A transfer of responsibility for performance of services that have been (or could be) performed by the organization ’ s employees to an external service provider. Offshoring:

Operations – related services such as cleaning kitchen exhaust systems, window cleaning, landscaping, maintenance, and janitorial services are often outsourced. Some lodging operations Outsourcing: A transfer of responsibility for performance of services that have been (or could be) performed by the organization ’ s employees to an external service provider. Offshoring: The transfer of jobs from an organization in one country to an organization in another country. Outsourcing: A transfer of responsibility for performance of services that have been (or could be) performed by the organization ’ s employees to an external service provider. Offshoring: The transfer of jobs from an organization in one country to an organization in another country. This staff member may be an employee of the hospitality organization or, alternatively, may be working for an external service provider. Courtesy Manchan/PhotoDisc, Inc./Getty Images c12.indd 422 12/14/07 8:02:37 PM 12/14/07 8:02:37 PMDownsizing and Outsourcing 423 utilize employees of external organizations to provide some or all of their housekeeping needs, and many healthcare, educational, business and industry, and other organizations outsource food services to contract management companies. Priority reasons to consider and implement outsourcing alternatives typically relate to cost concerns and, often, to an inability to attract and retain qualified personnel to perform the necessary work. Some small properties, for example, contract for outside cleaning services. Their service providers employ many staff members and can obtain and provide medical and other benefits at lower costs than can the property using its own employees. This enables the service provider to attract and retain staff members, while their counterparts (small properties) must continually recruit to fill these high – turnover positions. The excessive time needed for recruitment, selection, and training of personnel, along with, frequently, the problems that arise when cleaning duties are not being completed (or as shortcuts must be taken) because of position vacancies prompts many organizations to consider outsourcing alternatives. Outsourcing decisions must, at their most basic level, consider the organization ’ s mission and core business strategies . What is it trying to accomplish? What are the most important things it does? Management goals must address these core business strategies, and some organizations then consider transferring noncore business functions to specialized service providers who can provide required products and services at similar (or higher) quality levels. Those with human resources responsibilities should be part of the team that considers outsourcing alternatives to address questions including: How can an outsourcing alternative help the business by reducing costs, improving performance, and/or improving guest value? What internal expertise is available or must be acquired to select potential suppliers, to negotiate agreements, and to manage vendor relationships if an outsourcing alternative is used? How can the property identify and control costs, assess the accuracy of financial projections that are made, and consider the financial/nonfinancial costs and benefits to a service provider relationship? What is the impact on existing employees? Note : This issue is especially critical when existing personnel will be eliminated if activities are outsourced. What type of escape clause is needed? The hospitality organization may want to terminate the contract without significant harm if the products and services provided under the contract are unacceptable. It will also need to manage (perform) the function while the decision to use internal employees or external organizations for the service is reassessed. When should potential outsourcing solutions be considered? click here for more information on this paper

The best answer is that it depends on the severity of concerns that are prompting consideration of an existing outsourcing alternative. Factors that typically prompt an analysis include personnel issues, including unqualified/unwilling staff members, high ! ! ! ! ! Core business strategies: The highest priority activities that are required to accomplish an organization ’ s mission. Core business strategies: The highest priority activities that are required to accomplish an organization ’ s mission. Escape clause: A provision in a contract that permits one party to terminate the agreement when one or more specified events occur. Escape clause: A provision in a contract that permits one party to terminate the agreement when one or more specified events occur. c12.indd 423 12/14/07 8:02:42 PM 12/14/07 8:02:42 PM424 CHAPTER 12 ! Critical Issues in Human Resources Management turnover rates, loss of key personnel, and staff members ’ failure to use required practices. Other factors include an inability to meet standards with in – house personnel, the need to focus on core business strategies, and the belief that to do so will increase and improve financial results. The process of making an outsourcing decision typically involves the following steps: 1. Determine exactly what is needed. 2. Review resources available in – house relative to those available externally. 3. Identify and evaluate potential bidders. 4. Develop and issue a Request for Proposal (RFP). 5. Evaluate proposal responses. 6. Select a service provider and negotiate the contract. 7. Administer the service agreement. 8. Renegotiate or terminate the agreement at its expiration date. Managers must consider the human resources impact of the outsourcing process when it affects employees. Examples of these times include: When announcing that an outsourcing alternative will be considered When evaluating outsourcing alternatives. Input from existing employees may be helpful, for example, as RFPs are developed and as proposal responses are considered. When announcing the outsourcing decision When transitioning to the service provider When administering the service agreement When continued use of a provider as an escape clause is being considered, or when the contract is about to expire Many of the principles for communicating and interacting with staff members during downsizing activities (see the previous section) apply as outsourcing decisions are made. In both instances, managers must consider the staff members who are immediately affected (those whose jobs will be eliminated) and their counterparts who will remain with the organization. Much of the decision – making process involves cost and process analysis, legal issues, and the administration of day – to – day service delivery, which may not relate directly to human resources concerns. However, the human dimension is an important consideration, because the organization relies on employees to perform core service functions. Their interest in effectively doing so is impacted by the extent to which their perspectives are considered as management decisions are made. A wide range of potential legal issues arise as contracts (agreements) for outsourced service providers are managed. Examples include risk management, intellectual property, privacy laws, compliance, disputes, litigation, and Sarbanes – Oxley Act requirements. ! ! ! ! ! ! Request for Proposal: A document developed by a hospitality organization that requests price quotations for and suggestions and other information about the provision of products and/or services from suppliers deemed eligible to supply them; often abbreviated RFP. Request for Proposal: A document developed by a hospitality organization that requests price quotations for and suggestions and other information about the provision of products and/or services from suppliers deemed eligible to supply them; often abbreviated RFP. Sarbanes – Oxley Act: The federal government ’ s public company accounting reform and investor protection act that contains numerous provisions focused on improving the accuracy and reliability of corporate disclosures to investors. Sarbanes – Oxley Act: The federal government ’ s public company accounting reform and investor protection act that contains numerous provisions focused on improving the accuracy and reliability of corporate disclosures to investors. c12.indd 424 12/14/07 8:02:43 PM 12/14/07 8:02:43 PMSuccession Planning Activities 425 Succession Planning Activities 4. Review basic procedures that are useful in the succession planning process. Succession planning is a process used by human resources managers to help ensure that they will continue to have the key professional and other staff needed to support their planned growth. To do so, they must consider numerous factors including attrition. As with any type of planning, the task is easier when it is done for the short term rather than for longer time periods. However, organization executives, human resources staff, and managers including position incumbents will do well to think about the future and to consider how, if at all, human resources needs are likely to change. Figure 12.3 identifies steps that can be used for succession planning. Let ’ s look at the steps in Figure 12.3 more closely: Step 1: Identify priority positions for succession planning. While all positions in the organization are critical (they should not exist if they are not), some ! OUTSOURCING AT DISNEY WORLD HOTELS Baggage Airlines Guest Service (BAGS) operates Disney’s Magical Express, the bus service that transports Disney visitors to and from the Orlando airport. That same company received a contract to provide bell, valet, and baggage service at the Disney World Hotels. It also recently contracted approximately 120 overnight custodian positions. While union officials plan to protest, Disney was negotiating with the union to offer displaced workers other jobs with comparable wages, tip opportunities, and hours. One sticking point is that the union contract prevents the company from subcontracting services to save money. However, Disney officials indicated that the change was being made to improve quality. The present outsourcing plans are the first that affect workers in direct contact with the public. Bell and baggage-service employees greet Disney visitors when they arrive, and valet workers assist guests in their hotel rooms. Source: Scott Powers, “Walt Disney World Hotels to Sub-Contract Out 167 Bell, Valet, and Baggage-Service Jobs: Change Being Made to Improve Quality.” Retrieved on 11/20/06 from: www.hotel-

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