As consultant, accountant, and guardian angel, sourcing advisors play an integral role in structuring the right outsourcing deal for HRO buyers. With the provider landscape growing increasingly complex, advisors are becoming more important than ever.
So, you’ve decided to outsource your human resource function. Moving to a broad scope, multi-process HR outsourcing environment is one of the biggest strategic decisions you’ll ever make. You’re charged with developing a business case for your senior management team and providing a detailed understanding of the costs and benefits involved and solid reasons for choosing a specific provider. And that’s just the beginning.
When you start the HRO implementation process, the business case and the cost/benefit analysis can get lost in the noise generated by an employee base and HR community still trying to align with the grand vision.
Where do you start? How do you ensure your business case is sound? How do you learn about the top providers, the myriad of offers, what constitutes fair pricing, the best match for your capabilities and culture? Sourcing advisors can help you navigate what has become a complex, fast-changing landscape. They can help you build a business case, ensure you’re meeting your regulatory and fiduciary obligations, and guide you through the process, all while keeping your needs top-of-mind.
The HR outsourcing industry continues to experience tremendous growth, and the provider landscape is shifting. These dynamics lead many decision-makers to enlist the help of sourcing advisors, instead of working solely with internal sourcing teams. HRO providers such as Hewitt Associates have worked with sourcing advisors for years as they guide present and future clients through the HR outsourcing process, and companies such as the Thomson Corporation have established relationships with sourcing advisors to aid in outsourcing decisions. The following is our perspective on what constitutes an effective sourcing advisor—criteria you’ll want to consider when choosing the best advisor for your company’s HR outsourcing initiative.
A good sourcing advisor will…
• Tell you what you need to hear, not only what you want to hear. Good sourcing advisors build realistic expectations for you, the outsourcing buyer. They help you develop a strong business case and define realistic costs. They can help you understand the process and identify the change management needs, helping you work sensitively through internal resistance and build internal procedures that will make the outsourcing effort most effective. A sourcing advisor can add real value by presenting a slate of potential HRO-experienced legal counsel for the company to consider. A good sourcing advisor also will make internal and external counsel aware of underlying issues and what is reasonable from a contractual perspective.
Lastly, a good advisor also will tell you if you’re not ready for a major HR outsourcing project and what steps to take to reshape your internal organization for outsourcing. They will tell you to slow down or clean up the systems and policies before leaping into HRO. This time spent on the front end can have a real impact on lowering the anxiety level and time-consuming issues, which will arise during the transition process.
• Assemble an unbiased team compatible with your needs. The best sourcing advisors will design their team based on your needs. The team you work with should have experience functioning with companies of similar size and scope to the project you’re considering and have experience executing deals. A good sourcing advisor team also has staff with relevant experience on the front lines, either with client-side HR operations or as part of an HR outsourcing provider team.
To the extent possible, the sourcing advisor should have prior experience with the vendors most likely to be finalists in the process. A good advisor team is unbiased, regardless of personal work history with providers. Most importantly, a good advisor provides a team that quickly demonstrates credibility with your executives, offering independent, balanced support of your judgment and choices.
• Help you build rapport with prospective providers. The best sourcing advisors provide ample opportunity for you to collaborate with prospective outsourcing providers to better assess the personal and cultural fit between your company and the provider. Perhaps it’s a group social setting, a one-on-one meeting, or simply an informal networking opportunity around a specific topic of interest. Whatever the case, these opportunities allow you to contact your potential outsourcing team and not rely on the advisor to filter all interactions. The advisor acts as the matchmaker, not the chaperone. After all, once you select an outsourcing provider, you have to trust and work closely with that provider for many years.
• Know not all providers are equal. Good sourcing advisors clearly articulate the differences among the providers you are considering, providing specifics, not generalities. They can competently evaluate differentiators among providers, cutting out hype in RFP responses and clearly define strengths and weaknesses within organizations. A good sourcing advisor will level the playing field where appropriate so you can compare offers and pricing and also help you understand the key value and solution differentiators among providers and offers that matter most.
• Realize that content counts. The best sourcing advisors know that HR domain expertise counts. They know that an HR deal is not an IT or finance and accounting deal. HR domain experts should be active members of the sourcing advisory team from the very beginning of the process and remain through the disengagement process. The information revealed during a deep-dive examination on a specific process with advisors will help you penetrate into the process details and differentiate among the various solutions that are being suggested.
• Help from start to finish. Good sourcing advisors involve prospective providers early in the selection process to give honest feedback on your proposed scope and requirements. Through regular conversation, an advisor can work through you and the provider to refine the approach and better meet your needs. The advisor should get you ready for due diligence so the RFP includes thorough data, enabling providers to efficiently gather information for viable bids.
They provide the framework for an RFP, templates for conducting an effective site visit, and other resources that can save you time and money and generate better proposals. The beginning of transition activities post-contract can be confusing and frustrating, and a good sourcing advisor can add real value by providing realistic expectations about the process during this time.
This is extremely helpful for the client company to know that problems it experiences through the post-contract period are not unique and are fixable. They stay involved through contracting and negotiations and beyond, as needed. A good sourcing advisor wants you to succeed and is committed to helping you become self-sufficient by providing the tools, knowledge, and skills needed to manage the outsourcing relationship you choose and to achieve your business case.
As the HR outsourcing market matures, the provider landscape is becoming more complex. The role of sourcing advisor has become a valuable, safe figure in this landscape. However, as all HR providers vary in offerings, so do sourcing advisors, and it is imperative for outsourcing buyers to have an understanding and expectation of the sourcing advisor role. Through experience, we’ve seen the qualities of a good sourcing advisor and can justify the benefits of this increasingly important role. When an advisor does a good job, it benefits us all.