How to Get the Best from Outsourcing

There's a great little article ('Business Lifeforms') on the back pages of the UK's leading management magazine, Management Today each month. It's a spoof (at least I think it is!) about some fictitious key player in a fictitious organisation. For January, it's about Ken, who's a 'Facilities Manager'.

Now Ken has seen it all and truly worked his way up from the bottom to the top. Until, that is, a couple of years ago when new MBA-armed suits took over and decide to slash Ken's department (until now, running very, very smoothly under Ken's watchful eye) and Ken himself. Of course it all goes pear-shaped and the top dog has to come grovelling back to Ken, offer him loads of money and a big car, basically to ensure that the toilets aren't 'backing up' any more!

This is in direct contrast to Michael Gerber, in his fascinating book The E-Myth Revisited. There he talks about working 'on' the business and 'in' the business, making it clear that if you do too much of the grindstone not-my-expertise stuff yourself, you lose track of what you are really good at, and what you went into business for.

In a past life, I too experienced challenging outsourcing. At one time I had a great little local cleaner who I trusted (he even opened the store up for me - hmmm, that was a long time ago!). He did an excellent job and was on hand for emergencies. Then a new senior director decided to consolidate and outsource, for 'economy and consistency'. It was cheap - but the service was awful. Each time I got a new 'centrally sourced' cleaning company, they came with great intentions for the first 3 months and then dribbled off (with our money!) until it became unsustainable and another 'excellent contractor' came along.

The moment of truth for me, was when the director for one of these contractors, came along for the first time in a brand new £60K Merc (and it's a few years ago now). Then I knew where my money would be going. I went through 6 contractors in 5 years, even though my hands were tied by 'Head Office' contracts!

To solve this problem? There needs to be strong leadership at the start. Very clear standards required from outside contractors and severe penalties (yes, stop paying them even!) for under achievement. Corporate central contracts agreed there, but implemented and managed locally, leave a lot of space for waste.

And yes, in a small business, don't even think of doing the bookkeeping yourself as soon as you can afford not to - do what you do best, value it and get on with creating the business you love, not like struggling Sarah in the book. But, get someone who you trust and who will deliver. Chris Barrow, of Million Dollar Coaching Practice fame, suggests that the very first thing anyone going into a consulting business should do, is get a PA. And that modern day evolution, a VA (virtual assistant) has made this a real, low cost possibility for many.

Moral of the story?

If you are going to outsource, especially if your business is big enough, where it's not only the fashion, but it can have economic and logistic value, take the following steps:-

  • Find the best on the market, not the cheapest.
  • Set the standards yourself, and don't take theirs.
  • Be very clear on expectations and outcomes if standards aren't met.
  • Keep in very business-like, however much you like/know/are related to them.
  • Have clear timescales for regular review.
  • Have a named and senior contact in the organisation for whom there will be pain if they lose the contract.
  • Keep contract length manageable.
  • If things start going wrong tackle them early, before too much money is wasted.
  • If 'Head Office' agrees the contract, don't chase your own tail over non-delivery - get someone from there down as soon as there is a problem - you have enough to do.
  • Don't get involved in the problems any local operatives might have - refer them back.

    Martin Haworth is a Business and Management Coach. He works worldwide, mainly by phone, with small business owners, managers and corporate leaders. He has hundreds of hints, tips and ideas at his website, http://www.coaching-businesses-to-success.com. (Note to editors. Feel free to use this article, wherever you think it might be of value - it would be good if you could include a live link)

    ...helping you, to help your people, to help your business grow...

    Latest News


    Single Source Introduces New Advanced Quote Management (AQM)(TM ...
    MarketWatch - 10 hours ago
    All functions seamlessly integrate to the inherent back-office financials, inventory, purchasing and management reporting functionality of SM-Plus-meeting ...
    KANA Recognized by Leading Industry Publications for Innovation ... Business Wire (press release)
    all 22 news articles

    BBC News

    ECONOMIC REPORT Global manufacturing gauges collapse in November
    MarketWatch - 7 hours ago
    ... of price pressures hit an all-time low, according to a survey of corporate purchasing managers released Monday by the Institute for Supply Management. ...
    Manufacturing index drops to 26-year low Washington Post
    Manufacturing index at 26-year low CNNMoney.com
    Manufacturing hits 26-year low Bizjournals.com
    CNN - Forbes
    all 615 news articles

    CharlotteObserver.com

    Construction Spending Reflects Economic Slowdown
    New York Times, United States - 2 hours ago
    The Institute for Supply Management’s monthly index of manufacturing activity fell to 36.2, from October’s 38.9. The reading is worse than Wall Street ...
    October construction spending drops 1.2 percent International Herald Tribune
    US manufacturing weakest since 1982 The Australian
    Construction spending fell again in October Bizjournals.com
    guardian.co.uk - International Herald Tribune
    all 270 news articles

    WCBD

    Price Tags on Partridges and Pear Trees: A Different CPI
    New York Times, United States - 3 hours ago
    By Catherine Rampell For the last 24 years, PNC Wealth Management (or its predecessor, Provident Bank) has released this whimsical index, a measure of the ...
    Video: 12 Days of Christmas' Items Would Cost $86,609 AssociatedPress
    '12 Days of Christmas' items would cost $86609 The Associated Press
    Twelve Days of Christmas would cost $21000 Telegraph.co.uk
    Reuters - guardian.co.uk
    all 349 news articles

    Gideon Technologies CEO To Give Unified Compliance Management ...
    MarketWatch - 6 hours ago
    Unified Compliance Management simplifies this complex problem. "The combination of a holistic centralized view of the network, unified and continuous ...

    AGC and LCM Declare Dividends
    MarketWatch - 3 hours ago
    a diversified closed-end management investment company, has declared its December monthly dividend of $0.0664 per share, reflecting a reduction of $0.0286 ...
    AGC and LCM Declare Dividends Trading Markets (press release)
    Madison Strategic Sector Premium Fund (MSP) Declares Quarterly ... MarketWatch
    PPR - $.0340 November Dividend MarketWatch
    MarketWatch
    all 58 news articles

    Reuters

    AIG sells wealth management unit to Abu Dhabi group
    International Herald Tribune, France - 11 hours ago
    NEW YORK: American International Group, the troubled insurance giant, said Monday that it had agreed to sell its wealth management provider AIG Private Bank ...
    AIG Sheds A Private Bank Forbes
    UPDATE 1-AIG to sell AIG Private Bank to UAE's Aabar Reuters
    AIG to Sell Private Bank to Aabar Wall Street Journal
    Trade Arabia - InvestmentNews
    all 163 news articles

    Updated Information Regarding Auction Preferred Securities Market ...
    MarketWatch - 2 hours ago
    BOSTON, Dec 01, 2008 (BUSINESS WIRE) -- MFS Investment Management(R) (MFS) today announced the availability of information on the results of the weekly ...

    Lincoln Financial Group Announces New Senior Management Committee ...
    International Business Times, NY - 3 hours ago
    She will also serve as amember of the firm's Senior Management Committee. Bettinger-Buckingham joins Lincoln Financial with more than 20 years ofexperience ...

    Research and Markets: Training Management Maturity Model: A ...
    MarketWatch - 7 hours ago
    How effective is your current training management system? What do you need to do to improve it? Find out with this best practice model and set of assessment ...
    Research and Markets: Fundamentals of Quality Control and ... MarketWatch
    all 12 news articles

    Resources