Outsourcing breaks every ground rule of good collaboration

Organizations are concepts created to allow for people to work together towards a common goal or outcome. Organizations act like living beings, composed with “organs”. When parts of the organization are removed or violated, the organization gets sick.

A typical example of change to the organizational body is a sourcing decision. Long before the decision was taken, some form of non optimal function was already perceived. Most of the time this was ignored, at least in the daily operation and top-down communication. It then grows slowly but surely into some kind of unhealthy feeling.

Fact: A sourcing breaks all needed basics for good collaboration

 

Then, when the shit hits the fan, ‘all of a sudden’ the management decides to outsource part of the organization. Like with disease, anxiety comes in and stays. In fact, a perceived mistrust is now made explicit: the management (mind) has diagnosed you (the body) that you no longer do a
good job. In fact, it is so bad that parts need to be amputated and replaced!

Of course that is not the official management statement. It goes more like: “We decided that for the growth of our organization we need to focus on the core, to make better use of our competences, to have benefits from the right scale of economy, to eliminate cost…” or whatever excuse is used for not having to tell: “For a long time, we both knew that…”

The beautiful prince on the white horse rides in…

As it goes with every prince in fairytales, he rides in and looks upward to the balcony, not noticing the dirt in the streets or hatred in the eyes of the population. They are mostly male after all…

outsourcing2During outsourcing the prince his troops enter with slogans as “technology innovation delivered”, “working together on the future”, “your new workplace arrives”, etc. Preceded by a wrist of bright and shiny IT-tools, a new workforce enters the building (sometimes only virtual) and tries to pick-up where the others left. In some cases, part of the workforce stays in place, but is now working for the new “prince” and no longer for the old “king”.

The tournament begins and the rusty armor unveils. The players in the game change from sportive participants and friends into rivals. The servants (the ‘retained organization’), assigned to assist the princely knights in preparing for the task, do not show up, do half their work or seem not to know what is expected from them. The end-users, as the
spectators of the play, are left behind with unfulfilled desire.

 

How to overcome this set-back in outsourcing situations?

Looking back at the basics of an efficient and effective team[1], all team requirements are initially violated by outsourcing contracts. All newly involved parties still have to learn to work as a team. The new situation has even become more complex than the old, because there are more parties, regulations and rules involved. According to this new situation, collaboration complexity has grown exponentially.

Professional transition and transformation are the crucial phases in an outsourcing implementation and the basis for a long-term success. Our experience told us that it is crucial to work on 4 aspects of the new situation.

  1. Set ONE common Goal for ALL

By nature, the goal of the sourcing party and the existing organization is different. In most contracts in which cost or revenue is based on numbers (#units, #users, #accounts, #servers, etc.), the dynamics are even in contradiction. We propose to set one goal for all.  The ultimate goal of the existing organization is the best candidate: their customer’s appreciation! In our experience NPS (net promoter score) is a good example. Our advice is to stay away from SLA-outcomes as performance indicators and to focus on a common goal. This means avoiding efficiency- instead of effectiveness discussions.

  1. Make sure all ‘contracts’ adhere

Alignment, Alignment, Alignment… Everybody knows that a team is only a team if it goes for that one shared goal. That is why the most important discussions in outsourcing take place before the details of delivery are crafted. A sourcing party cannot deliver good service if it is stuck in the middle, between the organization and other subcontractors. Here is a list of “contracts” needed to reflect upon and needed to align: the (end-)user appraisal or bonus schemas, the sourcing contract performance parameters, the sourcing party employee appraisal bonus schemes, the retained organization employee goals, the subcontractor contracts (payment and bonus formulations), other existing sourcing contracts… So the second important step is translating the one goal in all contracts.

  1. Work actively on and facilitate the collaboration between the retained organization and sourcing parties

Collaboration is the consequence of working together. Working together happens only if there is enough trust between parties. Trust on the one hand requires insight and insight requires openness. This means that installing teams that work together will take time. New and old ideas will collide and will lead to conflict. Conflict that is managed well, is a good thing. It leads to insight and commitment. When coming out of a conflict with new, adopted or adapted ideas, people will in the end feel accountable to realize them and to proof their right or learn from their wrong. So, besides the goal and the legal contracts, the psychological bounding or -contract is what drives performance and needs to be aligned with the paperwork (or vice versa!).

  1. Establish an open communication to the (end-)users and teams

Rome hasn’t been build in a day. It takes time to perform as a team and to master complex situations. No matter how hard we try, the complexity of a sourcing situation usually can’t be grasped in its entirety upfront. Learning, making progress, experiencing set-backs, will happen. Moreover, the classical reporting that has its roots in justifying for cost or mal-performance, will hardly help. Our advice is to openly communicate and work with the why’s, the how’s and the progress of the sourcing trajectory.

 

More?

The Crossroad Change and Design team works with your organization (and suppliers) to obtain best possible transition or transformation. Want to know or learn more? Please contact us at tellmemore@crossroad.be.

By Danny Lievens

[1] “The five disfunctions of a team”, Patrick Lencioni, 2006, Business Concepts, (John Wiley & Sons)