How To Get the Most out of Your Vendors

Creating and maintaining strong relationships can minimize trouble spots.

By Desda Moss Jun 19, 2017

Managing outside vendor relationships has never been easy. Salespeople promise potential clients the moon, but after signing on the dotted line, customers often find that products and services fall short of their expectations. Workarounds and add-ons don't help, and thousands of dollars later, the frayed relationship ends.

Although most companies rely on third parties to help run their HR programs, few have intentional, systematic ways of evaluating potential vendors or managing performance on an ongoing basis, said Matthew Kaiser, presenter of the concurrent session "A Blueprint for Assessing and Managing Outside Vendors" at the SHRM 2017 Annual Conference & Exposition. Kaiser, managing director of Lockton Benefit Group, a risk management, insurance, employee benefits and retirement services consultancy based in Kansas City, Mo., shared tools and techniques for effectively assessing potential providers and managing ongoing vendor relationships to lessen an organization's liability and burden.

Assuming a key role in vendor management is a "hidden opportunity" for HR to showcase its value, Kaiser said. Vendor management has become particularly important given the high cost of technology investments and the proliferation of vendors in the HR technology space.

"Did everyone see the rows and rows of vendors in the exhibit hall?" he asked attendees "The people in the booths were all friendly. They all looked nice, and they had nice brochures. How do you choose wisely?"

Kaiser advised attendees to create vendor management processes that ensure full disclosure and transparency and urged them to work closely with their IT and legal counterparts to effectively vet and manage vendors.

"Most businesses can't tell you who owns the vendor management process, so getting clarity around that is critical," he said.

Like any relationship, he noted, the partnership between a business and an outside vendor needs to be constantly nurtured.

"Cultivate a personal relationship. Schedule meetings with vendors during slow periods of your business cycle. Meet with them in person if you are making a business trip to their city. Don't just talk to them when there is a problem or at contract renewal time," Kaiser said.

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He suggested that HR leaders discuss their organizational goals with the vendor to see if the product aligns with those goals. "Is your business experiencing fast-paced growth? Is cost cutting a high priority? Let the vendor know who you are ... and tell the whole truth," he advised.

Reinforce accountability through strong nondisclosure agreements that protect your organization's data, and don't blindly accept standard "limits of liability" terms that favor the vendor in the event of a data breach.

"Everything is negotiable," he said.

For companies that have had issues with an outside vendor's performance, Kaiser suggested they leverage their renewal process to elicit desired changes.

"Renewal is a good time to discuss what hasn't worked and press the vendor to address those issues."

Suzanne Pearson, HR manager at Arby's Restaurant Group in Atlanta, has been through several painful experiences with outside vendors that fell short of sales promises.

"We've been through several implementations where we reached the point that we knew things were not going to work out," she said. "In one case, we actually backed out of a contract before it took effect and had to pay penalties. We'd already invested a lot of time and money in the process. It's frustrating."

Pearson said she intends to use some of the templates and tools that Kaiser provided to steer her organization to a better outcome next time.

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