As human resource professionals are being asked to find creative ways to contain costs, many are learning that outsourcing complex and non-core processes, such as payroll, HR and benefits administration, makes these activities more cost-effective. 

How to choose the right outsourcing partner

As human resource professionals are being asked to find creative ways to contain costs, many are learning that outsourcing complex and non-core processes, such as payroll, HR and benefits administration, makes these activities more cost-effective.

But how do they choose the right partner for their company?

"Employers need to take great care to choose a vendor that is not only prepared to meet their unique needs today, but that is poised to grow along with them," said Lydia Ophaug, Ceridian's senior product manager for Health & Welfare benefits administration.

We asked Brenda Stevenson, benefits operations manager for L.L. Bean and a member of Ceridian's Customer Advisory Board, to give us her top three criteria for the vendor selection process. L.L. Bean has been using Ceridian's benefits administration solution since 2006. 

1. High-quality vendors

"As we think about the vendors we partner with to help us achieve some of our strategies," Stevenson said, "we're looking to select, number one, high-quality vendors." 
Stevenson explained that there are several questions she asks when evaluating whether a potential partner meets L.L. Bean's standards:

Is the vendor an industry leader? These organizations are recognized as being at the forefront of the marketplace, and are respected for their longevity in the industry. Ophaug added, "Industry leaders evolve with their customers' needs and expectations, and are able to stay in step with new technology and changing compliance requirements." 

Do they offer competitive, scalable services that support our business expansion? This means the vendor's solutions can be configured to work with your distinct company culture and offer the functionality you need to operate at the highest level of efficiency. In addition, employers should consider whether the vendor will be able to meet the needs of the organization as it grows. For instance, L.L. Bean's workforce used to be based primarily in Maine. "We are now in 13 states, so we're looking for vendors that can help us achieve services for our employees wherever they may be," Stevenson said.

Do they share our cultural commitment to service? Finding a partner that shares your core company values is important. Because excellent customer service is part of L.L. Bean's culture, they look for partners who are dedicated to providing outstanding service to their employees.

2. Strong partnerships

Stevenson said, "We look at our vendor partnerships as long-term relationships because there is complexity in this world, and our vendors enable consistent delivery of products and services so the experience of our employees and their family members is consistent."

How can employers go about building strong partnerships? "In addition to finding partners that share your company's core values," Ophaug said, "look for vendors that have an entire suite of solutions that work together." 

"We look at our vendor partnerships as long-term relationships because there is complexity in this world, and our vendors enable consistent delivery of products and services so the experience of our employees and their family members is consistent."
— Brenda Stevenson, benefits operations manager, L.L. Bean

For example, what begins as a benefits administration relationship could one day expand to additional human capital management solutions such as HR record-keeping, employee self-service, payroll, workforce management (time and attendance), business intelligence, wellness programs, consumer-directed health care and more. 

"It's important that the infrastructure is there to say, 'we can be your full-service vendor/partner for many of your needs,'" Stevenson said. 

3. Competitive fees

Finally, it's no surprise that in a business climate focused on cost-containment and revenue growth, Stevenson said there is certainly a financial component that comes into play in L.L. Bean's vendor decisions. "As an employer," she said, "we just want to ensure that our partnerships allow us to have access to services at competitive fees." 

Ophaug added, "Keep in mind, being competitive means more than just having a low price. Employers also want to consider the scope of what's included in the pricing to determine the solution's overall value and how it will help the organization achieve its goals in the long term." Often, initial fees quoted for outsourcing will not include upgrades, support and other unexpected costs, which can erode a company's return on investment over time. 

What criteria are most important to your company when choosing an outsourcing partner? Tell us in the comments section below.