How insourcing can improve productivity

Given the difficult conditions they face, it is easy to see why many management teams in the public and private sectors consider reducing outgoings while attempting to retain their strategic agility, quality and service levels. But slashing budgets and cutting expenditure without disrupting the business or harming its growth potential is a big challenge.

One approach that some businesses take is to outsource non-core activities – a strategy that the bosses of Oslo University Hospital (OUH) implemented between 2000 and 2010 when looking to cut their textile cleaning facility’s costs. But while working with EY two years ago, management decided to try something new: insourcing.

The EY team’s experience of working with several large organizations to improve performance was applied to the OUH project. The EY team understood that by improving the cleaning service team’s productivity, management could cut the workload, relieve the pressure on staff and boost morale. This approach would also give the cleaners more time to complete their work, removing any need to outsource services to third parties.

From the outset, the EY team focused on improving productivity, making cost savings and giving staff morale a much-needed boost. To achieve their objective, they would need to breathe new life into an institute that had struggled since forming a year earlier.

Once the six-month operation was complete, EY asked each member of the cleaning services team to fill out a questionnaire. Of the 90% who responded, 74% said they were more motivated than before the project started.

The strategy clearly paid off. Motivation is high, the staff are happy, efficiency has improved and productivity is up, while costs are down. What would most companies, in today’s challenging global market, give to achieve similar results?

The complete article was written by:

  • Bård Høyland Karlsen
    Executive Director, Advisory, EY, Norway
  • Kjetil Helle
    Senior Manager, Advisory - Performance Improvement, EY, Norway

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