The Forgotten HRO Capabilities
It is no longer enough to just talk about HRO lowering administrative costs and burdens. The lead focus is now on how HRO and a particular vendor’s services will help make the buyer’s business better and HR more effective.
As soon as a business grows in size, it grows in complexity. And HR services are, in and of themselves, unexpectedly complex and dynamic – a lesson learned the hard and costly way by many a client and HRO provider. Thus, in addition to defining the service solutions and holding the pricing discussions, it is important to bring to light both the provider’s and the buyer’s capabilities to manage complexity. These deeper capabilities can make or break long-term results achievements, and make the partnership a binding one or a bonding one.
Most HR organizations are networks of services, some that cross internal support services organizational lines and others that involve multiple suppliers and start and end in the business units. Even with a new multi-process HR outsourcing (MPHRO) engagement, it is unlikely that all existing suppliers and technologies will be displaced. And a best-of-breed approach can actually enlarge the network, requiring the client to manage the services integration and vendors, or separately pay one provider for the integration and vendor management.
Complexity management capabilities such as governance, program management, project management, change management and supply chain management become critical enablers. No matter how latest and greatest the technology, or how compelling the pricing, it must all work in the ever changing world of HR and for businesses still facing uncertainty.
Let’s focus on one of the sometimes forgotten HRP capabilities – supply chain management. Vendor management is often listed somewhere in the benefits statements or addressed briefly in the RFP. The level of integration and coordination needed across a complex network of internal and external suppliers is major and can be a real bottleneck. Every interface is a service break point; every vendor requires communications, coordination and contracts. Just ask Boeing, which for years has been struggling with delays and burdened by hundreds of millions of dollars in cost overruns due to a complex and uncontrolled supply chain for its largest new planes.
What happens when changes, expected or unexpected, that cross boundaries of the HR network occur? For example, a change to the benefits plans requires changes to multiple systems including payroll, IT, the network of benefits providers, knowledge databases, etc. Who will handle what? What tools and governance systems will be used? Does the provider’s approach sound reactive, or proactive?
When I was with AT&T as contract manager for a large MPHRO deal, I remember the unexpected benefit of our vendor actually managing other vendors and suppliers, and coordinating with our internal IT, treasury and security departments. AT&T HR and my group were deeply involved as well, and together we were able to successfully implement more projects and changes on time and within our budget than ever before.
Buyers, really dig for complexity management proof points. Providers, showcase your competitive advantages!
Linda Merritt, Research Director, HRO, NelsonHall
Tags: hr outsourcing, HR services, hro, HRO change management, HRO complexity, HRO complexity management, HRO contracts, HRO governance, HRO program management, HRO project management, HRO providers, HRO supply chain management, MPHRO, multi-process hro, nelsonhallYou can comment below, or link to this permanent URL from your own site.