HR Green ASD for Local Governments Handbook - Executive Summary - Manual (Page 7)

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What we learned from a survey of recent research:
• Organizations typically decide to proceed with outsourcing based on the following considerations:
• Financial: condition of fiscal stress requires innovation
• Higher capacity for risk
• Innovation: manage limited resources with high quality services
• Access to external resources and knowledge
• Flexibility for staffing and hiring
What we learned from the focus group discussions:
The sample for our focus groups included six municipalities ranging from a large city to a very small village, and both types of
form of government were included.
• Obstacles to outsourcing exist at every stage.
o
Even consideration of outsourcing may bring up fear and resistance from employees.
o
The skills and capacity must exist to manage the contracts and the necessary investment to
deliver public goods and services by contract with an outside vendor.
o
Outsourcing must be married with the capacity of the organization to ensure success. In
particular, staff needs to be well skilled in managing the performance of contracts.
• Contracting with the private sector is not viewed the same as with the nonprofit sector. There may
be higher trust in these contractual relationships, and the contracts themselves may be unwritten.
• Economic Considerations
o
Contracting in and of itself should have a financial benefit, but this may not be the primary
benefit. There could also be political reasons to consider alternative service delivery as the public
pressures elected officials and managers to control costs.
o
Outsourcing also has the potential to expand or improve existing services that just would not be
possible to replicate in-house at the same or lower price. This is particularly true for outsourcing
of legal and technology services.
• Political Considerations
o
Many municipalities spoke about either seizing a window of opportunity with strong political will
and public support combined with management’s interest and abilities.
o
Other municipalities didn’t wait for a window of opportunity but rather deliberately sought out
supporters for the idea and expanded support over time through influential leaders internally and
externally. Managers would be hired with this goal in mind to begin with or they would bring
alternative service delivery ideas to the elected officials to gain their support.
o
Just like with any innovation, there are early adopters as well as more latent adopters who may
pursue reform more slowly. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Readiness checklist for contracting out:
 Is there a window of opportunity to explore alternative service delivery reforms?
 Does your organization have the necessary contracting capacity: the number and skill level of staff to
administer and monitor contracts with private and nonprofit firms?
 Do elected officials have the necessary political will to increase service quality by investigating
alternative service delivery option?
 Can managers and staff effectively communicate with the various stakeholders throughout the
outsourcing process?
 Has the municipality done a complete risk assessment of outsourcing; both in terms of time and cost
of managing the contract as well as the risk of bringing that service back in-house if necessary?