Human Resource Analysis on BAE Systems-Xchanging Partnership

Human Resource Analysis
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Human Resource Analysis
Part 1
Sourcing Options
Restructuring human resources through shared services was the best option for BAE at the time. HR shared services imply the provision of services in a centralized form instead of decentralized service provision. Companies that operate within the confines of shared services are those with strategic business units (SBUs) that traditionally operated independently in their HR activities. Companies that intend to cut costs understand that controlling HR activities from decentralized nodes can be challenging, especially if each unit is motivated to operate optimally with its current enablers. At BAE, it was becoming impossible to sustain decentralization because costs were hiking while the company needed to cut its operational costs by 15% in a stretch. The choice for shared services was strategic for various reasons. Primarily, shared services cut down redundant employees leading to immediate impacts on cost reduction targets. There is also the need to trigger productivity and customer satisfaction at the end.
The choice for shared services with a third party was also strategic relative to the other options that the company faced. BAE sought the input of a management consultancy as one of the options. Management consultants can be advantageous, especially when the organization is motivated to restructure quickly. However, the long-term impacts of such a move are not acceptable to most organizations. BAE noted that using a consultancy comes with long-term limitations like the lack of skills transfer and lack of sustainability of results besides the possible escalation in big bang HR changes. The other option, fee-for-service outsourcing, also came with notable challenges. FFS has been used in multiple industries in which it was characterized by uncontrollable expenditures, disorganization, and overprovision. For a company motivated to reduce operational costs and maximize profits, adopting FFS would come with multiple challenges. Hence, among the options that BAE explored, only shared services proved robust in addressing the prevalent challenge while also addressing the cost management issue in the long term.
The choice for shared services may have been anchored on various advantages that the option bares. Primarily, technology is among the biggest challenges when it comes to managing costs in HR. However, shared services allow companies to fuse HR tasks with technology. While using SBUs, companies disintegrate their technological inputs depending on the requirements of the units. However, it becomes simpler to eliminate overlaps that escalate costs in shared services. HRSS is also linked to higher overall efficiency. HRSS eases task transfers within the HR hierarchy to allow for focus on talent pool development. The other benefits of HRSS include focusing more on HR strategy and steering operational consistency, which also impacts cost management initiatives.
There are, however, various drawbacks linked to HRSS that BAE and other potential implementers must explore before choosing the approach. Primarily, one size does not fit all the HR needs. Different SBUs manifest different resource needs and targets. Hence, while one strategy can be fruitful in one of the SBU, it can fail in others. Companies must ensure that the principal analysis explores the impacts on individual SBU’s before the policy is implemented completely. The other challenge is technological inefficiency, where some bogged down technologies can trigger operational inefficiency, thereby enhancing the costs unexpectedly. The other drawbacks that HRSS can attract include shifting HR responsibilities to non-administrative employees, the materialization of cost-saving in the long-term, and needed considerations into impacts as if an organization is operating with different niche or specialized workforces an HR shared services approach may not work.
The front-back delivery (FBD) model would be the fourth option that BAE would have employed in its move to streamline HR activities. FBD bears some similarities with the business partner models as it focuses on expertise, shared services, and business partners. However, FBD allows for more localization and flexibility across the business units. In this model, technologies are shared, and activities are highly centralized. However, the scope of technological applications depends on the needs of individual unit needs. To that extent, a company can cut more costs by limiting technological applications in some units while achieving the targeted centralization objective. One challenge that companies must understand with the implementation of FBD is that it leans towards operational duplication across units, which can only be eliminated through a continuous alignment. The model must also be governed tightly to reduce the costs.
Part 2
Xchanging showcased various strengths and weaknesses in the transformation of HR at BAE. Primary among the company’s strengths is its insight into HR through competencies. The company understood the scope of the challenge it would face in addressing all the joint venture roles. To reach the terms of the contract, Xchanging developed seven competency areas that it would address both individually and collectively for the required operational efficiency. Xchanging also showcased its ability to attract talent. Having the right talent in the organization would be key in unlocking operational efficiency. The last strength that Xchanging showcased in the negotiations is the company’s HR analysis capabilities. Based on the developments after the implementation process, Xchanging had chosen the right technology for BAE’s centralization needs. Often, choosing the right technology is a challenge. It is even a bigger challenge to be successful within the shortest period that Xchanging showcased. One of its potential strengths will be risk assessment. Xchanging committed capital into the project, knowing the uncertainties that surrounded such a move. A proper risk assessment strategy for Xchanging w...