04 Feb Outsourcing’s Value
One of the ‘rich’ domestic discussions my wife and I have, from time to time, involves the saying we’ve all heard: “Perception is reality.” She forcefully responds, just about every single time she hears this – usually insisting, “No, reality is reality!” Of course she’s right and we both do believe in absolute truth, but we’ve all seen time and time again, that people will act on their perceptions – whether of not they’re accurate. That’s the truth too.
Companies and institutions outsource services for a variety of reasons. A compelling rationale is to hire experts in a particular service that is not central to the core business, so that management is not distracted by having to concentrate on things that don’t advance the central mission. This makes great sense and often results in better quality and innovation at lower costs. That’s real value and it’s what you’d expect from experts you’ve hired – right?
Most of Tenacity’s clients manage services where a dedicated account manager or operations director is assigned to the client location. They bring a high level of training, experience and support to create value for the client and insulate them from the day-to-day responsibility, watchfulness and sometimes hassle. Oftentimes, they report to District and Regional multi-unit managers and they function as the point person to gain access to the expertise they can bring along with other support departments back at HQ.
At least, that’s the way it’s supposed to work. When Tenacity consultants conduct FreshEyes® Reviews, we probe to understand the status of the relationships and more specifically the strength and presence of a fully formed Web of Influence®. One of the pivotal questions goes something like this… “Other that the on-site personnel, whom do you know from the provider company and what specific value do you believe they bring to the contracting relationship?” The client’s answer to this question has a lot to say about the value of outsourcing and potentially the risk of loss of the contract.
Importantly, the value of outsourcing is all above the on-site / Account Manager level in the Web of Influence. Graphically, this is depicted in the diagram below:
Outsourced service providers who fail to focus on the value their clients receive (and perceive) above this line shouldn’t be surprised when their clients realize they can hire the on-site manager away, save the management fees and still get pretty much everything they were getting before. Again, this value must be both received and perceived!
The gap between perception and reality must be filled with proactive and relevant documentation and communication embedded in a formal process of high-level account management. The best client relationship firms may make this look easy. It isn’t and there definitely aren’t any shortcuts.
Steve & John