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Human Resources Administration: Outsourcing Andrea West Eastern University Human Resources Managment
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Outsourcing Defined as: The process of contracting with an outside party to perform functions that could be performed in-house Outsourcing is a growing trend in Human Resources Management 78% of large American firms outsource some of their operating functions Two thirds of companies worldwide outsource at least one business function
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Human Resource Management Outsourcing Current trend is to outsource only part of HR functions Employee assistance programs, flexible spending account administration, background/criminal checks, payroll, health and pension plan administration Certain HR functions should NEVER be outsourced Activities related to strategic decision making, requiring specific management knowledge or require confidentiality
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Hierarchy of Outsourcing Management Decision Activities Highly Confidential Specific Organizational Knowledge Specialized Knowledge Economies of Scale Routine Activities Ancillary Activities
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Advantages of Outsourcing Expense Reduction Management Time and Effort Conservation Increased Time for Organizational Competencies Greater Professional Expertise Increased Employee Morale Improved Service Quality
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Disadvantages of Outsourcing Increased Direct Costs Decreased Morale among Employees Poor Quality of Service Provided Poor Fit with Contracted Company Perceived Loss of Control Confused Responsibilities
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Considerations for Outsourcing Careful selection of outsourcing firm for a “good fit” Ability to meet with those who will be performing the work Open communication View it as a long-term arrangement Set clear performance expectations
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References Caruth, D. L., Pane Haden, S. S., & Caruth, G. D. (2013). Critical factors in human resource outsourcing. Journal of Management Research, 13(4), 187-195. DeCenzo, D.A., Robbins, S.P., & Verhulst, S.L. (2013). Fundamentals of human resource management (11th ed.). New Jersey: John Wiley & Sons, Inc
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