Transcript of "Forging successful partnerships with an outsourcing provider"
FORGINGSUCCESSFULPARTNERSHIPSWITH ANOUTSOURCINGproviderAdvice & Anecdotes from the C-SuiteSusan DeFazio & Dr Anne Dibley
Kelly OCG and the Henley Centre for Customer Managementat Henley Business School undertook a year-long study to identifythe repeatable characteristics of successful outsource providerpartnerships. They reviewed and analyzed the most respectedpublications on the topic of service agreements, and conductedin-depth interviews with over a dozen senior executives fromoutsourcing providers and client companies. The findings arecrystallized here in a 15-minute primer for senior executives.
01success factor Strong Governance Plans change. Outsourcing agreements and memorialize those ‘mechanisms’ in the The timing and composition of meetings should can’t account for every possible wrinkle in agreement. You may decide to have a single be spelled out in the service agreement—no an evolving, dynamic relationship. Strong point of contact to delegate tasks, or to institute matter how plodding the exercise may seem. governance agreements compensate for a customized ‘heat map’ that documents on- The structure and purpose of meetings should uncertainty and define how the partnership going tasks, unresolved issues, and individuals be reviewed constantly so they don’t become will ‘flex’ over time. responsible. stale. Consider atypical formats from time to time, such as a ‘blue sky’ discussion, to foster Create a mirrored governance structure Demand a clearly mapped ‘relationship innovative, fresh thinking. between the provider and client, from senior infrastructure’ from the outsourcing provider. management on down. Disseminate the right management The outsource provider should define and map information to support the governance. You should know who’s ‘facing off’ when clear roles across their global organization, problems surface. Mirroring begins with the repeated by country and by discipline. By Sharing clear, relevant, real-time information CEOs of both organizations, who should meet standardizing roles, the OS is better positioned is critical to drive action. Key performance at least bi-annually to ensure the governance to scale the partnership to multiple countries indicators (KPI) should be reviewed at every structure is effective at delivering the results and business units. meeting—not as lengthy ‘back-patting’ both parties expect. The ladder of mirrored overviews to show how all is proceeding to relationships should be clearly documented in Respect the critical importance of meetings plan, but a tightly focused look at exceptions. the agreement, from C-level all the way through as the ‘tailwind’ in a successful partnership. As one executive put it, “The MI should be used operations. A tightly woven partnership solves to drive out the low and high points, and think In our interviews, the subject of meetings problems more efficiently than the alternative. about the future.” (e.g. how often, who comes, what follows) Define roles clearly, particularly who ‘owns’ was a point of extensive discussion and what issues in your governance framework, thoughtfulness. Consistent, well-run meetings— then set up accountability for marking from weekly progress meetings to executive- progress and resolving problems. level performance review meetings—were characterized again and again as the element of Institute a clear system for following up on traction in highly complex relationships. action points from project review meetings— 3
02success factor measuring value & success Measure success based on supporting Gut-check KPIs regularly. Client satisfaction is among the most growth rather than driving down costs. important measurements to capture. The OS and client should examine in-place Explains one executive, “Some clients think metrics regularly to determine if they are still No matter how stunning your KPIs, the client they’re asking for cost reduction and value, but relevant. To move beyond a short-term focus (both managers and end-users) must ‘feel’ are really only focusing on costs. They need on costs, be explicit about the value being this success to make it so. Says a procurement to look at the ‘total cost of performance.’ For delivered. Says an OS executive, “[We] might executive, “We, as procurement, can say, ‘this example, Client Performance + Provider A gives be running twice the number of applications is a really successful programme, we have ‘x’ you Performance X, but Client Performance + with half the people. If you don’t [define] this, in amount of savings’ etc, but in essence, the Provider B might give you Performance Y.” two or three years time, your client is going to programme will not be successful, as long as it say, ‘you aren’t doing enough.’” is not in the minds of our business stakeholders. An outstanding outsourcing provider can help clients raise the bar, setting new performance The concept of value can change, almost One executive reports two simple ways to goals based on growth and access to talent. imperceptibly, over time. Says one OS measure whether client satisfaction is high: executive, “You need a quarterly process to “First, does the client say ‘yes’ when you want recognise and define how value is changing. them to act as a reference for a new piece of At a senior level, every meeting you have with business? Second, is the client prepared to put the client, put on one sheet of A4 paper – ‘this their name or brand on a case study?” is what we’ve done for the organisation; this is what we’ve achieved” “To get approval for a video case study is the ‘holy grail.’ if your client is prepared to have a video of him on your website saying you’re all good to work with... In my opinion, it doesn’t get any better than that.” —outsourcing provider 4
03success factor Openness, transparency, honesty & responsiveness Don’t forget to recognize the value the Expect a provider to propose strategic, outsource provider is providing, repeatedly. sophisticated solutions, based on their expertise—and offer plenty of opportunities Treat the provider as you would one of your for them to do so. own executives or managers to promote greater openness and transparency. Consider As one provider explained, it’s “not just getting an awards program, team building ‘day-aways’ the ball back over the net,” but dealing with or other special gatherings. These types of root causes and the long-term. The solution events warm up the relationship, signaling to a particular problem may not be a simple, respect and commitment. bottom-line solution, but require a more nuanced analysis. “Each institution holds dear the long-standing relationship and understanding they have [with an outsourcing provider]. Most companies would point to one or two suppliers where (sic) you know that, come hell or high water, that supplier is going to be there for you.” —client organization 5
04success factor MUTUAL TRUST AND CONFIDENCE Trust and confidence—assuming it’s well- questions and analyze difficult problems. Why does building trust matter? If the OS team placed—begets a more productive relationship. Says one client company executive, “The feels hung out to dry, says one provider, “You Those are qualities that grow out of a outsource provider must have the ability to get the ‘dregs’ on that account. On the provider competent, long-term relationship, yet there are connect and understand the business, and side, people can manage themselves out of actionable steps to speed the process. look at the overall value it can bring to the accounts. The client doesn’t necessarily realise organisation. They need to understand the it’s getting the B, C and D teams.” Share problems early and plainly—and ask business pressures we’re facing, and how they for this type of openness in the agreement. can help us meet our goals.” Aspire to reach a state of mutual, institutionalised trust. Trust and confidence emerge not in heady Share sensitive information early. periods of success, but in the midst of challenge Institutionalised trust is characterised by low and stress. One OS leader explains, “Honesty is A true measure of mutual trust is the number attrition and extensive sharing of financial telling the truth when you’re asked a question; of ‘unofficial conversations’ the relationship information. Says one provider executive, transparency is telling the truth, plus showing manager on the client side is prepared to have “You mention the name of the client, and concerns, gaps, negatives, and being open with his counterpart on the provider side. For everyone responds instantly. [...] Each institution when you can’t do something. example, a client may tell the provider about holds dear the long-standing relationship an organisational change before it has been and understanding that they have. [...] Most Choose your key contacts—particularly officially announced to help the provider look companies would point to one or two suppliers the OS-based ‘client manager’—wisely. good to within his own organisation: “They’re where you know that, come hell or high water, This individual should be chosen as a steward telling you because they trust you that it won’t that supplier is going to be there for you” of the relationship. Aside from having excellent go any further, [...] giving you a ‘heads up’ on relationship skills, he or she should also be a something that may impact you, rather than shrewd businessperson, able to ask probing leaving you on the back foot.” 6
05success factor Delivering what you promise To deliver on promises, take time we actually agreed here? What does it mean to study and internalize what’s for you?” The facilitator helped the employees commemorated in the agreement. visualise the reality of the outsourcing relationship: “If this is what we do, this is what To do so, bring in a third-party facilitator to it will look like for you and your people.” These run workshops that ‘translate’ the language exercises embed the ethos of the agreement of the agreement into real-life scenarios and across both organizations, moving beyond the processes. One executive recounts how a checklist of expectations. facilitator helped employees to reinterpret the contract, and answer the questions, “What have “Internally, ensure you’ve properly mapped and understood issues surrounding each of the customers within the [client] organization (i.e. how those relationships work and how people react). Don’t fall afoul of the strongest opinion-formers within groups. Understand who they are--they are not always the most obvious ones.” —Outsource Provider 7
06success factor Achieving mutual goals, bringing mutual benefits The client must believe that success for the Clients should not view providers as provider equals success for the client. a destination for savings, but as an extension of their own enterprise, If the client genuinely supports and believes and an opportunity to create value. in the importance of the provider’s success, this enhances the chances of a successful The best partnerships function as peer-to-peer. collaboration. Says one client executive, “The Says one client executive, “Even though they better they perform, the better they perform are a third party, we like to think they’re part of for us. [We need to] ensure they’re motivated, [our organization.] It’s 50-50, the relationship. progressive and doing best industry practice. We rely on them, we’re there to support them; We’ll do whatever we can to support that.” they’re the ones who give us feedback. [...] We bring new initiatives to the table, then they have 50% input on how it all works. [...] If we ask them to do something and they can’t do it, we have to be real; they can’t do everything. We always work on solutions together.” “I’m supporting the growth of their business; this stimulates them to do things for me that they might not be contracted to do. It’s a balanced ‘give and take’ relationship. I make sure information is shared; by withholding information, you’re shooting yourself in the foot.” —client company 8
07success factor Giving extra value and on-going innovation The OS must have the ability to find To innovate, create ripe opportunities. connections between its knowledge The client and provider must set aside time— base and the client’s needs. as a contractual obligation—to discuss and Says one client executive, OS companies support innovation. Says an OS executive, must “look at the market and us, and “Innovation happens when the client understand trends. Understand what HR encourages it, [saying,] ‘We’re going through operations will look like in five years time. a restructuring, and we’d love your thoughts They must work out how they need to develop on how we’re going to manage our workforce their products to serve that industry. They differently in this new model. Can you work with should present us with leading-edge us on this to make us more nimble?’” capabilities that have been developed; don’t use us to learn and build capabilities.” “You need the right people and roles in place to foster this discussion on a regular basis, as well as formal governance planning.” —Client Organization 9
About the AuthorsSusan DeFazio is Senior Director and Principle Workforce Consultant withinthe Global Centre of Expertise for Kelly Outsourcing & Consulting Group. Shehas extensive experience in the human capital sector which includes leadershippositions in staffing operations and strategic account management.Dr Anne Dibley is Programme Director for the corporate MSc in StrategicMarketing Leadership, and is a Lecturer in Marketing at Henley BusinessSchool. Anne’s research projects for the Henley Centre for Customer Managementinclude studies focusing on corporate social responsibility, sustainability, how tomanage outsourcing relationships, and collaborative innovation.About the Henley Centre for Customer ManagementUnder the directorship of Professor Moira Clark, the centre brings together businesspractitioners, industry thought-leaders and experts/ academics to help organisations tackletoday’s business challenges through a programme of workshops and research projects.Find out more at www.hccmsite.co.uk.About KellyOCGKellyOCG is the Outsourcing and Consulting Group of Fortune 500 workforce solutions provider,Kelly Services, Inc. KellyOCG is a global leader in innovative talent management solutions in theareas of Recruitment Process Outsourcing (RPO), Business Process Outsourcing (BPO), ContingentWorkforce Outsourcing (CWO), including Independent Contractor Solutions, Human ResourcesConsulting, Career Transition and Organizational Effectiveness, and Executive Search.Further information about KellyOCG may be found at kellyocg.com. EXIT
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