CWS 3.0: January 4, 2012

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In the Spotlight: Outsourcing Noncore Jobs

From a certain perspective, the problems facing America’s most venerable corporations mirror those of our government’s fiscal quandaries. Much like the United States' underfunded liabilities such as Social Security and Medicare, corporate “legacy” commitments in the form of pensions and medical benefits have loomed as a serious worry for years, and over the last decade have driven many businesses into financial ruin. Most recently, American Airlines became the subject of heated debate after it was suggested that its pension plans were underfunded by $10 billion, and the company’s massive labor costs were certainly a contributing factor to its November 2011 bankruptcy filing.

To Randy Hatcher, president of MAU Workforce Solutions, a Georgia-based staffing and recruiting firm, these calamities are the repercussions of years of flat-out overreaching -- companies accepting responsibilities far beyond that of their “core business” instead of farming out non-critical jobs. Even in manufacturing industries, Hatcher argues, there may be upwards of 50 percent of jobs that could be more efficiently accomplished and managed by staffing companies, thus limiting one’s long-term commitment while increasing flexibility to deal with marketplace fluctuations. His recent book, The Birth of a New Workforce: 21st-Century Strategies That Will Revolutionize Your Business, outlines a model for streamlining down to one’s primary objectives, and offers a persuasive argument that such thinking is paramount for survival in today’s hyper-competitive global arena. Contributing writer KJ Fullam recently spoke with Hatcher about corporate resistance to change and the movement toward a new workforce landscape.

Q: There’s always resistance to change in any sort of environment, whether it be in the public or private sector. How do you overcome inertia in a corporation?
A: It’s really about senior leadership; they’re the key to all of this. One example is in the book: A buddy of mine was running eight plants that were selling products to … Ford and all the other [automotive suppliers], and all they did was assemble the parts that [the auto] company made. So [the auto companies] manufactured the parts, and then they sent them [my friend’s]  assembly plants, and those plants assembled them just in time to get them to the final assembly line.

And I asked him one day, “Why do you still do that? What’s your core?” He said, “Well, it’s really to design and innovate in terms of how seats can be made, and to lower our costs for the client.” And I responded, “So why do you continue to do the assembly part? Why don’t you find somebody that would manage those eight plants and assemble the seats for you? [Laughing] How difficult can it be to assemble a seat?”

And he said, “It’s just our blueprint. We’ve had this blueprint for so long. What would happen to all of my VPs?” I thought, “Is that the way this works? That the man or woman who’s capable of making this decision, who’s the president ... the first people they worry about are the reports underneath them, and that’s so uncomfortable.”

If you’re the one who has the ability to make this decision, you have to be willing to terminate senior leaders, because decisions like this could directly impact your jobs. A lot of times, CEOs feel that’s too uncomfortable, and then also start asking themselves, “Do I really have time for this? Is this something on the board’s agenda, will I have their support if I start going down this path?”

Q: You stress the value of human relationships. Is that something that’s difficult to measure, in terms of what might be lost in terms of outsourcing part of the workforce?
A: When we’re looking for partners, and they’re just anxious to save money, we usually figure it’s not going to work out. But if they say, “We want the best thing for our company, the best thing for our workers, the best thing for our shareholders,” we can find some common ground where it’s a win-win-win. [In cases where we’ve staffed jobs that clients have outsourced], the workers are part of our culture in terms of the uniqueness that we bring. They’re also part of our client’s culture, and so we blend the best of the two. If you asked them today [what it's like] to be the subcontractor, I would wager they’d say “I don’t feel much different than anybody who works inside this plant. We’re all a team.”

Q: How do corporations respond to having the interview processes for jobs outsourced to a firm such as yours?
A: You’re just maximizing the use of your time, quite frankly.  If a company decides to do this, if you really believe it’s about “what I focus on every day and higher-value tasks.” There could be 20 to 30 steps involved with the hiring process, but we always let the company make the final decision on candidates.

We have a new project in Tennessee. [A client is] getting ready to hire around 100 people, and they’re going to outsource all the hiring to us, we’ll do all the coordination and the services. And I said to [a member of our board], “What do you think it is that they liked about that?” And he said, “Well, really, all they have to do is steer this thing, because they’re managing by ‘dashboard.’”

And so we set up a dashboard with measurables and times about interview steps in the hiring process to quantify whether we’re in compliance with the [time frame]. Wouldn’t you rather log in to a dashboard where you could see the status of every one of your [hires], and see … how we’re doing? And the only thing you know you have to do is interview the person.

Q: In the past year, have we seen more of a move toward the “farming out” of services in corporate America?
A: Take the call center business — when’s the last time you called a company’s service line and got someone in North America? But when you think about it, that’s not what the company does, they’re not in the call-center business. This other company is in the call-center business, they should do a better job of it. They should be able to figure it out, analyze it and measure it. That’s one of the things I see that validates [where this movement is going].

KJ Fullam is a freelance writer based in Chicago.

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