FAQ: How do I protect our services if our strategic partner is sold?

By Allan Watton on

protect services supplier soldWhile change can be worrying, often it’s the anxiety surrounding a prospective change in the status of your strategic suppliers/partners which can cause more uncertainty. Therefore, rapid, inciteful and accurate information to determine the validity and severity of an issue is always your best course of action in these circumstances.

If you are told, hear rumours or suspect that your supplier may be going through a ‘transition’ – whether it’s financial difficulties, issues with talent retention or its sale/takeover – then get your early warning system up and running to give you the clarity you need in these circumstances so you can take whatever action may be required to protect your service delivery.

That early warning system involves watching out for three telltale signs of trouble, something we’ll review in detail a little later in this article.

The Amey sale example… will they or won’t they?

Amey is one of the UK’s largest outsourcing groups with a workforce of 14,000 and a multitude of government contracts. A quick look through the company’s newsfeed shows that in December alone they secured a new £6m a year contract with Transport Scotland and two contracts with Greater Manchester’s Metrolink.

However, Amey was also going through a protracted sale process. The organisation’s parent company, Ferrovial, decided in 2018 to dispose of a number of its services businesses. Six months ago, Ferrovial announced that it had come to a deal with PreZero, part of the Schwarz Group, to sell its environmental services business in Spain and Portugal to them for 1,133m euros. Three months ago, it announced that it had agreed to sell its infrastructure services business in Spain to Portobello Capital for 186m euros. And at least two organisations – HIG Capital and Buckthorn – have been reportedly vying to buy Amey in a deal worth an estimated £300m for a number of months now.

Good, possibly, for Ferrovial shareholders, but with no idea who will be buying the organisation or what they will do with it once they do, end-clients of Amey may well be concerned in terms of dealing with a level of commercial anxiety over this change.

However, Amey clients – and any others that find themselves in a similar situation of a reasonably predictable future being brought into question by an event beyond their control – may be able to gain a little insight into what is to come by watching out for a few signs which may indicate that it’s time to sit down with your supplier to discuss a productive way forward.

Three signs that it’s time to call a meeting

Change can be good as well as bad. No matter the circumstances you find yourself in, it’s important to recognise that not every major change or challenge that your supplier faces will end with your services suffering. There are many ways in which change can actually result in increased innovation, productivity and commercial trust. But, your journey from anxiety to peace of mind must first start with identification that there is an issue to discuss.

Therefore, there are three primary signs to look out for:

    1. Quality or productivity reduction

While your supplier will not wish to promote the fact that there is an issue through knowingly reducing its productivity on your project, it is a possibility that this will happen anyway – either as a result of resources being reallocated to fight internal fires or as morale plummets when rumours spread among the supplier’s people of the issues the company is facing.

In these circumstances it would be natural for everyone to start to wonder what this will mean for them. As it is far more likely that the supplier’s own staff will identify company-wide issues before anyone else, their commitment to your work – or, to be more precise, a change in their commitment to your work – can sometimes be used as a barometer to measure the scale of the issue you may be facing.

The question then simply is, are you listening and watching out for this and how rapidly will you recognise that something might not be quite aligned to your expectations?

It should be remembered, though, that this is a fairly blunt tool for identifying major issues with your supplier. There may be many reasons for productivity fluctuates which have nothing to do with a major issue that could have an impact on your service delivery. So, while it’s important to keep your ear to the ground, remember that overreacting can be as bad as not reacting at all. Often it’s best to watch out for at least two of the three signs before you start to worry.

    1. Skills/talent depletion

So, the supplier’s workforce have heard the rumours of an issue which might impact on their future… what do they do? The answer is that some of the high-flyers, the best talent, might start to look for more stability with another employer. It is logical to assume that as the brightest stars, they are more likely to be the first to hear of any issues as they’ll be closer to the heart of things. If you see that the people you most depend upon from the supplier side are no longer around, it may be time to start asking questions.

Suppliers going through a challenging time may also reallocate resources to other projects, eroding service delivery and effecting productivity on yours.

Either way, if your supplier’s staff numbers on your project start to go down, or if top talent leave one day and never return, it can be a clear sign that a conversation may be necessary to uncover why as this will likely be having a direct impact on their work for you.

    1. Erosion of innovation commitment

Innovation is the engine behind optimised performance; it is evidence that your supplier is going above and beyond in its commitment to you as it is investing time and resources into looking for more efficient solutions to your need or problem, a way to achieve the outcomes you’ve contracted with them to achieve.

However, when your supplier hits a major road bump, it’s often innovation that’s the first victim of the organisation’s attempts to keep themselves on track. All of a sudden innovation becomes an unaffordable luxury and resources are redirected to BAU tasks instead.

Once again this alone may not indicate a service delivery threatening issue, but it’s worth watching out for as it adds data to inform your decisions.

It’s important to recognise that investigating these signs once you already know there’s an issue is a little like closing the door after the horse has bolted. Yes, you’ll be able to determine with a little more certainty whether you should be calling that meeting with your supplier – and that’s still an important win – but wouldn’t it be better to have known sooner?

The Intelligent Client Function (ICF) advantage

An intelligent client function team is a cross-department group of skilled individuals that you task, from the outset of a project, with building and maintaining the closest of relationships with their supplier side counterparts. This is so that: 1) they can be plugged into the supplier side rumour mill to act as an early warning system to identify issues before they become issues so they can be diverted or dealt with more effectively, and 2) so they are more likely to have sway with their supplier side counterparts should issues need to be dealt with or misunderstandings resolved.

A well-resourced and talented ICF team that’s given autonomy and authority, or at least the ear of those at the decision-making table, will give an organisation valuable additional advance warning of major issues.

Calling a meeting with your supplier

You’ve set up your early warning system and have identified a number of red flag issues/behaviours. Now it’s time to gather your evidence.

Suppliers may be understandably reluctant to discuss major issues that they have not yet released to the public (or to their staff), so it’s important to approach your meeting with them armed with evidence of issues that are impacting on your relationship with them – productivity slippage, talent erosion and a change in the organisation’s commitment to innovation.

These are reasons for calling the meeting and justification for concern; they are not to be used for blame or creating friction, as the purpose of the meeting is to uncover whether there is an issue and how severe it may be so you can determine its potential impact on your ongoing service delivery and what contingency plans you need to put in place to protect it going forward.

Remember, this is your collaborative partner, not your adversary, so the goal is to ensure that they recognise your genuine reasons for asking questions and for ensuring that you work together to maintain the quality and consistency of your relationship.

If you are looking for some guidance on the creation of an effective ICF team or protecting your service delivery in the face of a potential issue your strategic partner is going through, then contact us on 0845 345 0130 or email advice@bestpracticegroup.com.