OUTSOURCING OF HUMAN RESOURCE MANAGEMENT SERVICES IN GREECE
Eleanna (Anna-Eleni) Galanaki, Athens University of Economics and Business Derigny 12, Athens 104 34, Greece, Tel./Fax No: +30 210 8203475 E-mail address:
[email protected]
Professor Nancy Papalexandris, Athens University of Economics and Business 76, Patission Str., Athens 104 34, Greece E-mail address:
[email protected]
ABSTRACT: Outsourcing is gaining considerable popularity in the field of business services and management. This paper illustrates the practice of outsourcing HRM functions, such as training, staffing, rewards and restructuring, in Greece. The analysis draws upon both primary and secondary data. The findings of the 1999 CRANET survey and a study on the companies that offer HRM services in Greece are used to set the frame of analysis. A series of in-depth interviews with HR managers and senior HRM consultants are used to support the quantitative data. The analysis suggests that the Greek market of HRM services is still at an initial stage of development, with limited credibility, while the customers lack the experience of managing outsourcing relations and are reluctant to establish a partnership- type HRM outsourcing agreement. Considerable differences are identified between the Greek market for HRM services and those of more developed markets. The description of the Greek market of HRM services can be useful to vendors and users of HRM services, as well as researchers dealing with outsourcing in small markets. KEYWORDS: outsourcing, human resource management services, Greece
INTRODUCTION HRM outsourcing means “having a third- party service provider or vendor furnish, on an ongoing basis, the administration of an HRM activity that would normally be performed inhouse”(Cook, 1999:4). HRM outsourcing has grown in popularity since the early 90’s, particularly in the US, where up to 90% of the companies outsource some HRM activity, and
1
western Europe (William M.Mercer and Cranfield School of Management report, 2000, Banham 2003, Cook 1999). A key reason for this growth is that many companies find that the use of outside service providers is more efficient and less costly than hiring staff to handle these functions in-house. Given that HRM services vendors specialise in the services they provide to their clients, they benefit from economy of scale effects and these benefits are transferred to their clients. This effect suggests that smaller companies may benefit more than larger ones from HRM outsourcing. Another reason why some companies may turn to outsourcing is the requirement for knowhow. Either they have not the necessary knowledge, or their knowhow is so outdated that they need to make significant investments. Many vendors have already made major investments in HRM tools and techniques and can spread their costs over many clients. In this sense, outsourcing provides knowledge and competencies that do not exist in-house. Prior research (Papalexandris et al. 2001, Mahoney and Brewster 2002) has established that the human resource services that are outsourced can fall into one of the following four categories: •
Recruitment and selection
•
Training and development
•
Pay and Benefits
•
Merger- Outplacement-Downsizing
We are proposing the additional following categories, which may also be of interest and have also been repeatedly mentioned in the literature (Cook, 1999) •
Performance appraisal systems
•
HR planning
•
Organisational climate and culture.
OBJECTIVES OF THIS STUDY Given this background, this paper examines the following issues: •
Which HRM services are mostly used by Greek companies and why?
•
How much the external HRM services market has developed in Greece?
•
Is there some particular pattern in the use of outsourced HRM services, which could be identified?
•
What is the future for outsourcing of HRM services in Greece?
2
Before answering these, some background detail on Greece is provided. The Greek Economy is mainly comprised of small and medium sized companies (Observatory of European SMEs, 2002). The dominance of SMEs (companies with less than 50 employees) and middle-sized companies (companies employing 50-250 employees) in Greece implies that outsourcing potentially may have more impact than in other countries, as it allows the small sized client to enjoy the benefits of the economies of scale achieved by the vendor. Furthermore, it is interesting to study the development of the HRM services market, under the light of a somewhat delayed development of the Human Resource Management function in many Greek companies. In the mid 1990’s and in some cases even now, the HRM function in many Greek companies was performed either by the CEO, or by the financial manager (Papalexandris et. al., 2001). Therefore, this study may provide insight into how the market for external HRM services has developed in a country where the Human Resource Management function is generally still under-developed in-house.
RESEARCH METHOD Two sources of quantitative data were utilised for the purposes of the current study: the CRANET Network Survey (1999) and the ICAP Financial Directory (2002). The CRANET Network Survey, 1996-1999, was run in 25 European Countries and examined the HRM practices, both cross-nationally and over time. The second source of information, focusing on the providers of HRM services, was the ICAP Greek Financial directory for 2002, which gathers the majority of the companies operating in Greece. The quantitative data were further supported by qualitative analysis. Five in-depth, semistructured interviews were conducted with prominent HRM consultants and professionals in companies that provide HRM services and another five interviews with top HR managers who are involved in the decision and management of outsourcing of their companies.
QUANTITATIVE DATA The CRANET cross-national survey, last run in Greece in 1999, provides information on the extent of use of outsourcing for the provision of HRM services. Specifically question 2b of the 1999 questionnaire identifies four broad categories of HRM services, namely: 1. pay and benefits 2. recruitment and selection 3. training and development 4. workforce outplacement and reduction
3
The results reveal that the most outsourced HRM function in Greece is training (60.3%), followed by recruitment and selection (34.6%). Surprisingly, pay and benefits also appears to be extensively outsourced in Greece (24.3%), while workforce outplacement and reduction is outsourced by fewer companies (4.4%) Figure 1 illustrates the ratings of Greece in comparison with other countries, in terms of the outsourcing of each of the above HRM services, according to the CRANET results. Table I summarises the number of countries with a higher ranking in outsourcing of each HR function than Greece.
Take in Figure 1
Take in Table I The results suggest that, in Greece, fewer companies outsource their HRM services. This is most evident in the case of services in “outplacement and downsizing”, and least in the one of “pay and benefits”. Some explanation on these results was revealed by the interviews conducted with HR Managers, where “external collaborators” is the exact term in Greek for “HRM providers”, in the field of pay and benefits. There, the respondents usually referred to the use of payroll bank accounts and to the provision of salary surveys. This could be the reason for the reported high outsourcing of pay and benefits in Greece, according to the CRANET results. On the other hand, the outsourcing of pay systems design, a service that HR providers can offer, is not developed in the Greek market, according to the HR managers and HRM vendors interviewed. In order to have a clear picture of the other side of the outsourcing relationship, we looked at data from HR providers. The ICAP Greek Financial Directory (2002), provides representative data from 22,000 Greek enterprises of all sectors of the Greek economy. Of these, 114 companies whose activity involved services in HRM were identified. Table II summarises the type of services that are offered by those companies, according to the description of their activity contained in the ICAP directory.
Take in Table II
Of these 114 companies, 40% were founded within the period between 1996 and 2000 and 22% from 1990 to 1995. Furthermore, 76% of all those companies experienced a profit
4
growth of up to 700%. Those findings illustrate the recent boost in the sector of HRM services and call for further, in-depth study. It should be stressed that the CRANET survey draws information from the companies using external HRM services, while the ICAP directory provided some aspects of the HRM services vendors group. Therefore, information was drawn from both parties of the outsourcing relationship. Figure 2 presents the differences between the findings of the CRANET research and the ICAP directory analysis.
Take in Figure 2
No particular differences between the proportion of the companies using HRM services and the proportion of the companies offering such services seem to exist, except for the case of “Pay and Benefits”. The slightly higher offer of training and recruitment services, according to the ICAP directory, could be attributed to the fact that the ICAP directory findings refer to 2002, while the CRANET findings refer to 1999. In the case of Pay and Benefits, though, many companies use such services (24.3%), while only 1.7% of the HRM services vendors are specialised in this particular sector. This may be because these services are currently offered by other providers, such as accountants and banks. Moreover, the field of “pay and benefits” services also includes the salary surveys, which are conducted by one provider for the sake of several clients of the same sector. This also contributes to a higher percentage of customers as compared to vendors of “pay and benefits” services. Greater detail and explication is provided by the qualitative data from the interviews.
INTERVIEWS As mentioned above, semi-structured, in-depth interviews were conducted with five consultants in the area of HRM, and with five HR managers. Companies of all sectors and sizes were represented in the interviews. The interviews aimed at collecting information and the personal insights of the respondents on the following issues: •
The HRM services commonly outsourced by Greek companies
•
The reasons why Greek companies outsource HRM
•
The aims sought for by the companies that outsource HRM
•
The profile of Greek companies that outsource part or all their HRM services
•
An insight to the development of the HRM services outsourcing market
5
•
An evaluation of the quality, reliability, development and competition in the HRM services sector.
Table III summarises the type of company, the number of employees and the services offered by each of the HR vendors that were interviewed. The interviews, though only five, covered a large range of HR vendors: a large multinational consulting firm, two small Greek entrepreneurial firms, and two consulting firms that lease or are the exclusive representative of HRM tools of foreign agencies. The spectrum of services that these companies offer varies from solely training or headhunting to total coverage of all HRM services, including strategic HRM consulting. The respondents are either partners or very senior consultants within their company.
Take in Table III
Table IV summarises the type, size and sector of the companies that were examined through in-depth interviews with the HR Manager/ Director. HR Manager A is the HR Director of a large transport and cargo company; HR Manager B is the HR Director of a large, multinational car manufacturer; HR Manager C is HR Manager at a very large banking group, employing 7000 people and HR Manager D is the HR Manager of a medium-sized Greek textile manufacturer. Finally, Manager E is a Senior Line Manager of a large Greek pharmaceutical company that does not have an HR department, so the HR functions are carried out by the line.
Take in Table IV
Profile of Companies outsourcing HRM activities From the interviews it came out that the profile of the companies that outsource HRM services is mixed. Many companies that outsource HRM services are medium-sized companies that cannot offer those services in-house. However, most of the HRM vendors interviewed reported that their customers include large, mainly multinational companies. A major finding of the interviews was the identification of different patterns of HR outsourcing, particularly in relation to the size of the outsourcing company. The interviewees,
6
when asked about the profile of the outsourcing companies, identified three main groups of companies that outsource HR services. A typical group consists of smaller companies, which don’t find it necessary to have an internal HRM department and instead outsource their HRM functions. This is the case described by HR Manager D, where the company from small entrepreneurial became part of a larger group of companies. In this transition, all the HRM functions were provided by an external consultant, who also dealt with the problems raised due to the acquisition. After the transition was completed, HR Manager D took up the HRM function. HRM vendors B, C and D also referred to a new trend, i.e. total outsourcing of the HRM function, whereby experienced HRM professionals, at the peak of their career, leave their company in order to offer tailor-made HRM services to three or four other, smaller companies. Their client companies typically do not need a permanent, full-time HR manager, and thus benefit from the services of an experienced HRM professional handling all their HRM matters. They usually treat this person as a partner, and expect him/her to develop considerable insight into the company’s vision and strategy. There is no employment relation between the company and the HRM professional, but rather a loose contract for services that stipulates some “preferential” treatment of the company by the HRM consultant. Four such cases were reported during the interviews. Another group of outsourcing companies comprises companies employing 150-250 employees. These have an HRM department, but may outsource some particular HR services in order to save time for their HR staff. They don’t seek for highly sophisticated services and they mostly outsource off-the-self services, in staffing, training and employee surveys. According to HR Vendors A, B and C, scarcely will the companies in this size group seek for tailor-made services, due to the cost that such services involve. The last size group of companies comprises larger companies (with more than 250 employees). According to Vendor A, these are more “demanding” customers, looking for more sophisticated services, that will also need to be tailored to their particular needs. They are more willing to pay for innovation and experience, since their budget allows for it and they are themselves more knowledgeable in HRM issues. However, in very large companies, such as the large banking group of 7000 employees for which HR Manager C, works, do not make much use of HR outsourcing services. Their HR departments are well developed, enough to deal with most HRM needs. They therefore only outsource very sophisticated, innovative services, for which they lack the knowhow in-house. The ideas expressed during the interviews, with both HR vendors and HR managers, on how companies of different size outsource HR services point to the type of the relationship that
7
usually exists among the size of the outsourcing company and the type of HR outsourcing (see Table V). As reported over and over by respondents, two major variables seem to characterise this relationship: •
Sophistication of the HR service, which presents the extent to which the vendor’s services are up-to-date, innovative and theoretically sound
•
Customisation, which signifies the extent to which the HRM services are customised to the particular needs of the customer (tailor made services)
An additional feature of HR outsourcing is the frequency and types of HR services outsourced. We are presenting this feature under the column “Description of HRM outsourcing” in Table V, as follows.
Take in Table V
As shown in Table V and according to the Interviews, we can claim that smaller medium companies outsource a large part of their HRM function but the HRM services they seek are not particularly sophisticated or innovative. It appears that for smaller companies a much more general background is needed. Larger middle-sized companies mostly outsource separate, basic HRM services, because their HRM department covers most of their needs for HRM and they probably cannot afford more sophisticated, external HRM services. Large companies outsource in order to cover their need for sophisticated and innovative services that they cannot procure in-house, but as the size of the company increases, especially in multinationals, outsourcing decreases because the companies develop more specialised HRM services in-house. The branches of multinationals also tend to outsource HR services in global HR vendors to whom their companies outsource HR services at corporate level. Current Development of the HRM Services Market The above-mentioned categorisation of the needs of companies of different size for HRM services was further developed in the interviews where both the HRM vendors and the HR managers interviewed agreed that the Greek market for HRM services is divided into: •
One group of HRM vendors that follow the advancements in the HRM service sector abroad, take considerable initiatives for quality improvement and innovation, constantly train and develop their staff, are characterised by credibility and trustworthiness and
8
usually offer services with a wider strategic focus. These companies often are national divisions or representatives of foreign groups of consultants. The cost of the services offered by those HRM vendors is usually high, so their client base includes mostly the multinational and large Greek companies, which can both appreciate the services offered and can afford the price. •
The other group of vendors competes mainly on price, not quality. They serve a client base that is not so knowledgeable on HRM issues, coming mostly from the medium-sized Greek companies. These vendors are smaller than their counterparts of the other group and usually cannot undertake projects that require a more strategic view on their clients’ needs or imply tailor-made solutions. Moreover, the vendors of the second group mostly offer services in training, recruitment for low and middle class positions and payroll and administration. They scarcely offer consulting for the development of performance management systems or for restructuring and change management, possibly because their customers are not willing to pay for that sort of services.
The above division in the Greek market of the HRM services is best illustrated in the sector of training services. According to the HRM vendors offering training services, the market received a spectacular boost from the mid-80’s to the late 90’s, due to the European Union subsidies for vocational training, paid to employers, both as a tax relief and as partial payment of certain training courses. Unfortunately, the subsidies resulted in a distortion of the demand for training services. There were companies that would outsource training programmes just in order to benefit from the European subsidies, and others that would first assess their real needs and then turn to the external market for the service they needed. These two different approaches to training ultimately created two groups of training programme providers. The one group offers tailor-made training services, actively trying to participate in the stage of assessment of the training needs of its clients, while the other offered custom training programmes, identical to the European Union’s subsidies specifications, without considerable adjustments to fit the particular needs of the client. Future Development of the HRM Services Market All the respondents expressed the conviction that the market of HRM services will grow further in the future. However, in the case of HRM vendors, this view varied according to the sector in which each one operates. For example, HRM vendor D, who is currently specialised in training and has abandoned the area of headhunting he initially operated in, considers training as more promising for the future. In contrast, HRM vendor E, a specialised headhunter who has abandoned the field of training, regards this field as more problematic, because “Greek companies still lack a developmental/strategic view over training, with the
9
result of not being willing to pay for holistic, tailor-made training programmes”. However, both vendors D and E appear to have been forced to take up more specialised-focused services and to limit the spectrum of their services. Given the views expressed by all the senior HRM professionals interviewed and the specialisation tendency expressed in the cases of both HRM vendors D and E, it could be assumed that in the future external HRM services will have a larger turnover in total, with higher specialisation of services for the smaller companies of the sector. Main Problems Faced in a Human Resource Management Outsourcing Relationship The most frequently reported problem in the outsourcing relation among HRM vendors and their clients is the difficulty of the HR managers to express and describe in detail what they require from the vendor. This problem could be attributed to the lack of experience in managing outsourcing relations, the importance of which is also stressed in the relevant literature (Masten and Crocker, 1985, Joskow, 1987, Harris et.al., 1998, Cook, 1999). An additional problem, to which most HR managers referred, was that HRM vendors lack the experience and actually learn on-the-job, with the project they are asked to carry out. As HR manager A reported “we feel that the HRM consultants learn from us, instead of us learning from them. It sometimes is a loss of time, although we outsource in order to save time”. This is due to the fact that consulting HRM companies usually hire young graduates to carry out projects that require significant HRM experience. On the other hand, the HRM vendors reported that it is difficult to recruit experienced HRM professionals for consultants’ positions. Smaller companies usually expect consultants to offer expertise on every possible matter and this places great demands on consultants, especially those of older age. At the same time, increased expectations by companies make them reluctant to accept younger consultants, something which explains the remark about the age of providers. This problem could also be attributed to the lack of maturity of the HRM outsourcing market. If the market was more mature, more experienced HRM consultants would offer their services, and the consulting sector would be more attractive to work in. Finally, adversely to the initial expectations of the researchers and to the prior literature (Masten and Crocker, 1985, Joskow, 1987), the formulation and wording of the outsourcing contract does not pose significant problems. On the one hand, the legal nature of such a contract is clear. It takes the form of a “contract for works”, which, according to both the HRM vendors and the HR managers interviewed are not complex to formulate or difficult to agree on. In fact, there are “model” contracts for each kind of service a vendor offers, which are only slightly modified to the specific requirements of each customer. Moreover, according to most respondents, the form of the contract is loose, because the consent between provider
10
and customer is mostly guaranteed by faith and good will. In any case, the small size of the HRM market, according to HR manager C is a factor preventing violations of the outsourcing agreement.
DISCUSSION The findings of the current study, both from the quantitative and the qualitative data that were gathered lead to some overall conclusions about the characteristics of the Greek market for outsourcing in HRM services. Underdeveloped market The Greek market for HRM services is still less developed than in most western European countries. This was confirmed by the CRANET survey and by the interviews. The impression of most respondents on the low quality characterising most HRM services that are offered and the feeling that the HRM vendors are learning “on the project” and “from their clients” is indicative of the low development of the market. The fact that the HRM consultants often lack the necessary experience and knowledge coincides with the recent development of the market and the fact that 62% of the current HRM vendors were founded from 1995 onwards. It appears, therefore, that the industry still lacks the experience and confidence of older service sectors, such as the banking sector or the accounting sector. The low development of the HRM services market is further expressed in a loose structure resulting in the division of the market, while the current and potential users of HRM services consider the services offered as of low quality and believe that the vendors lack credibility and are not well aware of the nature of the service. As mentioned at the beginning of the paper, the underdevelopment of outsourcing of Human Resource Management services may be related to the low and recent development of HRM as opposed to Personnel Management (Papalexandris et. al. 2001). Indicative of this is the lack of educational programmes in the field of HRM, where the first Master by a Greek University was launched in 2002. Moreover, the fact that Greece, with 12 million inhabitants, is a small country may imply that the small size of the market in general does not allow for considerable economies of scale to be developed for HR vendors. Therefore, HR outsourcing is developing slowly, as there are not large profit margins in the market. Divided market The major effect of the low development of the HRM services market in Greece is its division in two segments, as described above. The one segment offers more sophisticated services, which are priced higher, and are perceived as offering better quality and credibility. This
11
segment targets mostly multinational or larger Greek companies and invests much in keeping up with the advancements in HRM services internationally. The other segment competes mostly on prices, is comprised by smaller HRM vendors and serves mostly medium Greek enterprises, usually offering services in the field of staffing, training and pay. This division of the market implies that there is a different speed in the diffusion of HRM outsourcing that could be further attributed to the different pattern of HRM outsourcing by companies of different size, as expressed in Table V, as well as on an overall division of the Greek economy. This division is not problematic per se. It could prove problematic, though, in the case of the Training and Development services, for example, if EU subsidies diminish, so that the market segment that relies on subsidies could loose balance. Needs of Greek Companies for Sophistication and Customisation of HRM services Combining the extent to which the two variables of sophistication and customisation that were discussed in the previous section are evaluated and needed by companies, we can see the main tendency according to the company’s size, origin and nationality (Greek versus multinational). Figure 2 attempts to present the leading style of HR outsourcing by type of company, as revealed from the interviews with our respondents.
Take in Figure 2
Push for more specialisation It appears that for the smaller vendors of HRM services a trend for specialisation of services and easier identification by potential customers exists. Possibly this trend expresses the need for higher quality and sophistication of the service offered and a greater maturity both on the part of the clients and the vendors. Dominance of training and staffing services - Low presence of consulting services Training and staffing, which are the most traditional HRM services offered, cover the largest part of HRM outsourcing. Consulting in HR policy and strategy is still scarce in Greece, while the HRM vendor is mostly seen as a provider, rather than a partner of the company/client. Loose relations among the two agreeing parties Another attribute of the HRM services market is the fact that both parties of the outsourcing transaction count more on good will and trust than on the legal contract. This is because turning to courts is time and money-consuming for contracts for consulting work in Greece,
12
while the definition of the service to be provided is often difficult. What is more, the small size of the market for HRM services allows for an indirect control mechanism through fear of loosing one’s credibility. Unsuitable certification procedure A further reason why the market mostly lies on trust and on informal control and restraint mechanisms is the weak regulation of the market for HRM services by the State. According to all respondents, the Greek State has failed to introduce viable certification criteria for the companies offering employee training or staffing services, while no certification criteria have been introduced in the case of other HRM services. The certification process focuses on the infrastructure of the companies in terms of buildings and technological equipment, while factors like knowledge and experience of the people offering the service, or the effectiveness of the systems and processes in place is not assessed. This results in the market not acknowledging the certification, and the certification failing to promote the most competent providers of the sector, to the benefit of the customers.
CONCLUSION Drawing upon quantitative data, i.e. the 1999 CRANET survey on outsourcing of HRM services and the ICAP financial directory for the year 2002, supplemented with 10 in-depth interviews with eminent HRM consultants and HRM managers, this study presents the current state in the market for HRM services in Greece. The major finding of the study is the somehow limited development of the Greek market for HRM services, which presents a sharp division in two segments. As the market grows, however, the need for higher specialisation, better quality, correct certification and recognition of the segment by the State appears necessary. The respondents expressed the conviction that the market will develop considerably in the very near future, which is also the belief of the researchers, given the rapid rate of growth of the market up to now, the overall development of the HRM function within the Greek companies and the pattern followed in countries like the United States or the UK (Banham, 2003, Cook, 1999, Mahoney and Brewster, 2002), the pattern of which is usually followed in Greece. The present study presented the function of the much-discussed practice of HRM outsourcing in a country that differs greatly from USA and the UK, where most research on HRM outsourcing has been conducted. The results suggest that, due to the small size of the market, the problems and issues raised in Greece differ from those in bigger and more developed countries. Therefore, different factors may affect the decision of companies to outsource some
13
HRM service in Greece, and the strategy and motivation of both vendors and clients of HRM services may differ from those in more developed countries. In a country like Greece, with less developed HRM, one of the major objectives is to improve HR practices in order to increase competitiveness through people. Given the above, and in view of the small size of companies, companies may benefit from services, which they could not be able to create internally. Through appropriate use of customisation and sophistication of their service, the HR services vendors can become key players in the development of the HRM function. The description of the Greek market of HRM services undertaken in this study may be useful to vendors and users of HRM services, as well as researchers dealing with outsourcing in smaller markets. One of the main implications of the study both for HR and line managers is the necessity for good knowledge about HR in order to be in a better position to identify their own HR needs and to select the best HRM provider for those needs. Given that the decision to outsource HRM is not always in the hands of the HR manager and other managers are involved, there is a need for training and good grip in HRM issues. Moreover, the current study has indicated that the HR provider has to possess general expertise and convey a message that he can be trusted for his long years of experience in the market. Further studies on outsourcing of HRM services should focus on the way decisions to outsource HR are reached by companies, the criteria for selecting providers, the effectiveness of services offered and the overall role of HR consultants in developing the HR function in Greece.
References 1. Banham, R., (2003). HR outsourcing leads the way. Outsourcing essentials. Vol. 1. The Outsourcing Institute, at http://www.outsourcinginstitute.com/mmr/hr_ leads _market.asp, last visited on April 30, 2003 2. Cook, M., 1999. Outsourcing Human Resources Functions. Strategies for providing enhanced HR services at lower cost. AMACOM: New York 3. Harris, A., Giumipero, L. and Hult, T., (1998). Impact of organisational and contract flexibility on outsourcing contracts. Industrial Marketing Management, Vol. 27, pp.373384 4. ICAP, 2002. Greek Financial Directory. ICAP. Athens
14
5. Joskow, P., (1987). Contract duration and relationship-specific investments: empirical evidence from coal markets. The American Economic Review, Vol. 77, N. 1, pp. 168-185 6. Mahoney, C. and Brewster, C. (2002). “Outsourcing the HR Function in Europe” Journal of Professional HRM, No 27, pp. 23-28 7. Masten, S. and Crocker, K., (1985). Efficient adaptation in long-term contracts: Take-orpay provisions for natural Gas. American Economic Review, Vol. 75, N. 5, pp. 1083-1093 8. Observatory of European SMEs (2002). SMEs in Focus: Main results from the 2002 Observatory of European SMEs. Enterprise Publisations, European Union 9. Observatory of European SMEs, 2002. SMEs in Europe, including a first glance at EU candidate countries. Luxembourg: Office for Official Publications of the European Communities 10. Papalexandris, N., Chalikias, J. and Panayotopoulou, L., (2001), Comparative Research in Human Resource Management Practice in Greece and the European Union. Editions Benos, Athens 11. William M.Mercer and Cranfield School of Management, (2000). European Trends in HR Outsourcing. Research Report, June 2000
15
Figure 1: 1999 CRANET Research Findings on HRM Outsourcing by Country 90% 85% 80% 75% 70% 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5%
Outsource Pay & Benefits
Outsource Recruitm ent & Selection
Outsource Training & Developm ent
Outsource Workforce Outplacem ent/ Reduction
UK
No Ja rt pa he n rn Irl an d No rw ay Po rtu ga l Sp ai Sw n ed Sw en it z Th e e rla Ne nd th er la nd s Tu ni si a Tu rk ey
Ita ly
Is ra el
G D R G er m an y G re ec e Ire la nd
Cy pr us Cz ec h De nm ar k Fi nl an d Fr an ce
Au st ra lia Au st ria Be lg iu m Bu lg ar ia
0%
17
Table I: Countries ranking higher in outsourcing than Greece, by HRM service HRM services
No of countries outsourcing more than Greece
Training & Development
16 out of 26
Recruitment & Selection
16 out of 26
Pay &Benefits
9 out of 26
Workforce Outplacement/Reduction
21 out of 26
Table II: Companies operating in the Greek HRM services market No. of Companies Services Offered
% of
(Total=114) Companies
Recruitment & Selection Services
42
36.84%
Seminars & Training Services
79
69.30%
BPR and Merger Consulting Services
4
3.51%
General HRM Consulting
12
10.53%
Salary Surveys and Pay
2
1.75%
HRM Information systems
3
2.63%
18
Figure 2: Findings from CRANET and proportions in the ICAP directory, under the section of HRM services providers
24,30%
Pay and Benefits
1,75%
4,40%
Merger- OutplacementDownsizing
3,51%
60,30%
Training
69,30%
34,60%
Recruitment & Selection
36,84%
0%
10%
20%
30%
40%
50%
60%
70%
80%
CRANET data- Proportion of companies that use the service ICAP data- Proportion to the total HR services providers market
Table III: Interviews: Group A- HRM Vendors respondents Position
Type of Company
Persons
Services Offered
employed Senior Vendor A
Consultant
Vendor B
Vendor C
Vendor D
Founder
Partner, Founder Founder
Multinational Consulting Firm, also
25 people
General Human Resource
offering Auditing
in HRM
Management
services Greek firm
5 people
Greek Firm using tools leased from foreign
Management Major focus on training,
15 people
agencies. Greek firm
General Human Resource
development and communication
3 people
Training services
6 people
Headhunting
Greek, exclusive Vendor E
Partner
representative of wellknown multinational
19
Table IV: Interviews: Group B- HR Managers respondents Type of Company
HR Manager A HR Manager B
Greek Company.
Sector of
Emp-
HRM
Position of
Activity
loyees
dept.
respondent
2
Human Resource
persons
Director
Transport & Cargo
273
Greek Division of a Multinational
Car Industry
400
Company.
HR
Greek Group of
Banking
Manager C
Companies.
&Finance
7000
4 persons
Human Resource Director, Greek Division
40
Human Resource
Persons
Manager
Greek Company, HR
acquired by a larger
Textile
Manager D
Greek group of
Industry
130
1 person
New Human Resource Manager
companies.
Manager E
Greek, family-
Pharma-
owned company.
ceuticals
No 360
HRM dept.
Senior Line Manager
20
Table V: Extent of use and specialisation of HRM services used by companies of different size Company
No of
Size
Employees1
Small
250
High Sophistication,
Scarcely Outsource and if so, they may do it through the Company
>500 High Customisation
Headquarters, abroad
1: Categorisation of Company Size according to Observatory of European SMEs (2002) 2: Sophistication signifies the extent to which the vendor’s services are up-to-date, new, and theoretically sound 3: Customisation signifies the extent to which the HRM services provided are customised to the particular needs of each customer
21
Figure 3: Need for Customisation and Sophistication in HRM outsourcing, according to
Low Customization
High Customization
Greek Respondents
Smaller Medium Companies
Large Greek and Large Multinational Companies
Larger Medium Companies
Large Greek Companies
Low Sofistication
High Sophistication
22
