By Karen Watterson
An essential component of outsourcing is maintaining good communication, both within an organization and with potential partners. According to Susan Cramm, an executive coach and founder of Valuedance, a firm that provides consulting services to executives interested in increasing the value realized from information technology, many different reasons contribute to the decision to outsource work. To get it right, an organization needs to be clear on what its reasons are and what it hopes to accomplish.
Tip #1. Understand what pressures are moving your company to consider outsourcing.
Strategic sourcing is about more than just saving money. It also involves staying competitive by accessing the best resources available in terms of technology, talent and effective, efficient business practice. It's important, she says, to have individuals within the organization sit down together to discuss where their strengths are, and where they could collectively benefit from bringing in expertise from outside.
Cramm describes the inherent dangers in allowing outsourcing to be carried out haphazardly, resulting in an organization that has lost its cohesiveness, "because there has been no decision about how to build flexibility in terms of staffing… A project comes along and because projects are variable, somebody goes out and hires a contractor, and then another contractor… and it rips the heart out of organizations because all the best work is being done by external parties." If all the innovation is coming from outside, and internal team members have had their roles diminished in contributing to the vital processes of the organization, the excitement and strength that drives a company from within are lost. Ultimately this also weakens the company's capabilities, as Cramm explains, "Then you have 300 contractors coming in from 200 firms, so there is no leverage on that side either."
Tip #2. The key to dealing with outsourcing is to "love it to death."
Cramm believes there is good reason to get excited about making outsourcing decisions, and the opportunity to take leadership of this important endeavor. She advocates taking a proactive approach and maintaining a positive attitude: "Take it as your own initiative… Say, ‘Let me lead it; let me do this correctly, because there are wonderful resources out there.'" With the right attitude, she says, a leader can create tremendous results. Cramm describes how one CIO managed to create outcome-focused dialogue with her people, by embodying an attitude of openness: "Let's explain our strategy. Let's explain how we are positioned toward the business strategy. Let's explain what innovation is happening and what we are going to deliver. Let's explain the competencies and capabilities and resources we need. Let's look and say, ‘If we want to use alternative sourcing, great.' Let's talk about the impact we want."
It's easy to see how this approach to discussing the alternatives would open up the possibilities, engage others, and lead to constructive conversation, rather than creating fear or apathy.
Tip #3. Show honor in your outsourcing decisions.
Cramm recognizes the need to not lose sight of the human cost involved in making strategic sourcing decisions. "I think at an individual level people are very concerned (about ethics and values). At an organizational level, somehow that gets lost… That is where leadership courage comes in." She recommends that leaders evaluate their effectiveness and career accomplishments not only in terms of numbers, but also "the impact we have had on the people that have been entrusted to us to lead."
The implications of this approach to leadership involve not only decisions regarding hiring and firing, but also finding ways to motivate and communicate that work for everyone.
As Cramm explains, "[Creating] a goal that inspires and is relevant to individuals… means you have to know them… You can't lead people if you don't know them." She pushes the idea of exploring the value in retaining people, or facilitating their career development if change is required. Ultimately, Cramm would like to see companies leave a legacy of success for their people, by maintaining a dedication "to understand who people are, understand their motivation, understand their talent, and help them develop a self-awareness to better manage and lead their careers."
Tip #4. Make effective sourcing decisions by owning your resources.
Cramm recommends against putting a chief officer or human resources specialist in charge of outsourcing. Rather, she sees the need for "confidence within a human resource organization to help guide effective sourcing." Her approach emphasizes the need for leadership to be proactive or offensive rather than defensive, and for leaders to really "own" their departments, their people, and their responsibilities. She is both an advocate of strategic sourcing, and a cautionary voice, warning that it is best done for good reasons if one is to preserve the integrity of an organization.
"I want them to spend time learning from what other people have done. Then I want to spend some really good inside time saying, ‘What do we hope our outcomes are? What do we do well? What are the hard lines about what won't be outsourced vs. what will be strategically sourced' …Like I said, in an ideal situation, everything would be internal. You need to explain why something is going out and under what condition.
"There is no inherent goodness to outsourcing or alternative sourcing. The problem is… most of us don't [have the advantage] of being big and stable and the best… The rules for competition don't change just because you are small. You have to figure out how to act or get the performance capabilities of somebody big."
As outlined by Cramm, achieving clarity of goals, and the careful evaluation of internal resources should precede any major outsourcing decisions. Then, choosing a direction in outsourcing should be done by the team members with expertise in the area being discussed. Evaluating one's options, and learning from the experience of other organizations and competitors is a valuable exercise in determining the best course of action.
Tip #5. Create value in strategic sourcing by forming strong partnerships.
One strategy that can yield positive results for everyone is a partnership between organizations with similar goals, corporate culture and so on. A longer-term arrangement allows everyone to really function as a team and not just a collection of isolated contributions. "I am optimistic," Cramm says, "Because I am seeing people [say], ‘OK, I have 300 employees, associates or contractors from 200 firms, and I know that is not leverage. Let me bundle all that up together and develop a couple of relationships that are much more strategic.'"
In exploring possibilities for bringing talent together, Cramm recommends talking to the frontline people who will be involved in doing the actual work, in order to create a good fit. It is important to foster a clear understanding of what the new people are being brought in to do, how that will work and what the implications are regarding changes in previous roles.
Tip #6. Maintain moderation, mutual value and balance in your strategic sourcing partnerships.
A positive example of how outsourcing can benefit everyone is when best practices and new technologies are brought in that strengthen an organization, and the majority of work taken over is that which the internal employees don't mind seeing outsourced. It is to a company's advantage to have a strong in-house team, augmented by strategic sourcing in areas that require upgrading. The best way to achieve this? Maintain a human focus, take the time necessary to reflect and evaluate the situation, and talk to the people involved. A satisfactory outcome can be found for everyone.
Kristi P. Carter contributed to this article.
Useful Links
Valuedance
http://www.valuedance.com/
Application development expert Karen Watterson currently enjoys her role as blogger and industry analyst from offices in the Western Mojave Desert community of Apple Valley, California. Contact Karen Watterson at karen (at) sourcingmag.com.
