Letke, who is founder and CEO of Integrity HR, Inc., in Louisville, Kentucky, offered her tips at BLR’s Strategic HR Leadership Summit in Scottsdale, Arizona.
How Do You Identify Providers/Partners/Vendors?
There are a number of helpful sources for finding outsourcing options, says Letke, including:
- Referrals, networking, colleagues
- Newspapers and magazines (HRO Today)
- Internet
- Mailings
- Professional associations
- Trade shows
As you evaluate potential partners, consider the following:
- Request for information (RFI)
- Request for proposal (RFP)
- Worksite location and suitability
- References
- Service guarantee/Cost savings
- Contract (You want 1 year, your vendor will want 3 years, says Letke)
- List your “Must Haves” and your “Like to Haves.”
- Be sure you understand what the relationship will be like.
- Clarify who your contact(s) will be.
- Map out how servicing will work.
- Determine what performance metrics will be used.
- Specify what sort of transition help will be provided.
Selecting a Vendor
Beware of “one size fits all” vendors, says Letke. That can be a problem. You’d like a vendor that offers:
- Proven performance
- Service level guarantees
- Flexible contract options
- Cost savings guarantees
- Recommendations from other organizations
- Compatible corporate culture
- HR and/or process expertise
- Leading technology
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Finalizing the Contract
Letke suggests that employers consider the following as you finalize your contract:
- Put it all in writing.
- Establish clear expectations.
- Document deliverables for all elements of the relationship.
- Review all legal documents with counsel.
Specifications of the Contract:
- Exact beginning and ending dates of the contract
- Financial penalties for early termination
- Parties to the contract
- Provision for additions and deletions (in case of acquisitions or divestitures)
- Names of all subcontractors and the right of approval for those introduced later
- Legal protections for you
- Fees
- Your data’s security
- Contract evaluation provisions
- Contingency plans
- Audits
- Services to be performed
- Details for support services
- Escalation process and dispute management
Performance Standards
Be sure that the performance standards you set are meaningful for your organization, says Letke. Reinforce standards with “at-risk” fees or rebates.
Who Should Manage Outsourcing?
Most human resources outsourcing (HRO) relationships are managed by the HR manager, says Letke. However, in some cases this role is taken by the CFO or the head of purchasing.
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