In This Episode
- How the pandemic has shown some significant gaps in vendor relationships and responsibility.
- How to choose the type of vendor relationship for the tactical and strategic HR needs for your company.
- Evaluating the leverage that is needed in-house versus outsourced.
- Exploring vendors who may not be in the top-two, but can deliver more value and results at a significantly reduced cost.
(00:00): So the inherent relationship of how we think about our vendors, how we find them, how we decide to partner with them. I really want you to take this time when your HR budgets are slashed immensely. If you even have one left and you still need to do certain things, I want you to go deep. Make sure from your vendors you are getting what you need and not what the vendor is telling you that you have or what they provide. You want a very clear match of that and I want you to dig deep into the numbers. I'm Melissa Anzman, HR practitioner turned CEO of a thriving employee experience company, but it wasn't all that long ago that I worked as an HR business partner responsible for increasing employee engagement at companies nationwide and I struggled to move the needle even after trying everything under the sun.
(00:57): Fast forward past many fail tactics and lessons learned and you'll see how I've been able to crack the code and replicated at companies of all sizes for creating true engagement and doing HR work that matters, work that changes the lives of leaders, HR professionals and employees. By focusing on the employee experience, I created the rethink HR podcast to give you actionable step by step strategies to help you make an impact. If you're an HR leader or one on the rise who's looking to stop spinning your wheels doing the same tired activities that aren't driving results or you want to have a career, you love your in the right place, let's get started. So there are a ton of lessons that we are learning almost by the minute. Maybe it slowed down a little bit at this point in time about what, six or eight weeks into the coven 19 shelter in place, quarantine, whatever you would like to call it.
(01:59): But we are learning new things about our company, our business, and our HR department at all times. It's revealed a lot of things for us. And that is really true, especially when it comes to the work we do in HR and who we partner with to do the work. So HR has had several reasons to panic over the last several months at this point. How can we help our workforce? How do our policies support the business when things go awry, why do we make the decisions that we make? What is the impact both short and long-term for our decisions or lack of decisions, our indecision, how does our bad leadership really show itself in times of crisis? And conversely, what's working really great that we weren't expecting? How about communication? What if that's gone really bad? What's the impact there? And on the flip side, what if we have communicated so well that our employees have a completely different view of our company now too?
(03:16): How can we be strategic in HR when everything is so damn tactical right now? How can we do the work that we're relying on so many different duct tape pieces together of software, of policies of knowledge and vendors to keep us moving and doing HR work all day every day and that thing in particular, the vendor piece of it is what I want to talk about a little today, our HR vendors, our relationship with them and how we leverage vendors. Now before you say a, this is boring or be, who the heck are you to talk about this? Let me be super clear. In some organizations I am considered my company better is considered an HR vendor, so I am talking this through on both sides of the fence as a vendor and as someone who hires vendors from within HR companies in house. Here's the thing, it can work really great, but for most vendor relationships it's not so fantastic and if anything has been amplified in this situation, including the quarantine and the down falling economy, it's that the way we work with HR vendors in particular is broken and not sustainable.
(04:48): If we want to move into a more strategic employee experience or people first culture function. Here's why. First, our vendors are not necessarily set up to operate in the way that we operate. They come to the table to help us out and sort of bend over backwards to work in our way in the HR, you know, inhouse way. But they have to do that for all their clients. So when things aren't smooth it's because they have to break out of a process or get out of the one to many framework they're in or add more people to their team, which they can't now pay for. So that alone is a big problem. But why our relationships are failing is first because we are not outsourcing the right things. Now I have worked with companies who have leveraged vendors in HR very differently. I have seen companies who have literally outsourced every single HR type of function activity software that they could possibly outsource so that they didn't have the talent in house in order to get the work done.
(06:09): Now I have been in touch with those companies and right now they're struggling because their HR talent in house is not at all able to deliver on the big gaps that have been uncovered with the vendors. So if a vendor's downsizing or now has a lot more urgency and doesn't have the staff to support the urgency to deliver things, maybe this is like an outsourced employee benefits functioned or an outsource unemployment claims function or worker's comp or what have you. If they're seeing an increase in that and that company obviously wasn't prepared for this, nor should they have seen it coming, they can't support it and there's nobody then in house in HR who knows enough to be dangerous, to be able to step in, take a few front end steps or backend steps off the process and deliver it. In addition, the inhouse HR person with a completely outsourced HR function has literally no decision making power.
(07:20): They are in charge of a lot of different levers and can weigh in on how certain vendors work or what they deliver or the outcomes. But as a general strategy, they have to fit the work that they do in HR, and we'll talk about what that is in just a second, but the work that they do in HR into how all these other vendors work with them and essentially their job isn't about people or experience. It's about connecting all of the vendor dots together. Now this may work for some companies. Truthfully I haven't seen it be super successful for true HR functionality. I have seen it be very successful when you want all the tactical out of the way and that HR department then becomes strategic only. But what ends up happening is that role becomes so tactical of managing the vendors that there isn't real people, deep meaty work that can happen.
(08:27): Okay, so that's the end of outsourcing. Way too many things. You don't have the knowledge or understanding in house of how each of those vendors are experienced by your employees or what the actual journey, the employee experience journey looks like. On the other end of the spectrum, you have companies who outsource bare minimum and this can look like or tends to look like they outsource the systems part. So payroll processing, time card management, benefits administration and that's kind of about it. They keep everything else in house, even the strategy behind those systems and really just let that third party vendor for each of those individual systems run those things. So they are still doing a lot of work, which is mostly tactical in some cases on the front end, but the backend render is responsible for the actual delivery components of that. Now this model can be super helpful when it comes to something breaking because you have the HR knowledge in house to be able to properly address each of those things, pull the right levers and move on.
(09:47): However, when something like this happens, you have a situation where you probably have maybe two or three key talent, HR people who are doing everything and are completely burnt out at the end of this crisis and that end is pretty far away and so you just have a long burn of frustration. Also those vendors that they are using are still not prepared for the influx and there's still issues and they may not have such a strong relationship with those vendors that they're addressed quickly. So the right answer is always going to be, it depends based on your company and what's in between. But what's more important than a decision on that framework is really what are you outsourcing? What is your outsourcing philosophy? There are very few other departments in organizations, particularly large ones who outsource so much of their work. And especially compared to what HR does, like in general at large fortune 500 companies, they outsource things like payroll, the systems for payroll worker's comp benefits.
(11:06): They like, there's a lot of things that are outsourced. Sometimes recruiting's outsource times, there's time management outsource or things like that. So that is the tactics of it. But the strategy around what you're outsourcing, you need to make sure you think through this, especially right now, that we have a little bit of a moment to think through. Worst case scenarios and our budgets are crazy, crazy tight right now. So when you think through what you're outsourcing, the right things would include things that are completely tactical. Things that can be online and employee self service should be stop it. I love the commercialized I've seen recently, I think it's with Barbara Corcoran from the shark tank about pay comm. I don't use Paycom. I don't know much about them but their commercials hilarious because it's about still making HR the barrier between employees and their information.
(12:06): Yes, you all are doing this stop that. If there is an online self-service component move there. It doesn't matter. Your employees are not used to it. They will learn. It's a learning process but at this point in time, this is probably a big gap that you found. The more tactical, the more paper, the more emails that are needed to complete an activity, the more a vendor is needed. In addition to that, we want to make sure that anything that is related to strategic HR work thought processes, employee experience levels, that we are not outsourcing those things that are unique to our company. Someone else's benefits administration communications are not going to be as important as the communications that are needed for your specific employee population. So you want to be sure that from the tactical perspective, the administration part, you can outsource that super tactical and there's an online component marking all the boxes there.
(13:09): But for a communications perspective, does that make sense? Does an off the shelf plugin the names of my plans or plug in the name of my company, does that help your employees make a better choice? Likely not, but maybe so it's just about the strategy road and landscape that you want to go down that Tim that makes sense for when you're deciding to work with a vendor or not. The other thing with vendor management from outsourcing the right things perspective you want to consider is accountability in house. The worst thing you can do is have a lot of vendors so that your internal HR department is not responsible and not accountable for delivering actionable HR results and they are. Your vendors are a very easy scapegoat for low performing HR professionals and for broken systems and processes. So evaluate if this is a problem.
(14:14): As you look at your HR functionality and your HR vendor list and see where the gaps are. The second thing to consider about vendor relationships, our budgets are way too tight, especially right now, to not have exactly what it is that we need from our vendor partners. It's just it's never been a feasible option, but right now it's ridiculous. If you're not getting served or overserved from your vendor partners. If they are not delivering on your timelines that you've agreed upon on the work that you've agreed upon, then it is time to start looking for new vendor partners. I still do not understand why it is okay for so many HR vendors to deliver or launch things late when they've agreed upon them at a certain time. It's not acceptable. You wouldn't look at your marketing department and tell them, Hey, it's totally cool that you missed your deadline with launching that new product or getting it to the FDA, but no problem.
(15:20): You needed more time like ahead and do it. Six months later, HR vendors should be held to the same standard. You make an agreement, you uphold it. Now if you change the agreement and things are added on, then you change the deadline. That makes sense. But a lot of times what I see is vendors getting a pass for not delivering what they needed. Whether that's a breakdown on the HR side or the vendor side, totally varies, but make sure that at a minimum what you need from your vendor you are getting. And that means a lot of how can we problem solve together? A lot of troubleshooting. I have worked for many large companies and I've worked for many large vendor providers and one of the things that I still don't understand is so many of these large vendors provide a one to many solution.
(16:16): So companies get a plug and play. Basically, here's our system, here's all the bells and whistles that we've added in. If you want to change anything, it's extra cause it's customization or personalization and you can do that at this amount of cost with this amount of extra time. That's complete BS. I almost said the real word, so be happy I didn't with that one, but it's complete crap because your vendors should be creating and fulfilling a need. You should not be bending over backwards to do that. So my advice to you is if you are not able to get the solution you need from your vendor partners, it may cost more. I get that, I understand all that, but if they're like, no, we don't do that, or no, that's not really in our model, or here's how we think it should be better, et cetera.
(17:03): And you know, that isn't serving your audience. You need to look at vendors who are smaller. I don't know why you're not doing this, but just because you know of a vendor's name because they had a cool booth at a conference or they have 90,000 employees who work for them does not mean that vendor is the right vendor for you is specially right now with so many small businesses able to take on more work, new clients, delivering super cool personalized things. There's no reason why you should be sticking with these large name vendors because that's what you're comfortable with is specially if they're not delivering. And the point number three that I really want to get across is aligned with one and two. So we're coming together with a solid number three, which is the inherent relationship that we've built with our vendors. Especially right now it's just deeply broken because we are overpaying for large name vendors and under delivering from the vendor side of what the HR department needs.
(18:18): It's kind of crazy when you think about it, when you think of these big name companies or vendors I should say, who are delivering work, but you still have to tweak it for you or personalize it. And pay more for that. That doesn't work. It's a broken model, but we keep her patchy awaiting it because we know those big name vendors of the world versus going to a local person or maybe it's a regional person or maybe instead of going to the number one and two in the space, you seek out the three, four or five or that speaker or that vendor that the smaller vendor that you saw at a conference. Like we need to be sure that when we set up our vendor relationships, it's based on outcome and spend, not just name recognition. I have gone into so many companies and these are large companies, mostly fortune 500 to be honest.
(19:18): And I come in and I say, well, what's your current solution for X product? And they tell me and I'm like, Oh, that's interesting. I'm like, how much are you paying for that? And they tell me and my jaw hits the floor every time because they still are not getting exactly what they need. And they are overpaying by at least 50 a hundred $200,000 dollars every single year because they know that brand name and right now those larger brands are under so much pressure in the marketplace because they have to downsize as well. They may not be able to flex as easily. They aren't necessarily ready to support these influxes and so on. So from inherent relationship of how we think about our vendors, how we find them, how we decide to partner with them. I really want you to take this time when your HR budgets are slashed in mentally.
(20:19): If you even have one left and you still need to do certain things, I want you to go deep. Make sure from your vendors you are getting what you need, not what the vendor is telling you that you have or what they provide. You want a very clear match of that and I want you to dig deep into the numbers. I want you to do informal RFPs.You don't need an RFP. You can just ask people, but that's okay. I digress on that, but I want you to go out and talk to those number threes, number fours, those boats, heat vendors, the up and coming new software and see what they can provide. See how they can specialize it for you and ask them how much money they're going to save you each year. Cause I guarantee you the number of dollars you are going to save a long with it increased outcomes you're going to get is going to, this podcast is brought to you by better microsites with your HR budget being cut and you being on the hunt for new ways to do more with less.
(21:34): Why not consider a total rewards or benefits microsite to not only increase your employee experience, but also deliver increased value at the cost? We all know that your off the shelf benefit administration website is extremely user unfriendly, lacking customization, easy to find information or crazy firewall and a missing search function all at an extremely high cost. Better micro-sites are a hundred percent designed based on what your employees need and your branding with your specific information, improving the speed in which your employees can find important benefit information seamlessly connecting you with your InMail woman vendor and giving you more time back to do the HR work that really matters. You can learn more about better microsites at better.com/microsites that's B E T T hr.com/microsites thank you so much for tuning in for this episode of the rethink HR podcast. For more information, including the show notes and resources, please go to rethink HR podcast.com/seven.