2.13 Factors that affect performance of outsourced vs. internal employees
2.13.1 Organisational factors
Organisational factors are those that are associated with an employee’s day-to-day activities and the environment in which they work in. These factors can affect the level of performance of an employee. Awases (2006, pg 28) explains that organisational factors can include the following examples “managerial support, colleague and supervisor support as well as organisational culture associated with high performance”. Other factors that will be explained are company culture, communication, human resource management, goals and strategies of an organisation and organisational structure.
2.13.1.1 Company culture
A company’s culture has been described as the organisational glue that holds the company together (Heide, Grønhaug and Johannessen 2002). Culture needs to be reinforced and monitored during a change such as an outsourcing implementation (Hrebiniak 2006). Cultural changes do not occur in a simple and linear manner. Differences in values, knowledge and skills present difficult challenges that must be overcome before implementation is achieved (Buller 1998). Having the appropriate culture gives a company a competitive edge when it comes to outsourcing, (Homburg, Krohmer and Workman 2004). O’Hara (2009) suggests that senior managers need to create this culture by setting an example. O’Hara (2009) goes on to Organisational
factors
Management factors
People factors Project Factors
Company culture Leadership styles Job satisfaction Project factors (Scope, time and budget) Communication Poor
communication
Education Project rewards
Goals and strategies Implementation model
Work stress Lessons learnt
Organisational structure
Training Motivation Job allocation
Human resource management
Having the right equipment
Community exposure and peer pressure Allocation of
resources
add that they must be active in maintaining a balanced work and personal life before preaching to their employees.
2.13.1.2 Communication
Communication can be time-consuming and may not be sufficiently executed by top management due to time constraints (Heide et al, 2002). Management do not inform their people of the objectives and direction the company is moving towards (Heide et al. 2002;
Brenes et al. 2008). Hence ineffective communication limits employees in their day-to-day decision-making about what activities are most helpful in making the business successful (Beer and Eisenstat 2000; Raport et al. 2002). Beranek (2006) adds that it is important for team members to establish social communication i.e. covering each team member’s background and interests. Possible examples are inductor lunches or after work get-togethers which are out of the work environment. Without the involvement of management, employees can become resistant to change and neglect organisational needs (Panthaworn 2005).
2.13.1.3 Human resource management
Careful consideration of the human element is one of the key factors that need to be focused on during an outsourcing implementation (Buller 1988; Fryxell, Butler and Choi 2004).
Human resource management is important in outsourcing implementation because employees have aspirations, needs and feelings that affect the organisation’s performance. Organisations and their staff tend to be interdependent (Heide et al. 2002). A change in one affects the other.
Employees expect to be kept informed about any changes, especially when it affects their jobs or them directly (Buller 1988; Heide et al. 2002). Employees need to be informed when the organisation has decided to outsource and when it will occur. A prolonged period of outsourcing implementation puts pressure on managers and employees. It causes stress and uncertainty in their lives, which affects their job performance.
Front line managers and employees are the ones facing many of these challenges while trying to make top management dreams and vision a reality (Chebat 1999). Staff in different areas and operational levels in the firm have a better sense than top management of the kind of co- ordination that is required to implement successful outsourcing (Brenes et al. 2008).
Outsourcing implementation and employee performance should be seen as a team effort.
Management must hire the right people to make the implementation model work. Just as importantly, they must also create an environment that encourages people to use innovative new ways to achieve and increase employee performance (Crittenden and Crittenden 2008).
Crittenden and Crittenden (2008) claim that ninety-five percent of company employees are not aware of or do not understand outsourcing. Hence, they are prevented from implementing
outsourcing, resulting in poor company performance, leading to a decrease in employee performance
2.13.1.4 Goals and strategies of an organisation
Bennet and Franco et al. (2001) cited in Awases (2006) stress that in order to achieve the organisational goals the company need to communicate their goals to their employees so they can understand the process. Other important goals that ought to be achieved by the organisation are to empower the employees with new skills and knowledge as well as having an organized and efficient feedback system. Derivco aims to create a world-class business- process management environment throughout the organisation. The management has identified the goals of the company to improve the productivity and efficiency of operations, as well as improving on the quality of the software produced. To support the above, the following high-level requirements have been identified as part of an organisation’s goals:
• Information must be provided to all areas of the organisation where necessary in an accurate and timeous way.
• The processes must support and assist in bringing about common practices.
• Correct outputs must be received, issued, manufactured and dispatched in the process.
Interfaces to both the business and development systems must be established.
• The solution must offer real-time integrated information with as little human intervention as possible as well as remove non-value add activities either via automation or elimination.
2.13.1.5 Organisational structure
Organisational structure affects implementation and employee performance indirectly through its influence on information, control and the decision processes (Hrebiniak 1992; Heide et al.
2002). Departments that work in silos create silo mentality. Hrebiniak (2006) mentions that imposing the same structure on all business or divisions simply because they are part of the same organisation are not a logical and appropriate way to determine structure. Business structure should reflect, and be driven primarily by the nature of business strategy in order to implement that strategy successfully. Optimal fit depends on total flexibility of the structure (Gupta and Govindarajan 1984; Reed and Buckley 1988). Size and geographical dispersion also play a role in appropriate structure design (Oslen, Slater and Hult 2005). A company’s performance can be drastically affected by the way it is structured during the outsourcing process. It is important to implement the right structure to ensure success in a project.