BIG CLAIMS, disappointing performance. That, in a nutshell, is the verdict of Professor Mari Sako (pictured) of Oxford University’s Saïd Business School on the burgeoning business of outsourced leadership and development training in Britain.

Not surprisingly, her view is challenged by some of the leading providers of training, but she says her research into the outsourcing of business services suggests that companies may get fewer benefits than they hope for.

“Companies are often looking for strategic advice, but outsourcing providers are generally administrators rather than strategic thinkers,” she said.

A comparative study of business practices in Japan shows that in the east there is much more caution about outsourcing generally. “Japanese businesses are cautious even with areas like payroll management and benefit administration, which have been outsourced in Europe and America for years, but they have particularly tended to retain in-house control of core areas such as selection, learning and training,” said Sako.

In Britain, there is growing anxiety about the standard of business leadership and decision-making. Accenture, the global consulting, technology and outsourcing company, carries out a review, The High Performance Workforce Study, every 18 months or so. It regularly finds that leadership is one of the top three concerns reported by senior executives.

Peter Cheese, Accenture’s global managing director for human performance, said: “Historically, organisations have not done a very good job in operating leadership training. In many organisations the core skills of people management, giving feedback, mot-ivating staff and managing change, have simply not been taught at all.”

Sako said: “In the UK, some big companies are starting to outsource these core processes. Those are the sectors that have higher added value, so the outsourcing firms want to provide them, but our research shows that the companies that outsource them are often disappointed by the savings they get.”

One common reason for disappointment is poor communication between the client and the outsourcing company. Rudy Vandenberghe, executive director at Arinso, an international business-services company active in 27 countries, agrees. “There needs to be a close fit – like a marriage or a long-term engagement,” he said. “If you have an informal company and a very formal outsourcer, for instance, there will be tension right from the start.”

He also agrees that the design of leadership and training courses and the selection of which staff should attend them are things that most companies would want to keep under their control.

“But today most companies are aware that there is a serious shortage of highflying executives. If outsourcing the support and administration of a leadership development programme means that human-resources staff in-house can concentrate on company branding, leadership, the management of high-potential employees and planning for the future, then the company can find itself in a position where the talent is seeking the company, rather than the company seeking the talent.”

A degree of informal outsourcing has been going on in leadership development and training for years. This has always given human-resources departments the advantage of variety: being able to select courses or providers that they think offer the best training and the best deals.

Handing over the whole training and leadership development process to a single outsourcer risks losing that advantage.

But the other argument is that a single company with oversight of a company’s whole training policy can provide a much more efficient, rationalised service.

Outsourcing companies are reluctant to discuss details of their charges, but in terms of cash savings Arinso claims to be able to cut the human-resources budget of a company by as much as 25% in a year. For a company with 80,000 employees, with an average human-resources budget of about £100m, that would translate into a £25m saving, but the benefits go much further than the bottom line of the annual accounts.

“We can reduce the cost of training, but we can also improve its quality,” said Vandenberghe. “One of our clients was Ikea, and it said that all the cost savings would be reinvested in better leadership programmes, courses, training, and development of staff.

“That’s the smartest approach: maximising the investment in the company’s own workforce.”

BRINGING IN A FRESH PERSPECTIVE

FUJITSU SERVICES called in the consultant SHL to organise a training-development programme for 160 of its managers last September.

The workplace-based programme involved assessing people’s strengths and weaknesses and aimed to bring together people from different parts of the organisation to improve the way they worked together and responded to change. After seven months, Brenton Clark, Fujitsu Services’ people development manager, believes that the programme has given Fujitsu a much larger pool of managers ready for the next step up.

He said: ‘Sometimes things can be limited within an organisation by what is considered normal. SHL brought in fresh thinking.’

SHL’s principal consultant, John Pope, said objectivity was a key factor. ‘It’s sometimes difficult for leaders to be objective about people in their own organisation,’ he said.

And the cost? About £100,000, or less than £700 per manager.

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