Outsourcing: relationship management

01 October 2019

This article was featured in the October 2019 issue of the magazine. 

Jason Davenport MCIPP MIoD, CIPP chair, discusses the fundamental issues and provides ideas and advice

The first article (see September, Issue 53) highlighted that outsourcing is about delegation not abdication. The client is still responsible for its employees, the terms and conditions applied and ensuring that the payroll, pension and reward responsibilities are completed effectively. 

In this, the second of three articles, the role of relationship management is further explored to ensure those who choose to outsource are equipped to manage both the outsourced relationship and the various stakeholders who have a responsibility to the service quality.

In a typical buying scenario, the strategic decision to outsource is led by board and senior management. Procurement will then be commissioned, and the review of potential partners occur. Often at these meetings, key items for success will be discussed and the operating model at headline level agreed. However, once contracts are in place and the project moves to operational delivery, it will be new teams at both the outsource provider and the client who are responsible for the delivery. A mistake frequently made is to lose any key messages, agreed items or particulars of the agreement as these must be handed across as part of knowledge management and continuity. Ensuring those early commitments made by both parties are documented is essential to the success of those who then pick up the responsibility moving forward.

Ensuring that the level of work being completed by the outsource provider is documented for review becomes a key foundational element. Building on this to have swimlane diagrams or a responsibility assignment matrix to outline those who are responsible, accountable, need to contribute or be informed, helps ensure tasks are completed. Often in organisations information will be handled by multiple owners of data and may have several approvals within the process. This means information may regularly pass between hands prior to submission. Having that process understood and ensuring timings for handling data are agreed can help to alleviate potential blockages that may occur were individuals or teams to sit on information for too long without progressing or keeping others informed.

 

...have swimlane diagrams or a responsibility assignment matrix...

 

Ask yourself, who is going to be responsible for the services within your own organisation, and how close to the subject matter in hand are they? Creating an intelligent client (IC) is very important to ensure productive reviews take place regarding service responsibilities. Individuals who hold these roles should be managing plans for either deployment of legislation or changes within the business that are discussed and agreed by both parties in good time for implementation of the changes. The IC role holder will also play a key part in co-ordinating communications and managing stakeholders within the organisation, so needs to have a level of seniority to ensure successful day-to-day management happens. As with life, in business challenges can happen to de-rail plans, and so contingency plans and business continuity arrangements need to be considered so they can be invoked quickly. The IC role holder also needs to be someone who can commit to managing such situations and remain calm in a crisis in order to ensure that should such eventualities occur the business will find its way through them and remain on track. 

Business stakeholders include the operational management and other business functions, such as finance and audit, and many third parties, e.g. pensions providers. Each of these areas will require a defined degree of reporting for them to be able to perform their own tasks. The involvement of the audit function provides an assurance rating of how well the whole process is documented, understood and controlled, fulfilling a key role.

One of the key qualities within the relationship is pragmatism. Issues may well occur and cause anxiety for both outsource provider and the client. A useful consideration of each party is how issues will be managed to resolution; understanding the impact of an issue for the other party can help drive empathy. Communication is key at these times as is being visible. The outsource provider must maintain dialogue and ensure that rectification methods used to resolve the situation are accurate and sustainable. The client in this situation must provide a view on what has priority and to be flexible if time is needed for resources to be deployed for fixes. Overpromising and underdelivering is a curse of the modern times. Allowing proper resource and time for resolution, as well as communicating at each stage, keeps both parties aligned to the common purpose of servicing the employee base and managing all stakeholders involved. 

I hope the above is informative and please feel free to contact me with any comments.