In working with outsourcing service providers for the past 30 years, the biggest lesson I have learned is if you are not thrilled with your outsourcing service providers, chances are the problem is with you, not them. Granted there are service providers who just don’t have the necessary expertise or the geographic coverage to fulfill their contractual requirements, but these points should have been discovered during the due diligence process.
What can you do to get to a state of satisfaction?
- Do your homework.
Structuring any outsourcing relationship takes work. A lot of work. And it must be done correctly to insure a successful relationship. Develop detailed performance standards for the tasks you want your service providers to perform – what is to be done, when it is to be done, and how it should be done.
- Make the right decision.
When you go through the evaluation process and you are getting ready to make a decision, I would like to suggest the following criteria, not necessarily in order of importance:
- Terms and Conditions
- Willingness of the service provider to work with the firm during the evaluation process
- Price
- Success in similar sized accounts with similar services
- Turnover of onsite staff
- Account Management Team – is it the same people who sold you? You will be sitting across from these people for the next three to seven years – make sure you are happy with the team..
Many firms make decisions on the specific individuals involved in the sales process. That individual may resign next year leaving the firm in a cornered situation.
- Verbal promises are nothing – get it in writing.
A few years ago, we got called in by a firm to assist them with their outsourcing contract. The problem was the vendor that was awarded the contract promised them a million dollars in savings in the initial year of the contract. When the firm pressed them on the issue, they denied ever making that promise. The firm looked to us for a solution; however, with nothing in writing, there was little that could be done.
- Expectation/detailed service levels
Service providers, like people, will do what is expected of them. Every employee in your organization has a job description – but do your service providers? Service providers should have detailed performance standards outlining exactly what is expected from them on a day-to-day basis.
5. Scorecards – holding their feet to the fire
Right now, if you look at your outsourcing contract you may or may not have a cancellation for convenience and/or possibly a cancellation for breach clause. They are your only recourse for poor performance which is kind of drastic. You can always huff and puff and blow their house down.
Scorecards with escalating penalties are a good intermediate step to correct poor vendor performance.
- Contractual terms that are critical
Your contract should have terms regarding flexibility of equipment, unlimited flexibility over labor, no non-solicitation and positively no severance.
- Make the best use of the monthly/quarterly/annual meetings on your terms
If you have sat through a service provider’s annual meeting, it usually consists of them telling you how great they are doing and what additional services they want to sell you. It is time you take the proactive approach; prepare a format on the topics you want to hear about. For example, what type of efficiencies can they introduce? Is their headcount correct? What is the status of employee training, turnover percentage benchmarked against the industry and your peer firms?
- If they are not meeting your expectations, let them know.
Remember all those people that were at the service provider’s presentation when they made all those wonderful promises to you? Hopefully, they are still involved. Give your local team a chance to address and solve issues, but if they don’t, don’t be afraid to voice your feelings to the service provider’s entire team involved in your account.
There is no reason why you should not be thrilled with your service provider’s performance. If you would like a plan for your specific situation, contact me at rmattern@matternassoc.com.
