Engineer a Commitment to Performance


An excellent relationship between a company and its outsourcing provider is necessary for success, but not sufficient. Outstanding accomplishments, of the sort that transformation requires, are created by a healthy tension between an intimate working relationship and a commitment to performance excellence. Leaders must stand up for both.

The conventional approaches to performance management in outsourcing don’t go far enough. Service-level agreements, penalty payments, and even bonuses for overachievement do incentivize behavior, but they don’t inspire commitment. The last thing you want are workers who are coin-operated. Psychological research shows that most people perform better when they internalize commitment, and that most people internalize commitment better when external incentives are minimal.[4] That is, people accept more responsibility for their behavior when they feel they have chosen their own course of action in the absence of strong outside pressures. They feel even more committed when they must actively work against outside pressures.

Instead of paying big bonuses to individuals, you will want to invite them to commit. Describe your joint organization as elite. Provide opportunities for them to volunteer to meet challenging targets. Recognize their contributions when they excel. Help them affiliate more with your joint effort than with their employer of record. Ask everyone to put his or her name and reputation on the line.

You should evoke the full force of the outsourcing partner’s culture and incentive system to help you. The partner company can act as both a foil and an accelerator at the same time. For example, when the UK Inland Revenue outsourced its entire information technology operation to the world’s largest outsourcing services company, the executives in charge asked for an open book arrangement. This was in direct opposition to the outsourcing provider’s corporate policy. By convincing the local partners to work with them in this way, they created a divide between these individuals and their bosses back at headquarters at the same time as they made their own relationship with them more intimate. They made the local partners choose sides.

That’s not all. They leveraged the provider’s internal corporate competition for recognition and status. The upwardly mobile employees in every company are constantly tussling with each other for recognition as they work their way up the status ladder. The Inland Revenue recognized the association with a successful account was beneficial to career progression and took advantage of this common playground dynamic. If the outsourcing provider met the aggressive performance goals for the initiative and successfully delivered reliable, large-scale, and complex day-to-day services as well as a major software portfolio, the local partners would earn enough margin on the contract to make them heroes back home. If their performance was only mediocre, their margin percentage on this big contract would place them at the bottom of the pecking order.

Don’t just invite commitment to outstanding performance; give your outsourcing provider the tools and support to deliver. Inject partners with a self-guiding instinct for acting on your behalf and instill personal accountability for high performance. The finance director at a UK-based grocery chain explains, ‘‘The head of our outsourced operation videoconferences in for my weekly meetings and shares sensitive business information, just like any other member of my senior team. Day to day, he understands the issues facing the business and the finance team, and can work with us to respond to them.’’[5]

You will also want to ensure that employees from both organizations feel connected socially and at parity professionally. For example, the BBC uses special events to bring in-house and outsourced employees together to break bread and compete in events, such as a quiz show about organizational knowledge. Last year, the outsourcer team won. The finance manager of a French chemicals company calls it ‘‘e clique,’’ or personal chemistry. ‘‘We’re not producing a finished product you can see and touch; it is intangible. That takes more trust. So we did not choose a company to work with, we chose a team—people we could connect with emotionally.’’

[4]Skip Stitt is now the senior vice president and managing director, Children and Family Services at ACS in Washington, D.C.

[5]Robert B. Cialdini, Influence: The Psychology of Persuasion (New York: William Morrow, 1984), pp. 92–94.




Outsourcing for Radical Change(c) A Bold Approach to Enterprise Transformation
Outsourcing for Radical Change: A Bold Approach to Enterprise Transformation
ISBN: 0814472184
EAN: 2147483647
Year: 2006
Pages: 135

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