The collaboration between companies and external HR partners has become a prevailing norm. In fact, most companies work with an outside HR partner at some point in their lifecycle. “Relationships with strategic vendors are increasingly key to business performance,” says Joanne Spencer, a Senior Director Analyst at Gartner.
HR Partnerships Can Include:
- Professional Employer Organizations (PEOs)
- Staffing agencies
- Technology vendors
- Suppliers
- Contractors
- Payroll services, and more.
Collaborating with external partners such as a PEO can bring numerous benefits. PEOs can handle crucial HR tasks ranging from payroll to employee benefits, compliance and risk management. This not only reduces the workload for the internal HR team but also provides access to specialized expertise that might not be available in-house.
Likewise, partnering with staffing agencies can make the recruitment process easier by tapping into their expertise in finding and hiring qualified talent. Additionally, businesses can engage other contractors to access specialized services tailored to their specific needs. These partnerships offer businesses the opportunity to improve their HR functions and achieve their goals more effectively.
That makes managing those relationships successfully more important than ever. “When managed badly, large strategic vendors can become complacent, slow moving and intractable,” says Spencer. So, how can companies manage these relationships to ensure maximum effectiveness? Here are four key best practices that can help guide you in managing external relationships.
1: Understand the Underlying Business Case
In any external relationship, having a solid understanding of the underlying business case is crucial. This means clearly outlining the reasons for the partnership. It includes tangible benefits like cost savings and efficiency, as well as intangible benefits like collaboration and shared values.
A well-defined business case acts as a roadmap for the partnership, outlining goals, objectives, and expected outcomes, including aspects related to performance management. It provides a clear rationale for why the partnership makes sense for both parties. Ideally, this should be documented in writing to ensure clarity and ensure alignment between involved parties.
Having a written business case helps companies make sure the partnership is based on strategic value and mutual benefit. It serves as a reference point for decision-making and helps to keep the partnership focused on shared objectives.
Furthermore, it's important to revisit and update the business case regularly. As business environments evolve and focus shifts, the rationale for the partnership may need to be adjusted. Regular reviews ensure that the relationship remains relevant and continues to deliver value.
2: Ensure Fit and Alignment
Ensuring fit and alignment is paramount for maintaining productive and external relationships. It's essential that both the HR department and its partners are in sync, working toward mutual objectives with a shared understanding of desired outcomes.
As companies evolve, it's crucial to regularly asses and confirm these alignments remain intact. A partnership where all parties are consistently aligned in terms of vision and goals is more likely to produce successful, long-term outcomes.
Regular communication and alignment checks help make sure that the partnership remains on track. And if there are any changes from the vision, they can be addressed quickly. This approach builds a collaborative environment where both parties can work together effectively to achieve common goals.
3: Communicate, Communicate, Communicate
Establishing open and clear lines of communication is vital for the success of any relationship, including real-time updates and meetings. Both parties should have a clear understanding of expectations, objectives and outcomes from the get-go.
Regular meetings and updates play a big role in maintaining transparency and addressing any issues promptly. For instance, Gartner recommends a structured schedule of review meetings. This includes monthly operational reviews and contract reviews, quarterly relationship reviews, and biannual risk reviews.
The goal is to make sure that the relationship remains on track throughout its lifetime. If there are issues, both sides should address them quickly to prevent them from getting worse.
4: Formalize Relationship Management Processes
To ensure the success of external partnerships, adopting a formal approach to relationship management is crucial. Relying on ad hoc methods for governing vendor relationships can lead to inconsistencies and problems.
Therefore, companies should use a structured management approach to reduce potential issues. This means documenting the different stages of the relationship. It also involves assigning tasks to each person involved. Additionally, it requires establishing a clear process for addressing and resolving issues.
The Society for Human Resource Management (SHRM) stresses the importance of this approach. They had this to say, "This documentation will spell out what activities should take place at each stage of the lifecycle and provide a step-by-step escalation sequence of actions designed to resolve issues when they arise."
Key Takeaways
Building good relationships with outside business partners like PEOs and staffing firms is crucial for HR departments to succeed. By implementing the best practices outlined, you can ensure that these partnerships remain effective and sustainable.
These partnerships are essential for adding value to a company, providing access to expertise, resources, and innovative products or services. By growing collaboration and alignment with external parties, HR departments can streamline business operations, improve efficiency and contribute to the overall success.
By focusing on managing these relationships, HR departments can leverage partnerships to achieve their goals and drive business outcomes. It is through these efforts that companies can thrive in today's business environment.
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