Executives list obstacles to outsourcing HR services

According to a new study, federal personnel executives are willing to consider alternative sources of human resources services, but face significant hurdles in transitioning to new systems.

The report, from EquaTerra, a Texas-based consulting firm, said those challenges include a lack of adequate standards, incomplete information about services offered and shortfalls in funding to implement new programs.

EquaTerra researchers interviewed more than 25 executives, all of whom told the firm that a lack of good cost and performance data for HR services was hurting their sourcing efforts. None of the executives said they felt that they had "meaningful benchmarks for measuring the cost of HR services," or a sense of what governmentwide standards for what those costs ought to be.

Glenn Davidson, who oversaw the report as managing director of EquaTerra's public sector division, said it was easier for the private sector to set standards for what HR ought to achieve and how much it should cost because of the simplicity of the profit motive as an end goal.

"In government -- where different organizations have different missions, be they to defend our borders, protect us from terrorists, respond to disasters, educate our children and take care of the less fortunate -- it is understandably more difficult" to set such standards, Davidson said. "But it is not impossible. If the will exists, most agencies and departments could drive to a common HR framework."

Despite the lack of standards, 54 percent of the executives said they "believe they may acquire HR services for less money and the same or better service through [shared service centers] or external third party," and only 18 percent absolutely rejected that possibility.

But 43 percent of executives said it was too early to evaluate the outcome of their efforts to outsource HR efforts, and only 14 percent said they were pleased with the outcome of their transitions to new HR systems.

The interviews identified a number of resources HR executives found lacking in efforts to implement systems. Seventy percent said that they didn't have the right software and computer systems to track whether sources of HR services were performing up to expectations, and another 70 percent said they didn't have enough funding to pay for advisory services that could help them improve their own performance.

Getting those tools is important, said NASA chief human capital officer Toni Dawsey in an interview earlier this summer, but so is learning how to measure HR performance.

The central question HR executives face, she said, is "What is it that will prove whether we have succeeded and whether we got the return on the investment that we were looking for?"