• Controversies

    by Published on 29th June 2013 02:25 PM
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    Stress From Outsourcing can Kill

    I was struck by the similarity in the situation when people are laid off during redundancies and the stress caused by the move from one company to another during outsourcing - it strikes me that this is an under researched area and something we as managers should pay more attention to.

    Pioneering studies in Scandinavia that took place some years ago, where centralized health care allows researchers access to vast databases of medical conditions and treatment, showed a strong link between downsizing, layoffs and illness. A study by Finnish researchers published in February (2004) in the British Medical Journal, found the risk of dying from a heart attack doubled among permanent employees after a major round of downsizing, with the risk growing to five times normal after four years. What was surprising about this study was that 'surviving' employees - those left behind - suffered as much stress as those who left. Those hit hardest by layoffs in this study - losing more than 18 per cent of their colleagues during the worst years of recession - suffered the highest risk of death from cardiovascular disease.

    Two other studies in the same vein suggested that other forms of strain in the workplace can also affect health. An analysis of medical records for 24,036 Swedish workers from 1991 to 1996 found that in workplaces that underwent large-scale expansions, the workers were 7 percent more likely to take sick leave of 90 days or more and 9 percent more likely to enter a hospital for some reason.

    What these studies showed was there is a relationship between work related stress and real physical outcomes - for those remaining as well as the obvious strains to those leaving. Outsourcing shares many of the factors that were shown to lead to this heightened risk and we should be aware that an over cavalier approach to managing people in this major change process could possibly lead to people dying before their time. It is not enough that we have to act carefully and ethically as other Blog writers on this forum have said we have to act with responsibility and care for people - in the final analysis if it could be shown we acted in an unfair and reckless manner in dealing with people during an outsource we also might find ourselves liable in law. More research is clearly called for in this area.

    by Published on 20th June 2013 11:43 AM  Number of Views: 533 
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    A Video about how guys in the US outsource their jobs for the price of a coffee!

    The first bit in particular is very funny!

    kind regards,
    by Published on 3rd April 2013 01:12 PM     Number of Views: 839 
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    What is leadership and does it matter?

    Leadership describes a dynamic relationship between people in an organization. It is not a one-way process as the popular press would have us believe and is strongly associated with other organization factors such as power and culture. Most people prefer to attribute organizational success (or failure as in the banks) in terms of the actions of powerful leaders compared to external forces such as the environment over which we have little control. However the situation is more complex than this as the environment itself is shaped by the actions of leaders operating within all forms and scales of organizations.

    How to define leadership

    Leadership exists when a person exercises influence over others in an organization and sets the everyday action and direction an organization takes. To be effective a leader must understand the context in which she operates as well as the relationships between herself and the people who are led. Leadership is not a characteristic of an individual in isolation - leadership exists in the duality between leaders and followers.

    Researchers and consultants have been trying various forms of definition of what constitutes and makes up a good leader and here are just a few.

    • A Trait based view of leadership focuses on the make up of the leader in terms of general intelligence, intellectual ability or sociability.
    • A Style perspective looks at what a leader does in terms of interaction with others inside and outside the organization.
    • Task oriented leadership approaches review how leaders organize the task - the scheduling and planning of resources and finance for example.
    • Situational leadership was once a popular approach and is an extension of a contextual leadership style and meant that leaders have to adapt their style to the prevalent context and actual situation of the specific task.
    • People oriented leaders busy themselves with the creation of environment conducive for action.
    • Transformational leadership are those who transcend or seek to change the parameters of the situation - in vogue as it suits the aspirational managers and consultants buzzing around large corporations at the moment.

    Participative in forms of leadership may be dependent on the context of the organization with some professional groups such as teachers expecting to have their opinions polled and considered as do care workers. However when we look at the evidence for which of these above styles are more effective - actually there isn't any - there is simply no clear evidence that any of these popular management styles are stronger. And whether leaders make any difference to organizational success is far from proved. There is also little evidence to decide whether any of the factors that make up so-called leaders are innate (leaders born) or acquired (made) and it may be that leadership is a happenstance and the attributes of a good leader are constructed in hindsight.

    What we can say is that to be effective a leader must account for the complex societal context she operates within and be adept at managing the relationships between herself and the people she leads. The ability and capacity to articulate a change and to construct a vision are the more value laden aspects of leadership and are important parts of the job description.

    Leadership is very popular at the moment especially in the public sector where all sorts of leadership development program are being launched. No-one it seems wants to be just a manager any more - we all need to be leaders. But this is a false dichotomy in part as we need people in organizations that can run them and pick up the mess after the charismatic leaders have been moved on or pensioned off. 'Managership' is just as important as 'Leadership' perhaps more so but as a closing point you can be a leader without being a manager but to be an effective manager you probably do need to be a good leader.

    by Published on 3rd April 2013 01:09 PM
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    Multi-Shoring - can risk be reduced by sourcing from multiple suppliers?

    Although the reality is very different a recent article in computer weekly (a UK based IT Magazine) suggested that companies are being more flexible and attempting to spread the risk by outsourcing to different suppliers in different countries. As Leslie Wilcox of the LSE suggested the process looks like 'spread betting'. Although this was a nice idea at least in print the practice of doing this for real is proving more difficult as the basis of off-shoring is often to move low value commodity call-centric services to locations where the language matches that of the home country. Accordingly much of the UK based off-shore market has naturally gravitated to India where a large number of skilled, low paid and disciplined people are available to man the phones. The Indian subcontinent turns out twenty to thirty thousand IT graduates a year for example and as a corollary of their degree course often speak English to a high standard. Another factor that causes management heartache with multi-shoring is the problems of managing several off-shore suppliers - its bad enough with one as the practice has shown.

    Although innovation is appearing as more important at least in surveys when deciding on outsourcing the main attraction for off-shoring still remains labour arbitrage - i.e. cheaper wages. However in India of late they have been 'enjoying' 25% wage inflation in the outsource industry as highly skilled graduates are demanding better salaries - furthermore the attrition rate is extremely high and it seems that graduates do not relish a long term 'career' in a call-centre but treat the job as a stepping stone into the world of work. It is these factors (rather than risk reduction) which is causing companies to explore the world more carefully looking for the next low wage spot. Unfortunately there are not many options and talk of using Malta, Singapore are fanciful and only really in the margins, and Russia and China have immense language barriers to overcome before they can be considered

    Another remark was made in the article that rather than always going down the low cost route 'companies are asking for more innovation' from their suppliers - this is not borne out by any evidence of course and is not clear what is meant by innovation but there is something useful in this comment. That’s the idea is that outsource providers can take up the proposition of innovation and actively improve their service, be more efficient, deliver in more up to date means, whilst constantly improving the cost base. In my view you can have innovation and cost improvement at the same time and suppliers rather than resting on their laurels after the deal is closed should from day one start to improve the service and pass on a fair part of this to the customer. Can you imagine what it would be like to be a customer of such an outsource provider? Working to improve their part of your business to make it more efficient and effective whilst reducing your bill year-on-year - rather than the account manager just turning up once a month to make sure you pay the bill and renew the contract! If suppliers did this they would probably have continuous rights to the business and be invulnerable to critique and outsourcing would look something more like a real partnership based on performance rather than just a mechanism gaining access to the market without much risk.

    by Published on 3rd April 2013 01:04 AM  Number of Views: 870 
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    The last part to the outsoucing process concerns carrying out a well-managed and transparent process
    In negotiation avoid shortcuts and set specific goals – and ensure they are delivered. Evaluate, clarify and frame negotiations to keep competition alive. Document all discussions and carry out frequent self-assessment and use a term sheet, this helps drive and track the discussion and allows apples to apples comparison -over time the term sheet can evolve into a contract. Good note taking then transference to the final document of the substantive requirement and agreements made during the discussion is important. Do not leave anything out of the agreement that important to you that was discussed and agreed elsewhere – if it is not in the agreement it does not count.
    Partnership rhetoric will appear at some time in the discussions especially from the vendor side. Unfortunately partnership usually means giving all the risks to the vendor from the customer side or to closing off competition from the vendor side (sole sourcing). On the positive side partnership can be invoked to get over tricky points and put them off until later stages in the negotiation – however as we point out later some things should never be put off until after the contract is signed. Partnership should be based on performance and strict business principles not waffle.
    Never ever let issues that should be solved at negotiation drift into ‘we will solve this later’ discussions. They never are and these can be a source of major conflict later. An old saw from the collective bargaining days is very apposite here: ‘It is better for the negotiation to break down rather than the agreement’. All-important details must be cleared before signing a contract – never sign until they are or you are courting disaster.
    5.0 Set up a well executed communication process
    Manage the up and down communication channels carefully. Make sure no senior management speak to vendors and control vendor access to senior management strictly. You will have to brief senior management about the risks of this issue. In best practice the rules of engagement will state that suppliers who circumvent the process automatically disqualify themselves. Some vendors are good at getting around the formal process to the senior management and exploiting this to short-circuit the tender process. We all know of ‘golf course’ deals that cut through a bid process and enable vendors to return to the customer team informing them they ‘know’ the requirements of senior management.
    Keep talking to vendors and meet frequently to discuss the proposals – the more open and interactive the better the eventual outcome. Ask for alternative proposals reordering or cherry pick ideas from several contenders to shape the deal you want.
    Communicate internally at an early stage and keep your own people up to speed at all times. Don’t imagine for a minute that you can hold discussions in camera and keep an outsource negotiation secrete. We cover this aspect in more detail elsewhere but bring staff on board at an early time can generally increase chances of success. Indeed the staff to vendor fit is a key success criteria for the whole business success of the process so informing must take place as early as practicable.
    Last but not least when the deal is done do the deal – as quickly as possible begin to execute the agreement. We have heard of examples where the transference can take many years to actually take place and this is a disaster for all concerned.