Human resources outsourcing in logistic companies.

Babic, Darko ; Ivakovic, Morana ; Safran, Mario 等

1. INTRODUCTION

Because of financial or time constraints, many logistics companies try to get strategic and managerial expertise from the same hire. As a result, they may hire a lower-level human resource professional who lacks crucial strategic or managerial skills, or they may opt for a high-level professional who isn't interested in managing the day-to-day activities of the human resource function. In either case, hiring an inadequately skilled employee only adds to organizational costs and creates greater inefficiency. But the fact is, some logistics companies don't need to fill a skill gap or address a pressing human resource need by hiring a full-time employee. Human resource outsourcing enables logistics companies to focus on their core mission while entrusting human resource functions to professionals who can devote the right level of expertise at the right number of hours necessary for each organization's particular situation.

2. FUNDAMENTALS OF HUMAN RESOURCES

Human Resources Management (HRM) as a business function encompasses the duties and tasks related to the people, their acquisition, selection, training and other activities that ensure the development of employees. The goal of human resources management is to help the company reach its strategic goals.

From the manager is requested to respect the essential characteristics: trust, decentralization and distribution of information and knowledge, education, clear roles and responsibilities, freedom of action, feedback, motivation and resources necessary for action. Managers are bond between employee and company and exercise their functions in order to achieve the integrity of the system and achieve the satisfaction of the people and the aim of the company.

Many theorists are exploring the phenomenon of Japanese success and competitiveness, and highlight the importance of organizational policies and good practice in human resources management, such as the following principles:

* recruitment and promotion based on knowledge, skills and competencies

* high level of investment in training and training of employees at work

* high level of team work and team culture

* development of multiple skills of employees

* better communication of managers and employees and better working relations

* commitment to quality

* stimulation of initiatives and suggestions of employees

3. REASONS FOR HUMAN RESOURCES OUTSOURCING

There are three basic financial drivers behind human resource outsourcing:

* Save money (ongoing expenditures)

* Avoid capital outlay (often a more important consideration than direct cost savings)

* Turn a fixed cost into a variable one (Thus, if the workforce shrinks, human resource costs can be reduced accordingly.)

Avoiding capital outlay is perhaps the greater concern for, logistics companies, many of which are operating with decades-old legacy mainframe systems and can scarcely afford routine software upgrades. From a services standpoint, outsourcing invariably means upgrading to new, often state-of-the art services that provide a better work environment for employees while giving human resource executives the tools they need to manage more effectively.

Outsourcing enables logistics companies to centralize highly decentralized processes that are repeated at multiple locations, through the shared-services model. Outsourcing additionally enables logistics companies to turn their attention from administration to more strategic efforts. By outsourcing the more rote, repeatable transactions and providing 24/7 self-service mechanisms, human resource professionals can devote their time and energy to activities, such as developing leadership skills throughout the ranks, designing rewards programs that support the company's mission, and helping the executive team define and implement strategy.

3.1 Structuring the outsourcing program

Any logistics company thinking about outsourcing some or all of its company's function must weigh what can seem like a bewildering array of considerations, including which processes or functions to outsource, how to select a vendor, what kind of service delivery model is most suitable, what kind of contract to set up, and how to manage the vendor relationship. Indeed, the decisions can prove so complex, that some logistics companies get help from consulting firms that specialize in this very area. An important goal of outsourcing is to obtain value added services, not merely to automate and ameliorate the performance of existing functions. Many such logistic companies entities see outsourcing as a way to provide competitive amenities and benefits specifically for the purpose of attracting and retaining talent.

4. HUMAN RESOURCES IN LOGISTIC COMPANIES

Making the decision to outsource human resource processes is a major step for logistics companies. Such decisions are not very easy to make, and they are precisely the subject of this research. The consequences of outsourcing human resources in certain companies were analyzed during the research. Once a company has decided to outsource one or more human resource processes and has selected a vendor, the next major task is to implement an effective outsourcing arrangement (Lesser & Stephane, 2005). Transitioning to an outsourcing arrangement can pose a unique set of risks that must be proactively managed, given the complexities associated with transferring significant operational processes to a vendor while maintaining ongoing service to internal customers.

After the research we came to a set of risks that have emerged within the company, by implementing the human resources outsourcing

* By outsourcing a particular human resource process, the logistic companies may be losing knowledge and capabilities that may gain additional importance in the future.

* Changes in the strategic direction of the logistics companies must now be coordinated with one or several outside firms that may or may not be able to react with the same level of responsiveness.

* Outsourcing can limit the opportunities to attract/develop future human resource leaders in the logistic companies.

* Disruptions in service levels are possible due to a failure to adhere to, or adopt, new processes, tools and other work arrangements.

* New technologies, the introduction of third-party subcontractors and the financial health of a vendor can all impact the ability to deliver a particular service.

* Outsourcing can also increase the perception that sensitive employee information might be misused or misappropriated.

The research goal was also to reduce the mentioned risks, which can be achieved by defining certain activities, which the logistics company would implement after the introduction of human resources outsourcing. We can identify four major sets of activities that can help reduce these risks:

1) Identify the leadership capabilities required to oversee the overall outsourcing effort.

In an outsourcing arrangement, the client does not necessarily have to worry about traditional issues associated with managing a large organization, such as hiring new employees, purchasing equipment or planning for additional office space. Instead, an entirely new set of responsibilities emerge, demanding skills that are not typically part of the traditional human resource professional's skill set.

2) Create an overall transition management plan that identifies all the activities required to transfer responsibility to the vendor.

A well-orchestrated transition management process can play an important role in facilitating the exchange of resources (both physical and know-how) and improving the odds that operations will run smoothly once the transition is complete.

3) Develop an ongoing governance and relationship management structure to address conflicts and build an effective working relationship between the client and the vendor.

By setting up a formal relationship management structure that begins at contract signing and evolves during transition and commencement of delivery operations, both sides can clearly identify who has responsibility for making certain decisions, how those decisions will be made and how the results will be communicated to others.

4) Build a measurement and reporting framework that communicates how well the outsourcing arrangement is operating.

Service level agreements are used to quantify objectively the performance to be provided to a client, report performance data to both the client and vendor in a consistent format, facilitate analysis of data across sites and regions and identify areas where improvements to service are necessary or possible.

[FIGURE 1 OMITTED]

Definition of risks and the actions to reduce the risks mentioned can be seen in the function of the organization of business logistics companies which have decided to introduce human resources outsourcing.

5. CONCLUSION

The reasons behind rapid projected growth lie on both the demand side and the supply side of the market. On the demand side, end users are using human resource outsourcing as part of corporate restructuring to reduce their internal costs and to focus on their core competence. On the supply side, human resource outsourcing vendors have entered the market from various points, either as 'pure play' firms, providers of a single process such as payroll administration, consultants, or technology firms. But on the whole providers with scale and scope, who can bring capital and technology to the table are more likely to be successful in survival. This is because much of the entry work being done is transactional, and transition to transformational work is not automatic. Lastly, since required processes in human resource outsourcing are not industry-specific, human resource outsourcing vendors have an enormous opportunity to exploit economies of scale, potentially for any logistics company.

The studies have led to the definition of concrete steps that logistics companies should adhere to if they want to reduce the negative impact of human resources outsourcing. Next steps in the research can be an implementation of the above stated solutions in logistics companies and monitoring their impact on the operation of listed companies.

6. REFERENCES

Ghiani, G.; Laporte, G. & Musmano, R. (2004,). Introduction to Logistics Systems Planning and Control, John Wiley & Sons Ltd, ISBN 0-470-84916-9, West Sussex

Lesser, E. & Stephane, J. (2005). Preparing for human resources business transformation outsourcing, IBM Business Consulting Services, NY, USA

Prusa, P. (2005). Outsourcing in the Next Supply Chain, Zbornik referatov Logisticko-distribucne systemy, vyd. Zvolen, Technicka univerzita vo Zvolene, 2005. p. 162-165.

Prusa, P. (2006). Outsourcing of Transport Logistic Processes, Zeleznicna doprava a logistika, 2006, roc. 2006, c. 4, p. 135-138.

Robeson, J. F. & Copacino, W. C. (1994). The Logistics Handbook, Andersen Consulting, ISBN 0-02-926595-9, New York, USA

Sako, M. & Tierney, A. (2005). Sustainability of Business Service Outsourcing: The Case of Human Resource Outsourcing, University of Oxford, United Kingdom