A Case Study: What Drove CarMax Auto Superstores to Outsource its HR | Article

Rolls RoyceCarMax Auto Superstores, Inc. was a Circuit City start-up. When the parent decided to spin off its successful offspring, the executives at CarMax faced an HR challenge. Circuit City had handled all its HR needs; now CarMax was on its own.

CarMax uses PeopleSoft for its financial reporting. Executives had to decide whether to outsource or keep the process in-house. That entailed making the investment in equipment, software, and IT employees who were not already on staff so it could activate the PeopleSoft HR module. Paul Pietrowksi, Manager, HR Information Systems, says the automobile retailer hired a consultant to determine those in-house costs so it could make an informed decision.

Pietrowski says the leadership team considered whether they wanted to focus on things every company does instead of processes that were CarMax-specific. Paying people is important, he notes, but it doesn’t affect the strategic direction of the company like hiring the right people. “We decided we didn’t want to distract our corporate personnel with these routine transactions,” the CarMax manager says.

The leadership also compared the scope of services. He says to drive costs down, CarMax would have made the offering “as skinny as possible” and meet the minimum HRIS requirements. But its vendor partner, ADP, offered a much broader scope of services. For example, ADP digitally records all calls to its call center, which it then tracks throughout the process. “We wouldn’t have gone to that extent,” Pietrowski says. But the leadership is happy it has the tracking because it improves its employee satisfaction ratings. “When it came to services, the price/value ratio leaned toward outsourcing,” Pietrowski says.

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