Outsourcing and Your Brand

article by Dr. John Sullivan & Master Burnett Last week’s column, Why Branding Is Important In HR, inspired a number of you to write in with questions regarding the impact of using outsourced providers in HR on both your corporate and employment brand. Because many of you shared similar issues, this week we wanted to address methods you can employ to make sure your corporate and employment brands are not undermined by the use of outsourcing. Recapping Why Branding Is a Critical Discipline in HR One of the most pressing reasons why branding is becoming a critical discipline within HR has nothing to do with what many accept as the historical role of human resources, and everything to do with how the game of commerce has changed in the ever-expanding global economy. The simple truth is that most of the levers (product features, price, position, and promotion) firms used to use to distinguish their firm and their products in the marketplace are largely ineffective in today’s market. Product features, for example, can be easily mimicked in a fraction of the time it took the original innovator to introduce the feature. New channels of distribution, including the Internet, make it possible for nearly every firm to get their product in front of the customer with equal visibility. Many CEOs now realize that, while they have always believed their workforce was one of their most valued assets, in today’s economy it can literally mean the difference between success and absolute failure. The increased visibility on the workforce, and its role in differentiating the firm, places a number of new pressures on the human resource function, long an organization that through politics has focused more on efficiency and functional goals versus corporate objectives. Today’s world-class human resources professional must not only execute the administrative side of HR to the nth degree of efficiency, but also design, develop, implement, and manage people programs that demonstrate an impact on people productivity. Nothing the HR function can do will provide an impact on firm productivity more than making sure the workforce consistently exceeds the expectation of the customer as established by your corporate brand at every point of contact. In short, it is up to the workforce to communicate and execute your corporate brand to your customers, and that requires more from them than most current HR systems enable them to provide. Employees Must Live the Brand In every industry, employees serve as the primary “channel” used to characterize the brand during direct contact with the customer. But in most companies, employees don’t understand the corporate brand or what is needed from them in order to help customers experience it. To make matters worse, many companies have developed practices that drive behaviors directly in opposition to the desired brand experience. Rectifying all that we have done wrong, and reestablishing HR to facilitate having an impact, will require:

  • A workforce that understands the customer service distinction you are attempting to provide and that believes in providing it.
  • An environment that actually lets the workforce live the brand which you are trying to build (most firms really screw this one up).
  • The presence of tools and products that exemplify or empower the brand values.

Outsourcing: Critical To Firm Success, Deadly To Your Brand The outsourced service model has been a godsend to most HR departments. It has enabled many to offload the high-volume transactional work that once characterized the function, enabling those left behind to foray into more future-oriented, strategic work. As business models go, outsourcing was a phenomenal success. However, as times change, and the nature of commerce becomes more complex, traditional outsourcing models can serve as roadblocks to solving some of the challenges currently before the HR function, including branding. When using outsourced services in HR, the key challenge becomes coordinating and managing the service vendors provide to internal customers and making sure that service supports or characterizes the brand values your firm wants your end customers to experience. In other words, if your firm wants your end customers to experience adaptable customer service, your employees must also experience adaptable customer service. Unfortunately, adaptability has never been one of the strong suits of the outsourcing model. Most if not all of the economics that make outsourcing possible rely on delivery of a relatively canned service, meaning that what you get is exactly what other customers of the vendor get. While most vendors provide a few customization options, they tend to be data oriented and very costly. To most, it may seem like outsourcing pretty much makes providing a brand consistent experience to your employees nearly impossible, but that doesn’t necessarily have to be true. Success in Outsourcing To achieve success in branding while using outsourced vendors, firms need to step up their vendor management practices, and realize that like all business relationships, success in outsourcing depends upon creating a win-win relationship between the two parties involved. What complicates the outsourcing relationship where branding is concerned is flexibility. Most firms have pursued outsourcing relationships where the contract is long-term, unambiguous, and binding on both parties. Unfortunately, such contracts rarely take strategic uncertainty into consideration and fail to permit ongoing adaptation over time. Outsourcing relationships need to be governed by shared expectations and established such that both parties can grow and evolve as their respective markets dictate. If this is established in the foundational stages of the relationship, then keeping internal execution consistent with your brand is as basic as selecting a vendor who mirrors as closely as possible your brand at the point of outsourcing inception. One proponent of outsourcing recently likened the process of selecting an outsource vendor to that of selecting a roommate. In both cases, you are looking for someone who most closely resembles your criteria, but whom you trust will adapt and grow with you as issues arise. Keeping Outsourced Service Consistent With Your Internal Brand While the bulk of minimizing the impact of outsourcing on your internal and external brands has to do with selecting the right vendor, there are a number of tips and methods that can help keep you in control of the customer experience your employees encounter with your selected vendors. The top suggestions are highlighted below:

  • Limit what you outsource. The outsourcing model makes the most sense when you outsource high-volume, non-value-add activities. However, some such activities, while presenting low value to the company, present great value to the employee. Consider adding an element to your decision criteria for what to outsource that evaluates the potential impact on your internal brand of moving a process or service out.
  • Divide outsourced processes into smaller component processes. Manufacturers long ago figured out that one of the best methods to minimize the risk of their failure was to utilize a larger number of vendors that focused on an individual component versus a small number of vendors that provided everything. This model enables you to establish control mechanisms at each stage of the process and more easily swap out vendors whose performance is marginal. Because each vendor controls a smaller piece of the overall pie, moving from one vendor to another will be much faster and less costly than if you had to move the entire process.
  • Manage vendors using a relationship management team. Most organizations select an operational-level person to manage the day-to-day relationship with a vendor. Unfortunately, this severely limits the amount of strategic vision that enters the relationship and prevents the vendor from recognizing how they might be able to adapt with you over time to better serve your organization in the future. To remedy this, consider creating a team of two people to manage a vendor relationship: one person capable of communicating the strategic vision and playing the political role, and another to focus on the operational aspects of the relationship.
  • Align measures of efficiency and effectiveness. Most HR organizations have yielded to political pressure and focused almost exclusively on the efficiency of HR operations. Unfortunately, this behavior has migrated to their vendor management practices as well. When attempting to ensure a consistent brand experience for internal customers from an outsourced provider, firms must establish effectiveness measures relating to the vendor service. Allowing both firms to outline their service effectiveness expectations and related measures of success upfront will go a long way towards keeping your relationship on track.
  • Align incentives/punishments. One of the most effective methods you can use to help insure a consistent brand experience is to align financial incentives and punishments to your vendor service expectations. Through service level agreements, you can outline your service expectations, and propose mutually agreeable incentives and punishments for execution within and outside pre-established limits.

Conclusion Outsourcing as a business model is here to stay, at least for the near future. At the same time, it is projected that the importance of branding within HR will only increase. While the two disciplines seem to present mutually exclusive needs, it is possible for the two disciplines to exist in harmony and support each other. What is critical to success is for all parties to admit that they can only manage based upon the data and experience available to date, and that any outsourced relationship will require adaptation over time. While incorporating ambiguity into legal aspects of an outsourced relationship is uncomfortable to many, it is requisite to the evolution of both the vendor and the client, and to the execution of a brand in a dynamic market. If you have thoughts, concerns, or best practices to share related to this topic, please post them.

About the Author

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Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations. He’s a prolific author with over 900 articles and 10 books covering all areas of Talent Management. He has written over a dozen white papers, conducted over 50 webinars, dozens of workshops and he has been featured in over 35 videos. He is an engaging corporate speaker who has excited audiences at over 300 corporations / organizations in 30 countries on all 6 continents. His ideas have appeared in every major business source including the Wall Street Journal, Fortune, BusinessWeek, Fast Company, CFO, Inc., NY Times, SmartMoney, USA Today, HBR and the Financial Times. He has been interviewed on CNN and the CBS and ABC nightly news, NPR, as well many local TV and radio outlets. Fast Company called him the "Michael Jordan of Hiring”, Staffing.org called him “the father of HR metrics” and SHRM called him “One of the industries most respected strategists”. He was selected among HR’s “Top 10 Leading Thinkers” and he was ranked #8 among the top 25 online influencers in Talent Management. He served as the Chief Talent Officer of Agilent Technologies, the HP spinoff with 43,000 employees and he was the CEO of the Business Development Center, a minority business consulting firm in Bakersfield, California. He is currently a Professor of Management at San Francisco State (1982 – present). His articles can be found all over the Internet and on his popular website www.drjohnsullivan.com and on www.ERE.Net. He lives in Pacifica, California.