Author: Rhonda Marcucci
Purchasing HR technology and outsourcing services from a third-party provider allows you to focus on your core business and leave many tasks (automation, compliance, reporting, engagement, etc.) to those with the expertise to do what they do best. However, anytime you shift responsibility to a third-party provider, there is an inherent risk of things not going as well as you hoped. For the best possible outcomes, employers should actively govern their relationship with HR technology service providers. That said, not all relationships warrant the time and effort required to govern them, e.g., tech-only or utility tools that, if they went away tomorrow, there would be no serious repercussions. Where service is part of the agreement, however, good governance will almost always pay off.
Use the following checklist to guide you as you govern the relationship with your HR technology providers.
- Define (upfront and in writing) what success looks like, share it with the HR technology service provider, and keep referring to it. Sometimes clients become unhappy with a solution because their expectation for what the tool will do has changed since the initial purchase, but the software didn’t. The onus is on you to find a different product. When your definition of success changes, share it with the HR technology service provider to make sure they can deliver.
- Define your risk. Once you’ve defined success, define the associated risk if something doesn’t work. What is the risk to my job if I’m in charge of benefits, and the CEO’s husband can’t fill his prescription? Or what is the associated risk if a recently added dependent doesn’t show in the system during a 3 am visit to the emergency room? There is a direct correlation between the value of governing a relationship and the associated risk. Accordingly, some relationships will warrant more governance than others.
- Communicate. Too often, we get brought in to resolve an employer’s problems with their HR technology provider only to discover that the provider was totally unaware of the issues. While service providers have a responsibility to inquire periodically, they should never be that blindsided. Let your HR technology service provider know you’re unhappy and why. Give them a chance to make things right.
- Meet formally at least once a year. There’s value to looking at your HR technology service provider in the eye to discuss how things are working. Talk about what has changed—growth, employee needs, service expectations, etc. Is your payroll system now managing double the employees compared to when you bought the system? Are you thinking about providing decision support for open enrollment? Have customer service response times slowed? Use this time to ask your HR technology service provider about product innovations, new offerings and evolutions.
- Make good use of regular touch-base meetings or calls. Be strategic about your use of this time. Bring specific examples of concerns (screenshots) and ask the HR technology service provider (in advance) to bring open issue logs, call center stats, etc.
- Involve the right people in calls/meetings. Typically, you want to include individuals who have decision-making authority related to technology-related processes and strategy. They should understand core processes and the user experience, but also be able to see the big picture and not be too “in the weeds.”
- Understand the roles and responsibilities (other players to involve) both internally and externally. HR may be managing the relationship with your benefits administration provider, but payroll has a vested interest. Bring in allied groups, as appropriate, for check-ins and issue-specific meetings. Who should be interfacing with whom, between the two parties? When the interface doesn’t work, what’s the escalation process? Outline clearly the answers to both questions and reconfirm at each formal meeting.
- Know your part and take responsibility when you are at fault. Recognize that sometimes YOU will be the problem. Someone on your team didn’t participate in training, follow instructions or adhere to an agreed-upon process. Acknowledge your role in any given situation and ask the provider to do the same.
- Set clear expectations for response times. This is best done mutually with your provider, based on the severity of the problem, e.g., a “severity 1” problem should be addressed within two hours while a “severity 2” problem might be 24 hours. There may be general industry guidance available; ask your HR technology service provider. Also, agree on what triggers service escalation. Most important for response times is a culture fit. If the providers’ culture is “we’ll get to it when we do,” and yours is “get it done yesterday,” then more governance will be needed (or the provider may be a poor fit).
- Insist on root cause analysis. When issues arise, insist on identifying the cause (no matter what side it was on). Was it technical or non-technical? While it is tempting to accept a quick and easy fix and move on, it’s important to resolve the issue at the source to avoid reoccurrence and the frustration that builds with multiple reoccurrences.
- Embrace your role as “control central.” You are most likely working with multiple HR technology service providers whose products must work together. You have a contract with each one, but there is no contractual relationship between the various providers. Don’t assume the providers will engage and communicate with each other to address issues and efficiencies; this is part of your governance responsibility.
- Try marriage counseling before getting divorced. In our experience, employers are too quick to make a change when things go wrong. Keep in mind that there is typically a lot of pain and cost associated with changing platforms/providers. Enroll a third party to help with communication and resolution before you decide to change HR technology service providers. Don’t wait until you have irreconcilable differences. Good governance will help avoid getting to this point.
The governance of HR technology and service outsourcing relationships is about realizing a mutually defined set of goals, which, when achieved, is a big win-win. However, don’t confuse governance with management. Governance is about authority—how decisions are made, who gets to make them, and who’s accountable for the outcomes. Management is about the responsibility for delivering to meet the expectations outlined by the governance process. Both are important for successful outcomes, but investing in good governance on the front end will make day-to-day management much easier and pay you back in time and productivity.
Contact us today if you’d like assistance governing your HR technology provider relationships. Or, if it’s time to move on, we can help you identify a new solution to support your organization’s needs, culture and budget.
