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Some outsourcing contracts actually ensure poor performance. It’s true! Service levels are too high, penalties drive over-performance in one area at the expense of others, and governance structures look pretty on paper but create zero accountability. Couple these problems with attitudes of blame and superiority that block problem solving and open dialogue and you have a recipe for failure.
Here is the frustrating thing to me—and maybe this resonates with you, too—people on both sides of the buyer/service provider relationship complain about their partners, but then don’t do anything about it. I sat stunned through a recent QBR, as an executive spent 45 minutes reading emails about the service provider’s poor performance. The rest of us could only study the backs of our hands.
I get it: the relationship can be better and the provider can perform better. Why complain and not act? Why not change the relationship and, if need be, change the contract too?
But even in such dire situations, I know there is hope. I puzzled over why companies don’t act in the face of less than stellar relationships. Then I had an epiphany.
How do you garden?
People approach contracting like my grandmother taught me to grow vegetables. There’s only one way: Big vegetable patch, long rows of kale or carrots or lettuce. Long hours of weeding, fertilizing and watering. A rush to harvest the entire row at maturity, followed by processing, freezing and canning. So when a friend described a completely different way, planning and planting the garden square foot by square foot in order to stage when the various vegetables were ready to eat, I thought, “That’s not a vegetable garden.” Then, driving away, I kicked myself: Many business people think about changing contracts the way I was thinking about changing how I garden.
We tend to operate from one paradigm, and we tend to resist changing that paradigm. Negotiating a contract has its own paradigm. We invest tons of time up front to get the contract in place. It’s a headache and we all want to get back to work. Once in the relationship, it seems easier to just deal with the problems (or complain about them) and we don’t even consider making adjustments to make the problems go away.
Unless there’s a crisis, like the 2009 recession, or a change in the scope of work, we won’t take on the “hassle” of anything that feels like re-negotiation. Because that’s how we see it: Live with it or start over.
Change Your Paradigm: Make Incremental Changes
There’s a third option: incremental relationship and contract changes. My clients, including the one above, turned difficult into collaborative. In general, here’s how one of my clients did it:
First, the buying company and service provider together identified problems with the relationship using diagnostic tools. Then they set about changing the relationship, one step at a time: they co-located to improve communications, they refreshed KPI’s to better track performance, and they started regular team meetings including representatives from both companies. Go to the full article.
Source:: Business 2 Community