In today’s fast-paced economy where organisations are striving towards productivity and cost-efficiency, organisations are becoming increasingly reliant on external HR vendors to enhance their HR processes. Third-party HR vendors span across various services that caters to the numerous industries, ranging from recruitment, talent planning, payroll processing services, employee benefits and many more. Outsourcing your HR operations can help your organisation cut costs in tough economic times, provided you outsource to the right vendor and maximising their services.
Appropriate vendor management practices provide only the necessary information at the right time to allow a vendor to serve your needs better. One of the goals of vendor management is to gain the commitment of your vendors to assist and support the HR operations of your business. On the other hand, the vendor is expecting a certain level of commitment from you. It does not mean that you should blindly accept the prices they provide.
Do Your Due Research
Good vendor management starts with choosing the right HR vendor for your organisation. If you do not fully understand the reasons for outsourcing, selecting the appropriate HR vendor can come across as a lengthy and painful process as different managements will have conflicting opinions. Analyse your HR requirements and areas for improvements to help narrow down the selection of HR vendors.
Open Communication
An open and transparent communication with your HR vendor may help them to understand and serve your business needs better. This does not necessarily translate to providing them with confidential employees’ information or payroll records. Instead, share with them your business priorities and goals or any other changes in management. It is critical to consider what type of information may help your HR vendor come up with the appropriate solutions to ensure that your HR processes run smoothly.
Value Over Dollar
While price is typically a main consideration when deciding on a HR vendor, it should not be the main driving factor. Instead, HR practitioners should focus on the quality and the value provided by the HR vendors. Additionally, the focus on the price tag should not be a reason to constantly change HR vendors simply for the sake of saving on costs. This can result in poor delivery of services as additional time is wasted on communicating the HR needs to new vendors each time.
Your vendor is in business to make money too. Constantly leaning on them to cut cost will cause the quality to suffer, or they will go out of business. Part of vendor management is to contribute knowledge or resources that may help the vendor better serve you. Asking questions of your vendors will help you understand their side of the business and build a better relationship between the two of you.
Vendor management is more than getting the lowest price. Most often the lowest price also brings the lowest quality. Vendor management will focus quality for the money that is paid. In other words: value! You should be willing to pay more to receive better quality. If the vendor is serious about the quality they deliver, they won’t have a problem specifying the quality details in the contract.
Maintain the Relationship Ties
Your relationship with your main vendor is undoubtedly the most important. However, this does not mean that you should ignore the other HR vendors. Always ensure the constant communication with them to maintain the relationship. This also allows you to be kept abreast of any additional services that they might provide should your HR needs suddenly change. For example, when you are expanding to a new country, you will need to local payroll expertise, registration with the statutory boards and setting up your payroll operations. If your payroll is outsourced to a regional payroll provider, you can easily reach out to your vendor. They can help on your new country payroll operations, saving you time and giving you peace of mind.
The Vendors’ Perspective
Remember that you are not the only client which the HR vendor is servicing. These companies are likely to have several clients with many urgent requests at hand. Thus, it is imperative to understand from their perspective in order to maintain the best relationship possible. If you are constantly making unreasonable demands and having a negative impact on the vendor’s business, they may very well choose to stop providing you with their services which in turn, can hurt your organisation.
HR vendor management prioritizes long-term relationships over short-term gains and marginal cost savings. Constantly changing vendors to save a penny here or there will cost more money in the long run and will impact quality. Other benefits of a long-term relationship include trust, preferential treatment and access to insider or expert knowledge.
Ultimately, good vendor management stems from a solid communication and relationship between both the HR vendor and the organisation. While HR practitioners have to be clear and open on their HR requirements and needs, HR vendors have to ask and raise questions to better understand the business needs. A proactive and open communication between both parties can enable critical issues to be addressed and solved quickly.
