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December 2008, Vol. 131, No. 12
Business Processes and Business Functions: a new way of looking at employment
Sharon P. Brown
When employers decide to add or eliminate jobs, they are sometimes guided by larger choices to add or eliminate entire classes of activity—business functions—within the company. What may appear to be incremental hiring may in fact be the gradual buildup of a new business function, such as an in-house information technology development department. Or, instead, a mass layoff may stem from a decision to outsource a specific business function, such as human resources management, logistics, janitorial maintenance, or even manufacturing. Deciding which business functions to source to outside vendors and which to perform in-house is a critical part of corporate strategy, as companies seek to become more efficient and competitive or address changes in demand for outputs or supply of inputs.
In an attempt to shed more light on how workplaces and industries are changing, a classification system has been developed that describes basic business processes of the firm and the business functions that are associated with them. This system is now being used in the Mass Layoff Statistics (MLS) program to identify the functions and processes involved in job losses from extended mass layoffs. The system, which is now providing new information on the nature of this type of change in establishments and industries, can be applied equally to other measures of employment, including the current employment structure of a firm, organizational expansions and job growth, and the geographic location of outsourced work. Called Business Processes and Business Functions, the system is based on an approach that is a synthesis derived from existing literature, models of firms’ activities, current research on outsourcing and offshoring, the results of a feasibility study of business functions conducted by the BLS MLS program, and the ongoing collection of the relevant information throughout the Nation by the program.
This excerpt is from an article published in the December 2008 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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Mass layoff data indicate outsourcing and offshoring work.—Aug. 2005.
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