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Crafting A Better HR Technology Contract

  3 Mar 2017, 09:53

In an ideal world, there would be no need for contracts between HR and it's IT providers because each party could be counted on to meet the other side's expectations. But agreements are written to govern the imperfect world in which we live and work. To that end, here are steps HR professionals can take to reduce risks to their organizations and secure recompense if the vendor's promises aren't realized.

Crafting A Better HR Technology Contract

Be Clear and Precise

HRIS leaders should take a proactive negotiating stance to ensure that tech providers are held accountable for performance after a new system is purchased. Although many vendors maintain that the boilerplate contracts they use can't be modified because those contracts have been meticulously constructed by attorneys, experts say there is usually leeway to insert addendums and other languages.

One of the biggest areas of contention can be service-level agreements (SLAs), which detail how vendors will manage client accounts after the technology is deployed. Negotiating a good SLA with software-as-a-service vendors is particularly important, given the challenge of identifying the root cause of performance breakdowns in more complicated cloud environments.

Set Expectations

A vendor's failure to meet requirements spelled out in the agreement should result in actions that compensate the client for its losses. These penalties should be clearly stated. If a cloud provider doesn't meet its obligation to ensure an agreed-upon 99.5 percent of a monthly system "uptime". Uptime is the time a system is operational and available and is a measure of reliability. Credits are typically applied as a percentage discount against future monthly service fees.

Assess Security

Given that cloud vendors will have control over your sensitive HR data, it's crucial that contracts address how information will be protected in storage and in transit. HR should also verify that a provider has adequate insurance in the event one of its employees causes a data breach.

Iron Out Implementation

Whether they are addressed in the contract or not, system implementation issues need to be ironed out in the negotiating stage. The stakes for HR during this period are high, given that the seamlessness, or lack thereof, of the system implementation, has a big impact on user adoption, which is a key measure of a new technology's success.

Anticipated Staffing Changes

Having the right vendor personnel assigned to your account is key to a successful relationship. But the customer doesn't always have the ability to choose the staff assigned to its project. It's not unusual for senior personnel to shepherd the start of a system implementation, for example, only to delegate the rest of it to less-experienced junior staff as the process unfolds. That's why some HRIS leaders insist on a contractual clause that gives them the right to preapprove vendor staff assigned to their projects.

Have an Exit Plan

Make sure to consider what your "tipping point" is for exiting a contract, whether it is one major issue such as a data breach that is the fault of the vendor or a series of small problems that aren't resolved.

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