Maybe I am a sad individual, and not just because I watched an episode of Big Boss Undercover. However, I did and it had a few interesting perspectives.
The Big Boss featured was the Chairman of Wyldecrest Parks, Alfie Best. He is an interesting character but, as we all know, any programme of this type is edited for greatest impact. Only three relationships were shown: a salesman, a maintenance guy, and the manager of an on-site community facility. They all were making a good impression, albeit the salesman needed to be bolder in his decision making, and the maintenance man was being paid poorly just because the organisation could get away with it.
The woman running the entertainment hub was about to walk away as there was little support. Best had outsourced it as it wasn’t a core activity. During the interaction Best realised how crucial the centre was to the success of the park, as the hub of residents’ lives. Naturally, at the end of the programme he made a significant investment to develop it further.
All fine, but what does it say about outsourcing?
Finance Directors love outsourcing. It reduces fixed costs, and they can ‘negotiate’ cost reductions, usually passed down onto the staff. Of course, a justification is it isn’t an area of our experience, which may be true or it may be a rationalisation.
The staff of the contractor don’t feel part of the client team, they will not enjoy the same Ts + Cs as the in-house employees and have little security. The client’s staff often look at the on-site staff of the contractor as ‘lesser’ contributors, carrying out demeaning work.
The results are lower morale, poor motivation and productivity levels, and a high staff turnover rate. Surely, if a job needs doing, we should own it and do it well. Insourcing may be problematic, as the contract may have numerous penalty clauses, accepted in the rush to get rid of the activities. Dealing with one such situation I encountered the binding commitment to purchase all of the equipment at premium cost. As an aside, there was most definitely an implied threat of physical retribution, which made our resolve to make the change even stronger.
Outsourcing is a classic case of knowing the cost of everything but the value of nothing.
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