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What should a company look for in an HR outsourcing partner?

What should a company look for in an HR outsourcing partner?

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Jane Hendricks

Before you start evaluating potential HR outsourcing partners, take stock of the role you want your partner to play. This process should involve all relevant stakeholders -- executives, managers, IT, finance and the employees who will be engaging with the outsourcing provider directly. This step will provide a list of requirements you can use in the vetting process, and help mitigate organizational resistance.

Once the parameters of the engagement are understood, look for a partner that provides expertise where you need it most, fits your culture best and demonstrates a commitment to transparency.

Expertise: Your partner should have specialized expertise in areas that are unique to your business. For example, if your organization uses temporary and contract workers, make sure your partner has that capability. Expertise should be measured thorough references. And don't rely solely on the handful the outsourcer provides -- tap into your own network, industry networks and the outsourcer's network.

Cultural fit: The fear of cultural deterioration is a major obstacle to outsourcing. Typically, cultural deterioration begins when employees believe the HR outsourcing provider is working against them. To avoid this, document expectations at every touch point between the outsourcer and the organization. For example: How, when and for what do employees receive direct support? What are the content, frequency and format of reports to the business? How are system outages and maintenance windows handled? Establish communication protocols at every touch point that fit your business, and look for partners that support your unique communication channels and style. Examine service-level agreements against your own expectations rather than against benchmarks, and look for partners that not only make the right promises, but also address what happens when promises are broken.

Transparency: A commitment to transparency starting at the beginning of negotiations and extending throughout the duration of the relationship protects your bottom line. Look for partners that are up-front about hidden costs, such as typical vendor management costs, travel, license transfer fees and out-of-scope requests. Transparency also extends to business stability. Your potential partner should demonstrate a roadmap for business continuity, and provide guarantees that will leave you whole should there be a market disruption. After all, your partner will have your data. Make sure your HR outsourcing partner has a plan to protect your data, recover it in the event of a breach and provide it to you at any time in a format that you can understand.

About the author:
Jane Hendricks is principal analyst at Nucleus Research Inc., overseeing primary investigative research on technologies that transform human capital practices at every stage of the employee lifecycle. Follow her on Twitter @jane_hendricks and read her research at

This was first published in September 2013

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