- 08
- DEC
- 2010
HR and procurement: should kindred spirits work closer?
Author: Jonathan Webb - Categories: Procurement Strategy, Outsourcing
I was talking to a senior HR manager the other day about the costs of grievance procedures. In one episode, he related to me a case where one employee was on sick leave for six months for stress, in a complaint that highlighted a low-level campaign of sniping from his colleagues. But the process, from a large and reputable company, was exhaustive.
A total of six senior HR managers were involved in the case, plus their assistants, plus lawyers' advice, plus the input and time of dozens of other staff that were consulted in the compilation of the file. Meanwhile, during the entire nine-month process, the employee concerned has been off sick.
Often there is a conflict between company values – where some are led by the slogan of 'putting people first' - and commercial costs of "stressed" employees chancing their arm. The cost in time and wages for HR in this affair is uncertain. But, what is sure is that it is a waste of resources. The resource implications also relate to opportunity costs, which deflect form a department that – like procurement – seeks to move away from operational activities to a high-value strategic role.
Both HR and procurement are shared services departments, with neither contributing any direct revenue streams to the business. But they both can add value to the organisation's bottom line.
Procurement is already involved in the recruitment of high volume or seasonal staff, but is there also room for closer collaboration. Professional services category managers already are expert at buying in legal advice. By keeping many of the legal issues in-house, HR is utilising its own expertise to manage the demand for legal advice.
Is there more potential perhaps for procurement to leverage its relationships with legal to help out HR?
Procurement has long subscribed to the view that low-value operational matters should be subject to more outsourcing. As the legal community outsources more of its basic activities to India, HR can also offshore its unproductive activities elsewhere.
The use of outsourcing for internal HR issues is a relatively under-utilised facility. Although call centres and shared services centres for processing basic employee data are ubiquitous, could issues like grievances also be outsourced?
In this case, procurement can use its skills to add further value to the organisation by reducing the costs of managing these procedures. Once the problems have been removed from the internal purview of the company, procurement can give renewed vigour to lessening their impact on the business.
Comments
Ted via LinkedIn
Fri 10 Dec 2010 16:04
Deifnitely...HR and Procurement can exist together. If there is cost involved there is value and opportunity awaiting. Granted, HR has many distinct elements, and rewards vary by category. However, perhaps in the case outlined it may be something more policy than contractual -- but Procurement should also have broad experience in that area, particlularly covering the 'what-if' scenarios. At best, HR and Procurement should work together to prevent a re-occurrence.
Cristina via LinkedIn
Wed 6 Apr 2011 16:26
Definitely HR and Procurement working together could add a lot of value to organizations. However if one expects results in a blink of an eye he/she might be disappointed...it takes time to build the foundation. Any practical experience you can share in this area?
Jorge
Wed 14 Sep 2011 15:36
A practical experience in my case is working with HR to set up an outsourcing company in Latin America to contractually manage our local employees. HR helps me understand the normal or usual cost for burden in country and Procurement negotiates the comission or the value of the service, at the end of the day the bottom line will reflect savings in the cost of each employee managed via this oursourcing company.