Corporate Leadership Council Releases a Study on the Importance of Vendor Relationship Management to Securing Maximum Returns on HR Outsourcing.

WASHINGTON -- The Washington, D.C.-based Corporate Leadership Council announced the publication of its most recent research, Maximizing Returns on HR Outsourcing Investments: Strategic HR-Vendor Relationship Management. The Corporate Leadership Council is a membership program of the Corporate Executive Board (NASDAQ:EXBD), a leading provider of best-practices research and quantitative analysis, and serves Human Resources executives throughout the world.

Managing Director Jean Martin noted, "Over the past decade, HR departments have increasingly embraced outsourcing as a means of providing HR services and generally report satisfaction with outsourcing outcomes. However, more than half of the potential value created through outsourcing may be lost after contract commitment through ineffective vendor relationship management."

Ms. Martin explained, "This research draws on the experience of more than 80 leading organizations worldwide to determine the impact of vendor relationship management on HR outsourcing returns and to identify the highest-impact strategies to enhance vendor relationship management."

Key findings include the following:

--Ineffective vendor management stems from two root causes: insufficient resources dedicated to managing the relationship and HR's lack of critical vendor-management skills

--Value loss from ineffective relationship management can be attributed to three types of risk.

--Operational risk increases an organization's cost of managing the vendor relationship by duplicating efforts and wasting resources allocated to vendor governance.

--Performance risk jeopardizes the desired impact of outsourcing through ineffective performance measures and inefficient strategies for outsourcing problem resolution.

--Portfolio risk diminishes the organization's potential long-term returns on outsourcing investments due to an inability to leverage outsourcing arrangements in support of changing HR, business priorities or new opportunities.

--Council research presents case studies of leading HR organizations' responses to managing these three risks. Key approaches include the following:

--Consolidate coordination of vendor management: Centralize relationship management between HR, the vendor(s) and all other internal constituencies.

--Tailor relationship management according to stage in the outsourcing relationship life cycle: Adjust the composition of the vendor governance team according to outsourcing relationship life cycle phase.

--Enable customer-focused vendor performance measurement: Focus performance measurement on outcomes relevant to the customers of HR outsourcing.

--Manage outsourcing problems according to resolution requirements: Provide tools and protocols to address outsourcing issues on an ongoing, real-time basis.

--Leverage outsourcing engagements to respond to changing HR priorities: Embed a fast-cycle change-order methodology.

--Extend vendor relationship boundaries to collaborate on emerging business opportunities: Enhance the value of the outsourcing engagement by aligning vendor capabilities with emerging organizational needs.

Participants in the Council's Maximizing Returns on HR Outsourcing Investments study included Agilent Technologies Inc., AT&T Corporation, BAE SYSTEMS, Canadian Imperial Bank of Commerce, Prudential Financial, Inc. and Unisys Corporation. The best-practice case studies are available exclusively to Council members. Additional information on the Council's research is available at www.corporateleadershipcouncil.com.

Maximizing Returns on HR Outsourcing Investments is the second volume in the Council's series of research reports on HR outsourcing. Published in December 2003, the first volume, Strategic HR Outsourcing, provides a quantitative assessment of HR outsourcing's prevalence and cost, quality, and timeliness effectiveness.

About the Corporate Executive Board and Corporate Leadership Council

The Corporate Executive Board is the premier executive network for leaders of the world's largest public and private organizations to solve their most urgent shared concerns. The Board provides its integrated set of services currently to more than 2,100 of the world's largest and most prestigious corporations, including over 75 percent of the Fortune 500. These services are provided primarily on an annual subscription basis and include best-practices research studies, executive education seminars, customized research briefs, and Web-based access to a library of over 275,000 corporate best practices.

The Corporate Leadership Council is one of the Corporate Executive Board's membership programs, and provides ongoing research dedicated to the strategic priorities of Human Resources executives. More information on the Corporate Leadership Council is available at www.corporateleadershipcouncil.com

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