Advisors and providers have lamented the lack of standardization in HRO for some time, saying employers often don’t know what to look for or what to measure when they search for an HRO provider.
That’s why the Human Resources Outsourcing Association, a consortium of about 300 HRO providers, advisors and buyers, has established a committee to set industry standards for the market.
The standards will provide a template for HRO buyers and sellers to use for their statements of work, service level agreements and pricing, says Richard Crespin, global executive director of the association.
“Our buyer membership is asking for greater transparency and greater comparability across different processes and providers,” he says. “The necessary precondition to that are standards.”
Earlier this year, the HRO Association formed a committee to focus on the project. Members of the group are: SAP,EquaTerra, Unilever, Prudential Financial, Accenture HR Services, Convergys, Kelly Services and Fidelity Investments. Crespin anticipates a final set of standards to be agreed upon by year-end. The standards would be free to members, and the organization will decide on pricing for outside parties, Crespin says.
Sourcing advisors EquaTerra and TPI each unveiled standards initiatives during the past couple of months, and the committee will try to find common ground between the two programs and establish a single set of standards, Crespin says.
“Both initiatives point to the same need for standardization across the industry,” says Debora Card, program director of HR advisory services at TPI.
Standardization would shorten sales cycles, thus reducing the amount of time and money that buyers and providers devote to the discussion phase of an HRO agreement, says Arthur Mazor, managing director of human capital solutions at Affiliated Computer Services, which worked with TPI on its initiative.
But providers shouldn’t be fooled into thinking that the largest HRO buyers are going to agree to standards, he says. Templates make sense for companies with about 10,000 employees, but larger organizations will still want a more personalized approach, Mazor says.
“We feel pretty strongly that getting to a nirvana of everything standard out of a box in the very large market is never going to happen,” he says. “Anyone who believes that will happen doesn’t understand HR or the complexities of this business.”
Although ACS worked with TPI on its initiative, it has also talked to EquaTerra about its “OpenDoor HRO” program, Mazor says.
It’s not an issue of who has the better program, Mazor says.
“The industry needs this,” he says. “Everyone wants to see one set of standards around the core components of contracting.”