Out of the Shadows: Managing self-employed, agency and outsourced workers

296 Pages·2007·1.72 MB·English

by  Patricia Leighton

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Out of the Shadows
Managing self-employed,
agency and outsourced
workers
Patricia Leighton, Michel Syrett,
Robert Hecker and Peter Holland

AMSTERDAM• BOSTON• HEIDELBERG• LONDON• NEWYORK• OXFORD
PARIS• SANDIEGO• SANFRANCISCO• SINGAPORE• SYDNEY• TOKYO
Butterworth-Heinemann is an imprint of Elsevier
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Butterworth-Heinemann is an imprint of Elsevier
Linacre House, Jordan Hill, Oxford OX2 8DP, UK
30 Corporate Drive, Suite 400, Burlington, MA 01803, USA
First edition 2007
Copyright © 2007 Patricia Leighton, Michel Syrett, Robert Hecker and Peter Holland.
Published by Elsevier Ltd. All rights reserved
The right of Patricia Leighton, Michel Syrett, Robert Hecker and Peter Holland to
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Contents
1 Introducing the topic 1
2 Context and evidence: the rise of the non-employee 17
3 Matching strategic and employment needs 49
4 Recruiting and preparing for non-employees 87
5 People management and non-employees 113
6 Regulating the use of non-employees 149
7 Contracts and the use of non-employees 189
8 Employment relations and related issues 221
9 Health and safety 239
10 Reflections and futures 253
Annex A: Case studies and contact details 261
Annex B: The management models explained 269

References and sources 271
Index 283
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1
Introducing the topic
Prescient tales
In 1999, British Telecom outsourced the delivery of a number of key HR
services to a leading international consultancy, Accenture. Like many
outsourced agreements, a significant number of the workers recruited
by Accenture to undertake the work were former BT employees. They
enjoyed good existing relationships with the line managers inside BT
who were the internal ‘clients’ for the services encompassed by the
contract, and they understood the context which determined the levels
of service against which the contract was determined.
Within three years of the agreement, the arrangement started to
degrade. Many former BT staff, unhappy with the terms of employ-
ment they were being offered, left Accenture, and the consultants who
replaced them were unfamiliar with BT’s internal HR needs. Gaps

started to appear in the quality of the service. The group’s HR depart-
ment lacked the IT infrastructure and focused attention to spot these
early enough to make an effective intervention.
By 2003, the situation had deteriorated to the point where renewal of
the contract between BT and Accenture was seriously under question.
Equally worrying, the negotiations were conducted in the public eye and
were subject to ‘real time’ coverage by UK professional journals such as
Personnel Todayand People Management. It took a ‘back to basics’ review
of operational procedures to convince BT to renew the arrangement.
In an interview with one of the contributors to this book (Syrett,
2004), Jenny Arwas, Director of BT Group Operations, admitted:
When we made the decision to move service delivery out of BT’s direct
hands, we initially disassociated ourselves from that part of the
operation. We outsourced our expertise and know-how and entrusted a
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Out of the Shadows
core feature of our reputation to a third party. The potential for overlap
and double handling went undetected and unchecked in those early
days, until we sat down with the supplier and established realistic
goals as well as clear lines of responsibility and accountability.
British Airways’ group HR practitioners would empathize closely with this
statement. In 1997, British Airways (BA) outsourced its in-flight catering
provision to a US-owned company called Gate Gourmet. This company
employed several hundred staff, largely living near Heathrow Airport. The
workforce was drawn from various ethnic groups, especially Asian.
As in the British Telecom/Accenture contract, many were former BA
employees. Gate Gourmet recognized trades unions, in particular the
Transport and General Workers Union (TGWU). The contract was a long
one and, importantly, BA sourced all its in-flight meals from Gate
Gourmet. The contract was due to be renegotiated during the spring of
2005. Profit margins were always low, and by 2005 Gate Gourmet’s
Heathrow operations were running at a significant loss. Its parent com-
pany, Texas Pacific, remained highly profitable.
In an effort to deal with the losses, Gate Gourmet proposed changes
to working practices and the increased use of agency temporary
workers. In June 2005, the TGWU and other unions agreed a restructur-
ing deal. This was rejected by members. The workers affected took
unofficial strike action – that is, they did not follow the required legal
procedures prior to taking strike action. The TGWU provided advice
and support.
Those who went on strike were sacked by Gate Gourmet, as the
company was entitled to do under UK law. Baggage handlers and other
staff employed directly by BA then went on a ‘sympathy’ strike, leading
to the cancellation of large numbers of BA flights, while those flights

that went ahead were often delayed and did not have meals for passen-
gers. There was widespread publicity regarding the situation at Heathrow
Airport. The disruption continued for several weeks. In the immediate
aftermath, investigative journalists apparently discovered unhealthy
and unsafe working conditions at the Gate Gourmet factory premises.
There had anyway been major complaints by BA in 2004 about poor
hygiene and safety standards.
The case achieved international publicity. The industrial dispute
lasted for months, and the damage to BA’s business and business repu-
tation is incalculable. The lesson BA learned was summarized effectively
by Rory Murphy, a Director of Morgan Chambers, who, when com-
menting on the dispute in Personnel Today (23 August 2005) said:
BA’s case highlights the need for early HR input. When you have no
control over how a business is run or its people management
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Introducing the topic
strategy – when it views its workforce differently from how you view
yours – disaster is inevitable.
It is a sad but inevitable characteristic of time-pressed, resource-
hungry managers that they rarely find the mental space to anticipate
issues that will dominate their work in the future, until those issues are
sufficiently immediate to smack them in the face.
HR practitioners are no exception to the rule. In 2001 and 2004
respectively, the people policies of two of the UK’s flagship companies,
British Telecom and British Airways, received unexpected and extremely
unpleasant ‘smacks’that did very public damage to their reputation and
cost them millions in lost revenues. Both were the direct result of the
wave of outsourcing and increased use of agency temps that has charac-
terized business operations in the past decade. Both were caused by a
failure, by no means confined to BA and BT, to anticipate the people-
management implications.
It is thought that part of the unexpected nature of the problem lies in
the fact that the temps, the workers of an outsourcing company (and,
one might add, the thousands of consultants and freelance staff typically
employed in most employing organizations) are not seen as part of an
organization’s people management. We undertook many case studies
for this book, and two quotations from respondents stand out:
You ask how many temps and consultants are working here today.
I haven’t got a clue.

They [the non-employees] do not count in this organization. This is
because they are not counted.
What this book aims to do
This book is about a rarely discussed topic: the management of people
who are not typically seen as a central concern of HRM – the ‘non-
employees’. Like the Accenture staff who delivered key HR services on
behalf of British Telecom, or the Gate Gourmet workers who provided an
integral component of BA’s customer service, their role is vital in sustain-
ing the organization’s performance, reputation and ‘brand’. They often
constitute up to 50 per cent of a workforce, yet they are not typically
3