Common HR and Payroll Outsourcing mistakes: Insufficient partner evaluation
Payroll and HR administration is strategic, yet it is too often treated as a commodity. Some companies invest little time when selecting service providers, while others may not use the right criteria. This may be why only 25% of businesses are happy with the solutions they have in place, according to The Hackett Group’s 2013 Global Payroll Performance Study. Selecting an outsourcing partner is a complex task where various factors and criteria need to be considered to make the right choice for the business, yet the EY Global Payroll Survey (2013) found that close to 40% of companies surveyed were so disillusioned with their existing outsourcing partner that they were considering switching.
SERVICE AND PARTNERSHIP NOT A ONE-OFF PURCHASE
Much like buying a new car from a dealership, you simply do not buy a metal box with four wheels, but you also purchase future servicing, reliability, customer service, fuel consumption, maintenance, insurance, roadside recovery and so on. Payroll and HR administration outsourcing arrangements are complex, and the services offered by your partner will reflect this. Software and back office solutions can transform an organisation’s HR operations, however, this is not part of a simple one-off purchase, but instead an on going relationship and a long-term commitment.
Your provider should partner with your business to offer innovative and flexible solutions that meet your business priorities as they change, expand and adapt to market pressures. Ben Trowbridge, Chairman at Outsourcing Center writes in BPOOutcomes.com (2013), “detailed pre-designed specification of requirements, arms-length dealings with multiple potential suppliers and old-fashioned adversarial contract negotiations… may be fine (if a bit old-fashioned) when buying certain types of commodity products, but cannot work when buying complex services which will be delivered over a period of years to a changing client in an ever-changing world.”
“Only 25% of businesses are happy with the solutions they have in place”
A 2009 survey of 250 senior HR professionals found that the three key determinants of an outsourcing provider’s quality were accuracy (71%), general level of service (68%) and reliability (68%). Yet 44% felt they didn’t get that from their current provider, believing they did not understand their needs.
“Key determinants of an outsourcing provider’s quality were accuracy (71%), general level of service (68%) and reliability (68%).”
Finding a suitable partner can be straight-forward however, the following need to be considered:
1. Proven HR expertise
2. Long-term service experience
3. Reliable financial and IT security
4. IT resources and HR innovation capacities
5. Organisation dedicated to service
6. International presence
HR outsourcing is a strategic and a long term decision. Only by selecting the right partner can you ensure BPO is a success for your business both now and in the years to come.
Written by: Connect@ADP team
Originally published July 18 2014