November 30, 2012
by By Peter Kenter
Purchasing departments are working more closely with human resources (HR) department staff than ever before, particularly in the procurement of third-party employee assistance programs (EAPs). However, the big picture reveals that the level of involvement is an evolving process, running the gamut from little input to intimate co-operation.
“We deal with both departments, but the majority of our contact is still directly with the HR department,” says Lamar Saunders, an account executive with HumanaCare, an EAP provider headquartered in Edmonton. “The HR representative will call with a list of requirements, and we customize the package for them. If the quote is accepted, it will be signed off by the HR director or benefits coordinator.”
Saunders notes that the company deals with clients employing as few as five workers, and the likelihood of negotiating with a purchasing department rises with increased company size.
Geoff Ramey, vice-president, human resources at Toronto-based St Andrew Goldfields Ltd, says that his department consults a broker who negotiates the best price for specified EAP programs provided by insurance companies.
“We design the EAP, the broker has the expertise to bring it to market and beat up the suppliers on price and that plan is processed through the finance department,” he says.
However, Paula Allen, vice-president of Health Solutions at pension and benefits consulting firm Morneau Shepell, says collaboration between HR and company purchasing departments is increasingly becoming the business model of choice for EAP procurement.
“The company wants a fair and objective process, and not one that may be influenced by friendships and personal relationships between HR staff and EAP providers,” she says. “They also want a broad and objective view of what’s available on the market.”
But such a process requires intimate consultation between the departments due to increasing complexity and rapid evolution of EAP offerings.
“The challenge is that the procurement department is not set up to develop EAP content knowledge,” she says. “A standard questionnaire offered by the procurement department often misses the objectives of the HR department’s needs because those needs aren’t easily templated. A common example is that an EAP often offers a series of products ranging from life training to trauma support. If it’s a hospital procurement department, the RFP may test the competency of only one of the services, without understanding that trauma support may be the most critical component of the package.”
Allen notes that a host of considerations may be required to craft an effective RFP. These may include less obvious considerations, such as the distance employees will be required to travel to access service, the availability of online or telephone counseling, or the preferences of the client base, who may be most comfortable with, for example, Christian or First Nations counselors.
She explains that HR personnel can improve the procurement process and deliver the greatest value by focusing on the core requirements of the RFP.
“Quite often, we see HR staff reflexively asking for a ‘best-in-class’ for each component of the EAP,” says Allen. “But that may not be what they want or can afford. By focusing on core needs, such as early diagnosis of depression, for example, they can target that for best-in-class. There should be no stigma attached to requesting a middle-of-the-road service in other areas.”
Purchasing professionals should also consult HR departments to establish objective criteria to determine whether the program provides value for money, and whether that evaluation will require the use of an objective third-party service.
Cathy Stepaniuk, purchasing manager with Wilkinson Steel and Metal in Edmonton, says that company history and culture often dictates the way that EAP programs are negotiated. In her company, negotiations are carried out largely by the HR department.
“The HR department assumes that they are better able to evaluate the RFP, simply because they always have,” she says. “We can demonstrate that we can bring value to the procurement of building maintenance and office cleaning contracts, and we believe we can demonstrate that we could bring added value to EAP contract negotiations as well.”
David Aucoin, manager of Purchasing Services at the University of Saskatchewan, has collaborated with the university’s HR department on three EAP procurements, with the most recent deal signed six months ago. He notes that although the organization requires human resources to collaborate with his department, gaining the trust of HR personnel is essential to making the process more effective.
“The RFP documents don’t change, but the needs of the HR department have changed significantly, along with the EAP programs they’re looking for,” he says. “We recognize that the HR department is the content expert and we ask them to recognize that we’re the process experts.”
Peter Kenter is a writer based in Toronto.