Vendor Management Services - Research Paper Example

Vendor Management Services Abstract The paper is an effort to understand the dynamic and innovative practice and approach in human resource management that would enable a reputed organization to do away with mal-practices of the outsourced vendors and overcome the hurdles that the employees in an organization face. It attempts to analyze and understand the basic traits of employee benefits with a recommended solution to the best benefit to be applied for a particular issue. Further it analyses in what way this solution would benefit the employees as well as the organization. Lastly it also explores in what way a good knowledge of the employee benefit has influenced us to be equipped with the necessary skills and knowledge that one could use it in one’s own professional domain. Keywords: Employee Benefit, Sodexo, Aetna, Vendor management, Service Level Agreement, Customer satisfaction, Employee feedback, whistleblowing. In today’s world of global competition, every organization survives in business with the help of its external and internal customers. The internal customers i.e. the employees in an organization play a very vital role. Hence leading organizations in the world today come with various benefit schemes that would help to stopgap the rapid rate of attrition. One of the main benefit schemes that an employer offers is healthcare benefit. In our case study we have the reputed company Sodexo which one of the renowned food & facility Management Company in the world. As a part of the usual practice in a huge organization like Sodexo, the task of providing the health care benefit is outsourced to a third party vendor, Aetna which has already been explained earlier in the beginning of the discussion. Part 6 Since we have already identified the core issues which need to be addressed we now would make an attempt, keeping in mind Sodexo situation, to recommend the best workable solution that would be cost effective and time saving. As it has been mentioned earlier that having a good defined benefit plan is one thing and effective implementation of the proposed benefit plan is another. No benefit plan, no matter how well defined they are, is of any use unless it is of use for employees. The yardstick is to measure employee satisfaction with the benefit plan and is always of prime importance. In the earlier part of the essay it has already been elaborated that after consulting CEO and HR head of Sodexo the CEO of Aetna fires all the medical practitioners who brought bad name to Aetna .However; Aetna firing its unethical medical professionals would hardly help Sodexo employees since there could be another third party vendor that would follow the same footstep. Now the question is who will invigilate the activities of other third party benefit providers for Sodexo, for example United Healthcare or Blue Cross Blue Shield providing Healthcare Coverage to Sodexo employees, Dental Coverage from Metlife and Eyemed for Vision Care. Sodexo as an employer should ensure that its employees are not exploited by any of the outsourced vendors just on the basis of their hierarchy within the organization. Not only that the company needs to be more vigilant when outsourcing works to a third party vendor especially acceptable vendor selection will be significant in this regard. Even after selecting vendor as facilitator for particular employee benefit a bit of administrative excellence and support would be required on the part of Sodexo. The top management should get statistical data from time to time regarding the effectiveness and the quality of service of the third party vendor as well as the feedback from the employees of their Client. Keeping an eye and appointing a team from within Sodexo to invigilate the activities of these third party vendors would be crucial. Sodexo as an employer will have to ensure that its internal customers are happy to deliver what is expected to its external customers for the growth of the business. Although Aetna employees have taken their learning from their predecessors and resumed to render satisfactory services to existing Sodexo employees but there is no guarantee that the issue will not reoccur in the future. There is always a possibility that once they are complacent with their service they would start taking employees for granted. Therefore, in order to ensure that the good practices exceeds employee expectation and raises level of commitment for the organization constant monitoring of vendors activities would be required. ( Bucki, 2011) Some recommended measures that could be taken by Sodexo to ascertain that good practices of Aetna employees continue to provide excellent customer service experience are as follows: First, Formal step should be taken to ensure that the new Aetna Medical team is hired only after their credentials are checked and approved by Sodexo management team. Vendors play an important role in successful running of the business since a mutual and cooperative culture between the vendors and customer would enhance growth and development for both the parties. Second, a team of experts should be appointed for vendor management responsible for collating feedback from the employees and passing it to the vendors regarding employee experience of customer service by the outsourced vendors. On the positive side vendor management would increase the level of communication fostering proper flow of messages that would ultimately boost the level of efficiency. On the negative side, unless a proper channel of checks and measures are maintained such radical changes might be a distant dream. Hence we can conclude that the practice of vendor management would bring the desired result if it is managed through a proper channel keeping in mind the cost effectiveness and feasibility. In this regard the role of HR is very important since it is their ownership and responsibility to cater to the needs and requirements of the employees. They cannot overlook the employees’ interest and brand them as ‘complainer’ or one who over reacts to any situation. The concern is indeed a serious issue because it would lead to loss of man power as well as reputation of the organization. The employees cannot be discriminated against the position they hold in the company. Eventually HR indifference to employees’ dissatisfaction regarding their Benefit would further worsen the already dismal situation. This would again hamper one of the key areas of HR functionality that is Performance management. (Bhagria, 2010) Human Resources team is also responsible for creating a positive attitude towards the organization by conducting employee orientation. Exit interview is one of the many tools that can give HR team an insight into the level of satisfaction an employee had in the organization. Again the exit interview feedback can be used to identify the areas of improvement for the organization that would make the organization a better place to work. First, HR Team needs to facilitate regular meeting between Internally Chosen Vendor management Team and Third party vendors to analyze the issues that are coming up. Second, there should be a channel for inflow and outflow of the messages from both ends. Third, vendors can also ensure from their end that they collate employee feedback on regular basis. Finally, HR personnel can ensure that Employee Opinion Surveys are conducted by an independent agency and they should give due importance to employee feedback. (Article base, 2009) Part 7 In the first half of this essay we have already identified the core issues regarding employee benefit while in the second half we have tried to recommend few solutions to overcome the issues. In this part of the project we will try to establish how the recommended solutions would help in realizing employee benefits with an assurance of quality. One of the key solutions to the mentioned issue is to ensure effective vendor management. Vendor management ensures quality assurance. One of the most effective methods to apply vendor management is to develop proper channels of communication between the vendor, Aetna and the company Sodexo. This can be achieved through various means like ensuring proper channels of communication, conducting regular meetings with the employees of the organization as well as the vendor to get regular feedback through discussions as well as by surveys and so on. Also it is very important to share relevant information with the vendor that would help the vendor to understand the implications of the benefits to the employees and also the consequences of having a poor rate of conduct. Further a balanced commitment approach is important so that the vendor gets to know that the company does not rely completely on the vendor and has other resources to obtain the same service. Moreover building a long term commitment also helps the vendor to have a clear understanding of the business process and vice versa. This is one of the reasons why the relation with Aetna is renewed. In this regard it can be stated that Aetna has already fired the responsible medical practitioners to gain the confidence of their client and they have already recruited a new professional team to cater to Sodexo employees. Thus changing vendor would not be a pragmatic decision rather we can give Aetna another opportunity to put to rights the mistakes that has been committed in the past. Another important issue is value. Often the company feels to cut short its budget and tries to get the most by paying the least to the vendor. This has a negative impact since very often when we pay less value for service; we also receive less service from the vendor. Therefore company should be willing to pay justified amount in order to get the best possible results. Lastly it is very essential to negotiate a win- win agreement with the vendor that would be mutually beneficial. This way both the parties would work towards achieving a common target. (Purchasing & Procurement Center, 2011) Moreover, in order to get competitive advantages on the business building an intensity of commitment for vendor and gaining at least the same level of commitment from the vendor would be required. Of course maintaining a balance at the levels of Commitment would be crucial. (About.Com) Good Vendor management states that both the Parties accept the terms of the contract in good faith and sign the agreement or contract only after reaching a consensus. This would create an environment for a mutual beneficial and durable relationship between the parties. Further, a well planned strategic relation with the service provider will fortify business on both ends. The term vendor management symbolizes that there is an agreement for Mutual benefit and growth plan for both the involved parties. But the success of the agreement depends on few important factors and most important among them is to discuss your priorities with the vendor and explain what your expectations are when you have outsourced the services. We may have to share minimum required information with the vendor to allow them to provide better service. In fact an effective communication with the vendor on regular basis will even eliminate the chances of service providers using unethical practices. (Bucki, 2011) The primary question that we are trying to answer by exploring the Vendor management strategy is why after all an organization should have a vendor management team in place. In order to ascertain that contractual agreements are met and there is transparency in the level of service there should be a governance team responsible for keeping a track of deliverables as per the contract and determine the level of customer satisfaction. It has been observed that a better managed vendor will be proactive in taking corrective measures to address an adverse situation for example Aetna CEO sacking the entire medical professionals responsible for malpractices. (Bucki, 2011) Therefore, the formation of vendor management team would allow Sodexo to monitor the activities of not only Aetna but all other vendors as well. Eventually this would facilitate a platform to constantly scrutinize the Service Level Agreements and other contractual aspects with the vendors to enhance the level of service. . (Perelman, 2007) The proactive role of Human Resources Team is yet another solution to ensure effective implementation of Employee benefits that we have discussed in the previous section of this assignment. Now we would analyze what function HR performs to cut shorts the negativities and unethical practices. Human Resources professionals are responsible for recruiting a competitive Corporate Governance team for vendor management. Once vendor management team has been appointed, HR can outsource the Employee Opinion Survey to an independent agency to ascertain that anonymity is maintained regarding the background of the employees and also regarding the nature of input that they have provided in the survey. This will increase participation of employees in the survey and also valuable information will come to the fore because employees would not have the fear of being marked as complainer. (Zarca Interactive, 2011) The HR team along with the corporate governance or vendor management team would facilitate regular skip level meetings with the internal employees to collect feedback about their experience with the service providers and the same information needs to be feed through to the management team of the service provider. This will create a platform for smooth flow of communication and ultimately would result in customer delight. Employee feedback can be used as a yardstick to measure the success of an organization it brings the strengths and weaknesses of an organization to the attention of the management team. Employee feedback also gives an insight to the management about the areas of improvement in the organization which is why good employers always encourage their employees to raise their concerns. As Human Resource is the bridge between the management and the employees, regardless of the rank of employee in the organization HR team should give due importance to all the feedback because this would increase employees participation. Employees will raise their concerns only if they feel that their ideas would be helpful and their employer is interested in executing new ideas for their betterment. (Article base, 2009) Thus good vendor management practice as well as effective role of the HR would make ways to do away with the issues and balance the pros and cons that we have discussed earlier. In fact the negative elements could be easy eradicated with the proper implementation of the mentioned best practices-vendor management and role of Human Resource. Part 8 From the above discussion we can draw a conclusion that a happy internal customer would provide quality service to external customers resulting in more business and good name to the organization. On the contrary if an internal customer is not happy that will reflect in their actions when they are dealing with external customers and the outcome will be an unhappy customer and in the long run that might cost us the business. Employees are asset to the organization and retaining quality employees would automatically pave the way for development of the organization. A motivated and happy employee goes “extra mile” to exceed the expectation of the employer and they take the ownership of what they do. When an employer shows interest in safeguarding their benefits for example what Sodexo did by inviting the retirees to share their experience with Aetna and assuring them that their benefit is their right and Sodexo as an employer will take all possible care to ascertain that they do not receive any unprofessional treatment when they contact the service providers? This kind of approach and attitude by Sodexo’s management team will help them to create a deep bonding with their existing as well as ex-employees. An employee who feels a sense of engagement with the organization would not only stick the organization but they would also advocate the cause of their organization if required. If HR and top management decide and approve the recommendation of recruiting a Corporate Governance team to invigilate third party vendors’ activities then there would be some sort of certainty that the issues that had occurred in the past are not repeated. Again, whistleblowing should be treated as healthy practice within the organization to guarantee that the corporate governance team is not biased in addressing employee feedback. Although Employee retention does not directly fall within the domain of HR but a well balanced policy in order to safeguard the benefits of employees would immensely help in reducing attrition. (Andy, 2011) One of the primary tasks of the HR department is to plan future Organizational goals; this would not be smooth sailing if the department does not get the support of the staff members. Thus HR has to be vigilant about protecting employees’ benefits by outlining different levels of checks to guarantee that staff members are not subject to any exploitation by any third party vendors. They themselves would have to be honest an impartial while receiving feedback from different levels of staffs. Most importantly, they should encourage the dissenting opinion to reach the root of the issues to eradicate the problem permanently. (Alford, 2001) In case of Sodexo, we have discovered that although, feedback was received by Hr department during the exit interviews regarding the unprofessional treatment of Aetna medical practitioners. The concerned department did not pay any heed to their suggestion and presumed that those employees were over reacting to the situation and the feed back has hardly anything to do with reality. This showed the HR departments biased opinion towards employee at the lower echelon of the organizational hierarchy. This was one of the main disadvantages that we had discussed in the pros and cons analysis in the first part of this essay. In order to eradicate this menace we need to set up a ‘whistle-blowing team’ to review the activities of HR as well. (Lilanthi, 2003) Thus after understanding the issues of the paper and analyzing the core concepts it has in fact opened a new horizon about understanding how important role the benefit schemes plays and what significance and consequences it may lead to if plans and strategies are not put to practice. Also it proves that employees in an organization should be vigilant and should immediately take proper recourse if the benefits they are entitled to are not put to practice. Further only defining employee benefit will not serve the purpose ,the benefit plan needs to be an excellent and coherent implementation guidelines HR department would not only define employee Benefit plans but they should act as the guarantor of the benefit to build employees trust and commitment towards the organization. Hence after this assignment we can infer that before choosing the benefit schemes we should be extra conscious to know how effective the benefits are in the real life scenario. Works Cited 1. About.com, Operations/Technology (updated 2011), wb, n.p http://operationstech.about.com/od/vendormanagement/Working_With_Your_Vendors_and_Suppliers.htm 2. Purchasing and procurement Center, Vendor Management Services – What Are the Benefits? (Updated 2011), wb, np http://www.purchasing-procurement-center.com/vendor-management-services.html 3. WOODRIDGE HRM Articles, How an Employee Satisfaction Survey Benefits Your Business, by West, Andy (Aug, 2011): Andy West http://human-resources-mgt.bestmanagementarticles.com/a-28837-how-an-employee-satisfaction-survey-benefits-your-business.aspx 4. Zarca Interactive, Benefits of Employee Satisfaction & Engagement Surveys (Updated 2011), web, np, http://www.zarca.com/Online-Surveys-Employee/benefits-of-employee-satisfaction-survey.html 5. Santa Clara University, Encouraging Internal Whistleblowing in Organizations (2003), by Ravishankar, Lilanthi http://www.scu.edu/ethics/publications/submitted/whistleblowing.html 6. Ethics & Policy Book Reviews, Whistleblowers: Broken Lives and Organizational Power, By C. Fred Alford, Ithaca and London: Cornell Univ. Press, 2001, 170 pp: http://www.epic-online.net/br_whistleblower.html 7. Young HR Managers, Roles and Functions of the Human Resource Department, (April, 2010), By Bhagria Amit:http://www.younghrmanager.com/roles-and-functions-of-the-human-resource-department 8. Article base, Free Online Articles Directory, Importance Of employee feedback(March, 2009), web, np, http://www.articlesbase.com/management-articles/importance-of-employee-feedback-807026.html 9. Martocchio, J.J. (2010). A Primer for Human Resource Professionals. Employee Benefits (4th Edition.) New York, NY: McGraw-Hill 10. Vendor Management Success Tips -Vendor Management: Making It A Win-Win By . Bucki , James’ (2011) About.com Guide http://operationstech.about.com/od/vendormanagement/tp/VendMgtTips.htm 11. Why Vendor Management Teams Need Specialized Tools for Outsourcing Governance, (March 2007), What Clients Should Know To Maintain Deal Health By Roehrig, Paul Ph.D. http://www.forrester.com/rb/Research/why_vendor_management_teams_need_specialized_tools/q/id/41478/t/2 12. “Six Steps to Successful Vendor Management”, by Deb Perelman (2007), web, n.p. http://www.eweek.com/c/a/IT-Infrastructure/Six-Steps-to-Successful-Vendor-Management/ Read More