The Secret to Dealing with Outsourcing Providers? It’s about You [Part 2]

This article continues from “The Secret to Dealing with Outsourcing Providers? It’s about You (part 1)

Success Secrets Revealed:

• Culture is key in working with Outsourcing Providers. We suggest you start with reviewing the knowledge level and culture of your prospective collaborative partner and its compatibility with your own. Knowing what to do is part of the equation – Doing it with a matching level of cultural sensitivity determines successful and efficient long-term and sustainable integration of the Outsourcing Providers team into your own organization.

It is surprising to see how many leaders deal with Outsourcing Providers in other cultures, yet without having any knowledge about the particular culture – therefore being greatly hindered in their cross-cultural communication ability and the partnership’s effectiveness. 

Do you and your people for example, know the difference between “high context” and “low context” type cultures? Do you know which type the Outsourcing Provider (OP) has?

Outsourcing ‘across cultures’ requires for you and your organization to be prepared for this added inter-personal communication and management dimension. If not, culture clashes will minimally raise anxiety, cause delays and in the worse case scenario cause projects to fail by becoming a ‘misaligned interest’ over time.

• Require a transparent and recurring organization, quality, system and infrastructure review as part of your due diligence and business relationship. It is not uncommon to find less than optimal internal IT hardware, software and systems within OP organizations.

The Outsourcing Provider’s drive for external client delivery and results, frequently challenges spending fiscal and human resources on internal ‘upgrades’ and systems. Often, in such organizations, efficiency-delivery of the results, can take a lot of personal effort and comes at a high personnel cost. This, according to many ex-OP employees, is also partly related to the double digit turnover in many OP organizations.

Structural and internal organizational development, “non-billable” work, will often be trumped by project related work. Be cognizant and monitor this OP organizational development and leadership tension -review if it matches your (ongoing) requirements.

• Based upon Request For Proposal (RFP) data, you may select multiple Outsourcing Provider organisations for an on-site visit to discuss capabilities in relation to your specific needs. This usually comes in the form of a presentation by Outsourcing Providers’ leadership and business development staff, followed by a question and answer session. The presentation usually provides a company overview with a presentation on the number of similar projects performed for other clients – in other words the prospective capability to successfully undertake your project.

Building relationships and efficiency requires continuity of effort and demands at a minimum some form of relationship between task and people.

• We suggest to thoroughly screen and review the assigned team and provide leadership and team recommendations prior to the start of the project. Also, continuously during the project when team turnover occurs, so that timely and efficient adjustments can be made, on the OP side, or on the Sponsor side, or both.

• Do you know the Outsourcing Provider’s current personnel attrition rate? Ask the Outsourcing Provider’s leadership for a breakdown of staff by function with their tenure level within the organization – Require transparency and proof through data. Although loyalty does not equal performance, it is important to you and you need to be able to integrate the turnover data within your planning. A likely double digit personnel attrition will easily set you back in time and money, particularly on a longer duration project.

• Unfortunately, as mentioned in part 1 of this article, so called ‘respected’ OP names, do not lead to undisputed, repeated and uncomplicated successful results. It all depends upon the team assigned and the level of ‘absorption’ your leadership and organization can handle to manage, i.e. can the OP team become an integral part of a newly formed team and can leadership manage this added complexity and new organizational ‘modus operandi’.

• With all due respect for the business part of Outsourcing Providers – Outsourcing Providers’ activities and change orders come at a price to your organization and are often not the result of lack of OP strategy, planning and, or internal OP inefficiency. Outsourcing, including change orders is an Outsourcing Provider’s business and you need to carefully plan and manage jointly with the OP to avoid repeated and costly change orders.

• When people do not know what to do and go to an OP, the professional OP will require information, develop a plan, or revisit an earlier plan and present a (revised) bill for the resources used and time spent. Therefore we feel successful OP interface management is a professional, sensitive, operational and a logistical task if you will, yet a task which, particularly in some industries, carries a lot of the technical and specifics of product-, or process-development know how within.

Well technical- and people-skilled individuals are definitely required!

• Working with an OP equals initiating change within the organization, hence as a leader the need to manage this adaptation process actively and intelligently – This implies collaboration, not merely  ‘delegation’ – Take full leadership accountability and for example, target to better define the interface, its management and hence improve the functioning of the interaction with the third party throughout your organization.

• We have experienced well written interface processes effectively “not working” and mediocre processes “being handled” with excellence by the people involved. However, creativity to manage and handle complexity and the dynamics of projects cannot be ‘harnessed’ by Standard Operating Procedures (SOPs) alone. As mentioned before, knowledgeable people are required, people who are neutral to the process and to you -Those who have no internal ‘push’ from colleagues and/or the OP. In addition, people who can build relationships and who can create client success by treating the project variables intelligently and sensibly – Animosity doesn’t belong in this relationship – Maturity and professionalism does. As business advisors we experienced quite dramatic uptake in project response, budget management and the overall planning by having the interface management clearly defined and being discussed upfront by knowledgeable people. This is not just about administratively ‘getting the contract right’- you need specialist and mature resources at the table, people who ‘have been there, done that’.

• Your leadership role, although limited, is critical in the process. We recommend to establish necessary communication and reporting lines, so your role is to lead and prepare for the interpretation of the project results, not repeatedly handling escalated collaboration, or interface project management issues. Require daily discussions if necessary, particularly if you ‘test’ some thing for your organization and you want to ensure to expend money and personnel on the right ‘thing’, or the right approach.

• We recommend senior level management interaction, as frequent as necessary, but no less than once per quarter for a full project(s) performance update, reviewing the full project(s) and any outstanding issues to be reviewed and discussed.

• We recommend neutrally guided pre-, during- and post-project interface review, resulting in improved relationships and greater interface effectiveness between you and your third party. ‘Post-mortem’ implies exactly that and is severely limiting project management effectiveness. You want ongoing vitality in the relationship, not mortality.

• We recommend for you to agree on the project Key Performance Indicators (KPIs) prior to starting the project – Ensuring identical measures of success are used by your team and the OP’s team. Prevent they will not become subjective ‘Key People Indicators’, through the development of clear and objective project related measurements. You’re not ‘giving’ all, or parts of your projects blindly away. Mutual agreement with mutual measurements in place, prior to the start of the project, prevents development of project ‘blind spots’. This, usually leading to unreliable decision making data at the end.

• We strongly suggest for you to stay away from the “Bookkeeper-Auditor Dilemma”. Create a clear and separate authority and communication line between who’s executing the work and who’s supervising and/or auditing the work. When this is not ‘possible’ for example, when complete development programs are outsourced, demand regular external Quality Assurance auditing, with full access to personnel, systems and data.

Working with Outsourcing Providers can be rewarding for you and can contribute to the organization’s business success. However, we want to stress once again, any time you collaborate with an OP, you create a new venture and you ought to create a collaborative partnership of “equals” with your OP to ensure success.

The internal adaptation to integrate and manage the outsourcing leads to greater success, than the routine focus on selecting the “best” outsourcing provider. It is as much, if not more, about you and your (adapted) organization, as it is about the selection of the OP organization.

Creating a clear outsourcing common vision, strategizing integration, defining efficient operationalization and communication with and organizing your internal resources, is as important as organizing the interface with the Outsourcing Provider’s resources.

It is clear, OPs are not a panacea, they will not cure a corporation’s missing talent, performance and/or organizational issues, they don’t deal with organization misalignment, missed succession planning and any other myriad organizational and business development issues you may be dealing with.

Both Sponsor and OP leadership have to be dedicated to collaborative success – focused on “Client Success” and mutual business success, by producing functional resource integration, assigning quality and dedicated leadership with appropriate project performance measurements.

As an organizational leader you must lead and manage your own organization, but you cannot and should not attempt to manage the Outsourcing Provider.

We hope through this 2-part article we have been able to contribute to improved and successfully dealing with the organizational development, communication requirements and collaborative leadership required in the preparation, planning and execution of successful partnership with OP’s.

Conclusion

Partnering is collaborating and collaborating needs to happen as “equals”. The internal organization and framework, its culture, is equally as important as the Outsourcing Provider’s culture you select.

Your leadership is key in preparing and leading your organization towards outsourcing success – you need trust, transparency and being able to continuously tell each other truthfully what’s going on.

The true panacea to your organizations outsourcing success – The secret of dealing with Outsourcing Provider’s is all about you, your organization and the leadership of the outsourcing relationship.

Last, but not least – Please remember, any time you consider outsourcing, first consider your specific need and the internal organization currently in place. How controversial this may sound, selecting the Outsourcing Provider is of secondary importance.

Wishing you much success!

References

[1] Beer, M., Nohria, N., (2000). Cracking the Code of Change. Harvard Business Review, HBR’s 10 Must Reads on Change, 88-95.

[2] Beer, M., Eisenstat, R. A., & Spector, B. (1990a). Why change programs don’t produce change. Harvard Business Review, 68(6), 158-166.

[3] Kotter, J. P. (1995). Leading change: why transformation efforts fail? Harvard Business Review, 73(2), 59-67.

[4] PriceWaterhouseCoopers (2007). The partnership bridge: Building successful IT outsourcing relationships – 2007 Global Outsourcing Survey

This article was originally published in Leadership Matters on 18 January, 2012.