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Calling All Buyers

Posted: 28 October 2014

There are literally hundreds of firms now who offer competent, accurate, conscientious, compliant and friendly services in regulatory compliance. Buyers, big or small, no longer have to mash up a slab from the lawyers, a slice from the software guys, a dash of insurance, some publisher garnish, the consultancies? seasoning and bring it to the boil themselves. Nobody wants their brightest and best bogged down with the fire-fighting, the sackings and exits that are inevitable in all human endeavour; you want them freed up for the stuff that makes you different, successful, and special to your clients. So finding a partner to take away all that grief is easy, yes? Well it would be if you could find the right recipe. So where to start?
We?ve studied and asked firms who outsource any and all aspects of regulatory compliance in HR and employee relations what it is they need. The answers are surprisingly still some way away from what most suppliers put on their Home Page. Fundamentally firms, large or small do actually want the same things. And yes ? no surprise ? they also emphasise various components very differently.

Everyone wants:

Advice
Specifically you want prevention and "intelligent" escalation. The rule is "no surprises": stop the bomb from going off, and make sure any issues that need to go up the chain of command do so quickly and concisely. The advice has to be appropriate to the issue, yes, but even more so ? to the competence, time poverty, inexperience and pressures on the people on the front line. That may be an owner manager, it may be a trained HR professional, an in-house solicitor or a distraught night shift manager. And it is taken as rad that the advice has to be not just correct, but practical and understood.

Proof
When it does go wrong (and it will, however professional your team is) you need your ducks in a row as quickly as possible. This is all about "reversing the burden of proof". Make the opposition do the hard work, not your team. Some call it eDisclosure, due diligence or compliance management systems ? it all boils down to the same issue: get in the position where you can genuinely say "have-a-go-if-you-think-you?re-hard-enough". Then walk quietly with that Big stick in your armoury. Defences win matches.

Reputation
When the playground is full of kids shouting "fight-fight-fight" you need cool heads and strong arms. Dealing with litigation, dispute resolution, negotiations, claims and counter-claims, gambits and ploys requires competence, capacity and an eye on the Big game. The issue here, however, is not efficiency in handling bulk claims or events, it is in making those events go away altogether. No more just-in-time or just-in-case; try just Gone.

Capacity
In-house teams will struggle now to be professional negotiators in medically led processes (that?s what absence is now), as well as grievance, disciplinary, discrimination, competence issues, recruitment, immigration, TUPE, redundancy, compensation and benefits, etc ? you simply have to pick the issue you must excel at and get help with the rest now. Regulatory Compliance projects are now major exercises when things go wrong, get help with the big projects by all means, but smart firms also get the tactical stuff out of the way so you can focus.

Effectiveness
Sustained behavioural change is the goal. The tools to deliver it are often wrapped in software, but the risks go away when the risky processes and behaviours do. Agility gets tough, really tough when you?re on the 8th sprint and the solution is still in beta queued up behind all the systems you really need your specialist team on. Compliance systems maybe be low priority, but they are always high risk. It also changes at the whim of government and regulators ? usually just when you are least able to divert internal resource to patch it up. The smart play is to find someone else who can stay ahead of the regulators here and keep your defences up to scratch.

Within these five main requirement areas, we have refined a list of 91 issues that firms consider important. Then we ranked them, as all good procurement specialists would, in terms of which items within each sector are the most important. These items are not static and set forever, however. Some years back, the importance of insurability was a key driver. It is why many tender processes still have often quite high thresholds for professional indemnity insurance cover among suppliers, etc. Since the last recession, however, software competence and fixed fee business models are both issues which buyers often rank higher than insurance quantum now. The influence in regulatory compliance of different types of training has also changed dramatically. Not long ago firms were happy to simply send a few people every now and then on "open" courses where appraisals or compliance events revealed a shortfall in training needs. It would be added on to the service. Now the rise of turnstile competence and eLearning solutions have made a big impact, are the norm in some industries and built in. Historically the issue in Tribunals used to be how efficiently a partner could handle them. Now it is how quickly they can make them go away altogether.
From this we can get a "score" in terms of how focused each supplier is at things a buyer wants. But the thing is, buyers change, as do suppliers. Some suppliers are brilliant at meeting the needs of owner managers in smaller firms, but simply don?t have the vocabulary to understand the needs of a multi-site major business. Equally a team brought up on very detailed capacity support on one or two complex issues, will be all at sea with a smaller firm asking for more generalist support. It gets complicated when some suppliers do both, and do them well. A typical example is where a firm supplies advice to the membership of a trade association or affinity group while also serving some major companies direct on specific aspects of compliance. Some law firms are very effective in court, while supporting a raft of SMEs on generalist employee relations issues. Others are specialists by industry and able, for example, to support start-up academies as well as major multi-site schools or universities.

We therefore rank each of the five sectors according to how different sizes of business see them, as well as each and every category within the sectors. The requirements of Blue chip firms and international businesses are different to those of Major UK, often multi-site firms. These in turn differ from medium sized firms, often large within a specific industry in the UK, who are again different from the small and growing (usually owner managed) businesses. They all differ from the micro businesses, which most commentators confuse with the term SME. The major divisions here are between those businesses run by owner managers, those with specialist management in place (ie HR managers), and finally those with professional management tiers and responsibilities, most notably recently the GC or in-house counsel/lawyer, but historically also the chartered FD/CFO.

The net result is a matrix of over 2200 component requirements fulfilling 5 basic needs for firms seeking to outsource regulatory compliance. We?re stress testing it now, but it works. It can demonstrate why Mentor is brilliant at some types of client and not others, why Peninsula is good in some parts but simply can?t reach others, why Ellis Whittam and Alcumus will appeal to different buyers, how Adviserplus are different, where Citation and AP Partnership can expect to excel, and why ELAS and Abbey are unlikely to ever end up on the same tender shortlist. New small teams can trump long established ones ? this is not a ranking by turnover, although we can and do overlay that too. But it is important to bear in mind that Big is not always beautiful ? just as small is not always "niche" either. There are software specialists, publishers, bookies, bankers and bureaux in the mix; there are partnerships, limited companies, law firms, ABSs and LLPs. There are firms which are certified, accredited, approved, listed, unlisted, and all points in between. What they all have in common is an ability to deliver many if not most of the requirements for any firm seeking to outsource regulatory compliance.

At last we have a way of helping buyers shortlist the suppliers most appropriate for them. We can help them manage a mix of suppliers who they consider complementary, and we can monitor the progress of these "panels" as requirements change and competencies evolve. We can then demonstrate who are the Big Players, the Rising Stars, the Niche Specialists, and the Creative Geniuses as well as picking out those who we consider should just be Highly Commended for a unique contribution.

Then you choose.

3HR plc

A law firm (ABS) and insurance intermediary building a strong position in outsourced HR and employee benefits services for larger and global firms.