Joyce Maroney

Deciding to outsource all or a portion of your company's HR services can be a bit like getting married: You elect to give up some of your independence and share responsibilities with someone else. If you are well prepared and well suited for the partnership, it can be a blissful coexistence. If not, you may rue the day you said, "I do.<br /><br />Just as successful marriages tend to share certain characteristics, so do successful outsourcing engagements. Asking yourself a few key questions as you contemplate an outsourcing partnership can help you predict its success. Has your company had any experience with a shared service model? Are employees willing to conform to the process changes needed to make the arrangement work? Is outsourcing aligned with your company's strategic objectives? Is a senior executive or executive team being held accountable for the successor failureof an outsourced activity? Before choosing to outsource your HR activities, be sure to honestly answer these questions.<br /><br />Common drivers for companies choosing to outsource include the need for expert focus on a particular function, a desire to achieve cost savings, and/or the implementation of new HR technology, according to a 2003 study by AMR Research. Typically, the activities that are the most promising candidates for successful outsourcing are those that are comprised of high volumes of rules driven transactions such as payroll or benefits administration. Less transactional, but similarly reproducible areas include recruitment and training. Outsourcing activities like these can free up HR staff to perform strategic work that is less about managing a process and more about adding expert value to the business.<br /><br />Whether you are contemplating outsourcing your HR services to achieve better outcomes, better practices, or cost savings, choosing a vendor who will be the right fit with your company's culture is critically important. In making this decision, consider the following steps to help ensure a winning partnership.<br /><strong><br /><br />Courtship: get to know each other</strong><br />Minimize the risk of a disappointing outsourcing experience by having an appropriate and thorough "courtship before making any commitments. Conduct due diligence by getting to know each other's cultureincluding an in-depth look at your own companyto gauge if you are compatible and if a successful joint venture is likely. Can you peacefully and happily co-exist? Do you have similar expectations and shared goals? Can you have productive direct conversations with each other when there are problems?<br /><br />Get to know each other's "friends by checking out the outsourcing vendor's references. Do you like the company they keep? Expect the vendor to check out your company, too. Be forthcoming about how your company operates, including its strengths and areas for improvement. Take your time during this "courtship, and don't rush into a relationship that neither of you is well prepared for.<br /><br /><br /><strong>Engagement: discovery and accommodation</strong><br />Once you decide to forge ahead with outsourcing HR services and believe you have found the right partner, create a service level agreement (SLA) to formally acknowledge and document the details of your impending partnership. The SLA is the behavioral contract, the embodiment of the commitment between your company and your outsourcing partner. Both parties must be willing to live up to this contract to achieve the outcomes you seek.<br /><br />The discovery process during the creation of the SLA is no time to be coy. Complete and full disclosure about your company and its operations is critical to the success of the project, as is understanding the true capabilities of your HR partner. As your outsourcing partner digs deeper into the mechanics of your business to determine exactly how its solution will interlock with your business systems, some surprises may emerge. You may discover, for example, that you don't have an automated in-house system that will provide your partner with vital workforce information required, or your outsourcing partner may need IT support to get full access to necessary resources within your firewall. <br /><br />While you each need to be flexible to accommodate discoveries, don't expect an outsourcing vendor to significantly change its proven processes to fit your company's idiosyncrasies, as such changes may reduce expected cost savings. Those proven processes are generally why you've selected the vendor in the first place. <br /><br />Include a responsibilities list and measurable objectives in the SLA so you can quantify the expectations of both parties. Also, make your outsourcing partner aware of potential plans that may affect terms of the SLA, such as expanding your business into international markets or increasing the size of your workforce. Allow for some flexibility in the SLA to address the evolution of your business and business systems.<br /><br /><br /><strong>Getting Hitched: communication eases problems</strong><br />Ongoing communication with your HR outsourcing partner throughout the implementation and launch of the project can improve the odds of a successful partnership. Sometimes implementation isn't everything you expected it would be and, as in many relationships, disillusionment sets in after the "honeymoon. There may be occasional lapses in services support or technical problems that need correcting. Don't let problems fester. Share your concerns, civilly.<br /><br />You also might reduce or avoid an unhappy period by first conducting a controlled pilot in one region in the business unit. Use the opportunity to refine the approach if needed, work out the kinks, and articulate expectations that you may not have expressed previously.<br /><br />Your respective "families can play a key role in reducing or working through problems. Utilize the skills of senior executives who are charged with the success of the partnership to work through any rough spots. Their seasoned executive perspective can pull the team through the predictable rough spots that accompany necessary process and business changes.<br /><br /><br /><strong>Potential Partnership Issues: people, process, systems</strong><br />While outsourcing may be good for the company overall, it may affect individual employees in challenging ways. Some positions may be eliminated or transferred to the outsourcing partner. Inevitably, people affected by the change will generally be asked to do their work in different ways. While some employees may nod their heads in agreement with the executive who outlines the shift to outsourcing HR services, these "family members may not do their best to make the project successful or might actively undermine or sabotage a project to diminish its success or slow the change.<br /><br />Once the SLA details are finalized and the agreement is blessed by both parties, publicly endorse your outsourcing partner within your company. Consider announcing project victories and recognizing key stakeholders in your company newsletter or a project-specific publication. Reinforce the message that your outsourcing partner is an expert on managing the outsourced services and understands and shares your company's goals for this area.<br /><br />Moving from an in-house service to a shared service will create process changes. Good change management practice dictates including all stakeholders involved in the discussion and implementation of the new process. Yet, remember that an outsourced arrangement often starts to unravel when a company wants to negotiate or change how a vendor's process is completed. The efficiencies that the vendor has built into the process can disappear as the process is picked apart and altered. <br /><br /><strong><br />Monitor Your Relationship: measure results and satisfaction</strong><br />As your outsourcing partnership progresses, be disciplined about measuring the results defined in the service level agreement, whether this is weekly, monthly or quarterly. Report these findings to key members of both organizations, assume mutual accountability for the results, and commit to making improvements where needed. <br /><br />Collect information on the satisfaction of internal users of the outsourced HR service. Also monitor your company's changing business circumstances, which may not be within the scope of the original SLA. Keep your outsourcing partner apprised of these changes. It is fair to request changes in a service and also fair for your partner to request changes in pricing. <br /><br />As the months pass and you move past your first anniversary, don't take your relationship for granted. Executives and key stakeholders in both organizations should remain engaged. While you may not share weekly or monthly updates, continue to plan updates to monitor the success of your partnership and keep disillusionment at bay.<br /><br />Outsourcing partnerships can continue successfully for years and investing the time and effort to create a successful HR outsourcing partnership can provide measurable benefits, if you are ready to walk down that aisle together.