The outsource resource

by 22 Jul 2008

HR teams in many organisations lack the full range of skills and/or resources required by the businesses they serve. Consultants and outsourced solutions can bridge these skills gaps. Teresa Russell speaks with two organisations that have handed a slice of the pie to outside experts

You name it in the world of HR and there is arguably a raft of consultants that specialise in the area. Prices can range from reasonable to horrific. Small, medium and large organisations use everything from one-man shows through to global HR consulting companies, depending on budgets, industry knowledge and organisational fit.

Technological advances have allowed companies to automate and even outsource a large range of traditional HR administrative tasks including recruitment, database management, leave approvals, performance management, development plans, compliance training records etc.

This changed landscape means that important HR skills today include identifying HR skills gaps and then researching, selecting and managing providers who can fill those gaps.

Broad range of needs

Jeff Pentney is the general manager human resources for Patties Foods, an Australian manufacturer and marketer of frozen foods, including iconic brands such as Four’N Twenty, Herbert Adams, Nanna’s, Patties Pies and Creative Gourmet. Pentney joined the company just six months ago, taking the first strategic HR role in a company of about 540 employees, most of whom are manufacturing-based. HR previously reported to manufacturing, while Pentney reports to the CEO.

After completing an HR due diligence review on arrival, Pentney identified critical priorities that were needed before the organisation could step up to the next level of business performance.

His list was large and included: a robust payroll system for pay, leave and superannuation management; employment contracts for all staff; a collective agreement renewal for non-contract staff; a review of roles and structures within the organisation; and creation and/or understanding of an HR policy and procedures framework governing the treatment of people, including recruitment, performance management, reward and recognition schemes, privacy, workplace harassment and a whistleblower policy.

“At the time, there was nothing specific in our business plan that articulated the priority that people play in the organisation,” says Pentney.

Tom Tyrpenou is the human resources manager at Rockdale City Council, a modest-sized organisation of about 400 staff. Located south of Sydney’s CBD on Botany Bay and including a part of Sydneyairport, it provides the usual council services to its community, with tourism a future focus.

When he joined the council five years ago, Tyrpenou estimated that 40 per cent of its ageing workforce would retire in 15 years, so he embarked on a program to attract younger people to the organisation.

This has included introducing graduate, traineeship and apprenticeship programs focussed on youth employment; delivering four-day weeks and nine-day fortnights and other work/life balance initiatives; focussing time and energy on leadership to make sure it appealed to GenX and GenY staff; and creating a safety culture that delivered Australian standards in OH&S.

With staff turnover now at 5 per cent compared with 30 per cent at many other councils, Tyrpenou knows his staff is much happier now.

Consultant or outsourced solution?

When a factory-based HR manager resigned, Pentney redirected the cost of that resource into outsourced support.

“Given the magnitude and priorities of the HR work we needed to do, I needed targeted, specialist advice and project-related support in the areas of workplace relations, OH&S and policy development,”says Pentney.

“It’s not about creating a dependency on the outsourced provider. We needed a lot of up-front help and then, through training, we expect to get good execution through our line managers to make the changes systemic and incorporated into our business practices. Then you need to ensure continuous improvement.”

He hired three specialist consultants from iHR to create people policies and procedures and review all workplace relations and OH&S matters to ensure compliance with applicable legislation and create policy frameworks. Pentney also started using for recruitment and has begun the process to outsource payroll and ESS to Talent2.

For the five years Tyrpenou has been at Rockdale Council, he says they have outsourced or brought in consultants to provide skills outside their own specialties. “Because of our low ratio of HR staff, it’s become a way of life that’s well accepted by all,” he says.

Tyrpenou explains that they spend a lot of time choosing the right partners to ensure they are an extension of the HR team.

Rockdale Council has used a broad range of L&D and OH&S consultants. One staff member spends most of his time managing the L&D outsourcing and consulting function. Consultants have provided training in areas as varied as project management, asbestos handling, working in confined spaces and leadership development.

Choosing providers

Pentney says that he had existing relationships through previous roles with all the consultants and outsourced HR specialists he used at Patties Foods. “These people are an extension of your function and they need to understand what outcomes you are trying to achieve.

“It is easier to manage the relationship if there are several specialists from one provider,” he says. He emphasises that it is “not just the big end of town that can deliver this stuff,” as long as they are fit for the purpose. “Small operators can respond quickly and cost effectively to our needs,” he adds.

Tyrpenou says that he and his team have given great thought to choosing consultants, including understanding how skill transfer will occur. He gives the example of choosing iHR to undertake a leadership development program for 60 leaders across the organisation.

“After spending months researching the market, we received 12 submissions from EOIs we had sent out. We chose a provider that we knew was a good fit and would partner well with our HR team. They espoused the same values and delivery ethos that we have. Their delivery mechanism would elicit the behavioural change we were looking for,” he says.

Price is always a factor for Rockdale Council. “The average L&D spend is 3 per cent of operating turnover, but we have to manage on 0.3 per cent,”says Tyrpenou.

Measuring effectiveness and ROI

It’s too early to start measuring vendor effectiveness at Patties Foods, according to Pentney, who is determined to keep his costs low. “You can bring specialists on and take them out once the job is done. HR costs can then operate at the lowest levels possible. HR needs to be ruthless with itself around the lowest-cost model,” he says.

Tyrpenou sets strict KPIs to measure the performance of all providers, but says it is difficult to quantify ROI in terms of dollars. “We set clear objectives, determine the KPIs and then bring in the L&D specialist to cement the learning,” he says.

They do pre-delivery and post-delivery evaluations on all training participants and conduct six and 12-month reviews.

It hasn’t all been about hiring in expertise. “I’ve had occasion to move out comfortable ‘cash cow’consultants in the quality arena so that we could gain ownership of the quality journey and achieve greater acceptance of the project. We trained our own people and created champions throughout the organisation …” says Tyrpenou.


“You must get the best and most up-to–date advice across all areas of HR management so you don’t compromise your own accountability and professionalism,” says Pentney.

“HR professionals must continue to review the value they create for the business, or otherwise be seen as a cost that should be cut out,” he says.

Tyrpenou says it is important to do your homework in identifying skills gaps. “The more time you spend at the front end assessing content, presentation style, organisational fit and values alignment, the better off you will be.

“Make sure the provider understands the importance of delivering specific skills. Integrate all your solutions into your overall HR strategy and make sure you stay within your budget,” he concludes.