SuSan DeFazio & Dr anne Dibley

ForGinG SuCCeSSFul ParTnerSHiPS WiTH an ouTSourCinG ProviDerAdvice & Anecdotes from the c-suite

Kelly oCG and the Henley Centre for Customer Management at Henley business School undertook a year-long study to identify the repeatable characteristics of successful outsource provider partnerships. They reviewed and analyzed the most respected publications on the topic of service agreements, and conducted in-depth interviews with over a dozen senior executives from outsourcing providers and client companies. The findings are crystallized here in a 15-minute primer for senior executives.

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STronG GovernanCe

Plans change. Outsourcing agreements

can’t account for every possible wrinkle in

an evolving, dynamic relationship. Strong

governance agreements compensate for

uncertainty and define how the partnership

will ‘flex’ over time.

Create a mirrored governance structure

between the provider and client, from senior

management on down.

You should know who’s ‘facing off’ when

problems surface. Mirroring begins with the

CEOs of both organizations, who should meet

at least bi-annually to ensure the governance

structure is effective at delivering the results

both parties expect. The ladder of mirrored

relationships should be clearly documented in

the agreement, from C-level all the way through

operations. A tightly woven partnership solves

problems more efficiently than the alternative.

define roles clearly, particularly who ‘owns’

what issues in your governance framework,

then set up accountability for marking

progress and resolving problems.

Institute a clear system for following up on

action points from project review meetings—

and memorialize those ‘mechanisms’ in the

agreement. You may decide to have a single

point of contact to delegate tasks, or to institute

a customized ‘heat map’ that documents on-

going tasks, unresolved issues, and individuals

responsible.

demand a clearly mapped ‘relationship

infrastructure’ from the outsourcing provider.

The outsource provider should define and map

clear roles across their global organization,

repeated by country and by discipline. By

standardizing roles, the OS is better positioned

to scale the partnership to multiple countries

and business units.

respect the critical importance of meetings

as the ‘tailwind’ in a successful partnership.

In our interviews, the subject of meetings

(e.g. how often, who comes, what follows)

was a point of extensive discussion and

thoughtfulness. Consistent, well-run meetings—

from weekly progress meetings to executive-

level performance review meetings—were

characterized again and again as the element of

traction in highly complex relationships.

The timing and composition of meetings should

be spelled out in the service agreement—no

matter how plodding the exercise may seem.

The structure and purpose of meetings should

be reviewed constantly so they don’t become

stale. Consider atypical formats from time to

time, such as a ‘blue sky’ discussion, to foster

innovative, fresh thinking.

disseminate the right management

information to support the governance.

Sharing clear, relevant, real-time information

is critical to drive action. Key performance

indicators (KPI) should be reviewed at every

meeting—not as lengthy ‘back-patting’

overviews to show how all is proceeding to

plan, but a tightly focused look at exceptions.

As one executive put it, “The MI should be used

to drive out the low and high points, and think

about the future.”

01SuCCeSS FaCTor

4

measure success based on supporting

growth rather than driving down costs.

Explains one executive, “Some clients think

they’re asking for cost reduction and value, but

are really only focusing on costs. They need

to look at the ‘total cost of performance.’ For

example, Client Performance + Provider A gives

you Performance X, but Client Performance +

Provider B might give you Performance Y.”

An outstanding outsourcing provider can help

clients raise the bar, setting new performance

goals based on growth and access to talent.

Gut-check KPis regularly.

The OS and client should examine in-place

metrics regularly to determine if they are still

relevant. To move beyond a short-term focus

on costs, be explicit about the value being

delivered. Says an OS executive, “[We] might

be running twice the number of applications

with half the people. If you don’t [define] this, in

two or three years time, your client is going to

say, ‘you aren’t doing enough.’”

The concept of value can change, almost

imperceptibly, over time. Says one OS

executive, “You need a quarterly process to

recognise and define how value is changing.

At a senior level, every meeting you have with

the client, put on one sheet of A4 paper – ‘this

is what we’ve done for the organisation; this is

what we’ve achieved”

client satisfaction is among the most

important measurements to capture.

No matter how stunning your KPIs, the client

(both managers and end-users) must ‘feel’

this success to make it so. Says a procurement

executive, “We, as procurement, can say, ‘this

is a really successful programme, we have ‘x’

amount of savings’ etc, but in essence, the

programme will not be successful, as long as it

is not in the minds of our business stakeholders.

One executive reports two simple ways to

measure whether client satisfaction is high:

“First, does the client say ‘yes’ when you want

them to act as a reference for a new piece of

business? Second, is the client prepared to put

their name or brand on a case study?”

“To GeT aPProval For a viDeo CaSe STuDy iS THe ‘Holy Grail.’ iF your ClienT iS PrePareD

To Have a viDeo oF HiM on your WebSiTe SayinG you’re all GooD To WorK WiTH...

in My oPinion, iT DoeSn’T GeT any beTTer THan THaT.”

—ouTSourCinG ProviDer

MeaSurinG value & SuCCeSS02SuCCeSS FaCTor

5

don’t forget to recognize the value the

outsource provider is providing, repeatedly.

Treat the provider as you would one of your

own executives or managers to promote

greater openness and transparency. Consider

an awards program, team building ‘day-aways’

or other special gatherings. These types of

events warm up the relationship, signaling

respect and commitment.

oPenneSS, TranSParenCy, HoneSTy & reSPonSiveneSS

expect a provider to propose strategic,

sophisticated solutions, based on their

expertise—and offer plenty of opportunities

for them to do so.

As one provider explained, it’s “not just getting

the ball back over the net,” but dealing with

root causes and the long-term. The solution

to a particular problem may not be a simple,

bottom-line solution, but require a more

nuanced analysis.

03SuCCeSS FaCTor

“eaCH inSTiTuTion HolDS Dear THe lonG-STanDinG relaTionSHiP anD unDerSTanDinG

THey Have [WiTH an ouTSourCinG ProviDer]. MoST CoMPanieS WoulD PoinT To

one or TWo SuPPlierS WHere (SiC) you KnoW THaT, CoMe Hell or HiGH WaTer, THaT

SuPPlier iS GoinG To be THere For you.”

—ClienT orGanizaTion

6

Trust and confidence—assuming it’s well-

placed—begets a more productive relationship.

Those are qualities that grow out of a

competent, long-term relationship, yet there are

actionable steps to speed the process.

share problems early and plainly—and ask

for this type of openness in the agreement.

Trust and confidence emerge not in heady

periods of success, but in the midst of challenge

and stress. One OS leader explains, “Honesty is

telling the truth when you’re asked a question;

transparency is telling the truth, plus showing

concerns, gaps, negatives, and being open

when you can’t do something.

choose your key contacts—particularly

the os-based ‘client manager’—wisely.

This individual should be chosen as a steward

of the relationship. Aside from having excellent

relationship skills, he or she should also be a

shrewd businessperson, able to ask probing

questions and analyze difficult problems.

Says one client company executive, “The

outsource provider must have the ability to

connect and understand the business, and

look at the overall value it can bring to the

organisation. They need to understand the

business pressures we’re facing, and how they

can help us meet our goals.”

share sensitive information early.

A true measure of mutual trust is the number

of ‘unofficial conversations’ the relationship

manager on the client side is prepared to have

with his counterpart on the provider side. For

example, a client may tell the provider about

an organisational change before it has been

officially announced to help the provider look

good to within his own organisation: “They’re

telling you because they trust you that it won’t

go any further, [...] giving you a ‘heads up’ on

something that may impact you, rather than

leaving you on the back foot.”

Why does building trust matter? If the OS team

feels hung out to dry, says one provider, “You

get the ‘dregs’ on that account. On the provider

side, people can manage themselves out of

accounts. The client doesn’t necessarily realise

it’s getting the B, C and D teams.”

Aspire to reach a state of mutual,

institutionalised trust.

Institutionalised trust is characterised by low

attrition and extensive sharing of financial

information. Says one provider executive,

“You mention the name of the client, and

everyone responds instantly. [...] Each institution

holds dear the long-standing relationship

and understanding that they have. [...] Most

companies would point to one or two suppliers

where you know that, come hell or high water,

that supplier is going to be there for you”

04SuCCeSS FaCTor

MuTual TruST anD ConFiDenCe

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to deliver on promises, take time

to study and internalize what’s

commemorated in the agreement.

To do so, bring in a third-party facilitator to

run workshops that ‘translate’ the language

of the agreement into real-life scenarios and

processes. One executive recounts how a

facilitator helped employees to reinterpret the

contract, and answer the questions, “What have

DeliverinG WHaT you ProMiSe

we actually agreed here? What does it mean

for you?” The facilitator helped the employees

visualise the reality of the outsourcing

relationship: “If this is what we do, this is what

it will look like for you and your people.” These

exercises embed the ethos of the agreement

across both organizations, moving beyond the

checklist of expectations.

05SuCCeSS FaCTor

“inTernally, enSure you’ve ProPerly MaPPeD anD unDerSTooD iSSueS SurrounDinG

eaCH oF THe CuSToMerS WiTHin THe [ClienT] orGanizaTion (i.e. HoW THoSe

relaTionSHiPS WorK anD HoW PeoPle reaCT). Don’T Fall aFoul oF THe STronGeST

oPinion-ForMerS WiTHin GrouPS. unDerSTanD WHo THey are--THey are noT alWayS

THe MoST obviouS oneS.”

—ouTSourCe ProviDer

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the client must believe that success for the

provider equals success for the client.

If the client genuinely supports and believes

in the importance of the provider’s success,

this enhances the chances of a successful

collaboration. Says one client executive, “The

better they perform, the better they perform

for us. [We need to] ensure they’re motivated,

progressive and doing best industry practice.

We’ll do whatever we can to support that.”

aCHievinG MuTual GoalS, brinGinG MuTual beneFiTS

clients should not view providers as

a destination for savings, but as an

extension of their own enterprise,

and an opportunity to create value.

The best partnerships function as peer-to-peer.

Says one client executive, “Even though they

are a third party, we like to think they’re part of

[our organization.] It’s 50-50, the relationship.

We rely on them, we’re there to support them;

they’re the ones who give us feedback. [...] We

bring new initiatives to the table, then they

have 50% input on how it all works. [...] If we ask

them to do something and they can’t do it, we

have to be real; they can’t do everything. We

always work on solutions together.”

06SuCCeSS FaCTor

“i’M SuPPorTinG THe GroWTH oF THeir buSineSS; THiS STiMulaTeS THeM To Do THinGS

For Me THaT THey MiGHT noT be ConTraCTeD To Do. iT’S a balanCeD ‘Give anD TaKe’

relaTionSHiP. i MaKe Sure inForMaTion iS SHareD; by WiTHHolDinG inForMaTion,

you’re SHooTinG yourSelF in THe FooT.”

—ClienT CoMPany

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07 the os must have the ability to find

connections between its knowledge

base and the client’s needs.

Says one client executive, OS companies

must “look at the market and us, and

understand trends. Understand what HR

operations will look like in five years time.

They must work out how they need to develop

their products to serve that industry. They

should present us with leading-edge

capabilities that have been developed;

don’t use us to learn and build capabilities.”

GivinG exTra value anD on-GoinG innovaTion

to innovate, create ripe opportunities.

The client and provider must set aside time—

as a contractual obligation—to discuss and

support innovation. Says an OS executive,

“Innovation happens when the client

encourages it, [saying,] ‘We’re going through

a restructuring, and we’d love your thoughts

on how we’re going to manage our workforce

differently in this new model. Can you work with

us on this to make us more nimble?’”

SuCCeSS FaCTor

“you neeD THe riGHT PeoPle anD roleS in PlaCe To FoSTer THiS DiSCuSSion

on a reGular baSiS, aS Well aS ForMal GovernanCe PlanninG.”

—ClienT orGanizaTion

eXit

abouT THe Henley CenTre For CuSToMer ManaGeMenT

Under the directorship of Professor Moira Clark, the centre brings together business

practitioners, industry thought-leaders and experts/ academics to help organisations tackle

today’s business challenges through a programme of workshops and research projects.

Find out more at www.hccmsite.co.uk.

abouT KellyoCG

KellyOCG is the Outsourcing and Consulting Group of Fortune 500 workforce solutions provider,

Kelly Services, Inc. KellyOCG is a global leader in innovative talent management solutions in the

areas of Recruitment Process Outsourcing (RPO), Business Process Outsourcing (BPO), Contingent

Workforce Outsourcing (CWO), including Independent Contractor Solutions, Human Resources

Consulting, Career Transition and Organizational Effectiveness, and Executive Search.

Further information about KellyOCG may be found at kellyocg.com.

Dr Anne Dibley is Programme Director for the corporate MSc in Strategic

Marketing leadership, and is a lecturer in Marketing at Henley business

School. Anne’s research projects for the Henley Centre for Customer Management

include studies focusing on corporate social responsibility, sustainability, how to

manage outsourcing relationships, and collaborative innovation.

abouT THe auTHorS

SuSAn DeFAzio is Senior Director and Principle Workforce Consultant within

the Global Centre of expertise for Kelly outsourcing & Consulting Group. She

has extensive experience in the human capital sector which includes leadership

positions in staffing operations and strategic account management.