Trust is something that really trips people up in outsourcing relationships. In my talks with hundreds of executives involved in outsourcing over the last decade, I’m intrigued by the fact that when I ask executives about the trust level in their relationship, some can’t determine if trust is there, some say they thought trust was there but then something happened that indicated otherwise, and most who say trust is key to their success can’t describe how to build or sustain it.
Outsourcing has an inherent challenge that makes trust become crucial to achieving successful outcomes. We’ve developed all sorts of ways to communicate in this age of cyber culture, but nothing can replace or be as effective as the type of communication that takes place when people have close proximity to each other. Distanced communication eliminates the crucial nonverbal cues (such as facial expressions, gestures, eye movements, tone of voice, etc.) that convey feelings and attitudes. Distanced communication is an inherent challenge in outsourcing. If you’re trying to communicate with people in diverse locations – whether they’re sitting in another department in your organization, or in another city, or in another country – the geographic distance makes the communication be less effective than if you were face to face in the same location.
This inherent challenge makes the level of trust in the relationship become even more important for effective communication and partnering. But I find the thing most often missing in outsourcing relationships is trust. So it’s no surprise that many complain that continual improvement, collaboration, innovation, and other anticipated outcomes don’t take place.
Just the other day I was talking with Stephen Dent, CEO of Partnership Continuum, Inc., and a renowned expert who advises companies on building and sustaining highly effective, trusting partnering relationships. He’s seeing more companies that are dissatisfied with the return on their outsourcing arrangements and spending too much time and effort on controlling, overseeing, or verifying their partners’ actions – a symptom of lack of trust. Stephen has some game-changing advice on communication and trust that I’ll share here with you.
Q: Often when I talk to customers in outsourcing relationships and ask them how they know they have a relationship built on trust, the response is something like: “We know the provider will do what they committed to do.” But isn’t trust something more than that? Do they have blinders on when it comes to what trust really is in the context of a relationship?
Dent: What you described is one “flavor” of trust. When partners do what they said they would do, it’s compliance; that is, they comply with the terms of the contract or agreement. In relationships where compliance is the measurement of trust, the outcome will be both parties providing the minimum they can to adhere to the terms stated in the agreement. And even then, they often send in an army of “checkers” to make darn sure their partner is complying.
But for most of us, when we outsource, we’re looking for something deeper than just compliance. We want the service provider to take ownership of the portion of our business we give them. We really want their ideas, knowledge, innovation, creativity and, yes, we even want their hearts. Of course, we want our partners to be committed to the task of what we expect them to do; but we also want them committed to having a relationship with us, and that’s where the heart come into play. This then becomes the hallmark of trust. When partners measure trust only by compliance, this is often a sign that a deeper level of trust does not exist.
Q: Besides focusing on checking a partner’s compliance, what are some other symptoms of an outsourcing relationship that lacks trust?
Dent: Conversations between non-trusting partners are reduced to squabbling about whether every “t” is crossed and every “i” is dotted in the contract. Neither is willing to accept blame and neither will take risks. Decisions are delayed. There’s resistance to change. Resolving differences doesn’t focus on compromise and brainstorming alternatives. There’s very little sense of teamwork. They don’t give the benefit of the doubt to each other. Communications aren’t open and direct and often are not timely.
People know when a lack of trust exists; they feel it. It is one of those intangibles that our intuitive intelligence warns us about. But the partner gives away clues as well, so we do not have to rely strictly on our intuition. One of the strongest indicators that something is amiss is when your partners start avoiding you. They fail to make conference calls, fail to deliver on time, fail to reply to e-mails. This is a clue something is wrong. Another clue is a large number of disagreements/conflicts and a strong sense of competition between partners rather than collaboration. If your partners do not trust you, they will compete against you to get their way. Overt competition between partners is a sign of the lack of trust.
When deeper trust exists, the tone and conversations become very different. Rather than looking mainly at production quotas, service costs, or SLAs and associated penalties, trusting partners focus on how to innovate a business process or further increase efficiencies. They talk about how to enhance their relationship and the outcomes they can achieve together. The tone and mood between individuals is relaxed and collegial. They’re open and honest with each other. Their behaviors are consistent. They show appreciation for each other.
Q: When I ask outsourcing customers how they worked together with their service providers to develop trust in their relationship, they most often respond that that they conducted due diligence on the service provider during the Request for Proposal (RFP) process. But even if due diligence includes talking with some of a provider’s current and past customers, isn’t this just going to result in getting information about the provider’s capabilities and thus not “developing” trust? How can two business entities develop trust?
Dent: Say you were dating someone and you wanted to make that relationship permanent. Would you go to their former girl/boy friend and ask about their relationship with that person? Conducting due diligence is an important step in any outsourcing process, and you can learn a lot of important information about an organization that way. However, nothing takes the place of one-on-one interaction with your partner. Each partnership has its own unique chemistry. This is because every partnership creates its own environment or culture, which is a complex alchemy of history and how individuals have interacted with each other.
The technique that I use to help organizations develop trust together is through the use of self-disclosure and feedback – one of the Six Partnering Attributes that are the foundation of my company’s methodology for partnering. The first step in building trust between outsourcing partners is to make sure they each have ownership of the relationship through the use of a jointly created strategic framework. I ask each partner to develop a vision statement for the relationship and share it with each other. This creates an opportunity for partners to make sure they have the same outcome in mind. Then I have them create a joint mission statement to make sure they are aligned with what they want to do. Finally, I have them create strategic directions together. This ensures that they agree on how they want to accomplish their mission. During this process, I also have them think about the relational expectations they have of each other, define them, and then agree to uphold them. This is the first step in building trust between partners.
Q: I’ve noticed that many organizations don’t have a relationship built on trust – but they mistakenly think they do. For them, the lack of trust comes to light when they have to resolve disputes, work through change, or make decisions about new opportunities. When should outsourcing partners discuss trust?
Dent: Often, the issue of trust never surfaces until it has been damaged. By then, more often than not, it has been allowed to fester so long it is difficult to rebuild trust. I think the first mistake companies make is assuming trust exists without talking about it. I am amazed at how reticent people are to bring up the issue of trust. I often ask executives why they don’t bring up the topic of trust with their partners, and the most common answer I get is “because if I bring it up, they may think I don’t trust them.”
The fact is most people are actually relieved when someone brings up the issue of trust so it can be discussed. Rather than thinking your outsourcing partner will think you don’t trust them, talk about how important the relationship is to you.
Q: What advice do you have for companies that are in an existing relationship and recognize they need to talk about building trust with each other? How can they start that conversation?
Dent: Explain that you’re bringing up trust to deepen the level of trust in the relationship and to make sure that your ideas of trust and their ideas of trust are in alignment. If they are not, this is an excellent time to talk about the expectations you have of each other around trust.
Both partners need to talk about what trust is for them. In a relationship, each person or organization has a slightly different take on trust because it’s based on one’s values. So it is important that that both partners define what trust means to them.
I advise both partners to describe the characteristics of trust, breaking it into two components: trust in completing the task and trust in the relationship, listing the desired behaviors in each category. The key here is not to just brainstorm a list of trust attributes you want your outsourcing partner to have but, rather, to sit down and create the list together.
Q: Because distanced communications are a challenge in outsourcing relationships, no matter where the service provider is located, what do you recommend people do to improve the effectiveness of their communications?
Dent: Long distance relationships are one of the biggest obstacles to overcome in building trust. Geographically, the further away you are from your partner, the more important it is to build trust in the relationship. I recommend that companies starting an outsourcing partnership build trust first, before moving to the specifics of the outsourced tasks. That is why I believe it is important to start the discussion of the strategic framework before signing the contract. Make sure your visions are in alignment; you have the same mission, and your strategies for achieving your objectives are compatible. Building a joint strategic framework is the first step in building trust and creating the relationship.
Once you have a joint strategic framework, put in some face time together to discuss how you want to behave with each other. By that I mean, what type of relationship do you want? In many cultures, people want to spend social time together eating dinner and drinking the night away. While that is important in some cultures, it does not address the real relational issues from my perspective. My list of relational issues includes:
- Leadership – Who’s in charge and when?
- Decision making – How do we make our decisions?
- Communication – Type and frequency of communication
- Conflict resolution – How do we resolve our differences?
- Change management – How do we manage change?
- Roles and responsibilities – Who does what?
- Escalation protocol – How and to whom do we escalate issues?
- Trust – What do we agree builds trust? What damages trust?
- Teamwork – How do we work together?
In addition, the most successful teams meet periodically to discuss their relationship, and these meetings must be face-to-face discussions. Depending on the situation, spending one day at a meeting talking only about the relationship deepens trust.
As we share information and provide feedback to each other, we explore for our commonness as human beings. This deeply embedded human trait is closely related to human tribalism. We trust those who are like us and, as we share elements of our relationship, we are able to identify the common human traits each of us has, which then deepens our bond to each other. Even in the most sophisticated relationships, it still boils down to us being human and requires us to use all aspects of who we are in how we communicate. So much of this is non-verbal and only happens when we are physically near each other. That is why it is so important to set up, at least twice a year, meetings that are only focused on the relationship.
What has been your experience in building trust in your outsourcing relationships? What do you think about these suggestions for how to talk about building trust and recognizing the lack of it? Join the discussion – add a comment to this blog and share your thoughts.
Stephen M. Dent is founder and CEO of Partnership Continuum, Inc. His first book, Partnering Intelligence: Creating Value for Your Business by Building Strong Alliances, describes the Six Partnering Attributes and how to build effective internal and external business alliances that create sustainable competitive advantage. It was listed as one of the top 30 business books in 2000. His most recent book, Powerhouse Partners, is a blueprint for building a partnering organization. He has over 25 years’ experience helping companies improve performance and operating margins through partnership-improvement methods including workshops and assessments. Prior to founding Partnership Continuum, Inc., Stephen was a Partner and Senior VP for Six Sigma-Qualtec.
Since 1998, freelance writer Kathleen Goolsby has studied outsourcing relationships’ successes, failures, trends, and best practices. She has interviewed more than 860 executives at buyer and service provider companies and is the author of “Critical Requirements for Building and Sustaining a Successful Outsourcing Relationship,” a chapter in Global Outsourcing Strategies: An International Reference on Effective Outsourcing Relationships (December 2006, Gower Publishing). As a freelancer, she also currently serves as the Senior Writer for Outsourcing Center (whose parent company is sourcing advisory firm, Alsbridge) and has authored dozens of articles as well as white papers. In a past role, she was editor of Outsourcing Venture (a former print publication). You can contact Kathleen at ksgoolsby@gmail.com.
Related posts:
- Nine Questions to Assess an Important Aspect of Outsourcing
- The “H” Word is Not Optional in Outsourcing
- An Essential Element for Outsourcing Success
- The Kind of Outsourcing that Takes You by Surprise
- Importance of Managing Diversity in an Outsourcing Relationship – Interview of Joe Santana, Sr. Director of Diversity, Siemens USA
Hmmm. An excellent article but perhaps a little long for a blog? Just a thought.
Anyhow, one thing that you don’t mention here is TIME. Nobody should get the idea that TRUST is a short-term process or that, indeed, real short cuts are possible. It is behaviour over time and not short-term behaviour that stimulates and maintains trust. A company has to be CONSISTENTLY trustworthy to gain real benefits from relationships and that means that they must have a corporate ethic that is, at heart, genuinely trustworthy. This is not something that you can act out or strategise.
If you create a “strategy” that harvests trust but then gouge your client at the first possible price-raising opportunity then you are not, de facto, trustworthy.
If, on the other hand, you make a business or operational mistake, you should always see that as an OPPORTUNITY TO COMMUNICATE. It is not the problems that happen in business that cause a breakdown in trust, it is the manner in which you react to such problems that will certainly do that if you get it wrong.
Nothin but nothing works better in creating trust than the statement “we’ve got a problem (or we’ve made a mistake) and here’s what we’re doing to put it right and to make sure that you are not sorely disadvantaged”.
Sounds simple? Sure. But it doesn’t happen very often….
As for problems with contracts, don’t worry about it. That’s what happens when the people we call lawyers get involved. It’s not necessarily to do with the core relationship.
Brett Trevalyan
Director
The DDC Group
http://www.datacapture.com
You’re right about trustworthiness over time, Brett. I think, to a large extent, providers are responsible for whether a relationship’s level of trust ends up as a story that’s good, bad, or ugly. Being trustworthy will result in someone else’s trust. As an example of the bad (or even ugly), a customer related to me that its service provider hid the fact that it had received reimbursement for costs due to a mistake of another third party, when that reimbursement rightfully should have been paid to the customer (and after escalated conflict resolution, the money was transferred to the customer). What impact did that provider’s behavior have on the level of trust in that relationship – as well as its reputation because of the customer relating this occurrence to colleagues in its industry? It’s interesting that when I’m told these kinds of stories, the customer refers to the provider as a “vendor.”
Then there’s the good. More than one customer has told me of their experience with their service provider proactively informing the customer of the outsourcer’s inadvertent mistake and voluntarily reimbursing the customer for the costs consequent to the mistake – even though the customer didn’t know and likely never would have discovered the mistake. In these stories, the customers refer to the providers as their “trusted partner.” In these types of relationships, the customers say their level of trust in the provider started from the very first interactions with the provider, even during the RFP process. they say the provider’s trustworthiness is notable from the outset from the behavior of its people and the values in the corporate culture.
Though trust has to be earned continually over time, I think customers also have to be willing to trust.
I often ask customers to describe an example of how their service provider went the extra mile for them. I hear all sorts of great examples of flexibility and “stepping up to the plate” to do what’s best for the customer, despite significant obstacles. And some of those stories are pretty dramatic. But what stands out is that the customers are always really surprised when their provider performs such services at no cost – even when the cost to the provider isn’t very much, it makes just as dramatic an impact on the customer as the times when the cost to the provider is very high.
Customers are seldom surprised, though, when the first unanticipated challenge arising during the transition/implementation phase of the relationship occurs and the provider wants to talk about money. Like you said, this often occurs very soon after signing the contract and agreeing to act “in the spirit of partnering.” Unfortunately, there are so many horror stories in the marketplace of providers “nickel-and-diming” their customers that buyers of outsourced services expect this to happen and, in expecting it, really don’t trust their providers.
Money issues can quickly cause one to doubt the “togetherness” aspect of one’s partner in any type of relationship and thus erode trust. And unanticipated cost issues will always arise in a relationship. Perhaps when they negotiate their outsourcing relationships, buyers and providers need to spend more time talking about their expectations around how “the togetherness spirit” from which they will both discuss unanticipated financial issues, rather than just planning who’s responsible for what and planning for conflict resolution if the issue is not easily resolved.
Here’s another aspect to consider: In relationships where the customer has visibility into spend, those companies tell me that the visibility helps them understand the provider’s true costs and it thus lessens the level of mistrust when a cost discussion arises. But many providers are not willing to be transparent.
The “nickle and diming” thing frustrates suppliers too. Often because we suspect the vendor companies of having deliberately low-balled their RFP to get the business with the intention of ramping up prices on pretext later.
It happens a lot, we think.
Mr. Trevalyan made an excellent point, which is over time, trust may happen if, in fact, people do what they say they’ll do. Sadly, in too many outsourcing relationships, partners do not talk about trust up front and then address it only when it has been damaged. Then it is difficult to repair.
Trust is an illusive quality that means different things to different people. That is why, with the same set of facts, some people will trust and others will not. It is based on a set of values held by individuals.
To avoid this costly and time-consuming mistake, explore with your partners what trust means to you and to them. Then, come to an agreement on the qualities of trust in your relationship. Be sure to remember that trust is not only about getting the work done – that is really compliance – but also about the relationship component of trust that develops during the course of business.
By openly talking about trust up front, you can by-pass the timely technique of waiting until your partner disappoints you before you have the discussion. Once trust is built, you will be able to think more strategically with your partners.
That’s so much better than being “nickled and dimed” to death.