When things go wrong in outsourced relationships, the parties will often scratch their heads, blame the other side and then look to escalate or resolve the situation that has brought them to this point. Escalation could mean anything from resorting to damages allowed for in the contract, through to legal action.
Resolution may be proactively encouraged through your Intelligent Client Function (ICF) team or through instructing a third-party facilitator, such as ourselves, among other ways. But what if, after all the bluster and finger-pointing, the accountability for lack of service delivery lies more heavily at your own doorstep, rather than that of the provider?
During the service reviews we undertake, the evidence we uncover means that it is not uncommon to find that – despite the client’s best intentions – on occasion, the client themselves has contributed to the reduction in service levels they are experiencing from their provider.
In these situations, firstly it can be very embarrassing. Secondly, it may be immensely costly. If your own team have contributed to the provider being unable to maintain or improve its service levels to you, but they are (a) unaware of their negative contribution and/or (b) simply are not taking accountability, this can significantly weaken your ability to ensure the provider is able to ‘up its game’ until your own team have first ‘upped their game’. Your provider needs to be able to be given the headroom (appropriately managed) to allow them to deliver the business outcomes you had agreed between you.
With the benefit of having worked on hundreds of major outsourced and other complex projects, each of which is forensically analysed, we have drawn up a short list of the six most common ways in which well-meaning clients can inadvertently sabotage their own outsourced and project relationships.
1. Clarity of vision
Are you able to clarify what you want in appropriate detail? Have you carried out all of the research you’ll need? Have you asked the right people the right questions? Are you projecting forward to determine whether what you think you need now will align the changes correctly for what you will need in the future? Essentially this is a combination of appreciating ‘what good looks like’ and evaluating the ultimate objectives of the project/service delivery with crystal clarity.
If you do not know where you are going, how will you know when you have arrived? Remember, just as important as finding the right answers is determining the right questions in the first place. Establishing the right answers to the wrong questions could send you dangerously off track, resulting in misalignment over expectations, potentially significantly higher costs, lower service levels and the very real possibility of disputes over service delivery.
Some organisations have been delivering their services in-house for many years. However, just because a service is decided to be outsourced, the client themselves does not necessarily know how to gain a clarity of vision and be able to quantify that vision for the purposes of outsourcing to an external service provider.
Over time, aspirations and expectations shift, the needs of service recipient change, team members move on and processes are not documented as often as they should be. Weak management of a service delivery process can often allow for inefficiencies to creep in. In other words, if you are outsourcing (or merely evaluating your options for future service delivery), this is an excellent opportunity to re-evaluate the way a service is being offered and the end goals you aspire to achieve.
Entirely new services and projects will require the same treatment, drawing in all those most crucial to its understanding and asking for their input. You will need to determine an agreed-upon outcome to align to, considering ways to ensure future enabled change of the project or service delivery so that it remains current and useful.
While it is the supplier/provider’s responsibility to determine whether they have enough information to go on in order to deliver to expectations, it is still the client’s responsibility to ensure that they have done all they can to supply clear and accurate information for them to work towards. More detail at the outset will lead to more clarity in contracts and communication and, therefore, a lower risk of service and relationship failure.
2. Clarity of communication
So, after a thorough review, you now know exactly what you want from your strategic outsourced provider. But are you able to effectively communicate this to them? This may seem obvious, but there are two issues to consider here, a) language is a wriggly thing that can mean one thing to the imparter something completely different to the receiver, and b) too much information can restrict your outsourced partner from doing their job to the best of their ability.
The way you phrase things can mean that different people hear different things. A very simple example we came across recently in a relationship recovery situation we had been instructed on, was a client that believed they’d communicated their needs clearly enough, only to find that each of the contractors around the table had a different view of what was needed. This is only one item out of many hundreds, but it demonstrates the simple types of issues over communications that arise.
A clear plan had been drawn up for the building they were constructing and discussions ensued about a particular type of safety door. Everyone realised that a safety door was needed because it was on the plan, but what sort of door was the issue. One thought it was to be a fire safety door, another a double safety door, another a glazed safety door and a fourth believed it was two safety doors one after another, much like the entrance to the building.
This is a simple scenario. Correct. But why such confusion? They each had their reasons for thinking what they did because of preconceptions and existing project specifications, but what was apparent was that everyone believed they understood what was needed, when in reality none of them knew what the client’s business outcome actually was (including the client – hence the failure in communication).
The moral of the story is that clarity is key. Never assume that people will understand what you are after just because it seems obvious to you. Ideally a ‘use case’ will help to communicate all necessary details required for the receiver to fully appreciate what you want from them, then clarify that they have understood what you wanted them to.
Communication in an outsourced relationship is a fine balancing act between providing appropriate information for your supplier/provider to understand what you are after, but without being too input-prescriptive as to stifle their creativity. You will normally have chosen your outsourced partner because of their expertise in a particular field, therefore it is important to allow them the freedom to handle how they achieve your goals themselves. If your instructions are too prescriptive then you run the risk of restricting any inclination towards innovation that could provide you with added value.
If your communications (aka: unquantified business outcomes) are ambiguous they leave the door open for misunderstanding, and if too prescriptive they could hold back your supplier/provider’s ability to shine. Both extremes can hinder your project or cause it to falter. And in both situations, your strategic partner will have a case to suggest that you prevented them from achieving your goals.
3. Contract ambiguity and future misalignment
Continuing the theme of clarity, it is just as important that you ensure that your contract terms are as clear as they can be, quantifying expectations wherever possible, documenting the operating ‘use cases’. And you should build into your contracts a review and refresh programme that will adapt the terms of your contract to the realities of the relationship and your changing business outcomes at least every six months.
It is important to have a contract that reflects your business outcomes as closely as possible to aid in your mission to achieve clear communication of expectations, but it is just as important to prevent alignment creep.
It may seem painfully obvious, but as time moves on in a working relationship things change: people, expectations, needs, resources, budget and so on. Your contract should, therefore, be a flexible document from the very beginning, developed with adaptability in mind. At least once every six months it should be a collaborative task for all parties to review the contract against the reality of the relationship and adapt it to ensure best value is achieved.
Failure to do this, or to ensure that reasonable clarity is achieved in your contractual documents, is going to increase risks in your project/relationship.
4. Compulsion to interfere
The balance between too little and too much information comes to the fore again here as a client must appreciate when it is time to stand back and let their supplier/provider get on with doing what they should do best. If you demand to be too involved in ‘how’ your outsourced partner achieves the outcomes you have explained to them and that they are contractually obliged to achieve, then you are playing with fire – both in terms of service levels and also undermining your contractual position.
It can be tempting, especially when you feel that those you have entrusted with the task of delivering on your project are not doing what you imagine they should, to interfere – to share your experience, to impart knowledge or to get involved where you really shouldn’t.
However, doing so has several negative implications.
- Just because they are doing it differently does not mean they are doing it incorrectly, and your interference or interjection can deflect them from their correct path.
- Suppliers/providers have been selected because of their superior expertise, so what if they are right and you are not?
- By clearly showing your strategic partner that you do not trust them you will affect both morale and potentially the collaborative working environment you have probably strived hard to build.
- Interference weakens your legal position should the project/relationship degrade to a point where you wish to seek legal recompense for its failure.
Leave the ‘how’ to your supplier/provider, unless of course you recognise a pattern of poor performance and you have absolutely no other choice but to step in. Once you have explained ‘what’ you want them to deliver, it should be up to your outsourced partner to determine the rest. Your role then is to performance manage the outcomes, not the inputs.
5. Complacency in a relationship
Despite what is commonly believed, outsourcing a service or project does not mean that you can wash your hands of all responsibility of it. To do so would be irresponsible and would mean that you are completely blind to the way the project is being run. As is mentioned in numerous articles on our website, there is a vital need for a well-resourced ICF team on every major service delivery relationship.
They not only need the funds and the in-house expertise, but the autonomy to act in the best interests of the relationship, and the ear of senior executives who are in a position to guide the outcomes. Your ICF team are your closest connection with your strategic partners; they are your early warning system if things are going wrong, your rudder to steer you back to calmer waters and your best chance of cutting through politics, pomp and personality to get to the heart of issues to resolve them.
6. Cash on demand
The structure of your relationship with your outsourced supplier/provider may well influence your chances of success, but fundamental to this is the way you pay them. It is imperative that you create the right environment to encourage the right behaviours throughout your relationship – behaviours that result in optimum levels of morale, motivation and innovation.
Remuneration is an effective way of controlling, or losing control of a supplier’s motivations on a project. Rewarding outsourced partners for targets achieved and penalising them financially for missed ones sounds simple enough, but it’s a delicate balancing act and can be too blunt an instrument if not structured and operated correctly. Not to do so though would be likely to encourage a more lackadaisical attitude, say for instance if you paid for your supplier’s service up front, or if you did not address productivity issues quickly.
This fine balancing act is an important one to master, as too hard with the stick and you will negatively affect morale, and too generous with the carrot and you’ll stifle innovation.
There are of course many other ways in which you may inadvertently damage your relationship with your outsourced partners, but those mentioned above are what we consider to be the big six. From omissions in pre-contract introspective research to over-generosity in your remuneration plans, you must remain vigilant in your mission to ensure that nothing you are doing is holding your own projects back.
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