The Website and Blog of HR Author and Speaker Lori Kleiman

The Right Vendors Are Critical


Vendor management is an step that can be considered critical in the role of a leader. Only by effectively managing vendors are leaders able to ensure that full value is received from the outsourced relationship.
While reviewing agreements and checking invoices can seem administrative, vendor management is actually a critical executive level action that supports overall strategy. There are four steps to vendor management that you should engage in with all vendors of the human resources department.

1. Understand their capabilities. Be sure you know what you are signing up for, what you have currently, and what you choose not to utilize at the original time of agreement. There may be processes you needed initially that are no longer utilized. You may also want to add additional functionality later when you are comfortable with the new vendor and systems.

2. Set expectations. Have deadlines and quality thresholds that are acceptable to both parties. Everyone makes a mistake or two, but when will the vendor have crossed a line that you just can’t tolerate? At the same time, understand what is expected from your team to be sure the vendor can accomplish their tasks. Create a system of notification if either side is not providing what is needed so you can fix problems before they become larger issues. Is your vendor willing to provide service level agreements to ensure they meet expectations? These will often provide a reduction in or rebated fees if you do not get the service that was promised in the agreement. You won’t get these guarantees if you don’t ask!

3. Annual review. Schedule a meeting annually with the sales representative and your daily contact at each vendor. During this meeting review the current agreement and discuss your level of satisfaction with the product or services. Ask about new initiatives the vendor is offering that you might be interested in. Be sure to ask if your team is providing what the vendor needs to give you the level of service you expect. How can you all work together to create an even better relationship in the new contract year? And certainly ask about fees or additional services. As you work with a vendor for extended periods of time, their job becomes easier. They know your players, have established systems, and will need to provide less training. This should be worth something in an ongoing relationship.

4. Conduct a full review of the marketplace every 3 years. This process is commonly called “Request for Proposals” or RFPs. Analyze what the competition has to offer every 3 years. The idea is not necessarily to switch vendors, but rather to learn what other companies are offering and how their price point compares to what you are paying. You may find a service that is of interest that your current vendor can provide. They may have assumed you weren’t interested or the offer came across in an email that you quickly deleted! Allow your current vendor to present their services as if you were a new prospect as well. By hearing their typical sales presentation you may learn about a new product or service that would work well within your organization. It is also helpful if they understand that you are going through this process and your business is not necessarily theirs forever!

As a leader in any function of the business, vendor management is critical. You can form amazing long term partnerships with vendors that support the functional areas of the business. A great vendor will free up critical time and allow you to focus on the drivers for the organization.

The preceding blog post is excerpted from Lori Kleiman’s upcoming book, Taking Your SEAT at the Table, soon to be released. For more information, or to pre-order your copy click here!

Photo by Brendan Lynch used under the following license.

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