Outsourcing is a committed relationship. You have to work closely with the account manager at your outsourcer. Like every other committed relationship, you need to communicate with your partner. However, also like every other committed relationship, quality communication is very difficult. Your vendor probably wants to talk to you all the time, and some of these talks are going to be about things you don’t want to talk about: new sales, raising rates, staff leaving, and so forth. Likewise, you will want to have talks that he vendor doesn’t want and would prefer to avoid: lower rates, quality complaints, offers by competitors. You and your account manager have different needs and probably different personalities, but you both have a common goal… to make your outsourcing program work! How do you work together and communicate effectively?
The two most important factors in good communication are: a commitment to regularly review your program and an agreement on the language you will use for communication. How will you do that? By following these five steps:
1. SLAs and metrics: As early as possible in the relationship… but not before you are ready… you need to agree with your vendor on what are the tangible, numeric measures that you will use to manage your program. Usually, they will include the meeting of deadlines, the level of quality and how utilized/productive your staff is. There are nearly infinite variations to these three measures. Decide what your metrics are, how you are going to capture them and then develop the service level agreement or SLA (ex. 95% of work will be delivered on time). These metrics form the basis of your common language. Metrics change the conversation from, “The service isn’t good,” to, “Delivery deadlines need to improve from 92% to 95% in the next three months.” Instead of a vague and emotionally charged conversation about failure, you engage in an unambiguous and dispassionate discussion about meeting measurable goals.
2. Management reports: Once you identify the right metrics, report on them at least once a month. Don’t be surprised if the first report is wrong, or if there is disagreement over the details of how numbers were collected or reported, or even if the metrics or service levels are wrong. This is normal, especially if this is the first time this service has had a management report. Over time you will improve the report, and even change your mind about the importance of different metrics.
3. Monthly meeting agenda: Once your program falls into a regular rhythm you need to meet with your vendor every month. When you don’t meet, problems build up and eventually develop into a crisis. Your monthly meeting should: review monthly metrics, dentify improvement initiatives (when metrics underperform SLA’s), and discuss new business not covered in the first two items. The monthly report is absolutely critical to the meeting, and should be delivered at least a week before you meet.
4. Other Meetings: You also need three quarterly meetings and one annual meetings (they can replace that month’s monthly meeting). You can review progress on initiatives during monthly meetings, but it is better to make the discussion of initiatives the core of your quarterly meetings. Why? Because an initiative probably takes more than a month to be completed, and month to month you don’t see a lot of progress. A quarterly makes progress more visible, and allows the time you need to go over details. The annual meeting is similar to the quarterly meeting, but looks at the entire year: what have we accomplished, how has the program changed or grown, and what changes can we expect in the coming year?
5. Attendees: Meetings are necessary, but so too are attendees. That applies to the vendor and the client. If the sponsors of the outsourcing program do not show up at the meetings, it is rarely a good sign. The monthly meetings can have slightly more junior attendees. The quarterly meetings should have all managers in attendance. The annual meeting should have at least the next layer of management above the “owner” of the program. The annual meeting is a great time for everyone to spend just a little time on what they have accomplished and allow everyone to get recognition from their managers.
If you establish your common language and agree to a regular rhythm of meetings, you will identify problems in their earliest stages and prevent operational issues from damaging your vendor relationship. By everyone receiving the management report before the meeting the fear (on both sides) of being ambushed with an unwanted issue goes away. If you already have difficult and stressful meetings with your vendor, you will be surprised how quickly you can improve the quality of your meetings by following this process. Remember, it may take some effort to get there but when both parties are talking it’s a good sign that the relationship is working! And that’s my Niccolls worth for today!