When considering the use of sourcing consultants, make sure they can do some of the heavy lifting. They can serve strategic roles at critical junctures along the HRO engagement path.
The thought of a consultant with nothing more on his or her mind than what the client thinks is the problem with HR that drives most employees to anger management courses. Also, there’s the delicate matter of cost. Every HR director is used to signing off perks that would make the blood of regular folks pop, but consultant fees somehow just crawl up into the spine and play havoc on the frontal lobes, or whichever lobes common sense resides in.
Then a multi-country, transformational HRO comes along, and there’s suddenly a use for the previously shunned—due mostly to the fact that this is something the organization has never done before. Sure, purchasing thinks it’s like buying a canteen service, and IT reckons it’s the same as the last contract for systems deployment, but, truth be told, it’s nothing of the sort. HRO may not boldly go where no man has gone before, but it’s a lot different from bread-and-butter HR stuff.
Perhaps this is the crux of the consultant dilemma in HRO. Maybe soon most HR departments will retain business process outsourcing (BPO) contracting and vendor management knowledge as a matter of course, just like compensation, recruitment, succession planning, etc. For the moment, however, where that isn’t currently the case, it pays to involve someone who has done this before.
So much for the plug; what about the bang for the buck? Consultancy companies have different strengths and experiences on their books. Some may develop out of an IT sourcing background or from IT project management. Others may have a lot of experience in accounts payable outsourcing or particular payroll deployments, for example. Picking one that complements the planned outsourcing is obvious but nonetheless essential.
Additionally, those offering HRO-specific experiences will probably talk about solution design, sourcing, and contracting stages including provision of draft documents such as a statement of work (SOW). Some might offer intimate knowledge of the provider base or even relationships that can generate bids that otherwise would not materialize. All of this is in addition to the knowledge and skills of anyone assigned to the project.
But just because the consultancy can do that doesn’t mean it needs to or in some circumstances should. Where contracting is concerned, for example, advisors can inform of comparative standards and provide templates for performance metrics, price mechanisms, and the SOW. However, large chunks of the rest, especially commercial and IT sections, are going to be dominated by the buyer’s experts, and the templates may even need a lot of rework. Therefore, depending on how much lifting is done by the buyer, it may pay to contract advice at critical junctures rather than purchase a full-time commitment.
How much of the sourcing process can be managed on behalf of a buyer poses a similar question. A draft RFP can be well worth the money in terms of time saved, and a proven roadmap helps buyers get the most from the bidding process. However, the cost of full-time participation or even management of the whole thing may not be necessary. Some buyers value a neutral go-between while others are cautious of consultants playing a significant part in the relationship with bidders.
Concept building or proving is a stage where good value can be derived largely because a lot of knowledge can be dumped into a small amount of time. Ironically, this is often completed by the buyer without advisor involvement.
Similarly, the implementation stage often receives little consideration. After paying the bills for a prolonged period, the buyer is relieved to cut the consultancy costs to get down to what he knows best: execution. However, avoiding pitfalls is just as important during transformation as it is during contracting.
A lot depends on the experience of the consultant and the buyer’s budget, but HRO is still new enough for most buyers to benefit from advice. However, those on a budget might want to restrict advisor involvement to specific interventions and guidance such as concept proving, RFP development, sourcing roadmap, and implementation planning.
Where experienced internal resources are not available, a continuous advisor presence will improve efficiency and quality. Just make sure the advisor can do some heavy lifting. If in doubt, pay for a few “training” days at the start of concept building, and find out firsthand the kind of expertise and experience you’re likely to get in a long-term commitment. Maybe there are folks who’d offer training for free for the chance to impress.