Preparing for Transition

Transitioning people and work from one company to another presents a huge opportunity for misadventure. Ideally, the work transfers smoothly and almost invisibly; in reality it is often fraught with problems and missteps. It is the first real activity of the outsourcing initiative. And as such, it can color people’s perceptions about the wisdom of the whole process for a very long time. In addition, those perceptions are sticky. Employees don’t lose the sour taste in their mouths after a poor start, even after many issues have been rectified. One company reported that it was receiving explicit complaints on its satisfaction surveys one full year after a nasty start-up problem had been completely resolved.

It almost goes without saying, but before executives start a transition, they will want to put the right management team in place. If critical management changes have not yet been made, now is the time. One executive recalls, ‘‘Quite early on, after the initial strategy, after we designed the outsourcing approach, we asked all the existing management team to rebid for their jobs. That was radical, there was some pain, but we had to do it because with the existing structure we couldn’t execute the change we needed. They rebid, and we had a process of competition. The previous team was not unprofessional; they are just entirely associated with the old way of doing things.’’

By this time in the process, executives will have made one of the most important transition decisions: whether to move the work process ‘‘as is’’ or whether to move to a new process and/or system as the work is handed over to the provider. This is an important decision because it affects the complexity of the transition process. Companies and their providers almost always underestimate the complexity of the work. When technical uncertainty is stacked onto political and emotional uncertainty—all managed under financial constraints—things are more likely to go wrong. From a technical perspective, the lowest risk option is to transfer the work as is. Next best is to transition to an existing operating system and process even though it may be different from the current one. The most risky option is to implement a new, untested system and process as part of the transition (see Exhibit 8.2).

Exhibit 8.2: Technical risk increases as the transition spans more process change.

What would make executives take these technical risks? They have to trade them off against more compelling risks that push them in the opposite direction. Political and financial risks most often revolve around time to achieve benefits. The more time-compressed the transition process is, the faster companies begin to achieve the results that set them on this course to begin with—assuming, of course, that the transition is managed effectively. So from a political and financial standpoint, faster is better.

This is a perfect time for an explicit risk-management process. Most companies and most outsourcing providers do not use this approach, but they should. If the outsourcing provider does not come with a risk-management approach based on its own experience, the company should borrow the scheme it uses for evaluating new product or capital investment risk.

A systematic project-management approach is also a very good idea overall. Many systems of this sort exist, but my personal favorite is Speed to Market’s Concerto. Instead of just capturing all the task-level details for managers, it helps focus attention on the bottleneck activities. Companies report very good results with on-time program delivery using this tool. Of course, tools by themselves don’t do anything. The executives who are accountable for the outcomes must decide they will use these tools to achieve their ends. So executives have a task plan for transition along with a risk-management and a program-management process. My intention is not to cover the details of outsourcing transition here. I just want to focus on the issues that are particularly important for transformational outsourcing.

If the object is transformation, the work process is going to change a great deal. If a company is going to transfer the work as is, it must document the old processes in detail. This process description should provide enough information so that the work can be done completely and accurately, even if the current employees do not transfer. In most situations, the company and its outsourcing partner would like to know which employees are not likely to move with the work so they can pay explicit attention to that part of the documentation.

If a new process is being implemented at the same time the work is being transferred, executives will want to take a different tack. They should collaborate with the provider to develop a detailed—underscore detailed—process and information flow for the way work will be done. Then they should map each data element, form, calculation, responsibility, decision, and handoff in the new process to its source in the old process.

When this is considered complete, the two organizations should run a rehearsal of each work process, conducted by the individuals who will be doing the work after the transition. Readying the organization for this event will involve training, but an action focus will give people every incentive to make sure they get what they need to know. Plus, this dry run will identify disconnects, missing data, poorly defined responsibilities, and timing issues. When these are cleared up, executives will want to stage a successful dress rehearsal before they allow the work to transfer.

Executives will complain, but the rehearsal should include the management process as well as the detailed transaction process. Why? With apologies to designer Mies van der Rohe, God is not only in the details, she is in the interfaces. Like passing the baton in a relay race, processes are most likely to break when roles and handoffs are unclear, where timing is tight, and where personal relationships are distant or nonexistent. A good rehearsal exercises all the interfaces.

Outsourcing provider organizations that offer multiclient shared-ser- vice centers frequently establish model offices so that new clients can rehearse both transaction-level and management-level processes with real data before they go live to iron out the interfaces. This model has working versions of all the systems that the service center will use to process the work. For example, before declaring the Chunnel from Britain to France complete, its program managers staged a simulated disaster to help fire, police, and ambulance crews prepare for their responsibilities. One thousand tunnel workers and their families pretended to be train passengers who were evacuated in a rehearsal of the tunnel’s emergency security procedures.^[8]

Worker transfers heighten the challenge in an otherwise complex transition process. People can feel angry and betrayed because they have to leave their employer of choice and separate from colleagues. Yet they are being asked to hand over all their specialized knowledge and then work especially hard to make the process happen. Even if they do have a job on the other side of the transition, they may be anticipating a more stressful environment and possibly a fight to survive more layoffs. Natural antipathies get in the way of the collaboration that is essential to transition work smoothly. Executives frequently supplement open and honest communication with quid pro quo incentives and stay bonuses. These kick in when knowledge and work have been transferred effectively to the outsourcing provider.

By the way, the new process documentation is more than just a transition tool. It is the starting point for a living library that should be audited annually for completeness as part of standard operating procedure in the outsourcing relationship. This not only provides the basis for thoughtful process improvement, but enables a company to change providers or bring work in-house if the partnership fails.

^[8]‘‘Curtain Up on Eurotunnel,’’ Glasgow Herald, April 30, 1994, p. 10.