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The supra-organizational HRM system
The Supra-Organizational HRM System John W. Me&of
and Brent Needham
I
n striving to become lean, flexible, and competitive, new economy organizations are externalizing their human resource infrastructures to an unprecedented degree. As a consequence, more and more of the HFU4 infrastructure for company employees is being provided by agents outside the firm. In addition, contingency workers are being brought into organizations on a temporary basis, usually supported by outside agents. To accomplish business goals, interfirm alliances are springing up in which some HRM work can be done on a cooperative basis, shared and coordinated by the firms in the alliance. This practice also moves HRM work, as it is traditionally defined, outside the corporation. Although most managers are aware of the separate trends leading to this external infrastructure, few have recognized the size and impact of the cumulative effect of them all. Given the growing importance of external HEM service providers, they can no longer be considered as piecemeal contractors. They must be recognized as an increasingly integrated system--the supruorganizational HhlM system-which must be well understood to be effectively used. As this system becomes more important, it is raising significant operational and strategic issues and creating new challenges for line managers as well as those in HEM. Its growth is being driven primarily by the three forces mentioned above: outsourcing, the contingency work force, and inter-organizational alliances. These three drivers and their effects provide the starting point for the observations and arguments made here. Outsourcing
Purchasing from outside vendors goods and services that could be produced inside the firm is called outsourcing, and it is on the rise. A survey of 303 multinational companies by the Economist Intelligence Unit and Arthur Andersen & Com-
The Supra-Organizational
HRh4 System
pany found that 85 percent of the firms surveyed currently outsource, and that in three years the percentage is likely to be 93 (Wells 1996). As shown in Figure 1, legal work, shipping, and information systems (IS) are the three most commonly outsourced functions. Outsourcing has its pros and cons. Cost savings are often significant. An external vendor with expertise and scale efficiencies may offer a product or service at less cost and higher quality than a small, unspecialized internal unit. A firm’s operations can also be simplified, leaving it with fewer internal tasks to coordinate and more time to concentrate on its core competencies. However, many companies have found their costs actually higher with outsourcing. Moreover, says Kelley (19951, coordinating “a gaggle of subcontractors is often more time-consuming and costly than managing [the1 in-house manufacture of the parts in question.” Another danger is that a company will lose its competitive edge if it leaves crucial functions to outsiders. Some companies have found themselves losing control of their own process technologies. Others have found their quality suffering from outsourcing. Not surprisingly, outsourcing HEM is now becoming quite common. A study by Linkage Inc. (Platt 1996) found that I6 percent of the firms in its sample spent more than a million dollars annually on HRM outsourcing, whereas 14 percent spent between $400,000 and $l,OOO,OOO (see Figure 2). Benimadhu (1995) found that among the firms he surveyed for the Conference Board
Businesses are relying more and more on workers who are not their own employees in Q growing network of human fesoufce inffustructure providers.
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Figure 1 The Outsourcing
Boom
Information Systems Financial Functions En~l>lo)re Benefits Production
Marketing
0
10%
20%
30% 40%
50% 60%
70% 80%
of Canada, 95 percent reported they had outsourced at least one HRM function, 55 percent planned more outsourcing over the next five years, and 8 percent planned to do less. The Linkage Inc. study also found that the three HRM functions most frequently outsourcecl are outplacement, training delivery. and relocation (see Figure 3). The HRM services outsourced can vary consicierably in their size and level of sophistication, ranging from the simple but time-consuming to the complex and strategically important. Sometimes, specific functions are outsourced on a oneoff basis. For example. the outplacement of executives must be specifically tailored to each case and may be needed only once every several years. Because it is not cost-effective to keep the skills for this kind of work in-house, outsourcing is an attractive option. At a more sophisticated level, a complete and complex HRM function may be given to an outside vendor on a more or less permanent basis, subject to continued good performance and contract renewals. Benefits administration and retirement plans are often outsourced on this basis.
In recent years, the sophistication of HRM services being outsourced has been on the rise, as shown by the growth of its ultimate form, outsourcing the entire HKM function. One way of doing this is through employee leasing, in which the worker is employed by the lessor to do the work of the lessee. The lessor performs such HRM basics as payroll, workers’ compensation, and benefits, while the lessee takes on safety. labor legislation compliance, and work supervision. Discipline and separation may be handlecl jointly. The lessor may even assume such strategic functions as benefits planning. Most lessors provide a full-service package for the workers they lease, but they can provide partial services as well. Companies in the leasing or near-leasing business are coming to be known as professional employer organizations (PEOs). The rise in the demand for this kincl of sophisticated and comprehensive service is reflected in the numbers of firms providing it. In the [Jnited States. between 1984and 1994,the number of PEOs leaped from 36 to 2,246, as shown in Figure 4. The prime advantage of using PEOs is the economies of scale lessors provide, which enable suc11 things as improved benefits packages. The lessor also takes on most of the day-to-day headaches of HRM. Leasing is attractive mainly to smaller firms; the average size of a leasing firm is 13 employees. Companies that lease their entire work forces and take the complete HRM service package typically employ fewer than 300 people, although many Fwtzrm 500 companies lease parts of their work forces. Increasing sophistication is 3150 seen in the practice of “blending,” which has become much more prevalent in recent years. With blending,
Figure 2 Annual Expenditures on HR Services Outsourced
lLlore than
the services of in-house and external suppliers are mixed. NCR maintains a corporate benefits staff and handles some benefits administration itself, but it has established a service center staffed by outside pension consultants that now handles most of its day-to-day pension-related activities. A related innovation is the use of tollfree numbers employees can use to contact the external providers of their benefits plan. Although the service is from outside, it can be as convenient for employees as an internal service. The blurring of the lines between inside and outside suppliers is also seen in cases in which firms have created their own outsourcers by spinning them off from their own HRM departments. In what is perhaps the best-known example, IBM outsourced its own HRM staff functions by spinning off a new company, Workforce Solutions. Workforce Solutions now provides HRM services not only to IBM but also to a number of other organizations. In a similar move, DDB Needham, a New York City-based advertising firm, spun off its entire HRM function as People Management Inc. Although DDB Needham is the largest customer of People Management Inc., it holds no ownership position in the spin-off. This blurring of boundaries and increase in the sophistication of services provided from outside have paralleled the growth of cooperative networks among client companies and external suppliers. Snell (lc)94) states, “Groups or teams are assembled-pulled from internal and external resources-to accomplish a task, disbanded when the job is complete, and reconfigured to take on additional or completely different tasks.” These temporary teams are supported by longerterm networking relationships, which provide the infrastructure of contacts making effective project teams possible. As the internal HRM department moves toward the role of coordinator and helmsman to a network of external sources, it is becoming a “virtual” department, a node in a network of HRM suppliers and users. HRM professionals are in charge of in-house HR capabilities and the links to external associates, which may sell outside services or purchase services the firm has in-house and is able to sell on the open market. In such networks, opportunities abound for HRM brokerage companies, which maintain networks of contacts and put together packages of services for client organizations.
temporary employment agencies increased tenfold. In 1994, the largest private employer in the United States was Manpower, the nation’s biggest temp agency. It had 600,000 people on its payroll-about 200,000 more than GM and 345,000 more than IBM. This boom in the use of temporary workers seems likely to continue. From a poll of 203 CEOs among the Fortune 500 companies, Fierman reports that 44 percent projected they would be using more temps five years from now, 9 percent said they would be using fewer, 44 percent said their use would remain the same, and 3 percent were not sure.
Figure 3 HRM Outsourcing in the 1990s
Outplacement Training Delivery Relocation Preemployment Testing Organizational Development HR Information Systems HR Administration 0%
20%
40%
60%
80%
100%
Figure 4 PEO Firms Increase 2.500
1,000
The Rise of the Temporary Work Force A phenomenon that has appeared along with the growth of outsourcing has been the rise in the number of people working for temporary employment agencies. Fierman (1994) states that the temporary work force grew by 240 percent in the decade ending in 1994, while the number of The Supra-Organizational
HRM System
500
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
45
This “temporary” work force needs to be distinguished from the “contingency” work force, of which it is a part. The latter includes all employees who do not have full-time employment contracts with their organizations. They might have such arrangements as part-time contracts and consulting contracts, or they might work for temp agencies. The contingency force is difficult to measure with its various components, such as free-lance consultants. Some researchers have found it to be growing phenomenally; others can produce numbers that show it is shrinking. The discussion here confines itself to that part of the contingency force that works for temporary employment agencies-the temporary work force. This component is easier to measure, it is very definitely growing, and its employers are definitely contributing to the growth of the supraorganizational HRM system. In addition to growing in size, the temporary work force is also becoming better educated. Traditionally, temporary employees were secretaries or day laborers hired to cover work that needed to be done in an emergency. More recently, however, temporaries are being hired for professional, technical, and executive work. Professional and technical workers now constitute about 20 percent of the temp force and represent its fastest-growing segment. The educational profile of temporary workers reflects this trend toward technical and professional jobs, as shown in Figure 5. Some temp agencies. such as Accounting Solutions and LabForce, specialize in providing professional-level workers. Employers are turning to temporaries for a variety of reasons, such as cost savings and flexibility. The cost of benefits, including such things
Figure 5 The Growth of Temporary Employment The number of people working for temp agencies in the by 240% in the decade ending in 1994.
LJS. rose
The number of temp agencies has increased tenfold in the decade ending in 1994. In 1994, the largest private employer in the U.S. was Manpower, the nation’s largest temp agency, with 600,000 people on its payroll. Between 1991 and 1995, the number of contingency workers in the U.S. nearly doubled to 2.2 million. Professional and technical workers now constitute about 20% of the temporary work force-its fastest-growing segment. are growing: 82% of contingency workers have more than a high school education, 25% have university degrees. and 9% have graduate or professional degrees. Skills and sophistication
46
as health care, pension, and life insurance, accounts for 30 to 40 percent of payroll expenses. Some of these can be reduced through the use of temps. Flexibility comes from being able to hire temps as needed and not being required to keep them around when they are not. Some companies also use temporary work to try people out for their permanent positions. If a temporary worker looks promising, he can be offered fulltime work; if not, he can be sent on his way with no obligation. A further bonus is suggested by a U.S. Department of Labor survey (Maniscalco 1992), which found that temporary workers are more productive than permanent workers and generally do not burn out as quickly. The services offered by temporary employment agencies have also become more sophisticated. They are being provided in competitive attempts to meet the demands of client firms. Some clients allow temp agencies to manage all the temporary workers at a given location, even furnishing the agency with offices on site. Olsten Staffing Services has this kind of arrangement at a Lotus plant in Melville, New York. Other agencies offer complete training services. In Memphis, Tennessee, Norrell Services has set up a 4,000square-foot training facility, complete with equipment, to train temporaries to work as high-speed packers. GE Medical Systems trains its own call-in customer service agents, but only after they have been recruited and been given a four-week customer service course by Manpower. Temporary employment agencies are now also acting as consultants to their client companies, helping them evaluate their needs for temporary employees, ensuring an appropriate supply, and even brokering with other temp agencies. Such activities mean taking on mainline HFCMfunctions that were traditionally done by the client firms themselves. Some temp agencies come into direct competition with traditional HRM consultancies. Temporary workers themselves are putting pressure on temp agencies to provide expanded HRM services. A survey of temporary workers reported by Sunoo (1974) found that only a few of them receive standard benefits packages. For example, only 8 percent receive health care benefits and only 2 percent receive a retirement plan. This is a sore point among temps and a concern of some government policymakers. Pressure is leading some agencies to offer their workers fuller benefits, including quite attractive packages for professional and technical employees. A second area in which temporary and other contingency workers are creating growth in the supra-organizational HRM system is in career support services. Traditionally, employees could receive career counseling, self-development, and job search advice from their in-house HRM de-
Business
Horizons
/January-February
1998
partments, but such advice is less and less available to even permanent employees. Despite their need for career advice, workers cannot depend on traditional employers to dispense it. As permanent and contingency workers realize this, they are demanding-and are willing to pay for-this kind of service. Headhunters, outplacement firms, and career counseling agencies have a growing market; revenues of the top executive search firms rose by 35 to 40 percent in 1995 (“Don’t Call Us.. .” 1995). Further evidence of these pressures is seen in the appearance of “career centers” within firms, which provide ongoing, career-related counseling and resources to their target populations. Interestingly, a common way to provide career centers is to have an inhouse physical space staffed by an external vendor. The importance of temporary workers in strategic human resource planning is reflected by their frequent inclusion in organizational planning. McDonnell-Douglas targeted its work force to comprise 10 percent temporary employees by 1996,up from its traditional level of just above 4 percent. AT&T considers temporary employees so important that it has created its own in-house department for coordinating them. AT&T’s system even includes moving full-time employees around on a contingency basis as work ebbs and flows in different parts of the organization. Georgia Pacific found itself dealing with 20 different external temp agencies in trying to meet its own work force needs, so it also established its own in-house function. That unit now provides workers not only for Georgia Pacific but also for other local companies, in competition with traditional temp agencies. Such developments illustrate not only the growing importance of temporary workers, but also the blurring of distinctions between “inside” and “outside” suppliers of them. As temp agencies expand the scope of their services and the length of the stay of their employees in client organizations, they are beginning to resemble the PEOs discussed earlier. The distinction between leasing employees and providing temporary employees has become more ambiguous as these two growing segments of the supra-organizational HRM system converge. Alliances:
HRM and the Virtual Organization
The third important force driving the growth of the supra-organizational HRM system is the increase in the number of virtual organizations. Coyle and Schnarr (1995) describe these as “networks of companies that come together quickly to exploit fast-changing opportunities.” This proliferation of alliances among firms is linked with the growth in outsourcing and temporary employment. But virtual organizations have some
The Supra-Organizational
HRM System
dynamics of their own that are separate from those found in the other two forces. The internal HRM department can perform a number of important functions in the alliance activities of a firm, including selecting appropriate people to work with alliance partners and developing a general HRM strategy for the alliance. Once an alliance is operating, the partners usually engage in a process of ongoing consultation, monitoring each other as well as the alliance. The parent companies may offer various kinds of concrete help as well on a wide range of issues, including HRM. In the case of an alliance involving the establishment of a joint venture, a company’s HRM unit will find itself being given advice and help from two or more cooperating external firms. Another form of supra-organizational HRM activity can occur when alliance partners decide to cooperate in providing some HRM function. It might be decided that certain training should be provided to all those involved in the alliance, regardless of which partner they come from. A common training program may be established. In this vein, Motorola sometimes has the personnel of its alliance partners take part in the training programs it provides for its own employees. In such a case, the employees of one partner are processed through the HRM system of another. Alliance partners might also agree that certain HR needs of the alliance cannot be found in-house among any of them. In this case, a cooperatively sponsored search activity, which is beyond the realm of any in-house HRM department, may take place. Again, a supra-organizational HRM activity occurs. Participation in alliances can also stimulate the use of outsourcing by a firm’s HRM department, contributing indirectly to the development of the supra-organizational system. If a firm is involved in a number of alliances, its HRM function may put a high priority on HR work for them, Spending a great deal of time on these issues may force the department to outsource some of the functions it traditionally handled itself. THE EMERGING HRM SYSTEM
SUPRA-ORGANIZATIONAL
T
he three forces that drive the growth of the supra-organizational HRM system are creating a shift in HRM’s center of gravity from in-house to external locations. As this shift gathers momentum, it may take us to the point at which the external system is more dominant and more important than the internal one. But how far the shift will go is still an open question. The external system may never be as large as the internal ones in aggregate. Whatever the outcome, it does seem clear that, for some organizations,
47
Figure 6 Characteristics of the Supra-Organizational HRM System The system is economically
significant
and growing.
The system provides ;I wide range of services. that are highly sophisticated. Its segments
are converging
including
into ;1 more homogenous
sonic
system
Its collalxx~tion Lvith clients can lx deep. and the Ixxindaries between internal and external systems are becoming ldurrerl. The system is networked, \\?th its many players involved ’ constantly evolving configurations and alliances.
The system provides
HRM infrastructure
Lvorkers, and increasingly nical level.
for a \\de for those at ;I professiond
in
variety of xnd tech-
the external sourcing of HRM services has gone from being a relatively small, incidental activity to one that consumes most of the HRM budget. Despite this general trend, some HRM functions may be kept in-house because they are core competencies. Microsoft’s ability to recruit and hire the best is considered one of its core competencies, driven and executed primarily by insiders. This emphasis on recruiting is common in other successful high-tech firms as well. so such a crucial HRM function will probably never be “farmed out.” It is unlikely, though. that a broad range of HRM functions would be considered so critical by a single firm that most of them would be kept in-house for that reason alone. What can we discern of the supra-organizational HIM system as a whole at this point? What is its general nature? Figure 6 provides a brief outline of characteristics that are inferred from the information currently availahie and constitute a first attempt at understanding the system. More research and thought will enable us to build on these beginnings. First. the system is economically significant and growing. This trend was found in all three drivers, though much more research is needed on the network as a whole. The phenomenon is so new that researchers have not yet begun to examine it systematically. A comprehensive study could give us 3 better understanding of the significance of the system and its major components. Second, the system is capable of providing a wide range of HRM services, some of which are highly sophisticated. This was particularly clear in the cases of outsourcing and temporary employment agencies. But how effective are these external service providers? We need comparative cost and effectiveness data for the external and inter48
nal sources of various HRM services. Such data probably have direct value to practicing HRM managers and professionals, allowing them to assess possible internal and external sources of services. Third, the system’s segments are converging. For example. temporary employment agencies now provide many of the services traditionally provided by HRM consultants. Fourth, the system is involved in deep colaborations with client organizations, with fuzzy boundaries between clients and vendors. External vendors are often given complete charge of some aspects of clients’ operations. along with office space on site. Some “clients,” like Georgia Pacific, are establishing their own temp agencies that provide for their own needs and also cotnpete in the open external market against “real” temp agencies. Fifth, the supra-organization:ll system has many of the characteristics of a network. It does not consist of just a few large organizations that dominate the industry and compete Lvith each other. Rather, the system consists of thousands of diverse players of varying sizes in evolving colahorations that often include multiple participants. For firms that have come to depend on this supra-organizational network for most of their HKM services, it can be said, “The net\vork is the HRM department”-with apologies to those who proselytize for the network computer. Finally. the sophistication of the workers being support‘t’d by the system is quite high and rising. The system handles physicians, accountants, and scientists, among many other workers. in increasing numbers. It is easy to get caught in the mindset that relegates the supra-organizational system to a peripheral role, akin to that occupied by temp agencies and outsourcing some years ago. The roots of the system are in those traditional activities, which n:ere peripheral. but now there is a new reality. The system as an entity needs to be brought to center stage for serious consideration. could
Implications for Managers and HR Professionals The growth of the supra-organizational HRM system requires new approaches by HFCMprofessionals and managers, as well as by other kinds of managers. Some of these changes are in dayto-day operations; others are more strategic in nature. Managers and HRM professionals will have to develop new operational skills for accomplishing their daily work. They will have to establish systems that keep track of the HR services available inside and outside the organization, including such information as the nature of the service, the
likely cost from a given source, and the likely quality of the work. They will have to learn to plan and coordinate the activities of both insiders and outsiders, with the attendant increase in uncertainty. The ability to negotiate with outside vendors will be important. There is already advice on some of these systems and skills available in such professional publications as Personnel Journal and HRMagazine, but the process of developing them to a high level will take years of conscious effort and experience. Strategic planning for HRM infrastructure will also have to take into account the emerging system. Some of the most important issues will have to do with its relationship to other supra-organizational systems, such as those for information technology (IT), disclosure and confidentiality policies, and organizational culture. Unless synergy is created among them all, companies will miss out on many opportunities in the future networked world. Just as the supra-organizational HRM system is networked, so is the supra-organizational IT system. Building compatibility between these networks is important for the effective use of both. If payroll is outsourced to one firm and benefits administration to another, will separate, incompatible databases have to be kept, or can a seamless system be established that gives ready access to the appropriate information for all parties? What will the IT compatibility issues be when one HRM vendor is discontinued (perhaps on an unfriendly basis) and another is to be brought in? A single, universal IT system with which all firms are compatible seems like a desirable solution, but such a system is not here yet. In the meantime, managers should develop an integrated strategy for HRM and IT that builds toward such a universal system and enables them to deal with current operational needs. Disclosure and confidentiality issues arise because effective networks depend on the free communication of some information and the strong protection of other information. These issues have implications for IT, HRM, and other networks and should be handled by policies that take them all into account. For example, sensitive data on the composition of a firm’s work force and its pay structure may have to be shared with an external vendor who is providing certain HRM services. If the systems of the external vendor are not secure, competitors may gain access to the information. The risk of inappropriate disclosure of proprietary information grows when external agents become involved with the data of an organization, and the more such involvements, the greater the risk. In addition to the risk of disclosing proprietary information, there is the danger of breaching the confidentiality of individual workers.
The Supra-Organizational
HRM System
Again, the more different parties there are involved in the use of data, and the more transient the work force, the greater the risk of a breach. Companies must develop strategies for disclosure and confidentiality that take into account the new realities of the supra-organizational HRM system. Given its network character, it seems likely that broadly shared methods of handling these concerns is a sensible strategic goal within which daily decisions should be made. Organizational culture presents another challenge in which compatibility plays a major role. Some firms have reported considerable difficulties arising from clashes between temporary and permanent workers. What they need is culturally based value systems that foster effective working relationships among temporary and permanent workers. In the ideal state, a single culture would be held by temporary and permanent workers in all organizations. Under the umbrella of this seamless culture, all workers could move smoothly from organization to organization, with transitions facilitated by cultural values. There is also the larger issue of the economic health of companies and economies that use outsourced and contingency HRM services and workers extensively. According to the World Competitiveness Report for 1995, the recent preeminence of the United States in its ratings can be greatly attributed to the tight control of labor costs in the nation’s business activities, which comes partly from the use of the supra-organizational HRM system. Such tight control has social costs, however, and some nations are not willing to pay those costs in order to be more economically competitive. Many argue that such costs are well worth it and are at least partly temporary, given the clear economic benefits that accrue from competitiveness. On the other hand, writers such as Pfeffer (1994) maintain that temporary workers and outsourcing, though they may yield short-term cost savings, will usually weaken firms in the long run. Pfeffer argues that firms with unique and strong human resources gain a competitive advantage. Contingency workers-with little company-specific training, little real loyalty to the firm, and alienated from the firm’s culture-are not the stuff of which competitive advantage in human resources is made. Competitive advantage in human resources is at least as important as in other areas, according to Pfeffer, and firms that weaken this resource do so at their peril. The prime advantage of the supra-organizational HRM system is the flexibility it provides, not only in the size of a company’s work force but also in its qualities. The ability to bring people in and let them go, on short notice, gives firms tighter control over their payroll costs. But it also allows them to deliver skills when and where
49
they are needed. This can be done with contingency workers and outsourced HRM functions. Such flexibility can be crucial in a rapidly changing and highly competitive economy-probably more important than the mere cost savings of flexibility. Being able to manage the flexibility of skills adroitly can be just as important as having loyal workers who are trained specifically for the firm and imbued with its culture.
A
lthough the pace of expansion of the supra-organizational HFN system will eventually wane, it seems likely that growth will continue and that the system is here to stay. Given its cost-effective delivery of HRM services ranging from the simple and occasional to the sophisticated and enduring, companies that ignore this reality arc risking a great deal. Managers and HKM professionals must develop such skills as negotiation and quality assurance for the daily use of the system and establish a strategic framework that builds on its relationship to other supra-organizational systems, such as those for IT, disclosure and confidentiality, and culture. Researchers must map the size, sophistication, and effectiveness of the system to understand it better and to provide practitioners with the data they need to make effective operating and strategic decisions. The rise of the supra-organizational HRM system is a significant recent phenomenon, and managers and Hill professionals must bring it to a central place on their agendas. not leave it in the traditional sideline position. They must remember that the network can be the HRM department. 0
J. F&man.
“The Contingency January 24, 1994, pp. 30-36.
Workforce.”
Fortune,
0.L.. Gallaga, “High-Tech Ternps in High Demand,” 7?w Globe andMail (Toronto), August 6. 1796. p. B17. B. Kelley. “Outsourcing Marches On,” .Journa/ of Uusimss Stratqy. July-August 1995. pp. 40-42. J. J. Labs, “PEOs Make HR Easier with Staff Leasing,” I’~~rso,lnel,Joz*rrlal, December 1996. pp. 64-72. R. Maniscalco. “High-Tech Temps in Demand,” azine, March 1992. pp. 66-67.
HRMag-
J. Pfeffer. “Competitive Advantage Through People,” Cblifornia Mamagemcnt Rudew, Winter 1994. pp. 9-H P.K. P&t. “Outsourcing
the HR Function.”
ACA iVc~us
June 1096. pp. 12-13. N.W. Snell. “Virtual HR: Meeting New World Realities.” Ci~q%xs~~fi~~z rr?ad l3cvlcf’fitsRe~Gw: No\ ember-Decemher 1994, J+ .3S-$3. 13.1’.
Sunoo,
“Temporary Services Create Employment P~lsonr?~~/.J~)/lrna/, July 1994, p. 56.
Opportunities.”
13.1’.Sunoo and J.J. Laabs. “Winning Strategies for Outsourcing Contracts.“ f’~~sonr~c~l~Jo~rr,aal. March 1994. p. 69. J. Wells. “Is Your Joh Safe?” ,2faclf_w~z:s, September
1976, pp.
Wol-~~4 Conz~)rtitit~~~nc Repoi? 1995 (Geneva: Economic Forum, 1995).
World
References
J, Coyle and N. Schnarr. “The Soft-Side Challenges of the ‘Virtual Corporation.‘” Human Re.swrcc Plut?ni?g. 18, 1 (19%): 41-42. “Don’t Call LTs....” E~oizonzist. Octol,er 7, 1995. pp. 71. 72.
20.
Lto-40,
John W. Medcof is an associate professor of organizational behavior at the Michael G. DeGroote School of Business, McMaster University, Hamilton, Ontario, Canada. Brent Needham works in the telecommunications industry.
and Brent Needham
I
n striving to become lean, flexible, and competitive, new economy organizations are externalizing their human resource infrastructures to an unprecedented degree. As a consequence, more and more of the HFU4 infrastructure for company employees is being provided by agents outside the firm. In addition, contingency workers are being brought into organizations on a temporary basis, usually supported by outside agents. To accomplish business goals, interfirm alliances are springing up in which some HRM work can be done on a cooperative basis, shared and coordinated by the firms in the alliance. This practice also moves HRM work, as it is traditionally defined, outside the corporation. Although most managers are aware of the separate trends leading to this external infrastructure, few have recognized the size and impact of the cumulative effect of them all. Given the growing importance of external HEM service providers, they can no longer be considered as piecemeal contractors. They must be recognized as an increasingly integrated system--the supruorganizational HhlM system-which must be well understood to be effectively used. As this system becomes more important, it is raising significant operational and strategic issues and creating new challenges for line managers as well as those in HEM. Its growth is being driven primarily by the three forces mentioned above: outsourcing, the contingency work force, and inter-organizational alliances. These three drivers and their effects provide the starting point for the observations and arguments made here. Outsourcing
Purchasing from outside vendors goods and services that could be produced inside the firm is called outsourcing, and it is on the rise. A survey of 303 multinational companies by the Economist Intelligence Unit and Arthur Andersen & Com-
The Supra-Organizational
HRh4 System
pany found that 85 percent of the firms surveyed currently outsource, and that in three years the percentage is likely to be 93 (Wells 1996). As shown in Figure 1, legal work, shipping, and information systems (IS) are the three most commonly outsourced functions. Outsourcing has its pros and cons. Cost savings are often significant. An external vendor with expertise and scale efficiencies may offer a product or service at less cost and higher quality than a small, unspecialized internal unit. A firm’s operations can also be simplified, leaving it with fewer internal tasks to coordinate and more time to concentrate on its core competencies. However, many companies have found their costs actually higher with outsourcing. Moreover, says Kelley (19951, coordinating “a gaggle of subcontractors is often more time-consuming and costly than managing [the1 in-house manufacture of the parts in question.” Another danger is that a company will lose its competitive edge if it leaves crucial functions to outsiders. Some companies have found themselves losing control of their own process technologies. Others have found their quality suffering from outsourcing. Not surprisingly, outsourcing HEM is now becoming quite common. A study by Linkage Inc. (Platt 1996) found that I6 percent of the firms in its sample spent more than a million dollars annually on HRM outsourcing, whereas 14 percent spent between $400,000 and $l,OOO,OOO (see Figure 2). Benimadhu (1995) found that among the firms he surveyed for the Conference Board
Businesses are relying more and more on workers who are not their own employees in Q growing network of human fesoufce inffustructure providers.
43
Figure 1 The Outsourcing
Boom
Information Systems Financial Functions En~l>lo)re Benefits Production
Marketing
0
10%
20%
30% 40%
50% 60%
70% 80%
of Canada, 95 percent reported they had outsourced at least one HRM function, 55 percent planned more outsourcing over the next five years, and 8 percent planned to do less. The Linkage Inc. study also found that the three HRM functions most frequently outsourcecl are outplacement, training delivery. and relocation (see Figure 3). The HRM services outsourced can vary consicierably in their size and level of sophistication, ranging from the simple but time-consuming to the complex and strategically important. Sometimes, specific functions are outsourced on a oneoff basis. For example. the outplacement of executives must be specifically tailored to each case and may be needed only once every several years. Because it is not cost-effective to keep the skills for this kind of work in-house, outsourcing is an attractive option. At a more sophisticated level, a complete and complex HRM function may be given to an outside vendor on a more or less permanent basis, subject to continued good performance and contract renewals. Benefits administration and retirement plans are often outsourced on this basis.
In recent years, the sophistication of HRM services being outsourced has been on the rise, as shown by the growth of its ultimate form, outsourcing the entire HKM function. One way of doing this is through employee leasing, in which the worker is employed by the lessor to do the work of the lessee. The lessor performs such HRM basics as payroll, workers’ compensation, and benefits, while the lessee takes on safety. labor legislation compliance, and work supervision. Discipline and separation may be handlecl jointly. The lessor may even assume such strategic functions as benefits planning. Most lessors provide a full-service package for the workers they lease, but they can provide partial services as well. Companies in the leasing or near-leasing business are coming to be known as professional employer organizations (PEOs). The rise in the demand for this kincl of sophisticated and comprehensive service is reflected in the numbers of firms providing it. In the [Jnited States. between 1984and 1994,the number of PEOs leaped from 36 to 2,246, as shown in Figure 4. The prime advantage of using PEOs is the economies of scale lessors provide, which enable suc11 things as improved benefits packages. The lessor also takes on most of the day-to-day headaches of HRM. Leasing is attractive mainly to smaller firms; the average size of a leasing firm is 13 employees. Companies that lease their entire work forces and take the complete HRM service package typically employ fewer than 300 people, although many Fwtzrm 500 companies lease parts of their work forces. Increasing sophistication is 3150 seen in the practice of “blending,” which has become much more prevalent in recent years. With blending,
Figure 2 Annual Expenditures on HR Services Outsourced
lLlore than
the services of in-house and external suppliers are mixed. NCR maintains a corporate benefits staff and handles some benefits administration itself, but it has established a service center staffed by outside pension consultants that now handles most of its day-to-day pension-related activities. A related innovation is the use of tollfree numbers employees can use to contact the external providers of their benefits plan. Although the service is from outside, it can be as convenient for employees as an internal service. The blurring of the lines between inside and outside suppliers is also seen in cases in which firms have created their own outsourcers by spinning them off from their own HRM departments. In what is perhaps the best-known example, IBM outsourced its own HRM staff functions by spinning off a new company, Workforce Solutions. Workforce Solutions now provides HRM services not only to IBM but also to a number of other organizations. In a similar move, DDB Needham, a New York City-based advertising firm, spun off its entire HRM function as People Management Inc. Although DDB Needham is the largest customer of People Management Inc., it holds no ownership position in the spin-off. This blurring of boundaries and increase in the sophistication of services provided from outside have paralleled the growth of cooperative networks among client companies and external suppliers. Snell (lc)94) states, “Groups or teams are assembled-pulled from internal and external resources-to accomplish a task, disbanded when the job is complete, and reconfigured to take on additional or completely different tasks.” These temporary teams are supported by longerterm networking relationships, which provide the infrastructure of contacts making effective project teams possible. As the internal HRM department moves toward the role of coordinator and helmsman to a network of external sources, it is becoming a “virtual” department, a node in a network of HRM suppliers and users. HRM professionals are in charge of in-house HR capabilities and the links to external associates, which may sell outside services or purchase services the firm has in-house and is able to sell on the open market. In such networks, opportunities abound for HRM brokerage companies, which maintain networks of contacts and put together packages of services for client organizations.
temporary employment agencies increased tenfold. In 1994, the largest private employer in the United States was Manpower, the nation’s biggest temp agency. It had 600,000 people on its payroll-about 200,000 more than GM and 345,000 more than IBM. This boom in the use of temporary workers seems likely to continue. From a poll of 203 CEOs among the Fortune 500 companies, Fierman reports that 44 percent projected they would be using more temps five years from now, 9 percent said they would be using fewer, 44 percent said their use would remain the same, and 3 percent were not sure.
Figure 3 HRM Outsourcing in the 1990s
Outplacement Training Delivery Relocation Preemployment Testing Organizational Development HR Information Systems HR Administration 0%
20%
40%
60%
80%
100%
Figure 4 PEO Firms Increase 2.500
1,000
The Rise of the Temporary Work Force A phenomenon that has appeared along with the growth of outsourcing has been the rise in the number of people working for temporary employment agencies. Fierman (1994) states that the temporary work force grew by 240 percent in the decade ending in 1994, while the number of The Supra-Organizational
HRM System
500
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
45
This “temporary” work force needs to be distinguished from the “contingency” work force, of which it is a part. The latter includes all employees who do not have full-time employment contracts with their organizations. They might have such arrangements as part-time contracts and consulting contracts, or they might work for temp agencies. The contingency force is difficult to measure with its various components, such as free-lance consultants. Some researchers have found it to be growing phenomenally; others can produce numbers that show it is shrinking. The discussion here confines itself to that part of the contingency force that works for temporary employment agencies-the temporary work force. This component is easier to measure, it is very definitely growing, and its employers are definitely contributing to the growth of the supraorganizational HRM system. In addition to growing in size, the temporary work force is also becoming better educated. Traditionally, temporary employees were secretaries or day laborers hired to cover work that needed to be done in an emergency. More recently, however, temporaries are being hired for professional, technical, and executive work. Professional and technical workers now constitute about 20 percent of the temp force and represent its fastest-growing segment. The educational profile of temporary workers reflects this trend toward technical and professional jobs, as shown in Figure 5. Some temp agencies. such as Accounting Solutions and LabForce, specialize in providing professional-level workers. Employers are turning to temporaries for a variety of reasons, such as cost savings and flexibility. The cost of benefits, including such things
Figure 5 The Growth of Temporary Employment The number of people working for temp agencies in the by 240% in the decade ending in 1994.
LJS. rose
The number of temp agencies has increased tenfold in the decade ending in 1994. In 1994, the largest private employer in the U.S. was Manpower, the nation’s largest temp agency, with 600,000 people on its payroll. Between 1991 and 1995, the number of contingency workers in the U.S. nearly doubled to 2.2 million. Professional and technical workers now constitute about 20% of the temporary work force-its fastest-growing segment. are growing: 82% of contingency workers have more than a high school education, 25% have university degrees. and 9% have graduate or professional degrees. Skills and sophistication
46
as health care, pension, and life insurance, accounts for 30 to 40 percent of payroll expenses. Some of these can be reduced through the use of temps. Flexibility comes from being able to hire temps as needed and not being required to keep them around when they are not. Some companies also use temporary work to try people out for their permanent positions. If a temporary worker looks promising, he can be offered fulltime work; if not, he can be sent on his way with no obligation. A further bonus is suggested by a U.S. Department of Labor survey (Maniscalco 1992), which found that temporary workers are more productive than permanent workers and generally do not burn out as quickly. The services offered by temporary employment agencies have also become more sophisticated. They are being provided in competitive attempts to meet the demands of client firms. Some clients allow temp agencies to manage all the temporary workers at a given location, even furnishing the agency with offices on site. Olsten Staffing Services has this kind of arrangement at a Lotus plant in Melville, New York. Other agencies offer complete training services. In Memphis, Tennessee, Norrell Services has set up a 4,000square-foot training facility, complete with equipment, to train temporaries to work as high-speed packers. GE Medical Systems trains its own call-in customer service agents, but only after they have been recruited and been given a four-week customer service course by Manpower. Temporary employment agencies are now also acting as consultants to their client companies, helping them evaluate their needs for temporary employees, ensuring an appropriate supply, and even brokering with other temp agencies. Such activities mean taking on mainline HFCMfunctions that were traditionally done by the client firms themselves. Some temp agencies come into direct competition with traditional HRM consultancies. Temporary workers themselves are putting pressure on temp agencies to provide expanded HRM services. A survey of temporary workers reported by Sunoo (1974) found that only a few of them receive standard benefits packages. For example, only 8 percent receive health care benefits and only 2 percent receive a retirement plan. This is a sore point among temps and a concern of some government policymakers. Pressure is leading some agencies to offer their workers fuller benefits, including quite attractive packages for professional and technical employees. A second area in which temporary and other contingency workers are creating growth in the supra-organizational HRM system is in career support services. Traditionally, employees could receive career counseling, self-development, and job search advice from their in-house HRM de-
Business
Horizons
/January-February
1998
partments, but such advice is less and less available to even permanent employees. Despite their need for career advice, workers cannot depend on traditional employers to dispense it. As permanent and contingency workers realize this, they are demanding-and are willing to pay for-this kind of service. Headhunters, outplacement firms, and career counseling agencies have a growing market; revenues of the top executive search firms rose by 35 to 40 percent in 1995 (“Don’t Call Us.. .” 1995). Further evidence of these pressures is seen in the appearance of “career centers” within firms, which provide ongoing, career-related counseling and resources to their target populations. Interestingly, a common way to provide career centers is to have an inhouse physical space staffed by an external vendor. The importance of temporary workers in strategic human resource planning is reflected by their frequent inclusion in organizational planning. McDonnell-Douglas targeted its work force to comprise 10 percent temporary employees by 1996,up from its traditional level of just above 4 percent. AT&T considers temporary employees so important that it has created its own in-house department for coordinating them. AT&T’s system even includes moving full-time employees around on a contingency basis as work ebbs and flows in different parts of the organization. Georgia Pacific found itself dealing with 20 different external temp agencies in trying to meet its own work force needs, so it also established its own in-house function. That unit now provides workers not only for Georgia Pacific but also for other local companies, in competition with traditional temp agencies. Such developments illustrate not only the growing importance of temporary workers, but also the blurring of distinctions between “inside” and “outside” suppliers of them. As temp agencies expand the scope of their services and the length of the stay of their employees in client organizations, they are beginning to resemble the PEOs discussed earlier. The distinction between leasing employees and providing temporary employees has become more ambiguous as these two growing segments of the supra-organizational HRM system converge. Alliances:
HRM and the Virtual Organization
The third important force driving the growth of the supra-organizational HRM system is the increase in the number of virtual organizations. Coyle and Schnarr (1995) describe these as “networks of companies that come together quickly to exploit fast-changing opportunities.” This proliferation of alliances among firms is linked with the growth in outsourcing and temporary employment. But virtual organizations have some
The Supra-Organizational
HRM System
dynamics of their own that are separate from those found in the other two forces. The internal HRM department can perform a number of important functions in the alliance activities of a firm, including selecting appropriate people to work with alliance partners and developing a general HRM strategy for the alliance. Once an alliance is operating, the partners usually engage in a process of ongoing consultation, monitoring each other as well as the alliance. The parent companies may offer various kinds of concrete help as well on a wide range of issues, including HRM. In the case of an alliance involving the establishment of a joint venture, a company’s HRM unit will find itself being given advice and help from two or more cooperating external firms. Another form of supra-organizational HRM activity can occur when alliance partners decide to cooperate in providing some HRM function. It might be decided that certain training should be provided to all those involved in the alliance, regardless of which partner they come from. A common training program may be established. In this vein, Motorola sometimes has the personnel of its alliance partners take part in the training programs it provides for its own employees. In such a case, the employees of one partner are processed through the HRM system of another. Alliance partners might also agree that certain HR needs of the alliance cannot be found in-house among any of them. In this case, a cooperatively sponsored search activity, which is beyond the realm of any in-house HRM department, may take place. Again, a supra-organizational HRM activity occurs. Participation in alliances can also stimulate the use of outsourcing by a firm’s HRM department, contributing indirectly to the development of the supra-organizational system. If a firm is involved in a number of alliances, its HRM function may put a high priority on HR work for them, Spending a great deal of time on these issues may force the department to outsource some of the functions it traditionally handled itself. THE EMERGING HRM SYSTEM
SUPRA-ORGANIZATIONAL
T
he three forces that drive the growth of the supra-organizational HRM system are creating a shift in HRM’s center of gravity from in-house to external locations. As this shift gathers momentum, it may take us to the point at which the external system is more dominant and more important than the internal one. But how far the shift will go is still an open question. The external system may never be as large as the internal ones in aggregate. Whatever the outcome, it does seem clear that, for some organizations,
47
Figure 6 Characteristics of the Supra-Organizational HRM System The system is economically
significant
and growing.
The system provides ;I wide range of services. that are highly sophisticated. Its segments
are converging
including
into ;1 more homogenous
sonic
system
Its collalxx~tion Lvith clients can lx deep. and the Ixxindaries between internal and external systems are becoming ldurrerl. The system is networked, \\?th its many players involved ’ constantly evolving configurations and alliances.
The system provides
HRM infrastructure
Lvorkers, and increasingly nical level.
for a \\de for those at ;I professiond
in
variety of xnd tech-
the external sourcing of HRM services has gone from being a relatively small, incidental activity to one that consumes most of the HRM budget. Despite this general trend, some HRM functions may be kept in-house because they are core competencies. Microsoft’s ability to recruit and hire the best is considered one of its core competencies, driven and executed primarily by insiders. This emphasis on recruiting is common in other successful high-tech firms as well. so such a crucial HRM function will probably never be “farmed out.” It is unlikely, though. that a broad range of HRM functions would be considered so critical by a single firm that most of them would be kept in-house for that reason alone. What can we discern of the supra-organizational HIM system as a whole at this point? What is its general nature? Figure 6 provides a brief outline of characteristics that are inferred from the information currently availahie and constitute a first attempt at understanding the system. More research and thought will enable us to build on these beginnings. First. the system is economically significant and growing. This trend was found in all three drivers, though much more research is needed on the network as a whole. The phenomenon is so new that researchers have not yet begun to examine it systematically. A comprehensive study could give us 3 better understanding of the significance of the system and its major components. Second, the system is capable of providing a wide range of HRM services, some of which are highly sophisticated. This was particularly clear in the cases of outsourcing and temporary employment agencies. But how effective are these external service providers? We need comparative cost and effectiveness data for the external and inter48
nal sources of various HRM services. Such data probably have direct value to practicing HRM managers and professionals, allowing them to assess possible internal and external sources of services. Third, the system’s segments are converging. For example. temporary employment agencies now provide many of the services traditionally provided by HRM consultants. Fourth, the system is involved in deep colaborations with client organizations, with fuzzy boundaries between clients and vendors. External vendors are often given complete charge of some aspects of clients’ operations. along with office space on site. Some “clients,” like Georgia Pacific, are establishing their own temp agencies that provide for their own needs and also cotnpete in the open external market against “real” temp agencies. Fifth, the supra-organization:ll system has many of the characteristics of a network. It does not consist of just a few large organizations that dominate the industry and compete Lvith each other. Rather, the system consists of thousands of diverse players of varying sizes in evolving colahorations that often include multiple participants. For firms that have come to depend on this supra-organizational network for most of their HKM services, it can be said, “The net\vork is the HRM department”-with apologies to those who proselytize for the network computer. Finally. the sophistication of the workers being support‘t’d by the system is quite high and rising. The system handles physicians, accountants, and scientists, among many other workers. in increasing numbers. It is easy to get caught in the mindset that relegates the supra-organizational system to a peripheral role, akin to that occupied by temp agencies and outsourcing some years ago. The roots of the system are in those traditional activities, which n:ere peripheral. but now there is a new reality. The system as an entity needs to be brought to center stage for serious consideration. could
Implications for Managers and HR Professionals The growth of the supra-organizational HRM system requires new approaches by HFCMprofessionals and managers, as well as by other kinds of managers. Some of these changes are in dayto-day operations; others are more strategic in nature. Managers and HRM professionals will have to develop new operational skills for accomplishing their daily work. They will have to establish systems that keep track of the HR services available inside and outside the organization, including such information as the nature of the service, the
likely cost from a given source, and the likely quality of the work. They will have to learn to plan and coordinate the activities of both insiders and outsiders, with the attendant increase in uncertainty. The ability to negotiate with outside vendors will be important. There is already advice on some of these systems and skills available in such professional publications as Personnel Journal and HRMagazine, but the process of developing them to a high level will take years of conscious effort and experience. Strategic planning for HRM infrastructure will also have to take into account the emerging system. Some of the most important issues will have to do with its relationship to other supra-organizational systems, such as those for information technology (IT), disclosure and confidentiality policies, and organizational culture. Unless synergy is created among them all, companies will miss out on many opportunities in the future networked world. Just as the supra-organizational HRM system is networked, so is the supra-organizational IT system. Building compatibility between these networks is important for the effective use of both. If payroll is outsourced to one firm and benefits administration to another, will separate, incompatible databases have to be kept, or can a seamless system be established that gives ready access to the appropriate information for all parties? What will the IT compatibility issues be when one HRM vendor is discontinued (perhaps on an unfriendly basis) and another is to be brought in? A single, universal IT system with which all firms are compatible seems like a desirable solution, but such a system is not here yet. In the meantime, managers should develop an integrated strategy for HRM and IT that builds toward such a universal system and enables them to deal with current operational needs. Disclosure and confidentiality issues arise because effective networks depend on the free communication of some information and the strong protection of other information. These issues have implications for IT, HRM, and other networks and should be handled by policies that take them all into account. For example, sensitive data on the composition of a firm’s work force and its pay structure may have to be shared with an external vendor who is providing certain HRM services. If the systems of the external vendor are not secure, competitors may gain access to the information. The risk of inappropriate disclosure of proprietary information grows when external agents become involved with the data of an organization, and the more such involvements, the greater the risk. In addition to the risk of disclosing proprietary information, there is the danger of breaching the confidentiality of individual workers.
The Supra-Organizational
HRM System
Again, the more different parties there are involved in the use of data, and the more transient the work force, the greater the risk of a breach. Companies must develop strategies for disclosure and confidentiality that take into account the new realities of the supra-organizational HRM system. Given its network character, it seems likely that broadly shared methods of handling these concerns is a sensible strategic goal within which daily decisions should be made. Organizational culture presents another challenge in which compatibility plays a major role. Some firms have reported considerable difficulties arising from clashes between temporary and permanent workers. What they need is culturally based value systems that foster effective working relationships among temporary and permanent workers. In the ideal state, a single culture would be held by temporary and permanent workers in all organizations. Under the umbrella of this seamless culture, all workers could move smoothly from organization to organization, with transitions facilitated by cultural values. There is also the larger issue of the economic health of companies and economies that use outsourced and contingency HRM services and workers extensively. According to the World Competitiveness Report for 1995, the recent preeminence of the United States in its ratings can be greatly attributed to the tight control of labor costs in the nation’s business activities, which comes partly from the use of the supra-organizational HRM system. Such tight control has social costs, however, and some nations are not willing to pay those costs in order to be more economically competitive. Many argue that such costs are well worth it and are at least partly temporary, given the clear economic benefits that accrue from competitiveness. On the other hand, writers such as Pfeffer (1994) maintain that temporary workers and outsourcing, though they may yield short-term cost savings, will usually weaken firms in the long run. Pfeffer argues that firms with unique and strong human resources gain a competitive advantage. Contingency workers-with little company-specific training, little real loyalty to the firm, and alienated from the firm’s culture-are not the stuff of which competitive advantage in human resources is made. Competitive advantage in human resources is at least as important as in other areas, according to Pfeffer, and firms that weaken this resource do so at their peril. The prime advantage of the supra-organizational HRM system is the flexibility it provides, not only in the size of a company’s work force but also in its qualities. The ability to bring people in and let them go, on short notice, gives firms tighter control over their payroll costs. But it also allows them to deliver skills when and where
49
they are needed. This can be done with contingency workers and outsourced HRM functions. Such flexibility can be crucial in a rapidly changing and highly competitive economy-probably more important than the mere cost savings of flexibility. Being able to manage the flexibility of skills adroitly can be just as important as having loyal workers who are trained specifically for the firm and imbued with its culture.
A
lthough the pace of expansion of the supra-organizational HFN system will eventually wane, it seems likely that growth will continue and that the system is here to stay. Given its cost-effective delivery of HRM services ranging from the simple and occasional to the sophisticated and enduring, companies that ignore this reality arc risking a great deal. Managers and HKM professionals must develop such skills as negotiation and quality assurance for the daily use of the system and establish a strategic framework that builds on its relationship to other supra-organizational systems, such as those for IT, disclosure and confidentiality, and culture. Researchers must map the size, sophistication, and effectiveness of the system to understand it better and to provide practitioners with the data they need to make effective operating and strategic decisions. The rise of the supra-organizational HRM system is a significant recent phenomenon, and managers and Hill professionals must bring it to a central place on their agendas. not leave it in the traditional sideline position. They must remember that the network can be the HRM department. 0
J. F&man.
“The Contingency January 24, 1994, pp. 30-36.
Workforce.”
Fortune,
0.L.. Gallaga, “High-Tech Ternps in High Demand,” 7?w Globe andMail (Toronto), August 6. 1796. p. B17. B. Kelley. “Outsourcing Marches On,” .Journa/ of Uusimss Stratqy. July-August 1995. pp. 40-42. J. J. Labs, “PEOs Make HR Easier with Staff Leasing,” I’~~rso,lnel,Joz*rrlal, December 1996. pp. 64-72. R. Maniscalco. “High-Tech Temps in Demand,” azine, March 1992. pp. 66-67.
HRMag-
J. Pfeffer. “Competitive Advantage Through People,” Cblifornia Mamagemcnt Rudew, Winter 1994. pp. 9-H P.K. P&t. “Outsourcing
the HR Function.”
ACA iVc~us
June 1096. pp. 12-13. N.W. Snell. “Virtual HR: Meeting New World Realities.” Ci~q%xs~~fi~~z rr?ad l3cvlcf’fitsRe~Gw: No\ ember-Decemher 1994, J+ .3S-$3. 13.1’.
Sunoo,
“Temporary Services Create Employment P~lsonr?~~/.J~)/lrna/, July 1994, p. 56.
Opportunities.”
13.1’.Sunoo and J.J. Laabs. “Winning Strategies for Outsourcing Contracts.“ f’~~sonr~c~l~Jo~rr,aal. March 1994. p. 69. J. Wells. “Is Your Joh Safe?” ,2faclf_w~z:s, September
1976, pp.
Wol-~~4 Conz~)rtitit~~~nc Repoi? 1995 (Geneva: Economic Forum, 1995).
World
References
J, Coyle and N. Schnarr. “The Soft-Side Challenges of the ‘Virtual Corporation.‘” Human Re.swrcc Plut?ni?g. 18, 1 (19%): 41-42. “Don’t Call LTs....” E~oizonzist. Octol,er 7, 1995. pp. 71. 72.
20.
Lto-40,
John W. Medcof is an associate professor of organizational behavior at the Michael G. DeGroote School of Business, McMaster University, Hamilton, Ontario, Canada. Brent Needham works in the telecommunications industry.