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Why David Coward outsourced 85 percent of his work to bring Royal Victoria Regional Health’s HR department into the new millennium

If you’re applying for a job and they ask you how you would handle a certain scenario, chances are you’re going to encounter that scenario if you’re offered the job.

When David Coward presented his revolutionary plan as part of his application to be the vice president and chief of human resources officer at Royal Victoria Regional Health, he didn’t realize he would be putting his plan into action as soon as he got the job.

When Coward applied for the position in 1996, the challenge he was given was how to update a traditional HR department into a more modern HR department. Monica Belcourt, a professor at York University in Toronto, inspired Coward. Belcourt said that only 5 percent of what most HR departments do is strategic, 10 percent is knowledge based, and the other 85 percent is purely transactional. So Coward made the case for outsourcing the 85 percent. Here, Coward shares with us how that project has propelled his career and has transformed Royal Victoria for the better.

How did the idea for outsourcing your transactional work come about?
Back in late 1996, when I was being interviewed for this position, the panel gave me a scenario: What would you do to take a fairly traditional personnel-type HR department and prepare them for the new millennium? Include the fact that we will be expanding and adding 1,000 new people over three years on a base of 1,800 staff. Little did I know that was actually the case at the hospital.

So I did a little bit of research, and the interesting thing about transactional work is it doesn’t really matter who does it. It’s how it’s done. Most people don’t know who creates their actual paycheque. What they do know is whether the pay is right or wrong. Accuracy in pay is a huge deal in an industry that’s heavily unionized. There are different premiums, overtime, callback pay, etc., so it’s fairly complex compared to most businesses.

So what was your solution?
The presentation I made was that we would build on the top 15 percent. The strategic part was about planning the expansion and our systems and programming for the new hospital or the new health center. The 10 percent that was knowledge based was really about our collective agreement and our culture building: making sure we had the right people on site who could work and understand our culture, understand the needs of our patients and our staff, and flow that through into our programming from an HR department and also affect our collective agreements.

The other piece didn’t matter. I just needed somebody who was going to do a really good job of understanding our complex payroll and making sure our different benefits plans were properly administered. We selected the vendor, which is TELUS Sourcing Solutions (TSSI) and they do a lot of this work in Canada, primarily in the western provinces.

Why did you decide to use TSSI over other vendors?
We were really looking for a one-stop shopping system. We had a small department, we were new to the outsourcing, and the idea of turning our HR department into a contract management department with three or four vendors was something I didn’t think met with our needs. TSSI understood that. They have one other hospital contract in Ontario, and they provided everything we asked for.

What were some of the challenges you came across in shifting all this over to another company?
The biggest hurdle was fear and trust. Staff and the unions are very suspicious of external partners who they feel are trying to make a dollar off of them. We answered that with the balance in the risk of the privacy issues. TSSI had to demonstrate and provide us information—both for our internal privacy officer at the hospital as well as for our staff—to be reassured. The negative with going outsourced is you’re opening your doors to somebody else. You’re opening your firewalls to someone else and that causes some anxiety. The benefit is the technical capabilities, the storage capabilities, back up and disaster recovery capabilities are so much greater that that became less of an issue.

What are some of the other benefits you’ve seen to outsourcing your transactional work?
There are operational benefits, but greater than that, there are strategic and corporate benefits. During this period of time, we had all those savings, but we focused our HR team on change management and focused on culture. So we’ve been working very closely with the Studer Group on building a better culture and we knew the best way to make sure you keep the people you hire is to have a culture where they want to work. It’s a much better investment in HR personnel and HR professionals to have them focused on culture and strategy, and allow experts in payroll and benefits to process your transactions.