Staff Augmentation Model - Part 3

Topics - Part 3

1. Comparison of Staff Augmentation and Managed Services
2. Definitions
3. Disclaimer
4. References

...Continuing from Part 2

Comparison of Staff Augmentation and Managed Services

Below is a ARCI matrix comparing the Staff Augmentation model and Managed Services model based on the context of this posting.

Process Area	Augmented		Managed
	Client	Service Provider	Client	Service Provider
Employee Lifecycle	-	-	-	-
Recruitment	ACI	R	CI	AR
Orientation	I	AR	I	AR
Onboarding	AR	CI	I	AR
Employee Development	IC	AR	I	AR
Employee Engagement	I	AR	I	AR
Employee Retention	I	AR	I	AR
Termination	CI	AR	I	AR
Replacement	CI	AR	I	AR
Workforce Management	AR	I	CI	AR
Delivery	AR	I	CI	AR
Transition and Onboarding	R	AR	CI	AR

Definitions

1.  Service Provider - The organization that owns and operates a Shared Services . Organization can be third party vendor. Or in house
2. Shared Services
3. Client - The organization that is engaging the service from the Service Provider.

Disclaimer

This blog post is meant to share my thoughts on this topic based on my observation and experience working in the Shared Services industry in Malaysia, Singapore, China and Philippines. This is not an exhaustive analysis on this topic and I do not use scientific method for analysis and validation.

References

1. Staff augmentation
2. Body shopping
3. Workforce Management 
4. Human Resource Management 

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Staff Augmentation Model - Part 2

Topics - Part 2

1. Human Resource Management
1. Workforce Management
2. Delivery
3. Transition and Onboarding
4. Risks
5. Benefits

...Continuing from Part 1

Workforce Management

Workforce management (WFM) encompasses all the activities needed to maintain a productive workforce and falls under the umbrella of human resource management. Service providers are responsible for WFM as augmented staffs are on its payroll. A good workforce management is important for service providers to attract and retain talent so that they can remain competitive in the marketplace. It is common for service providers to improve in this area by actively soliciting feedback from staffs via some form of employee satisfaction survey.

Delivery

In Staff Augmentation model, the client is responsible for all aspect of work delivery. This includes work assignment, monitoring and tracking of work completion for the augmented staffs. Even thought service providers are not responsible in delivery, they will need to facilitate their clients in remote managing the staffs in their offsite locations. Service providers only get involved to take corrective actions in there is deficiency of the augmented staffs' productivity, skills, knowledge or quality of work.

Transition and Onboarding

Transition activities in Augmented Staff model is minimal in comparison to Managed Services. The common transition activities is for the service provider to put in place facilities for communication and mechanisms for remote management of the augmented staffs. Both the communication channel and the management method has to be agreed upon between the service provider and the client before the engagement commence. Onboarding augmented staff is similar to onboarding internal staff other than the fact that they are offsite. Onboarding is usually conducted by the client.

Risk

I have listed some common risks associated with the Augmented Staff model that I have observed (I will expand on this list as time goes). I have left out some attributes of risk such as probability, impact and mitigation steps as this is largely dependent on organization and the contractual agreement between service provider and client. The owner in the table is the party responsible to implement corrective or mitigation steps for the risks.

Category	Description	Owner
HR	The augmented staff is unable to integrate with client's workforce.	Service Provider
HR	High turnover of the augmented staff.	Service Provider
Delivery	The augmented staff is unable to perform up to the expectations of the client.	Service Provider
Delivery	The project that the augmented staff is working on is unable to meet its objectives.	Client
Delivery	Confusion in responsibilities and authorities over the augmented staffs between service provider and client.	Client + Service Provider

Benefits

Let's look at the benefits of the Staff Augmentation model from a client perspective.

1. You have a staffing need in a niche area where qualified resources are difficult to find. Certain service providers specializes in a particular skill or technology platform and will have these resources available.  
2. You have a temporary need for staffing or want to supplement your existing workforce for a period of time. 
3. You need to quickly staff up your project. Some service providers allow for their augmented staffs to be absorbed into the clients' workforce for a fee. 
4. Cheaper resources due to cost arbitrage.

To be continue... (Part 3: Comparison of Staff Augmentation and Managed Services)

Public Holiday Planning For a Shared Service Center

I thought this is a good topic to discuss since Chinese New Year is just around the corner.

Malaysia has one of the highest number of public holidays in the world. This present a challenge for the shared services industry or any businesses that need to remain operational during public holidays.

I have seen quite a number of different variations of how service providers plan for public holidays and have summarized them below.

1. Follow local government and company gazetted public holidays - Staff is required to work on public holidays. They are compensated accordingly when they are scheduled to work on these days. 
2. Follow the supported region public holidays - Staff work according to the public holidays for the region that they support. They are compensated if they happen to work on days that fall on local government and company gazetted public holidays. 
3. No public holidays - Staff work all the days. Local government and company gazetted public holidays are added to the staff's annual leave. No further compensation. 

I left the compensation part vague as companies compensate differently. Some compensate using monetary while others compensate by giving leave-in-lieu or annual leave. Do note that leave-in-lieu or annual leave presents a challenge on its own in that staff tends to accumulate far too many days than they can clear without impacting operation.

Another challenge is scheduling staff to work on public holidays or scheduling staff who wish to take leave during public holidays for Option 3. I find that having guidelines help to avoid frantic planning at the last minute and calls of unfairness. I especially like guidelines that empower the staff to make scheduling decisions.

From a service provider's perspective, there is no best option. It depends on the service provider's needs and ability. For example, not all service providers are ready to deal with the financial burden of dishing out monetary compensation.

The staff's perspective is just as subjective. Some like to have the same public holidays as their family members and friends while others like the flexibility of Option 3.

I, like all people, like to have more public holidays. However, if you look a bit deeper, public holidays increase the cost of doing business. I believe there needs to be a balance between having sufficient public holidays to celebrate our multicultural background and for us, the shared services industry in Malaysia, to remain competitive in the global marketplace.

Footnote: 

This blog post discusses share service centers that operate on an 8x5 basis. The options gets more complicated for shared service centers that operate 24x7 as we will have to deal with working on weekends, working more than the regular 8 hours and working odd hours.

Employee Cost Components

Ever wonder why you are getting only a portion of the amount paid to your employer by your client?

This is likely because your remuneration is a only a component of the "price" that your employer charge your client. The infographic below is a sampling of the different components that go into costing "you" in a shared services company. Bear in mind that this is just the ongoing operational expenditure of owing and operating "you" and does not include the corporate and profitability markup that your employer will most likely add.

Staff Augmentation Model - Part 1

Topics - Part 1

1. Introduction, Assumptions and Definitions
2. Staff Augmentation Model
3. Human Resource Management
1. Employee Lifecycle
1. Recruitment - Sourcing and Selection
2. Orientation
3. Onboarding
4. Employee Development
5. Employee Engagement
6. Employee Retention
7. Termination

Introduction

Staff Augmentation and Managed Services are two main models that service providers in the
shared services industry use to provision services. The purpose of this blog post is to inspect and discuss the attributes of the Staff Augmentation model in the context of shared services. The relationship, responsibilities and accountabilities of the service provider and the client will be discussed when these attributes are explored. Comparisons with the Managed Services model will be made where appropriate. The discussion is based on a simple implementation of the Staff Augmentation model as there are many different variations of these models. Thus, some real world factors that affect implementation and operation of such model are ignored for simplicity sake. This is to keep this blog post from being overly lengthy.

Staff Augmentation Model

For the purpose of this blog post, Staff Augmentation model is defined as a service provisioning strategy used by a service provider where the service being offered is in the form of staffs with a set of specific skills as required by the client. The staffs are meant to augment the client's existing workforce. Below are the limitations specific to this post (and not a limitation of the model itself)

1. The augmented staffs are located in an offsite location owned and operated by the service provider instead of in a client's premise. The reason is the differences between a permanent employee of the client and an augmented resource is greater in such situation.
2. The discussion does not consider the sourcing arrangement - whether Outsourcing or Insourcing.

Human Resource Management

We will discussed a limited topics from the human resource management umbrella that is of interest to this topic. Human resource management is too wide to discuss in its entirety within a single posting.

Employee Lifecycle

We will look at the the different phases of an employee lifecycle from where a candidate is identified as suitable for an augmented staff role to the staff leaving the client's workforce.

Recruitment - Sourcing and Selection

Recruitment is perhaps the most important aspect in an employee lifecycle in the context of a Staff Augmentation model. This is especially true from the client's perspective as whilst the service provider is responsible to provide a pool of qualified candidates (either in house candidates that the service provider has on the bench or potential candidates to be hired) according to the client's requirements, the client is responsible for the selection and ultimately accountable for the quality of the selection. Therefore, the client must ensure that a robust and comprehensive candidate evaluation program is in place.

Orientation

The service provider is responsible to conduct orientation activities for the augmented staffs as they are employees of the service provider working in their premise.

Onboarding

The client is responsible for onboarding activities for the augmented staffs. Onboarding refers to activities that will be carried out by the client so the augmented staffs can acquire the necessary knowledge, skills and tools to become an extension of the client's workforce. Onboarding activities will largely be the same as the client's own staffs as the augmented staffs are expected to be an extensions of the client's workforce. Arrangements can be made so that a portion of the onboarding activities are delegated to the service provider especially in the provisioning of documents, tools and standard operating procedures.

Employee Development

Employee development is largely the responsibility of the service provider as the augmented staffs are on the service provider's payroll. It is common for service providers in the shared services industry to provide comprehensive development program for their staffs to ensure their continued marketability with current and future clients.

Training and development can be driven by the client in 2 instances. First, the augmented staffs have deficiencies in areas that they are expected and contracted to perform. In this case, the service provider is responsible to take corrective actions including providing training to eliminate the deficiencies. Second, the client desires the augmented staffs to acquire additional knowledge or skills. However, this may involve further negotiation in the service rates or having the client pay for the cost of training and development.

Employee Engagement

In the Staff Augmentation model, the "product" being sold by the service provider is their staffs. Therefore, it is to the interest of the service provider to ensure their staffs remains highly engaged. A highly engaged employee is more productive, help build reputation and draw in future business. It is common for service providers in the industry to hold frequent employee engagement activities such as team building, family day and fun day.

Employee Retention 

Similar to employee engagement, the service provider is intrinsically interested to ensure that their staffs, especially staffs that are highly marketable, remains with them. In addition, high turnover incurs cost and hurt reputation of the service providers.

Clients also has a vested interest in making sure staff turnover will not be an issue and would often look at a service provider's track record and reputation in retaining staffs before engaging their services.

In a competitive market like Malaysia, service providers strive to offer a competitive compensation package, healthy work culture and safe work environment to both attract and retain top talents. Service providers often go the extra mile to gauge their staffs' engagement level and survey the talent market to remain employers of choice.

Termination

We will discuss termination in the context of a client ending the service of the augmented staffs and will exclude topics on staff treatments once they exit the client's organization. In a Staff Augmentation model, termination usually occurs for 2 reasons - i) staff performance and ii) needs no longer exist. Once the service provider and the client work out the termination conditions, including any contractual obligation, the augmented staffs will simply exit the Client organization similar to any staffs in the Client's workforce.

Replacement

Typically, the service provider will bear the cost of finding a similar replacement if an augmented staff leave the service provider employment and in extension the client's workforce. The service provider may incur penalty if there is a lapse of service.


To be continue... (Part 2)