Outsourcing Relationship Management: It’s Not Business — It’s Personal

Spend Matters would like to welcome a guest post from Sara Enlow, Principal at Vantage Partners.

I often hear providers of outsourcing services and their clients talk about a need to be more objective in the way they manage their deals -- to "take the emotion out" and "just focus on the facts." While many of us would like to be able to check our feelings at the door to the office, it's not possible to always be purely objective. Outsourcing isn't just business, it's personal.

Client-side sponsors stick their necks out when they say to their skeptical constituents (and bosses) that outsourcing will help the company save money, achieve greater flexibility, and maintain or improve service levels. Provider account executives know that an unhappy client generally means they will be swapped to a different account, or worse. And those delivering the service and working along the interface between client and provider want to do their jobs well and be appreciated for their hard work, like we all do. With all that is at stake for both sides, it's no wonder that when things go wrong, emotions run high and the tendency is to defend rather than listen.

Unfortunately, it's when things aren't going so well that collaboration and good mutual understanding are most difficult -- yet matter the most. When everyone is haggling over who is at fault, emotions run high and it doesn't necessarily help to say, "Let's be objective and look at the facts." We tend to focus on different "facts," and even when we focus on the same facts, our unique perspectives often lead us to different conclusions. The question is: How do you set the stage for collaboration when it all feels so personal? And how do you promote joint problem solving when emotions are involved? Here are three things to try:

  1. Agree on shared goals
    A major IT system failure impacted thousands of end customers and resulted in a public relations nightmare for one transportation company. It also led to a complete breakdown of the relationship between the company and its IT services provider. The parties spent the first few weeks after the outage pointing fingers, with the buyer touting the provider's contractual responsibility for uptime, and the provider waving all of the reports they had previously sent to the customer, saying they were paying for much less service than they needed based on the criticality of their systems.

    Ultimately, the company's CFO and an SVP from the provider found a way out by settling on five key shared goals related to improving the company's availability and disaster recovery position, and putting in place new technology to enable greater flexibility. Much like having a common enemy can unite people, providing a common challenge, whereby everyone seeks the same outcomes, enabled the leaders to harness the personal commitment of their teams to move the relationship forward in a constructive direction. Identifying shared goals for which all are held accountable at the outset of the deal helps to build more of a "joint delivery team" mindset, which in turn helps enable collaboration from the start.

  2. Measure both parties
    The leaders in the example above also knew that one-sided service level agreements (SLAs) weren't going to cut it to get their team moving forward. After all, treating service levels as something only the provider needs to worry about tends to exacerbate an "us vs. them" mindset and contribute to feelings of defensiveness. Many experienced buyers of outsourcing services have begun to learn all of the ways that their organization contributes to (or detracts from) the value created in their outsourcing arrangements. For example, they know that their ability to transfer knowledge effectively and enable teaming across geographies is critical to achieving savings in an offshore deal. [For more on what companies can do to get better results from their providers, click here.] And they've learned that measurements of their own teams' ability to do those things that enable their provider's performance are early indicators of the outcomes they'll see from their providers. Establishing some bilateral metrics helps keep both parties focused on the things they can do to enable the other's success, engendering better collaboration.

  3. Discuss contribution, rather than blame
    In many outsourcing relationships, when the inevitable challenges arise, meetings to talk about "how we got here" usually devolve into meetings about who is at fault. These conversations are a surefire way to waste time and lead to more of the same problems. Instead, try a simple reframing -- call it a "What can we do to keep this from happening again?" meeting. Task each side with generating ideas about what they can do going forward to lead to better results. This is not about "blaming the victim" -- it's about problem solving, empowering each side. It shows our teams -- who take their work personally -- that they can take action to make things better; they are not prisoners to their counterparts.

Let's face it: business problems are emotional. Most of us spend the better part of our waking hours working, sacrificing time with family and friends, and doing other things that we love, and for many of us, it's not just about a paycheck. Good relationship management in outsourcing is not about taking all of the emotion out. It's about setting the stage for collaboration -- harnessing our personal interest and emotion in a way that furthers, rather than detracts, from our business outcomes.

-- Sara Enlow, Principal at Vantage Partners

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