment and reducing concern thereby helping to secure the transfer smoothly and effectively. This in turn enables the service provider to better warrant no disruption in service to the client.
This enhanced ‘buy in’ is difficult to achieve in the adversarial pantomime of cost based tendering and the likely resultant lack of acceptance from the staff which may undermine the outsourcing causing it to fail due to a lack of commitment from the people. Furthermore this scenario provides the partner with a ‘probable’ escape clause, which would diminish the contractual obligations of the partner and the ability for the customer to hold them accountable for non-performance.
So how do you authentically engage with individuals with whom you have no relationship? Guidance can be found in the application of Abraham Maslow’s Hierarchy of Needs. This model is widely accepted as applicable in the organisational context by HR Professionals, with the 5 levels corresponding to job related transactions. Maslow argued that in order for individuals to realise growth and development their basic needs have to be satisfied.
The same theory can be applied to how an organisation treats and engages with the transferring staff in order to achieve the transformation that outsourcing promises.
It is for very good reason that Maslow’s model is expressed visually as a Pyramid and verbally as a hierarchy. Until the needs in lower layer have been met you will not be able to proceed to the next level.
Irrespective of the organisation level of the transferring employee the new service provider has to assume that the basic needs have to be met before progressing. Whilst progress rates through the model will differ it would be an error to assume that you may start the process at anything other than the base layer.
Maslow’s Hierarchy of Human Needs
Job Related Hierarchy of Human needs
This represents the basic Human need for survival- air, food, drink, shelter, warmth, sex, sleep.
Basic conditions of employment needs-
This represents salary, pension, benefits, work hours, safety, transport etc.
Not many of us work for the love of it, we need compensation for our labour to pay the bills and to cover the basic necessities of life and hopefully have enough left over to have a modestly comfortable lifestyle.
It is important to understand that we need to start from this premise for all Transferring employees. We should not assume that because the law covers the workers’ rights in terms of not being worse off that he/she will understand or even believe this.
Safety needs –
Protection from the elements, security, order, law, stability, freedom from fear
Job security needs-
need for stability and protection against abuse and arbitrary dismissal
Having delivered on the basic survival needs the next question on the lips of all transferring employees ‘do I have job security?’.
No one outsources their non-core operations and wants to pay more but the suspicion will be that the cost savings promised will mean layoffs down the line. In most situations transferring employees believe that they were going a good job against very tight budgets so how will the incoming service provider manage cost savings and deliver a profit?
Given the volatile nature of the job market, most people fear losing their job and the prospect of having to join the unemployment line. Whilst the concept of a ‘job for life’ is all but dead, people generally crave security and structure in the workplace – and much like salary would put this above other aspects of a job.
When the first two ‘levels’ don’t meet our needs the job instantly becomes less attractive to us. Many larger employers have no issues satisfying those needs, especially when it comes to higher level positions. A big company recognises the importance of attracting the best talent. But what do you do once you have them? This is where Maslow’s needs theory really comes into play.
Love and Belonging Needs-
The need for the feeling of friendship, intimacy, affection and love, – from work group, family, friends, romantic relationships
Need for belonging and social interaction with Colleagues-
The need for belonging to a group and or company and need for recognition as part of that group.
Having met the basic needs of the employees we will have achieved a level of engagement upon which to build a sense of belonging. This will involve developing trust and acceptance within a group. Outsourcing contracts generally follow a team principle so creating a sense of camaraderie should just come naturally. This is developed from the Human need for purpose to feel as though we are part of something bigger, as sense of being valued for your contribution.
This is the first big hurdle for the service provider and in truth many staff members never make it to this point because of poor change management. The need to diplomatically break the connection with the values of the previous employer is a huge challenge, the employee may ostensibly be doing the same job in the same location, serving customers that were until recentlmy his colleagues. This is often too much for a lot of employees to adjust too. Previous indoctrination, the lack of drastic environment change and possibly many years of service doing things in a set way without any understanding of customer service and the effect of customer experience is too much of a change for many to go through. And it is often for this reason that jobs are lost not as a reason to cut costs.
Clearly this sort of change does not happen overnight however this is the change that is crucial for the transformation to happen. In most Outsourcing this is the focus of the change management initiatives during the transition phase.
The need for achievement, mastery, independence, status, dominance, prestige, self-respect, respect from others.
Need for attention from Management-
Need for respect for professional/ work achievements.
This leads us on to the growth that really enables individuals to engage with their job and the company they work for. The sense that their contribution is important, that they are a key part of the organisation and that they are vital to the success of the company. This feeling of significance, especially within a large company is absolutely vital if a member of staff is going to feel any real affinity and advocacy towards their paymasters. If you make your staff feel as though they are integral to the company’s values and goals then that’s when you have reached the high engagement holy grail.
The realising of personal potential, self-fulfillment, seeking personal growth and peak experiences.
Need for professional and personal development-
The need for challenges, continuous learning, and upgrading of competencies and career advancement
Self-actualisation is the highest level of needs that can be addressed. Most people harbour some kind of ambition and want to move forward so the important role of the organisation is to harness that ambition and facilitate an individual’s growth.
Please note this does not mean that you are at the highest level in the organisation, indeed self-actualisation can occur at any level and in any discipline. Self-actualisation means that the staff member is equipped to be highly successful in their role and become an asset to the organisation, inspiring others along the way.
One of the key things as an employer is displaying a genuine concern and interest in your staff’s progression and development within the company. When employees have access to opportunities this is meeting their highest level of need.
Please let me have your comments below….