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Follow these 7 steps to set up an effective Service-Level Agreement

by , 08 January 2016
A Service-Level Agreement (SLA) is a contract between a service provider and its customers, or even between service providers.

It formally records the understanding about the services, priorities, responsibilities, guarantees, etc. In other words, it records the level of service that is required, by both parties, for the successful execution of the contract.

On top of this, it usually includes:

· definitions of services which the outsource company will provide;
· Performance measurements; and
· Penalties for not meeting requirements.
Now, this may all seem very straightforward, but coming to an agreement is not necessarily that easy.

So follow these 7 steps to set up an effective Service-Level Agreement (SLA)...


Gather any background information to have a solid foundation from which to negotiate the SLA.


Ensure that both parties agree, as it's important you both have the same view about the role and scope of the SLA.


Navigate the minefield of HR issues recent changes to the BCEA, EEA and LRA have created

Have ground rules for working together. Reach an agreement on the process you'll follow in drafting the SLA.


Develop the agreement

Also debate and negotiate the contents of the Service-Level Agreement


The result of 'step#4' will be a draft of the SLA.

Both parties should then review the draft and make any suggestions before finalising and signing it.


Complete pre-implementation tasks.


Implement and regularly manage the agreement by monitoring the actual relationship and requirements as set out in the SLA.

TIP: The most important clauses to include in a Service-Level Agreement include:

·        Contract termination clauses;
·        Terms and conditions for the continuation of the contract;
·        A clause that covers you from sudden, and permanent, service interruption. For example, this could include assisting and migrating to another provider; and
·        Terms and conditions on adjustments to pricing.
*Those were 7 steps to set up an effective Service-Level Agreement. If you'd like to learn more on SLA's, then subscribe to the Practical Guide to Human Resources Management today.

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