Human Resource Management International Digest

Unilever's sound outsourcing strategy: HRD key issues for companies large or small
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, (2009),"Unilever's sound outsourcing strategy", Human Resource Management International Digest, Vol. 17 Iss 1 pp. 9 - 11
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 Unilever’s sound outsourcing strategy
HRD key issues for companies large or small

ifferent organizations have different criteria for considering whether to outsource

D parts of their HRD function, with cost, competence and capacity usually being the
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three major elements that provide the impetus. One of the most regularly cited
reasons is cost reduction. There is a perception that financial savings are likely to be made
because vendors – who supply a similar training program to many different customers –
could offer benefits through economies of scale.
With advances in technology, some businesses are choosing to move their entire learning
function to large service-center facilities, which share heavy fixed costs among multiple
clients. IBM is providing this sort of business process outsourcing (BPO) service.
However, saving money should not be the primary purpose of outsourcing in the training
area. A recent study found that only 29 percent of respondents believed they had actually
saved money as a result of outsourcing, whereas 63 percent gave quality-related reasons as
their primary benefit from BPO.
Outsourcing may also increase an organization’s access to a range of experts and
specialists. Most firms lack the internal resources to keep ahead of rapid technological, legal
and other changes. The use of outside training suppliers can ensure greater currency in the
area of good employment practice. While this is clearly important to all organizations, it is
particularly pertinent for small and medium-size enterprises, since external training
providers are more likely to be able to offer smaller companies a range of best-practice
solutions.
The decision to outsource is also often driven by an organization’s desire to concentrate on
its core competencies, so firms can focus scarce resources on, for example, product
development.

Four-stage ‘‘good practice’’ approach to a key decision

A further business case for outsourcing HRD is in response to a risk assessment of demand
uncertainty. If a company relies on an internal HRD function, it will bear the consequences
associated with increasing or reducing the workforce as demand fluctuates. Outsourcing
enables organizations to respond more rapidly to changing market forces.
The key issues that need to be considered when trying to make an outsourced training
strategy successful in any business relate to making the right decision about what to
outsource, engaging the right providers and then putting measures in place to build and
maintain a strong, trusting and effective relationship. The approach comprises:
B Prioritize. Decide what should be outsourced, ensuring that areas of strength and core
competencies are kept in-house.

DOI 10.1108/09670730910929369 VOL. 17 NO. 1 2009, pp. 9-11, Q Emerald Group Publishing Limited, ISSN 0967-0734 j HUMAN RESOURCE MANAGEMENT INTERNATIONAL DIGEST j PAGE 9
 B Select. Determine clear criteria for selection when choosing providers, and pay special
attention to the match between values and philosophies.
B Trust. Build trust through communication, clarity and commitment on both sides of the
relationship.
B Monitor. Ensure evaluation measures are in place to monitor the success of the
outsourced function.
These principles were tested on the UK business of Unilever, an international manufacturer
of foods, home-care and personal-care products.

Priority given to marketing and selling its brands

Prioritize
At Unilever learning is currently centralized, with a core group of external providers
delivering general, professional and leadership training in factories and head offices. Eight
dedicated staff undertake training-administration activities in-house. It would seem that a
selective outsourcing/out-tasking approach is currently in operation.

Select
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However, Unilever last year handed responsibility for practically the entire function to the
business process outsourcing provider Accenture. It could be argued that a company the
size of Unilever should be able to create its own economies of scale within an internal HRD
function. It seems, then, that the principal driver behind the BPO strategy was the need to
take non-value-adding activity, such as administration, out of the business and ensure the
company concentrated on its core competencies of marketing and selling its brands.
It was decided that transactional activities and delivery should be taken outside, with
transformational and strategic activities remaining in Unilever’s remit. In practice, this means
that administration, supplier management, the majority of training delivery, and most training
design are undertaken by Accenture, while learning-needs analysis, professional-skills
training and most leadership and team development remain the responsibility of internal
HRD.

Trust
Unilever recognizes that close interaction between the internal and external HRD functions is
required to make the arrangement work. Joint staff meetings take place regularly. The
measures taken go some way to developing the trust that is the cornerstone of a successfully
outsourced training relationship.

Monitor
In terms of evaluation measures, there is a comprehensive structure in place to regulate the
service provision from Accenture at local, regional and global levels. However, it is not
intended that Accenture be perceived as ‘‘the training department’’. The aim is that there still
be a clear separation between the internal and external functions.

‘‘ Most firms lack the internal resources to keep ahead of rapid

technological, legal and other changes and the use of outside
training suppliers can ensure greater currency in the area of
good employment practice. ’’

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PAGE 10 HUMAN RESOURCE MANAGEMENT INTERNATIONAL DIGEST VOL. 17 NO. 1 2009
 Closer integration would lead to greater commitment and trust
Although much of Unilever’s outsourcing strategy seems to be sound, there are still some
points that need to be considered to ensure its success. One relates to how the company
assesses the benefits of training. Thought should be given to maximizing the efficacy of the
training activities delivered by Accenture staff.

Core-competency training has been retained within the internal function, reducing the
requirement for the vendor to create an in-depth understanding of the business, and of its
core values and infrastructure. However, closer integration into the business would increase
the relevance of all learning and development activities. Moreover, with an increased
investment of resources to enable knowledge transfer by both parties, the partnership would
gain from greater commitment and increasing levels of trust.

According to a further, as yet untested, framework:

B When the training needs are highly specific or complex, but there is low sensitivity to the
organizational assets, the solution will be found in tailor-made outsourcing.
B If the training needs are simple or generic, and the value of the organizational assets is
low, it is wise to purchase off-the-shelf training programs.
B When there is greater sensitivity to the organization’s value-base and assets, but there are
relatively simple training needs, it seems that a blended approach to insourcing and
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outsourcing should be adopted.

B However, if the training needs are complex and specific, and if there is a great risk to both
the organization’s assets and value base, the training should be retained in-house.
Keywords:
Comment
Outsourcing,
Value analysis, This review is based on ‘‘A model for outsourcing HRD’’, by David Simmonds and Rebecca
Quality, Gibson. Advice for organizations wishing to outsource HRD is offered both in the form of an
Human resource innovative model and case studies of Unilever’s UK operation and Colliers CRE, a UK
development commercial-property consultancy.

Reference
Simmonds, D. and Gibson, R. (2008), ‘‘A model for outsourcing HRD’’, Journal of European Industrial
Training, Vol. 32 No. 1, pp. 4-18.

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