As the Fall and Quarter 4 arrive, company HR personnel, CFOs, accounting departments and business owners often scramble to look at finding the perfect service provider or in some cases, multiple providers to position themselves for a January 1st start with or conversion to the new firms. Doing so often is driven by the need for increased functionality with regard to their Human Capital Management in Payroll, HRIS, Benefits Administration, Applicant Tracking and Workers Compensation Reporting.

The desire for change is at times based on the need for more complex information sharing, shifts in technology preferences, streamlining the use of multiple vendors, dissatisfaction, frustration, accuracy issues, and the common service or responsiveness concerns.

Some providers are highly skilled in offering complex solutions that incorporate all Human Capital technology components on one platform and most importantly, serviced from one firm. Whether your company is looking at one or all of the above human capital components from a provider(s), the process of identifying and qualifying a new firm or service provider takes time. I highly recommend starting this process as early as possible.

The competitive service providers ramp up for this Fall window of opportunity and are out in force qualifying, presenting to, and converting new clients. Some use mild tactics while others will offer the world for your business in a January. The best strategy is to take your time, follow several steps in evaluation, and then have a well planned conversion timeline once decisions have been reached as to whom to go forward with.

In all cases, there are critical component steps and findings that should be used in an evaluation and conversion. Doing so will minimize a company’s time in review and more importantly, prevent a less than efficient transition or even costly “wish we had not” mistake. The below is meant to be a general overview of some of the measured aspects, questions, and steps to ensure a successful evaluation and conversion. It however is in no way comprehensive as each company’s criteria and needs differ. Based on my 18 year background in client conversions, I feel these are most critical in a successful transition.

Evaluation Of A New Provider
Most businesses begin looking at new provider options in the fall of the year. Doing so provides ample time to compare several full service options while continuing use of a current provider or in house system through year end and the subsequent completion in January of the prior year filings/W2s.

A recommendation diligence wise would be to look at two to three companies in a comparative at minimum. In the 90’s and early 2000’s, many a decision to change was entirely cost driven. This was based on the fact that there were fewer service providers, the absence of web-based technology, and really not that much difference in reporting features. In the pre-technology/web based technology age, providers sold predominantly on cost with little focus on enhanced services, reporting functionality, ease at data transfer, communication, etc.

With today’s complex staff internal roles and responsibilities week in and week out, there is less time and pressing time constraints, added responsibilities, greater need for customized reports, the rising demand of bio-directional data communication, etc. What is interesting is that even with a challenged economy and decision makers more focused on costs than ever before, end users are far more experienced in knowing their ideal or preferred solution and very savvy when shopping perspective services. To put it simply, they know the fact that their time and potential ongoing frustrations will in no way justify a mere percentage reduction or measured dollar savings per pay period or annually should their provider(s) be less than standard once on board.

The following are some criteria that should be looked at in determining when a provider is best positioned to meet your needs:

1. The business should begin the process of narrowing down potential new providers by seeking endorsements or recommendations to potential firms from one or more of the following:

2. Once identified, seek feedback from the above as to experiences with named providers and start a document to track your query.

3. Never select a provider solely based on their website, on a internet search, direct mail or electronic mail piece.

4. Document your objectives/plans:

5. Although initial dialogue, presentations, “go to meeting” demos and the like can be completed without a face to face meeting, it is important as the evaluation of the firm or firms progresses, that you have a face to face meeting with whom you are fielding the presentation / proposal from. As you are considering handing over a vital component of your business, most veteran professionals will willingly meet at your location to facilitate the signing of the Engagement Documents and/or to acquiring the conversion data. This is also where doing business with a regionally local firm is important from a service and support standpoint.

6. Ask the provider under consideration for or about:

7. Ask for a list of client references you can call to discuss the service they provide. It is important to speak with businesses large and small compared to your company’s size. This will provide a range of feedback and will also indicate client experiences with the firm regardless of size, volume or billed revenue. Sound questions asked to current company clients should be:

8. Request when appropriate a preliminary or formalized Cost Proposal – Make sure it indicates all per pay period, quarterly and annual fees. Exercise caution if you ever receive a hand written cost proposal! Often times it may be best to discuss costs early on as your budget and cost expectations may be dramatically different than what a provider charges and you can table further discussions and avoid spending hours of time on presentations, demos, and follow up calls.

9. Some additional cost items to measure would be:

10. On the subject of discounting, most Sales Consultants will have both the training and ability to provide discounts/incentives to acquire the deal. Be cautious to this as it in part is indicative of the culture of the firm. Example given is first 3 to 6 months at no charge, free W2s, no charge on delivery, etc. Most of these are hard costs to the provider and although will appear to be at no charge on the front end, are hidden or padded in other fees that may not come out till further along when in fact you are less likely to scrutinize invoices or fee charges.

11. Lastly, some providers indicate contracts or periods of service agreement. Avoid signing any as such at all costs. Know that in all cases these are non-enforceable and unnecessary. After all it is your hope that your are entering a partnership with your provider to last several to many years. Proactively, you need to be able to timely depart services in the case of a negative experience.

Conversion
Once a decision has been reached to transition to a new provider(s), the following will help as a guideline to insure a smooth, timely transition, while covering all data and service parameters are in place to commence. Special note – January is the busiest month on the year for payroll companies. In addition to new client starts, they are also tasked with Q4 production and year end tasks (filings, W2s, 1099s) from the prior year. It is best to proactively have as many aspects of your conversion completed as timely as possible and well in advance of December 31st. If you are well schooled and the talent and experience level of the firm warrants it, you may want to look at the advantages of a Q4 conversion. This however involves an entirely different set of processes and should only be completed by firms with highly experienced personnel.

1. Complete all Engagement Documents and make sure and get a completed / processed set of these documents including the cost proposal for your records once signed and processed by new firm(s).

2. Provide all data to be used in conversion for all platforms (exclusive of any new hires or changes between data send and 1st cycle in January) which will need to be documented and provided in advance.

3. Provide new provider your SUI rate(s) for the coming year.

4. Have the conversion timeline, first and second pay periods, payroll input or processing, and check dates in writing.

5. If you are converting to a platform more substantial than payroll will your Time & Attendance, HRIS, Benefits Administration, etc. technology all commence simultaneously or in interval stages?

6. Identify the staff training dates by component and how much time needs to be allotted to such?

7. Pay attention to the Christmas and New Years Holidays in the effect they may have on either training or 1st cycles.

8. Request of the sales consultant drafting of or a review of the company letter(s) to terminate existing services. This is critical as based on the date of termination. The prior company should complete certain processes to cleanly close out the relationship with the former client (specifically production of prior year end filing/W2s, etc.)

Having the above as a guideline will hopefully assist in your search for a new provider. The most important and best advice is to request constant updates and communication through all phases of these processes. You should find your Sales Consultant very involved in this role. If not, a closer look may be due the firm you are evaluating. If I can assist in the above in any manner, Cyntron or otherwise, feel free to call on me at anytime.
Best wishes for a successful year end and prosperous 2013!