In a rapidly changing market, HRO finds some common standards.
HRIS is typically the most vital and consistent element when creating process standards for HRO. As discussed in last months column, the introduction of broad-scope outsourcing into HR is gently beginning to promote process standards between groups of companies via simple economic decisions. And although no universal process standards are being driven by any one large, overreaching committee, each supplier is beginning to subtly suggest best operating practice via their pricing policies and service level agreements (SLAs).
So how does the HRIS come into play and what does it mean to an HRO buyer? When considering HRO, every HR practice must be reviewed with a dispassionate eye toward determining whether it helps the organization secure and retain the most talented people to drive the business. The objective of the HRIS is to codify the processes of an HR organization. By doing so, the organization articulates what its HR policies are and provides guidance on how they are executed.
This happens in very subtle cases from how data is entered and manipulated, relative to how users interact with the system and the way information is reported to a variety of users. Some users have very high expectations for HRIS and expect the ability to extract and enhance information via sophisticated data mining capabilities. The HRIS must be able to identify trends, highlight strengths and weaknesses, and compare results at an organizational, departmental, or individual level within the entire buyer culture.
At this point, the lack of overriding standards within HRO becomes a factor in the growing relationship between buyer and supplier. The emerging informal rubrics become unique to the relationship that is being developed and the overall self-fulfilling standards within the HRO industry. For as HRO suppliers expand their customer base, the standards produced by individual SLAs evolve as more clients are added. This sum of the parts process results in the evolution of an overriding series of standards. Over time, they become self-actualized: serving not only as a foundation for future HRO relationships, but also producing a livingbreathing tradition for existing HRO relationships.
As the HRO industry evolves, we see the supplier community assuming a couple of different generalized strategies as they become more definitive in the build-out of their capabilities. Suppliers must decide where to make their investments in the HRIS system and their strategies will take one of three different basic flavors (See Figure 1). Each of the three models assumes a different level of customization for the buyer across a wide variety of issues including process standards.
Buyers should carefully examine not just the HRIS and the SLAs during the contracting process, but also the operating standards that the supplier will use to accomplish the tasks. Over time, the Darwinian principle of survival of the fittest applies as the process of natural selection dictates best practice and the suppliers that are most able to deliver.
Today, buyers should be certain they ask the right questions and constantly ask themselves whether their process is truly unique and requires customization, or if they are better served by moving to the new set of standard industry processes that are emerging in HRO.