Realistically, how long can an outsourcing service provider and its customer go without having a conflict? Though people often compare an outsourcing relationship to a marriage, it’s not the same when it comes to conflicts. For instance, in a marriage where the couple has conflicts over how to manage their money, they can open separate bank accounts. In an outsourcing relationship, the decisions each party makes – or wants to make – impact the other’s wallet; so conflicts are inevitable.
The way the parties handle conflicts can decide a relationship’s fate. Sure, they establish the basics for this at the outset of their relationship, especially a governance structure including issue-resolution/escalation. And many prepare in advance by participating in workshops on conflict-management, win-win negotiation, or the Harvard Negotiation model for “getting to yes.”
But along comes a conflict that puts them in the “incredibly-frustrated-with-you” position or the “having second-thoughts-about-you-and-this-relationship” stance.
On those days, how do they work it out?
I’ve asked that question of many outsourcing buyers and service providers over more than a decade. Responses are in two different camps: those who say they approached the issue from trying to understand each other’s challenges so they could get to a shared interest, and those who basically say they put their leaders with strong personalities in a room and duked it out.
One gentleman’s response stands out to me as the best advice. He wisely pointed out that it doesn’t matter what negotiation skills one uses if there is not a real “relationship” to begin with. And a relationship is all about people – a fact I’ve been blogging about for several months and recently brought to light again.
The customer in that relationship went on to explain that the people in an outsourcing relationship must protect it so it can grow. Protection involves more than a “corporate” understanding of each other’s business needs. Here’s a few other things it requires:
- Continually monitoring the relationship and making a concerted effort to keep it strong and solid
- Keeping an eye focused on how to enhance the relationship
- Celebrating the relationship itself, not just the “wins”
- Caring about each other’s people
Addressing conflicts winds up being either a time for engaging with each other or engaging against each other. Relationships that are not protected so they can grow won’t be able to withstand “the tough stuff” that comes along since sometimes a decision or solution doesn’t meet both parties’ needs.
What are your ideas on how people can protect and grow their outsourcing relationship so it can withstand conflicts?
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.
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Dear Kathleen: I appreciate your point of putting people central in the success of outsourcing relationships. I believe that a lot can be done in the beginning of the relationship: take the time to get to know eachother, to meet everyone involved on both sides of the relationship. Put them in a room, let them have dinner together and make sure there is a match of values. If the values are matching, ensure that the vision is the same. Both parties should be walking the same path to the same paradise. And thirdly, create a win-win situation and don’t compromise if one of the parties looses out somewhere, because that’s where the friction will come at a later stage.
Hugo Messer
http://www.bridge-outsourcing.com
Kathleen, I really enjoyed your recent article in Outsourcing Buzz. Do you have any insight as to how to foster relationships before a conflict occurs?
Steve Bateman
President & CEO
Call Center Connections
http://www.callcenterconnections.ca
Steve, a way to foster relationships and thereby prevent conflicts from occuring or at least minimize their adverse impact, is to ensure that both parties have a common understanding of what is important for the success of the relationship, at the business outcomes and relationship management levels. A willingness to collaboratively test the relationship’s effectiveness and openly discuss potential or existing weaknesses, as well as encourage corrective actions, should provide a buffer against future major conflicts. This should go a long way to avoiding relationship tension, where things that are improtant to a party, especally the customer, are persistently performed in an unsatisfactory manner.
Absolutely loved reading this blog. The key is to always stay focused on the fact that it’s a relationship and needs to be nurtured with trust and respect.
Kathleen – good post. I am not sure if you are familiar with the University of Tennessee’s work in what we call “Vested Outsourcing.” UT completed a research project funded by the United States Air Force to find a better way to outsource. During our research we studied successful outsourcing deals and we codified what made them work well in a book (and a course we teach) called Vested Outsourcing: Five Rules that Will Transform Outsourcing.
Vested Outsourcing gets to the heart of much of what you outline and addresses the points in the comments (win/win, trust, relationship before the contract, economics of getting what you call the wallet factor right).
Microsoft, Intel, UPS and several others have endorsed the concept of Vested Outsourcing. For those who are interested, the University of Tennessee has a dedicated website devoted to the topic of Vested Outsourcing at http://www.vestedoutsourcing.com
Kate Vitasek
Faculty, Center for Executive Education
University of Tennessee
Great ideas! We are faced daily with having to reinforce our delivery relationships at a greater extent than the relationships we have with our clients. We also find that no single solution works for any two parties even though the functions of the process are the same. I liked the advice of really exploring the feasibility of the relationship as well as the mutual respect factor. I think the one thing we will begin to do immediately is slow down the onboarding process and “date” each candidate a while longer.
Well, let me make a constructive but (probably) slightly unexpected suggestion.
I’ve been an owner/manager of an offshore outsourcing company for 21 years (The DDC Group – Philippines BPO). This is an unusually long time to be involved in the offshoring aspects of this industry and over that period of time I reckon I’ve heard just about as much as I can take on offshoring partnerships, mutual advantage etc etc. The truth is that, in the end and when it comes right down to it, it’s always the line of least resistance to beat up your supplier in times of stress, no matter how or why that stress arises. Of course, in business, stress is inevitable eventually for reasons of commerce, competition, management change or whatever.
When we started out (and we started absolutely from scratch, with nothing), I was absolutely NOT a believer in Corproate Hospitality. I saw it as wasteful, an excuse and a junket. I NEVER took clients on hospitality venues (except for dinenr, etc, as per usual).
I’m a convert. The truth is, if you spend a long time with clients at events such as soccer, motor racing, skiing or ESPECIALLY cricket; amazingly it turns out that you’re all human and that you all like to have fun. Funnily enough, that being the case, the next time there is an issue of any kind, it proves so much easier to fix! This is especially the case because the conversation is not confrontational in any way but is constructive and friendly.
Look, I’m not sure that Corp Hospitality OUGHT to make managing long-term contracts easier but I can tell you that it DOES. It’s a pretty simple solution to all these millions of journalistic words but there you have it.
You read it here first.
BTW, getting people to spend time at your offshore locations also works a treat but that’s a different rant…….
Brett Trevalyan
Director
The DDC Group
http://www.theddcgroup.com