Reference no: EM133011755
Assume that you are a top executive for a large, privately held company. Your specific area of responsibility is managing all aspects of compensation and benefits for the company; you report to the executive vice president of administration. This individual, in turn, is from the finance department and oversees HR, finance, and environmental regulating but shows little interest in HR per se as long as things are going smoothly.
The firm employs more than 20,000 workers, has operations in 15 countries, and has a long and stable history of growth and profitability. The owners of the firm, the descendants of the original founder, are not actively involved in management and express satisfaction with the firm's current and projected financial performance. All components of financial performance are excellent, and the firm is widely respected for the quality of its management. The owners also have often expressed an interest in protecting their workers and maintaining as much job security as possible. The firm has not been forced to lay off any of its employees in more than 20 years.
About a year ago, you read some research extolling the benefits of outsourcing. You have been quietly looking into how outsourcing might benefit your company. Your findings are troubling, and you are not trying to decide how to proceed. Specifically, you have determined that outsourcing parts of the firm's HR function could yield modest cost savings for the firm. Unfortunately for you, compensation and benefits also seem to be the area most conducive to outsourcing.
On the other hand, as a manager you feel obligated to consider anything that might lower costs or improve the financial performance of the firm. Outsourcing seems almost certain to improve financial performance, albeit only in relatively small ways. Thus, if you present your findings to your boss, the firm and its owners will benefit. On the other hand, if outsourcing were to be implemented, you estimate that approximately 15 employees would lose their jobs, and your own position would be substantially diminished in importance.