First, if you missed the early installments, you should go read Part 1 and Part 2.
If you have gotten to this point, you have gone through your outsourcing contract and service agreement, and surprised even yourself with the meticulousness you brought to the task. Ready to sign? Not just yet! A couple more things need to happen.
Lost in the excitement of all the great things that are coming is what happens if this doesn’t work out? You have been the cheerleader for this move to outsourcing, so it can be really hard to get yourself into the frame of mind required to consider that this may not go as planned. And, what is important to consider is not just a letdown in service, but also changes in your own company that would necessitate a move away from this arrangement that you are so pumped up about right now. The most common:
- Growth to the point where you look to bring the management of your stock plan inhouse (this change can also apply to an event like an IPO)
- Merger or acquisition
- Change in stock plan system vendor and/or utilization of one with greater outsourced stock plan management capabilities
You should review the termination provisions of the contract in the context of some of the common reasons for ending these types of relationships. All these things can happen, often much sooner than you think. If the contract language is not clear around why you may terminate, now is the ideal to tighten that up (after all, most vendors see the same rosy path into the future together that you are seeing, and are just as likely to discount the possibility of your blissful union ending). Better yet, have as your goal the elimination of any termination fees…you may be surprised at how much they will give when you frame it the right way. In any case, make sure that the termination provisions seem reasonable enough knowing that the end may already be near.
Of course, the other reason you may want to leave is just plain old dissatisfaction. To be sure, not everything is going to be perfect, and everyone understands that. Almost any final selection you are going to make will have been informed by the systems and processes your vendor has told you so much about; but remember, you are going to be working with people. Right now, countless people in every industry across America are pulverizing some of their own company’s carefully defined processes, and making mincemeat of these same company’s precious systems. “Best laid plans” and all that. The good news is that many more people are doing a good (or great job) as I write this.
What can you do (that not enough people do) to ensure you have the latter and not the former? If you have not already done so, ask to meet and interview the team you will be working with everyday. Not their managers. Them. And then, when you are completing your reference calls, make sure you are getting those for at least some companies that work with the team you will be working with. Most vendors will point you toward their most satisfied clients, and that is great. But you should definitely want to speak to clients who know (and hopefully love) your team, the people you will be working with everyday.
People — not systems or processes — are a stock plan outsourcing company’s greatest asset (or weakest link). Do the work up front to ensure you are getting off on the right foot with the right team.