This Week's Herman Trend Alert

Leadership in Normal 2.0

  The Herman Trend Alert

July 4, 2000

Outsourcing HR . . . and more

180 Days until January 1, 2001

As we move into the future, outsourcing and insourcing will be increasingly common in the corporate world. We see this practice building momentum in the human resources arena as well. This shift will create new firms that will contract with client HR departments, transferring functions and jobs to these new entities.

In the corporate structure, several key generalists will manage the company human resource function, with at least one of them actively participating at the strategic level. Most of the functions such as recruiting, employment, record-keeping, and benefits administration will be outsourced, with a high level of automation using computers. Much of the employee's communication with human resources, tasks like changing addresses or dependent status, will be done through kiosks or the company intranet on computers employees use every day.

A significant portion of the company's workforce will be contingent labor, requiring a substantially different set of skills for recruiting, negotiating, managing, and servicing a very flexible workforce. A large number of workers will be independent free agents, though many of them will sell their services through an international network of brokers.

Most benefits will be self-designed and self-managed, relieving most employers from carrying this load. Since most employment arrangements will be established through individual negotiation, wage and salary specialists will play a much different role.

We're moving into an age of specialization that will combine with out-sourcing designs to significantly change how human resource services are delivered. A number of employers have already invested heavily in these new approaches, but there is much more to come. The field is changing, creating new challenges along with the new opportunities.

Will other functions follow the same path? Mailrooms have been operated by outside contract firms for years. How about shipping and receiving? Accounting and finance? Can sales and marketing be contracted? As this trend continues, the core company will consist primarily of strategic level coordinators who manage outside resources to achieve internal results.

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