Outsourcing Relationships

Going in with the Right Attitude

I remember my corporate sourcing expert buddy Lou.  He was a pragmatic fellow. “If the ‘parasites’ can’t follow the contract then we’ll burn them” he used to mutter in relation to the recruiting companies that made up his portfolio. The attitude was that the providers sat on the other side of the fence and were to be managed to the letter of the contract. Corporate sourcing ran the contract process and was empowered with the final decision about ‘who was in’ and ‘who was out’.  From a rationalists point of view it was great business, from a ‘partnership’ point of view the process was rotten and lead to fractured relationships between the supplier and those who were actually to benefit from the relationship. It is not my intention to slander corporate sourcing. Instead, I intend to highlight how the concept of ‘partnership’ is critical to the success of any outsourcing relationship.

As providers of outsourced Human Resources services in Asia and Australia the iHR client base is diverse; government, major national corporate organisations, multinationals and SME’s all utilise our services.  Generally our client relationships become long standing built on a cultural or values based commonality. When this commonality doesn’t exist one party or the other walks away.  Sometimes we find that the relationship doesn’t work because the critical person who manages the relationship from within the client organisation doesn’t appreciate our values and/or approach, or is threatened by it. That person may not necessarily represent the view of the organisation. Fortunately this doesn’t happen very often. However, I must say that our long term relationships have never lasted when we have been kept an ‘arm’s’ length from those to whom we actually provide the service.

If an organisation is embarking on any long term Outsourced HR arrangement it has to be prepared to throw itself ‘whole heartedly’ into whatever arrangement it has; not blindly and certainly with clarity about scope but still whole heartedly.  If you can’t trust the provider then, like a union, there cannot be an effective ‘partnership’.

Furthermore the idea of ‘partnership’ does not suggest abdication of responsibility on behalf of either partner. If the client goes in with the ‘it’s their problem now’ attitude then the relationship will fracture quickly. On the other hand, if the provider goes in with an ‘all care and no responsibility’ attitude a similar result will occur.  Therefore, getting a ‘roles and responsibilities construct’ agreed to by both parties upfront is essential. Furthermore, it helps both parties if a values proposition around the way the provider and the client will engage each other is agreed up-front.

The Meaning of Partnership

As an Outsourced HR provider that is unapologetically obsessed with long term relationships, the concept of ‘partnership’ drives everything we do. According to the Collins English Dictionary the term ‘partner’ means ‘ally or companion’.  I like how their example goes onto say ‘…players on the same side in a game’. So ‘partnership’ in the outsourcing sense is nothing to do with a ‘command and control’ or a ‘parasitic’ relationship. The effective outsourcing relationship is all about a practical working partnership that makes achieving an end point easier.  If there is not mutual benefit, satisfaction and a synergy of approach, the relationship won’t work.

Starting Off the Right Way is Imperative.

How a client approaches the outsourcing relationship is vital – especially in the sphere of Human Resources. There are five key questions to be answered in order to get off on the right foot when outsourcing any element of the HR function. These are:

  • Why are we going down this path? Be clear that an outsourced relationship is what you really want.
  • Do we really want a Partnership? Or is this going to be a one night stand?
  • Have we a clear idea about how we envisage the partnership working? Clearly define objectives, roles, responsibilities and the values that will underpin the relationship.
  • Do we have criteria for selection that extends beyond price alone? If price dictates alone, chances of long term success are low.
  • Do we know that this organisation really understands our objective and does it really have capacity to deliver to our required standards?  Remember it is ok to test out the provider on a few small jobs before giving them the big one.

I always say to our clients that outsourcing of any element of the HR function needs to be a solution that is made up of a combination of energy, knowledge and skills, cost effectiveness and mutual commitment to the relationship.  If not, keep it in-house.

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