Canadian HR Reporter

January 13, 2014 FEATURES FEATUR 9 CANADIAN HR REPORTER OUTSOURCING Outsourcing no longer just arm's length, buyer-of-services process Codes of conduct help employers avoid becoming (bad) front-page news By Jagdish Dalal O utsourcing used to be viewed as a desperate act to fix a problem or a "necessary nuisance." But that's no longer the case. Many employers have adopted it as a strategy to refocus their business model and become more competitive and agile. In the wake of this change, the importance of outsourcing and the complexity of managing relationships have advanced the notion that outsourcing is a profession and engaging in outsourcing is a business imperative. Outsourcing can no longer be viewed as an arm's length, buyer-of-services process, devoid of the usual business controls and disciplines. In fact, many key outsourcing relationships are classified as material to business results and fall under various governmental regulations (such as the privacy act). A buyer of outsourcing services cannot hide behind a statement that it is not affiliated with the outsourcer. This has led to a highly necessary discipline of governance based on a detailed, contractual framework. Experienced businesses have created and implemented methodologies and codes of conduct around outsourcing. As a result, they are seeing benefits such as better results and better risk management. They are not worried about becoming front-page news as organizations that have created unhealthy business relationships for themselves and employees. Governance for outsourcing covers several areas, but one important one is codes of conduct. These fall into two distinct categories: corporate limits and pre-requisites; and managing outsourcing engagements. Corporate limits and prerequisites All corporations have defined or implied limits of strategy imple- GETTING IT RIGHT Codes of conduct Credit: Reuters/Andrew Biraj Garment workers gather in front of the burning Standard Group garment factory in Gazipur on Nov. 29, 2013. The Bangladesh factory supplied several Western brands and the blaze spurred further debate about the use of overseas workers. mentations or "boundary conditions" for operation. They are driven by various factors, including: •market positioning •branding •product placement •regulation compliance •social responsibility consciousness. At well-managed organizations, these principles are predefined and deployed in all areas of operations, including outsourcing acquisition. They identify the circumstances in which a business may or may not pursue a certain strategy or action. For example, most Western employers have adopted the United Nations' principles of labour laws (such as age restrictions and preventing a harmful work environment). Total compliance with the laws — of business as well as an outsourcer's place of work — is another strong code of conduct adopted by most businesses. Some employers also adopt codes of conduct based on their unique positioning in the marketplace or on corporate values. For example, a CEO may not even consider sending any work offshore because it might hamper her ability to sleep at night and live comfortably among neighbours and customers. Or perhaps an organization has a philosophy of selecting providers that engage under-privileged workers, improving their overall economic and personal conditions. These aren't necessarily altruistic values — some companies produce products that employees could afford to buy if they had a slightly higher economic level. It's The International Association of Outsourcing Professionals (IAOP) has established core codes of conduct for those who achieve a level of proficiency and become Certified Outsourcing Professionals (COPs): Professional responsibility: To adhere to the highest standards of ethical business practices in all business dealings, especially those that involve business decisions on entering, maintaining or discontinuing outsourcing relationships. To conduct oneself in a way that contributes to a positive image for the individuals and organizations that work in the field of outsourcing. Professional representation: To represent one's skills, knowledge and experiences with honesty and integrity, enabling customers, employers and other business partners to make fully informed hiring and contracting decisions. Accountability for outcomes: To measure and share accomplishments in terms of the business outcomes actually achieved over time, using industry-defined terms and thresholds, where available, in a way that can be objectively evaluated by others. Professional development: To continuously increase the economic value derived through outsourcing by building professional skills and knowledge through ongoing education, expanded experience and a focus on innovation. Outsourcing advocacy: To be an effective, proactive advocate for outsourcing as a management practice and as a profession. Issue resolution: For these standards to fully benefit the field and profession, customers, employees and others need a reliable method for reporting and resolving issues with standards and how they are being applied. govern each engagement. Most of these deal with process management and governance. These codes of conduct are contractual in nature, as well as personal for those involved. The IAOP (International Association of A well-defined Outsourcing Professionals) has established outsourcing process core codes of conduct is the only way to yield for those who achieve a level of proficiency and a high level of success. become Certified Outsourcing Professionals similar to the thinking of Henry (COPs) (see sidebar). In addition, Ford in the early 1900s who paid governing the process of engaging his autoworkers considerably a provider for services includes: more than other factory workers •managing the outsourcing proso they could purchase a Model T. cess in a disciplined manner to ensure a credible outcome for Managing outsourcing both the buyer and provider •creating a team environment to engagements Once the business boundary conavoid setting up artificial manditions are well-established, there agement boundaries, thereby are certain codes of conduct that creating a higher-performing team of customers and providers who can create higher productivity, job satisfaction and increased business relationships •continuous and unchanging management attention and relentless discipline in governance •a joint commitment of both the buyer and the provider. A well-defined outsourcing process — supplemented with a strong code of conduct and commitment to remain compliant — is the only way outsourcing can yield a high level of success and, ultimately, a high return on the investment for a business — buyers and providers alike. Jag Dalal is chief advisor of thought leadership at IAOP (International Association of Outsourcing Professionals) and president of JDalal Associates in Hartford, Conn. For more information, visit www.iaop.org or www.jdalalassociates.com. New system also helps with talent management PAYROLL < pg. 7 for us and the future is only going to look better." The employee population also needed training, which was about educating people and managing expectations, says Beatty. "I wanted to make sure there were as many modalities or ways in which we were going to be able to educate our population on the use or utilization of this new tool." That meant a webinar, online tools and a cheat sheet, but also training "super users" at each location who became resident experts, supporting the operations from an on-site basis, with a payroll administrator as their key contact. And, in the end, the implementation has gone well since its launch in June, he says. "When we flipped over from the old payroll system to the new one and didn't hear anything that, to me, was success." Multiple benefits Along with providing greater accuracy and efficiencies, Workforce Now provides better reporting and helps HR in terms of developing a scorecard to provide strategic direction on talent to the executive group, says Beatty. "(It's about) being able to provide a line of sight to where the talent is, how talent is getting compensated, what's the difference from year over year in terms of their total compensation package... to better understand what's the cost benefits analysis of using that." The system is also "wowing" Beatty from a talent management point of view, he says. As a large organization with a high number of front-line sales staff, it's pretty normal to have a high turnover rate, especially operating in highly competitive markets in Alberta, Saskatchewan and Manitoba. "Our ability to be able to manage talent, to have line of sight to it, is critical. So that's one of the big things as we move into 2014 — how do we leverage that tool in order that we can have talent pools within our database, we can understand the talent we have internally... give them opportunities to grow both within their role and within the organization." It's important for the company to maximize its ability to onboard skilled people, says McIninch. "It's less about the tools or technology that helps them identify skilled labour (and) more about not spending cycles on people who aren't qualified. That was a huge part of it too, the efficiencies that they get from an applicant tracking system… to recruit the right people and not spend too many cycles on people that maybe aren't the right fit or don't have the right skill set." That means the data flows through a single system where an employee record is created effectively at the time of interest and goes all the way through to her very first paycheque, without having to do manual re-entry, rekeying or a substantial amount of task-based work, he says. "The workflows inside the tools manage the new hire through the lifecycle all the way through to payroll and that makes the HR (department) a lot more efficient as well."

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