Category Archives: Contract Management

Managing People – Contracts of employment take a great deal of thought

Managing People – Contracts of employment take a great deal of thought

Following on from yesterday’s post about the Psychological Contract, Annabel Kaye,  Irenicon – employment law in a mad world, thought you would find this video useful. It is about how employers make life so much tougher for themselves than it needs to be by using another organization’s contracts. And Annabel is right, many employers do not understand how important the right contract is  in setting up good performance management and employee relations for the future. One size really does not fit all, better to reflect the spirit of that organization’s particular psychological contract.

Wendy Mason is a career coach.  She helps people reach their goals and aspirations, without sacrificing their home and personal life.  Before working as a coach, Wendy had a long career in both the public and private sectors in general management and consultancy as well as spells in HR.  She now divides her time between coaching and writing. You can contact Wendy atwendymason@wisewolfcoaching.com and find out more athttp://wisewolfcoaching.com

 

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Out-sourcing – how to be good at it!

In the present climate the pressure to seek value for money through out-sourcing is stronger than ever.

Yes, you can save money but getting the full value from your outsourced service and making sure that it supports your business in the way you intended is complicated.

The financial benefits alone are often not properly understood.  The results of research by Warwick Business School working with IT group Cognizant showed that less than half (43 per cent) of all CIOs and CFOs have attempted to calculate the financial impact of outsourcing to their bottom line let alone determined the real value to their organisations. They don’t know the real value and it is doubtful that they are getting the outcomes they expected!

Here are some steps you can take to ensure you achieve real value from your out-sourcing activity.

1. Know why you are doing it

Don’t out-source just because the competition does it!

What do you expect from the service and what resource will be available to support it?

Can you specify what you need and will you be able to measure and monitor it when it is delivered?

Have you got experience of managing outsourced services or can you afford to buy that expertise?

How essential is this service to your business operations?

Can you afford to take the risk?

2. Be systematic but keep it simple

Work out a strategy for out-sourcing that your organisation can cope with!

If you are new to out-sourcing don’t go for a complicated strategy that involves many suppliers.

If you go for a complex supply chain, you will need to know how to manage it

If you go for multiple suppliers, you will need to know how to coordinate them

Start with a single and relatively simple business function and a single supplier and build from there.

Gain experience as you develop the approach

3. Know how you are going to measure and monitor

Many companies rely on service level agreements (SLAs)

SLAs are crucial to outsourcing arrangements but you will need more than a traditional SLA if you are interested in business improvement!

Measuring against an SLA will tell you about delivering the status quo

Most SLAs will not tell you if the service is really delivering benefits and the right outcomes to your operation!

You need to focus on business improvement rather than just service improvement processes!

Determine what evidence of success and the right outcomes really looks like and use it!

Use industry benchmarks IF they are useful to your business

4. Invest in the relationship for long-term value

Demands and expectations change over time!

This can lead to disagreements with your supplier which can erode the relationship

Agree at the start how you will recognize and respond to changes together

Share information honestly between you

6. Be an intelligent client

Don’t hand all your talent across to the supplier with the service

Keep enough expertise available so you can talk intelligently to your supplier about performance

Keep enough expertise to cope with changing your contractor if necessary in response to supplier failure or market changes

Keep enough expertise available to cope with business innovation.

Be honest with your supplier about your expectations and your customer base

But be prepared to learn from your supplier

You can find this as a slide presentation on LinkedIn at the following link  http://slidesha.re/hc0HyK

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Alice down the rabbit hole – or customer service and schizophrenia in the downturn!

I’m reading ‘Surviving Change – A Manager’s Guide’ from Harvard Business Press. It advises on managing in the downturn and opens with a discussion of different survival strategies – hard and soft!  In fact, most change is a mixture of the two and the strategy chosen usually reflects the underlying culture of the organisation!   How the mix works is critical because if it is not well managed it can become fraught with conflict and demoralising for people in the organisation; it can lead to a schizophrenic approach to customers.

The ‘hard’ approach to change is usually short-term and about economics  – cut costs and increase cash flow! If a unit, or an employee, cannot demonstrate how they add financial value, out they go with very little ceremony or concern for personal well-being. The change is usually hard driven from the top with little wider engagement.  Often consultants advise the magic inner circle and HR consultants deal with casualties that might cost the organisation.

Soft change focuses on developing the organisation to meet new conditions with high engagement across the piece from the leaders. Employees trust in the informal contract they have with the organisation and work towards its well being.

Sadly experience shows that neither soft or hard approaches work in isolation.  The hard approach works in the short term but with that alone you are usually left with a demoralised and disloyal workforce – your best employees probably left at a rate of knots when you started the change.  The soft approach can take years to embed and the market doesn’t stand still!

Most successful change is a combination of hard (rationalisation well managed) and soft (employee engagement and encouragement to learn new skills).  But if change is a reflection of underlying culture and that has conflicts within it, a change can put the whole organisation out of kilter.  What I’m thinking of here is an organisation that pays lip service to soft but is really hard.  I believe in the downturn this is likely to be an increasing problem, particularly in the service sector.

Clients of service companies, particularly in the UK public sector, like to hear how well the company manages its employees.  A tender panel may take great interest in training and development approaches but, of course, the final decision is usually made on the keenest price.  In the present climate the client is likely to continue to seek cost reductions, which mean lots of change to be managed.  This can lead a company into a kind of schizophrenia.  It flags up all the good things its HR team would like to do but finds itself increasingly having to make hard, and very short-term, decisions.  As a consequence, its own employees and its middle managers in particular, become confused and a little cynical!  In turn this impacts on the service delivered to the client – so the client pushes harder!

What is the answer.? Well maybe it starts with a little more honesty on both sides!   Perhaps clients should start being more realistic about how they expect their service companies to manage for the price they are prepared to pay.  Perhaps the companies should be a little more honest with clients, and  with themselves, about the real costs of delivering ‘cuts’  At the end of the day, a client gets what they pay for and it they want to see services well managed with employees committed to the services they deliver, they need to recognise there will always be a cost even in the downturn!

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MANAGING CHANGE – TALKING TO YOUR CONTRACTOR

If you are managing a change team you may work with a number of contractors – finance and HR service providers for example. It is surprising how few clients and contract managers bother to get to know their contractors and suppliers. Oh yes they engage during the procurement process. But quite often the teams that actually manage and deliver the contract will be quite different to those who negotiated it. The marriage has been arranged and now both parties need to settle into a new life together. And like a marriage the contractual relationship will develop better with good communication. The contract gives you a skeleton for the relationship – you both now need to put flesh on the bones! Every organization has its own unique culture and way of doing business. You can help your supplier deliver successfully if you help him to understand the culture of the organization you expect him to deliver in. If you understand the culture of your supplier’s organization you will understand better how to get the best from him. For example, if yours is a distributed organization, can you expect the same level of service from all of your supplier’s regional teams? Perhaps there are extra services available from your supplier in particular regions to meet your own regional team needs.

When things go well!

It is surprising how few contract managers actually tell their suppliers when they are pleased with the service being delivered. Many seem anxious that if they do so they be thought soft and will be taken advantage of as a result. If this happens, quite simply you have wrong supplier. You can, and should, be able to praise your supplier without appearing weak. Reinforce and reward good performance with praise and advertise that performance within your organization. Remember, good supplier performance reflects well on you as contract manager.

When things go wrong

The first message is to tell your supplier exactly what your problem is as plainly as possible. Don’t ramble – be as precise as you can in presenting your evidence – times, dates, statistics, complaints! Then give your supplier an opportunity and enough time to investigate and respond. Ask for action and if the matter is urgent, let them know and explain why. Be scrupulously fair in judging their response regardless of the internal pressures within your own organisation – this is part of your responsibility as contract manager, If the supplier’s explanation is reasonable and they can make restitution – let them do so. It is rarely advantageous to invoke the contract if the service can be restored and you can use your own communication skills to reassure your internal customers. However be clear about the failure resolution clauses in your own contract. The majority of suppliers will not want a contract to fail – never underestimate the value of talking. The issues may need to be raised at more senior level in your organization and in that of the supplier. CEO to CEO telephone calls are a better result than contract failure and expensive legal action. Remember your supplier’s failure is your failure and with good communication on most occasions this can be avoided.

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GOING THROUGH MAJOR CHANGE – IS YOUR SUPPLY CHAIN RESILIENT?

If you are going through major change the last thing you need is a key supplier to fail! Follow this link to a useful post on the G&W Consulting Blog  “Making Performance Meaningful” http://tinyurl.com/MPMReviews2 .  It will help you work out  whether your suppliers are at risk of failure.  Wisewolf and G&W have depth of experience in managing change and managing complex supply chains.  Geoff  Edmundson ( the G in G&W) has managed change and challenging supply chains in both the public and private sectors!  So have I!  We will be very happy to help with a risk and resilience review!  Follow this link to contact us for further advice

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MANAGING CHANGE – MAINTAINING A GOOD RELATIONSHIP WITH YOUR SUPPLIERS

When your organisation is going through change and specially in a time of financial stringency, a good relationship with your suppliers becomes much more important. Here is a Checklist from G&W Consulting which should help you to achieve the firm relationship you need!

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