Workplace Engineering

The failure to meet unrealistic expectations can have a huge detrimental impact on a business partnership. Business partnerships and outsourcing relationships in particular are complex, lengthy, involve considerable change and require both personal and organizational investment to be successful. Lack of understanding, over ambitious promises and lack of preparation and rigor can all lead to expectations that are not matched by reality.

Knowledge, preparation and communication are the answers to unrealistic expectations. Developing a deep and structured knowledge of your processes, needs, performance requirements and your partner capabilities drives realistic criteria. Deep preparation leaving little to chance ensures that scenarios are thought about and surprises are reduced. On-going, honest and clear communications ensures that everyone is on the same page and there is little room for unrealistic expectations.

There is a temptation to over measure and get lost in detailed performance metrics and lose sight of the overall objectives of the partnership. After taking the time to develop detailed processes, understand key quality items, benchmark and then developing a complex algorithm linking pay to performance that a mad scientist would be proud of, performance stubbornly refuses to budge and great expectations are dashed.

This temptation to measure and set targets for everything the greater the possibility that they will influence each other (in possibly not fully understood ways) and  prevent major gains in any one area. In statistics, this is known as “regression to the mean,” for the poor individuals managing or performing in this scenario it is a classic no-win situation.

It can also be tempting to set arbitrary standards because they seem to make sense at the time. The percentage is the biggest villain here. 98% performance may sound great or 99.99% may sound like perfection. When that becomes a target for missing mail for an organization delivering 100,000 letters a day to a business, it means that that means 99 can go missing each and every day. Reality checks are critical when setting targets.

Both of these problems can be avoided by taking a step back to clarify objectives and what actually needs to be measured and then give that balanced scorecard a healthy dose of reality.

Unless there are clear tangible and intangible benefits from the new arrangements there can be a significant tendency to revert to old ways of doing things.

Investing the time and energy to make the partnership and the relationships with in it are the only prescriptions for ensuring that the change holds and continues to deliver value. Using Prosci’s ADKAR stages of change can provide an effective gauge of personal and organizational progress in a transition

• Awareness - Identified that a change is coming
• Desire - A willingness to change (have decided to support the new over the old)
• Knowledge - knowing how to change
• Ability - implementing new skills and behaviors
• Reinforcement - maintaing the change once it has occurred

(Adapted from “Employee’s Survival Guide to Change by Jeffrey M. Hiatt)

It’s quite a time consuming and resource intensive process to find and transition in new ways of doing things. It is the small interventions all the way through that ensure that the change becomes as embedded as the old way of doing things.

Even within supposedly single industries with common training structures, regulated activities and well defined professional organizations there is a surprising amount of disagreement over fundamental definitions of an object, service or performance. 

Turnaround or response times are a key item in many outsource partnerships, yet the start and finish point can be a major point of disagreement. For a customer, the start point may be when they first picked up the phone and had an informal conversation, for the help desk when the work order was actually entered, for the maintenance manager when they got it and the ultimate performer when they were asked to do it.

The possibility for confusion and disagreement around definitions, standards and service levels are enormous. Although reference to recognized to standards endorsed by IFMA, OSCRE, BOMA or other institutions is a great start, time must be taken to develop an agreed set of performance criteria that can be measured and actually reflect a common understanding of the operation or service.

So by now you’ve figured out that this is pretty much entirely focused on outsourcing partnerships.

Particularly in an outsourcing partnership, an often unstated goal of the partnership is the transfer of knowledge from one partner to the other while keeping it available for both parties during the life of the partnership. While much of the technical knowledge may be documented as well as possibly in the best practice process charts and proposal documents, much of the organizational knowledge on how to get things done and the nuances of the service or operation is held within the heads of the people currently doing it.

This knowledge is critical importance during the early stages of a transition. People that believe they are being poorly treated or feel insecure may decide to “jump before pushed” or withhold that knowledge they have built. 

A solid retention strategy that explicitly targets key personnel before, during and after implementation is a highly effective way of preventing the brain drain. Communicating widely, clearly and openly during the entire process increases confidence and makes it more likely that people will stick around.

Perceived poor cost performance can be the result of a lack of understanding of the true costs with providing a service or operation, additional costs that occur as a result of managing a partnership, a genuine difference in costs or increased awareness and visibility being mistaken for an actual increase.

Very often and organization has not taken the time to fully evaluate and apportion the true costs associated with providing a service internally until the time comes to have that service or operation provided by someone else. As a result, there may be limited insight into the overhead and administrative costs associated with the service and for some organizations, internal pricing may obscure the true cost of the service itself.

Understanding the fully loaded costs of a service or operation gives real insight into the true cost structure, what savings can and cannot be expected and then provides a suitable benchmark for measuring success over time. It will also help identify where the true costs are and allow the partners to develop an effective plan to improve performance in the right places.

Remember that fully loaded costs include administrative and overhead costs in addition to the costs of providing the service itself.

There is a British Army axiom that perfectly proper planning produces perfect proper performance. Many organizations that enter into some form of partnership set the stage for disappointment through inadequate planning. There may be lack of insight into the effort and resources required to deliver a service or how to evaluate their own performance. Taking the time to understand the processes, resources, required performance and actual performance before the formal search for a partner begins is critical for ensuring success.

Fortunately, there are some relatively simple methods to assist with planning. The Six Sigma processes of developing a SIPOC and CTQ can go a long way to developing an understanding of the processes within an operation and the elements that are critical to successful performance.

The SIPOC provides an effective way for a team to map its processes at a very high level; identify the individuals, teams or organizations that are suppliers to the stages in a process;  what they actually input to that stage; what outputs are needed to allow the next stage to occur and who the customers of that output are (the final customer or whoever is carrying out the next part of the process. Developing a SIPOC should be a wide collaborative process and may need a trained facilitator to ensure that the team flies fast and high and doesn’t get stuck minutiae. Scope of work documents, business requirements and other contractual items are much easier to write and understand with a fundamental understanding of the overall purpose and processes within an activity.

With an agreed process the areas that are Critical to Quality can be identified. Most people and teams perform better if they understand what success actually looks like. As importantly, understanding what success looks like in measurable terms makes it a  whole lot easier to describe to an outside party what is important. CTQ is another Six Sigma tool that is pretty accessible to most team members and can be used effectively without a deep knowledge of statistics.

Of course, there are other methods that can work equally effectively to help teams and prospective partners understand achieve a common understanding of the processes in an activity and what success looks like. Going to the effort early in the process helps to ensure that expectations are founded in a common understanding and sets the partnership up for success.

Organizations enter into partnerships for many reasons. Some partner to deploy talents they lack internally, others to be able to tackle projects too large for themselves alone and others partner to release their internal resources for core activities or to reduce cost.

Whether entering into outsourcing arrangements, strategic alliances, joint ventures or full blown mergers the management of partner relationships is critical to success and yet often a cause for consternation and sometimes the ultimate failure of the arrangement. According to the Black Book of Outsourcing, business process outsourcing is at least a $543bn business and other forms of business partnership multiplying that figure many times, it is clear that successfully managing partner relationships can deliver considerable value to the enterprise and provide an opportunity for career advancement.

There are many different takes on the pitfalls associated with good partner relationships. Here is my list of ten:

1. Poor Planning
2. Marry in haste, repent at leisure
3. Faulty Financials
4. Underinvestment in the Transition
5. Brain Drain
6. Passive Aggressive Teamwork
7. The tower of babel
8. It doesn’t last
9. Losing the wood for the trees
10. Unrealistic expectations

Over the next few weeks, I’ll be exploring each of them in more detail and giving my suggestions for overcoming them.