In recent decades, public agencies have witnessed a burgeoning trend toward privatization of government services. Governments have come to rely extensively on the private sector to perform traditional public functions. Privatization is a key component of the reforms towards human resource management (HRM) that takes advantage of private sector to lower costs, improve productivity, and expand organizational flexibility. HR is the “philosophy, policies, procedures, and practices related to the management of people within an organization” (French, 2003). HR services for individual employee include not only the employment life cycle (from recruiting to termination), but also planning for organizational staffing needs and improving organizational effectiveness. Generally, contracting out the HRM both in public sector and private sector are defined as the purchasing of HR services from a third party supplier (CIPD, 2009). HR outsourcing is more predominant amongst private sector than public agencies. In the UK, a report indicates 69% of private organizations pursue this strategy, while 25% of public sector organizations undertake it (CIPD, 2009). In the United States, privatization of public personnel management rises as a trend for public sector reforms. At the federal level, the Bush administration sought greater reliance on the private sector through privatization programs such as the Competitive Sourcing Initiative. In 2004, the Bush administration outsourced the management of the federal government’s workforce recruitment system, USAjobs, to a private firm (Shafritz et al., 2007). For states, the extent of outsourcing activities for public HRM includes specific functions, agency HRM services, and HR functions for the entire state. For example, the Cincinnati, Ohio based firm Convergys was awarded lucrative contracts for the provision of HR functions in the states of Florida and Texas (Battaglio & Condrey, 2006; Coggburn, 2007; Condrey & Battaglio, 2007). The state of Nevada has a relatively small public personnel workforce and does not contract out human resource functions. Division of Human Resource Management (DHRM) is the main agency of personnel management in the state level. The main functions include agency human resource service, employee & management services, payroll & employee records management, compensation, and classification & recruitment management. There are more than 80 staffs working in this division. THESIS
Outsourcing functions of public personnel management would deduct cost and public expenditure, improve productivity, take advantage of private firms in the delivery of professional human resource, and leave time for HR professionals to focus on core functions in the purpose of achieving organizational goals. I recommend DHRM of the state of Nevada contract out transactional functions, such as payroll service, compensation calculus, tax filling, as well as informational technology support for employee record and recruitment. But the risks, such as losing control of payroll system, side effect of cost increase, impact on organizational culture, negative morale, and jeopardizing trust are necessary to draw the attention of public administrators. RESEARCH REVIEW
Outsourcing human resource is a research hotspot both for private sector and public sector in recent decades. Due to the tendencies for monopoly, hierarchy, and structural and managerial intransigence of traditional pubic sectors (Savas, 2000, 2006; Shleifer, 1998), proponents of public management reform urge public sector practitioners to model private sector behaviors by adopting market-like mechanisms (Kelman, 2002; Kettl, 2002). Hence, privatization of public personnel function is deemed an alternative approach to reinvent government.
Champions advocate human resource outsourcing could improve the efficiency of government...