Outsourcing Personnel Functions

Abstract

One of the more recent “hot button” issues in our field is that of outsourcing all or some human resource (HR) functions whether by fee for service or contract. Advocates from the field of Public Choice Economics assume and, in many cases, economically substantiate the case for privatization of governmental functions.1 Even though these economists demonstrate an underlying anti-government bias, their basic argument with supply of government services is “that agencies should compete to provide citizens with goods and services instead of acting like monopolies under the influence of organized pressure groups.”2 Responsiveness to the needs of individual citizens (or to governmental units to be served by staff agencies, for that matter) is best obtained by competing within markets, with the result of economic choices by clientele between competing services. From this market environment economies in resource allocation and efficiency and effectiveness in operations are said to result. Public Choice Economists would also include simulation of market forces by introducing competition, possibly within the same department, governmental jurisdiction, or between other public, profit or nonprofit providers.3 This essay departs from an article by Robert J. Agresta.4 He argues for an extension of the Public Choice approach from one of “citizen-customers being empowered to select freely among providers of a service—whether it is schools or health care (with vouchers) or groceries (with food stamps)—and have control over the resources needed to acquire the service…”,5 to the same market relationship between central administrative (staff or auxiliary staff) agencies and the line units to which they provide services. While Agresta writes of building choice into any line-staff relationships, this article is concerned with HR service supply alternatives and alternative modes for their delivery.