Yesterday’s Advisor offered consultant Amy Letke’s guidance for HR managers considering outsourcing HR functions. Today, how to select your outsourcing vendor, plus an introduction to the everything-HR-in-one-place website, HR.BLR.com®.
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Letke, who is founder and CEO of Integrity HR 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 legal 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 to approve 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 HR outsourcing 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.
Dealing with the hassles—and pleasures—of outsourcing; in HR, if it’s not one thing, it’s another. Like FMLA intermittent leave, overtime hassles, ADA accommodation, and then on top of that, whatever the agencies and courts throw in your way.
You need a go-to resource, and our editors recommend the “everything-HR-in-one website,” HR.BLR.com®. As an example of what you will find, here are some policy recommendations concerning e-mail, excerpted from a sample policy on the website:
Privacy. The director of information services can override any individual password and thus has access to all e-mail messages in order to ensure compliance with company policy. This means that employees do not have an expectation of privacy in their company e-mail or any other information stored or accessed on company computers.
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E-mail review. All e-mail is subject to review by management. Your use of the e-mail system grants consent to the review of any of the messages to or from you in the system in printed form or in any other medium.
Solicitation. In line with our general policy, e-mail must not be used to solicit for outside business ventures, personal parties, social meetings, charities, membership in any organization, political causes, religious causes, or other matters not connected to the company’s business.
We should point out that this is just one of hundreds of sample policies on the site. (You’ll also find analyses of laws and issues, job descriptions, and complete training materials for hundreds of HR topics.)
You can examine the entire HR.BLR.com® program free of any cost or commitment. It’s quite remarkable—30 years of accumulated HR knowledge, tools, and skills gathered in one place and accessible at the click of a mouse.
What’s more, we’ll supply a free downloadable copy of our special report, Critical HR Recordkeeping—From Hiring to Termination, just for looking at HR.BLR.com. If you’d like to try it at absolutely no cost or obligation to continue (and get the special report, no matter what you decide), go here.