Group Presentation Guidelines



HRO or FAOHuman Resource Outsourcing (HRO) is the transfer of one or more HR processes to an external service provider that owns, administers, and manages these processes. Likewise, Financial & Accounting Outsourcing (FAO) is the transfer of one or more FAO processes to an external service provider that owns, administers, and manages these processes. Both HRO and FAO markets have continued to grow each year. See Everest Group’s 2011 predictions for HRO and FAO. Historically, Human Resource Outsourcing was limited to targeted HR activities such as payroll administration. The market for large-scale, transformational human resource outsourcing (HRO) accelerated in 1999 with the creation of two pioneering firms, Xchanging and Exult (now AonHewitt). These HRO providers had the idea that the bulk of a large client’s decentralized HR transactional services could be outsourced in order to radically reduce costs and improve services. The client’s HR is transformed through the provider’s transformation levers: creation of shared services from clients’ disparate HR departments, headcount reduction for redundant and low performing employees, retraining and empowerment for retained employees, process redesign and standardization, and significant technology enablement. These providers took over a myriad of their client’s HR activities, including HR information systems, benefits administration, compensation (salary administration and job descriptions), recruitment, training, career development, and regulatory compliance. Clients typically kept HR strategy (budgets, policies, workforce planning, organizational design), employee performance (assessment, counseling, career paths), and liaison roles in-house. This type of transformational HRO injected the HRO market with new vitality.Financial and Accounting Outsourcing has seen similar growth. Clients may outsource discrete F&A services like tax services, or large sets of processes like procure-to-pay, order-to-cash, and record-to-report. Some FAO deals are huge—like Microsoft’s global FAO deal with Accenture that provides FAO services for 95 countries or BP’s FAO deal, also with Accenture. See CASE STUDY PAPERS:Lacity, M., and Willcocks, L. (2012), “Mastering High-Performance: The Case of Microsoft’s OneFinance” Willcocks, L. and Lacity, M. (2012), “Mastering High-Performance: Strategic F&A Partnering at BP”The task for your group is to help general managers understand the promises, pitfalls, and best practices associated with either HRO or FAO.Your presentation may begin by answering these questions:Did you choose to study HRO or FAO? Why?How big is the phenomenon today and how big is projected to be?Which types of processes are most frequently outsourced? What are the real risks to a client company as opposed to perceived risks in outsourcing HR or FA?Who are the top outsourcing providers in this space?Who are some of the major customers in this space? (Client firms who signed megadeals).Your presentation should proceed with one to three case studies of organizations' with HRO or FAO. One of these case studies may be about a company that examined outsourcing HR or FA but decided against outsourcing. Case studies should include the Company Background: Size of company in terms of sales and profits & number of employeesMajor products the company sells The main part of the case should be a retelling of the HRO or FAO story at each company. (See questions to ask interviewees below).The group should end the presentation by comparing the cases and providing some best practices or important lessons for general managers. Your group should also cover HRO or FAO trends. If you have other creative ideas, please feel free to discuss them with me.Potential questions for interviewees:Please tell us a little bit about your current job and the role you play or played in outsourcing: Job title Length of time in current position Role in HRO/FAO decision, implementation, and/or managementPlease tell us your HRO/FAO story—when and why did your organization decide to look at outsourcing?Who were the senior leaders in charge of the decision?What was the scope of work initially?FunctionalityNumber of workersContract valueContract duration TRANSITION PHASE:How was work initially moved to HRO/FAO provider(s)?Were any in-house employees transferred to HRO/FAO provider(s)?What were the two to three things you did well to successfully transition work to the HRO/FAO provider(s)?What were the two to three things you could have done better in transitioning work?What were the two to three things the HRO/FAO provider(s) did well initially?What were the two to three things the HRO/FAO provider(s) could have done better initially?DELIVERY PHASE:Since the initial transition period, what has changed in terms of:Scope of workQuality of deliverablesProcesses used to assign, review, and accept work from internal clients to HRO/FAO provider(s)People assigned as liaisons or contactsHow does your organization resolve conflicts or misunderstandings between internal clients and HRO/FAO provider(s)?Please describe your governance process including performance metrics, service level agreements, chargeback mechanisms, etc.OUTCOMES OVERALL:Overall, to what extent is your organization getting the cost savings from HRO/FAO it expected to get?Overall, to what extent is your organization getting the quality of work from HRO/FAO it expected to get?LESSONS LEARNED:What advice would you give to another company interested in outsourcing HR/FA?What are the three critical success factors in outsourcing HR/FA? There are many academic references on HRO/FAO. Here are a few on HRO:Lacity, M., Feeny, D., and Willcocks, L. (2003), “Transforming a back-office function: Lessons from BAE Systems' Experience With an Enterprise Partnership,”? MIS Quarterly Executive, Vol, 2, 2, pp.86-103.Braun, I., Pull, K., Alewell, D., St?rmer, S., and Thommes, K. (2011), “HR Outsourcing and Service Quality: Theoretical Framework and Empirical Evidence,” Personnel Review, Vol. 40, 3, pp. 364-382.Shih, H., Chiang, Y., and Hsu, C. (2005), “Exploring HR Outsourcing and Its Perceived Effectiveness,” International Journal of Business Performance Management, Vol. 7, 4, pp. 464-482.Weeks, M., Thomason, S. (2011), “An Exploratory Assessment of the Linkages Between HRM Practices, Absorptive Capacity, and Innovation in Outsourcing Relationships, International Journal of Innovation Management, Vol. 15, 2, pp. 303-334.Shih, H., and Chiang, Y. (2011), “Exploring the Effectiveness of Outsourcing Recruiting and Training Activities and the Prospector Strategy’s Moderating effect,” International Journal of Human Resource Management, Vol. 22, 1, pp. 163-180.Wahrenburg, M., Hackethal, A., Friedrich, L., and Gellrich, T. (2006), “Strategic Decisions Regarding the Vertical Integration of Human Resource Organizations,” International Journal of Human Resource Management, Vol. 17, 10, pp. 17726-1771.McIvor, R., Humphreys, P. and McKittrick, A. (2010), “Integrating the Critical Success Factor Method into the Business Process Outsourcing Decision,” Technology Analysis & Strategic Management, Vol. 22, 3, pp. 339-360.Gilley, K., Greer, C., and Rasheed, A. (2004), “Human Resource Outsourcing and Organizational Performance in Manufacturing Firms,” Journal of Business Research, Vol. 57, pp. 232-240.Delmotte, J., and Sels, L. (2008), “HR Outsourcing: Threat or Opportunity,” Personnel Review, Vol. 37, 5, pp. 543-563.Klaas, B., McClendon, J., and Gainey, T. (2001), “Outsourcing HR: The Impact of Organizational Characteristics,” Human Resource Management, Vol. 40, 2, pp. 125-138Gospel , H. and Sako, M. (2010), “The Unbundling of Corporate Functions,” The Evolution of Shared Services and Outsourcing in Human Resource Management,” Industrial and Corporate Change, pp. 1-30. Klaas, B., McClendon, J., and Gainey, T. (2001), “Outsourcing HR: The Impact of Organizational Characteristics,” Human Resource Management, Vol. 40, 2, pp. 125-138Here are a few on FAO:Dunbar, A. and Phillips, J. (2001), “The Outsourcing of Corporate Tax Function Activities,” The Journal of the American Taxation Association, Vol. 23, 2, pp. 35-49. Carey, P., Subramanian, N., and Ching, K. (2006), “Internal Audit Outsourcing in Australia,” Accounting and Finance, Vol. 46, pp. 11-30. Bandyopadhyay, J. and Hall, L. (2009), “Off-shoring of Tax Preparation Services by US Accounting Firms: An Empirical Study,” Advances in Competitiveness Research, Vol. 17, (1&2), pp. 72-90.Maelah, R., Aman, A., Hamzah, N., Amiruddin, R., and Auzair, S. (2010), “Accounting Outsourcing Turnback: Process and Issues,” Strategic Outsourcing: An International Journal, Vol. 3, 3, pp. 226-245.Kamyabi, Y., and Devi, S. (2011), “An Empirical Investigation of Accounting Outsourcing in Iranian SMEs: Transaction Cost Economics and Resource-based Views,” International Journal of Business and Management, Vol. 6, 3, pp. 81-94.Desai, D., Gearard, G., and Tripathy, A. (2011), “Internal Audit Sourcing Arrangements and Reliance by External Auditors,” Auditing: A Journal of Practice and Theory, Vol. 30, 1, pp. 149-171. ................
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