Outsourcing, if not managed correctly, can be a major disaster.  IMG_1570

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 recently seen in relation to some government outsourcing.  In 2016, the ABC 4-Corners reported on the government outsourcing of some tertiary “TAFE” level education courses and more recently on the residential care for displaced children.  The lack of diligent and planned oversight of these programmes has cost the government dearly, but the price paid by the so-called recipients of these services may last a lifetime.

Why do government and private sector implement so many outsourcings, privatisations, sub-contracting without the basic checks and balances?  If the 4-Corners alleged neglect and routing of the system has gone undetected for long periods, even years, then the organisational checks and balances are obviously not in place.  Unfortunately we also see the same lack of monitoring and control in the private sector, not-for-profits etc.

In Australia we tend to provide the “recipe” which specifies how it is to be done rather than define the “outcome” which specifies the end result.  The outcome based approach empowers the deliverer, encourages initiative and innovation while ensuring we get what we needed and at the standard required.  The recipe approach is prescriptive and often provides an opportunity for the contractor/deliverer to interpret the recipe as suites them and therefore enables the system to be manipulate in their favour – “but I just followed your instructions”.  The outcome approach is easier to specify especially the inclusion of quantifiable checks and balances as an assurance of the delivery.

Does the Human Resources department have a responsibility when the organisation decides to outsources or sub contract services? 

The Human Resource 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 as these services are contributing to the organisations core purpose.

Human Resource departments should play a key role in providing guidance and support in development of monitoring and controlling mechanisms within the organisation:

  1. HR policies and procedures together with the monitoring is clearly a HR responsibility.  However HR has a wider responsibility for overseeing the development and maintenance of the organisations policy and procedure framework;
  2. The performance management system monitors the organisations success in the delivery of the strategic direction and the corresponding operational plans.  A component of the performance measures deal 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 organisations performance management systems rely on the policies, procedures and proof of compliance (sometimes referred to the 3 x P’s) together with the financial and operational delivery measures.  The operational audits play a key role in providing components of the proof of compliance and outcome standard.

The HR department has a responsibility in the process of outsourcing 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 the ABC 4-Corners have highlighted have to take a degree of responsibility for the disasters and impact on the “clients” especially as these services were largely people based services.

In Conclusion

If the tertiary education and the “resi-care” programs had been outsourced using an outcome-based approach, that included a comprehensive performance management system, which incorporated operational audits, then the reported disasters would have been minimised if not eliminated.

Outsourced services must be managed as well as, if not better than if the services were delivered in house.  An appropriate performance management system must include measures that are supported by the policies, procedures and proof of compliance.

The sad aspect of these cases is that if basic good governance and sound management practices had been applied then the disastrous situation could have been avoided or at least minimised.