Multi-process HRSourcing

Best Practices on HRO RFP, Assessment, and Governance

Following these steps can help light the way to selecting the most appropriate course of action for your organization.

by Mark Hodges

Thinking about transforming HR? Is it best to outsource, optimize your shared services, or explore a hybrid solution? How and when do you develop an effective RFP? And how do you otherwise ensure success?

The roadmap begins with careful strategy and assessment. That is, don’t rush to the marketplace with a RFP. Instead, take the time to thoroughly evaluate the relevant HR service delivery options. Define your desired end state, and consider the time, cost, and capability required to achieve it. Finally, keep in mind that what works today will not always work tomorrow.

Choosing the model
To determine the best delivery model for your situation, it’s important to assess all of the options, not just one. Consider your desired end state and these three key factors for getting there:
Time to Achieve. Can you do it in a year? Or will it take 3, 5, or 10? Strive to keep your estimates realistic. Companies are often overly optimistic about the time required for knowledge transfer to a service provider.
Total Cost to Achieve. With each model, it’s important to assess the true, end-to-end cost for service delivery, which includes one-time costs as well as ongoing expense for factors such as technology, labor, real estate, and productivity. Incomplete cost estimates are a frequent pitfall, as organizations often measure the central costs or budgeted costs without also considering delivery costs in the field. They may also make inaccurate productivity assumptions or fail to consider the costs specific to some delivery models.
• Capability to Achieve. Depending on the delivery model, required capability may include such elements as technology, project management, or relationship management.

Developing the RFP
Now you are ready to request proposals from service providers. Resist the temptation to issue an RFI; instead, develop an effective RFP. Consider the following:
Build the Right RFP Team. To pave the way for a productive RFP process, assemble a team with the relevant skills and experience, and make sure that HR takes the lead on the project. It’s also important to ensure stakeholder alignment at the beginning of the process and stakeholder signoff at the end.
Narrow the List. Don’t send the RFP to more than three providers. It’s better to have in-depth discussions with two providers than limited discussions with four.
Involve Providers in the Solution. The more information you share with prospective providers, the better. At a minimum, the RFP should include the financial baselines, key business terms, statement of work and service levels. Develop the RFP in accordance with industry standards.
• Use advisors Judiciously. Finally, do not use third-party advisors for staff work. Instead, leverage their expertise on such factors as pricing, vendors, volumetrics, statements of work, and service levels.

Investing in governance
No matter which service delivery model you select, it’s also critical to choose the right governance model to ensure your HR solution mitigates risk and realizes the intended value. Whether your governance structure is transactional, collaborative, or transformational, it should include six key components. For risk mitigation, those components are commercial management, compliance management, and problem management. For value realization, they are change management, service quality management, and communication management. Moreover, these six components include 29 distinct governance processes, which requires sufficient specialist resources to manage and coordinate.

Unfortunately, many organizations considering HRO or shared services don’t know what these processes are, let alone how to manage or automate them. Tools such as Governance WorkPlace, a joint solution from Microsoft and EquaTerra, can help governance teams streamline processes, improve collaboration, and otherwise deliver on the intent of the transformation.

Remember that the roadmap to success begins with a careful review of service delivery models, which will result in a strong “probability to achieve” recommendation that points your HR organization in the right direction.

Tags: Multi-process HR, Sourcing

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