So, now that you have adequately planned for your procurement, how can you ensure your procurement process is an efficient one destined to help you achieve your overall goal of purchasing a new product or service?
Through my years, I have found the following tips to be the most beneficial to ensure a smooth process, ending in the procurement, which is best suited to your business. From being involved in the whole process, to focusing on the products at hand rather than the money, these tips will help ensure you compare apples-to-apples and meet your original purchasing objective.
Don’t be at arm’s length – be involved to find your perfect match
One of the most typical pitfalls when procuring HR & payroll services is when the business, the people using the technology or accessing the services being procured, aren’t involved in the selection process. But, to put it bluntly, if you don’t get close to the suppliers, their technology, and services then it will be sheer luck that you get what you expect and work well together. Like any relationship, a supplier of services needs to have a good relationship with the client (and vice versa) and the procurement process is the perfect opportunity to spend some time and effort getting that client-supplier-client fit right.
There is no reason for the process to be cold and too formal. For a supplier, the best relationships are one where the supplier feels like a department, rather than a supplier, ultimately an inhouse service being outsourced must be a good fit, and from feedback I receive this is also the case for the client. Involving more of the people consuming the service with those who will be delivering the service (and not salespeople) allows a transition and adoption of change for the benefit of both parties. Having hearts and minds aligned as early in the relationship as possible is only ever going to be an advantage.
It’s not only about the money
Consider how important price is within the process; “buy cheap, get cheap”, “you get what you pay for”, “what did you expect for that price”.
If you buy the cheapest tent off amazon, I am sure it would be ok for a few trips. Maybe ok for some bad weather. But ultimately, do you think it will last a long time? Will it last for a lot of trips? Will it survive more harsh conditions? Maybe. Maybe not. How long will it be before you replace the tent? But if you invested in a decent tent once, it may save you buying three tents over the same period.
Businesses must realise the return of investment when selecting something more expensive than the cheapest option. If something is more expensive, don’t rule it out based on a weighting process alone. It is very possible that there is a reason for the price, and it’s worth investigating further.
The cheapest option is probably very baseline and will attract many additional charges, it also might be more basic in functionality and will need more effort from people effort to utilise it.
Equally, the most expensive may cover the scope of the services in full and is merely an honest “bid to deliver”, not a “bid to win”. It may be that there is a longer return of investment to be seen over and above cheaper options. Staffing costs make up 60%-70% of business operations, so investing in a more efficient technology will always reduce human effort needed to support basic technology. Benefitting from reduced staffing costs and having fewer manual processes will increase accuracy and ultimately justify investing more in the technology. I would urge businesses to look at the bigger picture when side-lining something more expensive. Look at the long-term benefits of investing more money into a better solution.
Know (really know) what you’re buying
Competitive supplier pricing is often very clever so make sure you know what is included in your prices, and most importantly what is excluded.
Making sure you understand what is included (and excluded) within the different options is crucial to picking the one best for your business.
I often have conversations where the buyer has chosen something else and has almost instantly seen price creep; “that’s not in scope”, “that’s only for one per month”, “that’s not considered standard to will be additional”. It goes without saying that if a customer wants to do more stuff, it will cost additional but understand what that looks like before you move forward. Know your scope, know the supplier’s scope and go in with your eyes open.
Equally know what is and isn’t included as standard, as your requirements might not always come as standard services. Integration, re-running a payroll, extracting data, producing specific reports, one off payments, off-cycle payroll, data adjustments (etc.) are all potential to be provided as an additional charge and not as standard. The list is endless and different per provider so understanding your business requirements and where these sit in the offering is vital.
It isn’t a dark art, it isn’t wrong, and its arguably clear in the commercials. But it enables suppliers to be competitive. And as most suppliers are doing a very similar thing, for a very similar cost base, then question the cheap options as these kinds of ‘exclusions to standard’ will likely be more prevalent.
Comparing apples with apples
What is especially important (and hopefully becoming clearer now) is that for HR & payroll services, you really cannot compare one with the other like you can with a commodity. The market is highly competitive, with multiple variables, which ultimately impact price. It isn’t just payroll. It isn’t just running payroll for you. There is so much flexibility in the technology and services across a wide variety of suppliers which make it really difficult to compare suppliers within the industry at face value.
The way procurement often fails the business is that the scoring method used for procuring HR & payroll services is conducted in the same way in which a supplier of something more commodity based is scored. Would you compare and buy a holiday the same way you compare and buy baked beans? The intricacies of a selecting the right holiday versus selecting a tin of baked beans is worlds apart, quite similar in complexity to choosing the right HR & payroll services.
My advice for the business is to work with procurement to adapt to the complexity of what is being procured. Find a better way to score the responses. Work with procurement to support the business rather than lead the business, as otherwise these intricate process requirements and technology differences are often missed.
So, there you have it. Procurement, especially for HR & payroll services is undoubtedly a complex process with many moving parts and requiring input from many people. However, I firmly believe that if buyers take the time to prepare and understand roles through the procurement process, we can achieve a more efficient, cost-effective process, which undoubtably will always result in the purchasing of a product which truly meets the businesses requirements.