HR contract management and why it is important for your business

February 6, 2011

Many companies admit that they could do a better job when it comes to contract management.  However, those companies that do consider contract management solutions, usually only consider operational contract processes, like procurement or sales contracting.

HR often gets left out in the cold.  It is fair to say that some business executives still view a contract as a  tactical ‘insurance’ policy for when things get difficult.  World class organisations who look at contract management from a business critical and strategic perspective, view contracts as the outline of the business relationship between themselves and a third party – with terms and conditions, that if effectively managed, can be exploited to maximise commerical gain or minimise risk exposure.

So why should a business care about its HR contracts?  There are several areas where deploying a contract management solution to automate the HR contract process can provide significant benefits.

First and foremost is staff turnover.   Average staff turnover for US organisations is 15% (closer to 100% in the fast food industry), according to a recent report by Nextera.  This can produce a significant burden on HR functions and business managers looking to contract with new permanent or temporary staff.  Contract drafting for most companies is a slow and manual process that involves duplication of effort and multiple stakeholders. 

Self-service contract authoring
Self-service contract authoring solutions, available in contract mangement solutions like Dolphin Contract Manager, allow business managers to create tailored and compliant contracts by answering questions provided in online wizard-driven questionnaires.  Contract Managemnet solutions with self-service contract authoring will automatically save contracts created in a central repository and can instigate internal approval workflows.  These solutions also make contract amendments, when employees change role, a simple and rapid possibility.

Implementing organisational change
Senior business executives who are looking to restructure their businesses have a need to have accurate and timely information about their human resource pool in order to assess how rapidly and smoothly they can instigate organisational change.  Information like length of service, termination terms, remuneration and notice periods are all required, but it many cases, current and accurate data relating to HR contracts is not easily accessible.  When employment agreements are lost in the myriad of corporate file systems, it can be even harder to efficiently gain access to contract-related information.  Contract Discovery solutions, like Dolphin AutoCapture, aim to make locating lost or hard to find contracts a thing of the past.  Dolphin AutoCapture locates lost contract documents in Windows file shares and computer desktops, automatically extracts key contract milestone data and uploads the contracts and data seamlessly in to the Dolphin Contract Manager system for proactive tracking and management.

Managing HR contract related litigation
Digruntled employees who sue their employers is a common cause of contract related litigation and costs businesses millions in disruption to business, expenditure on external legal and audit and discovery services, particularly when the current version of the employment contract cannot be readily located or where the contract has not been updated to reflect changes to the employees role or employment status.

Human Capital Management
A growing number of companies have begun to look at managing their people and talent as resources that have a financial value to their business.  Human Capital Management and the on-going requirement to enhance the training and qualifications of employees to enhance their asset value, requires micro-management of contract related terms and conditions to extract the greatest value and potential.

Managing outsourced service providers
For those businesses who have outsourced their Human Resources function, will be be aware of the need to manage contract milestones, performance targets and obligations closely in order to maximise the value and savings expected when key business functions are contracted out to third parties.  Contract Management software is key to allowing HR and key business stakeholders with the right management information to manage these relationships effectively.

In short, contracts are central to Human Resources and HR executives who are looking to improve efficiencies and erradicate unnecessary cost and risk in HR contracting should consider deploying a contract management solution.  Dolphin Software holds regular free to attend web seminars.  Visit: www.dolphin-software.com/events.htm for more information.

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