China remains front of mind in terms of global trade and this is certainly reflected in the work we are doing with our international client base. We are increasingly being asked to run China cultural awareness training courses by organisations who find themselves in contact with the world’s second largest economy.
In this second blog post of this series on Chinese business culture I look at a couple of key areas we would always explore in depth in any China cultural awareness training programme we deliver – these issues are face and hierarchy.
Everybody knows that it is important not to do things that could make Chinese counterparts lose face. But what, exactly, is ‘face’ or Mianzi? And that question is exactly where the problems start. Most Chinese (and many other Asian business people) are very quick to tell you how important ‘face’ is – but most of them find it very difficult to explain exactly what it is.
What Mianzi is not, is the slight degree of embarrassment a Westerner might feel when they make a mistake – the sense of Mianzi impacts much more directly on the sense of self-esteem somebody feels about themselves and the way in which they perceive they might be viewed by the people in the various groups they belong to. (Remember that China is an ultimately group-oriented culture and people belong to a myriad of groups – family, university peers, the Party, work teams, social club, the Party etc.).The idea of face can probably be better understood through reference to China being an extremely hierarchical society. The relative position a Chinese person occupies in relation to another (e.g. a boss to an employee, or a parent to a child) demands a certain degree of respect and demands certain behaviours. Thus, a leader of a local Chinese company will expect their lower ranking colleagues to politely greet them in ritual fashion on arrival at work in the morning and a parent will expect his or her child to achieve high marks in school. If these expectations are not met, the leader or the parent will potentially feel slighted or embarrassed. This would then mean they potentially lose “face” in the eyes their co-workers or family.
The great danger of being seen to make somebody lose face (even unwittingly) is that the ‘victim’ might not want to do business with you in the future and, in addition, their peers are likely to view you as a potentially ‘dangerous’ person. If you can make one person lose face, will you do the same to others?
The type of typical actions which a westerner might undertake unknowingly which might make the Chinese lose face are:
Of course, along with the concept of losing ‘face’, sits the concept of gaining ‘face’. Many things can ‘give face’ including being praised by a boss, having a well-respected job, working for a powerful company, becoming a Communist Party member or even driving an expensive car – all of these can lead to being admired by one’s peers and society in general which leads to ‘gaining face’. It is probably a good idea to help counter-parties gain face because they are much happier working with someone who is a known as a face-giver than somebody who is oblivious to face-related issues.
Many companies in China are either family-owned or government run and therefore tend to operate within a hierarchical structure. This hierarchical approach is then underpinned by the all-pervasive influence of thousands of years of Confucian philosophy and teaching and a strongly hierarchical, bureaucratic Communist Party structure. The combination of these elements means that local Chinese hierarchies need to be understood and interacted with appropriately – they simply cannot be ignored or wished away.
Many Western business people have been taught to view hierarchical business models as inefficient and slow – this may or may not be accurate, but hierarchies exist and cannot be ignored. The key impacts of hierarchy on day-to-day business issues which need to be addressed are:
Information tends to flow less freely within a strong hierarchy – information follows the hierarchical lines. Thus, a subordinate will give information upwards to their boss (who may pass that up to their boss) who will then pass it horizontally to a counterpart in a different function before it is sent down the chain again to the relevant party in the other function. When the information returns, it follows the same path in reverse.
This means that information flow around a local Chinese organisation can be slow – from a Western viewpoint. It also places an emphasis on getting the information to the right person first time (otherwise even more valuable time could be lost) which in turn means you need to understand their hierarchy and who the key contact people are.
A good piece of advice would be to take time in the early stages of any project to talk to senior management in your counterparty about how information flows. ‘If we want information about something, where do we go to find it?’
Senior managers do not expect or appreciate being directly disagreed with by more junior people from outside organisations. Your senior leaders should deal with their senior management – even, sometimes, regarding quite minor matters. This can put additional resource pressure on your senior leaders who may need to become involved in issues they would normally delegate to more junior people. Senior leaders also need to understand that if junior colleagues ask them to do something which ‘back home’ should be done by somebody more junior, it is not because the junior staff are hiding from their responsibilities – in fact they are taking real responsibility by acknowledging the need to respect the Chinese hierarchy.
Senior Chinese managers will be friendly and respectful of senior western business people but probably not overly impressed by them and are definitely not overawed by them. The meeting of very senior western business people and senior Chinese corporate leaders are often purely formal events in which work done before the meeting by more junior staff is celebrated and approved. These meetings are often not really used for real business discussions or decision-making.
Leaders are expected to lead in China and leadership style can therefore appear paternalistic with leaders telling people exactly what to do and subordinates doing exactly as they are told – unquestioningly (even if they think the boss might be wrong).
Strongly hierarchical cultures often produce a lack of initiative at the lower levels. Subordinates undertake the tasks they are told to by their leaders but tend not do anything else. If the leader wants something to be done, they will give those instructions and if the instructions are not given the boss doesn’t want that task to be undertaken. To perform a task unasked by the leader might be appear as insubordination.
Age is worthy of respect in, and of, itself. Age produces wisdom and older people are to be respected because of their age. This has traditionally meant that most senior people in China were older men. Demographics in China seem to be affecting this traditional approach with younger people being promoted earlier as the older generation retires.
If you would like to have a conversation about how our China cultural awareness training programmes might help your business work more effectively in China, please contact us.
In our previous blog post on global outsourcing we looked at some key issues such as strategic fit for the business, selection locations and keeping the clients in the loop. In this second blog in the series we move the process on and look at the critical challenges of partner selection and management buy-in. In the work we have done on major global outsourcing projects, these are phases which have the potential to go badly wrong.
The reasons for deciding to outsource work can be many and varied. Often the move is driven by cost concerns, but this is not always the case. Many organisations, for example, find that they need to outsource to a secondary location to find scalable talent or to be near to a key client.
Whatever the reason for the transition, you will need to select an outsource partner (unless you decide to open a captive operation) and the future success of your entire organisation could then be heavily dependent on how that partner performs. Therefore, selecting the right partner is a very critical process.
What do you need to consider when going through the selection process?
When embarking on a transformational programme such as this, all companies are confronted with many organisational elements which need more attention than usual – managing change, staffing, project management and execution, learning how to manage virtual teams, communication –and each of these elements have to have total focus from the leadership team for the project or projects to be successful. In light of this it is evident that the most critical factor for any successful offshoring/outsourcing programme is the buy-in of the Senior Leadership team and the subsequent total involvement of all levels of the organisation. Even those business teams not directly involved in the process under transfer will have a role to play to ensure a timely, high quality and cost-effective outcome.
This ‘buy-in’ is critical for several reasons:
The success or failure of transformational programmes is nearly always down to the level of business leadership engagement and how that is seen and felt within the organisation. Having your teams feel comfortable about the upcoming and ongoing changes is essential. Your messaging needs to be well thought through and consistent and everybody within the organisation needs to be aware of what is being communicated both internally and to the client base.
We would love to talk to you about the importance of Leadership and Organisational Buy-in as key enablers to a successful outsourcing and/or offshoring programme – please get in touch if you would like an initial discussion.
I’ve been running cultural awareness programmes for major global corporations now for almost two decades and India has always seemed to loom large in my work schedule. I have noticed clients’ interest change from seeing India as purely a cost-saving outsourcing destination to a keener interest in India as a potential future mega-market. During this period, we have run India cultural awareness training programmes all over the world and client interest mainly stems from the following areas:
Whatever our clients’ relationship with India might be, we know that a better understanding of cultural expectations in India will make any relationships run smoother. When operating in such a totally different type of market, cultural awareness and knowledge are vital.
We have thought a great deal about what a good India cultural awareness training programme should focus on and I’d like to share a few thoughts with you on this topic in this blog post.
However, I’d first like to start by covering what it definitely shouldn’t be focused on – unimportant superficial issues! We are often asked to cover such issues as:
These are the type of areas I would consider to be trivia and they will not have a significant impact (positive or negative) on your business going forward. Indians will look after you and help you with these issues. They know you are not Indian, that a lot of what you experience will be new to you and will, therefore need explanation. By all means include these areas in a training programme but don’t make them the focus.
In our view there are five key areas that a training programme should focus on. There are others, but time is always limited so these are the essential topics:
Business structures in India mirror Indian society. Both are hierarchical in nature. This is not a good or a bad thing – it is just a fact and it is essential to understand the ways in which this hierarchically-based approach impacts on Indian attitudes to business. In our experience, the failure to take this issue into account is the direct cause of untold cultural misunderstandings when working with India.
Information tends to flow up, down and across organisations with a clearly defined and well-understood structure being seen as the key to efficiency and aligned with this structural approach come a leadership style where the boss is the boss – his instructions are assumed to be correct and it is unlikely that they will be questioned even if it might appear that the instructions are wrong.
We find that many international companies want to introduce a flatter structure in their Indian subsidiary so that it is closely aligned with other offices in the group. This often proves difficult in a country where hierarchy is the norm.
As with many hierarchical societies, it is important that the manager acts like a boss. The position of leader demands a certain level of role-playing from the boss and a degree of deferential behaviour from team members. The boss is not expected to perform any minor tasks such as making coffee or moving chairs in a meeting room. Western concepts of egalitarianism where the leader is viewed as the first amongst equals don’t sit easily in a country still impacted on by the historical conventions of the caste system.
The boss is expected to give explicit instructions which will be followed precisely – even, as I said earlier, if people think that the instruction might be wrong. Imprecise instructions are likely to result in inaction because team members will be left confused as to what exactly needs to be done. Managing people in India often requires a level of micro-management which many western business people are uncomfortable with – this approach however is likely to bring the best results.
In the India cultural awareness training programmes we run, the most consistent ‘criticism’ we get from people about their India colleagues is that they just don’t show any initiative. They do exactly what is asked of them and no more – and won’t do anything unless explicitly asked to do so.
This is a strongly cultural issue. If you are from a culture in which the boss is expected to give direct, precise and detailed instructions, the expectation is that you do what your boss has asked you to do. To do more could almost be seen as insubordination – the boss had wanted you to do other things, he or she would have given that instruction. Therefore, if things don’t get done it is a failure of leadership for overlooking things.
This single misunderstanding leads to endless cases of missed deadlines, unhappy colleagues and feelings of mistrust amongst the teams. Any good India cultural awareness course should address this issue head on.
India is a very relationship-oriented country. Family ties are extremely strong and influence the career path of individual employees. A recent global survey showed that Indians are under greater parental pressure to succeed than in any other country in the world. It is important to make your parents proud of you – and this is one reason why job titles are so critical. The better the job title, the more prestige you have amongst family and friends.
Relationship-orientation however extends beyond the family and into the work place where employees are keen to develop close personal relationships with both peers and leaders (in fact the leader can very much be seen as a mother or father figure who is charged with looking after, supporting and guiding their ‘children’.) A great deal of emphasis is placed on promoting the company as a place that you not only work at but also belong to – birthdays and team social events are really important in an Indian working environment.
Western colleagues need to recognise this and develop strategies for building relationships with Indian colleagues, but this is not always easy when those colleagues are thousands of miles away and working in a different time zone.
It might be assumed that, as most India colleagues speak almost perfect English, there will not be any communication difficulties, but this would be far from the truth. Indian colleagues have a different style of communication which is rooted in non-confrontationalism and wanting to please people. One of the most common questions we get asked on an India cultural awareness training programme is ‘when does yes mean yes and when does yes mean no?’Any good training programme should focus on:
Improved communication with India results in improved relationships and efficiencies.
An India cultural awareness training (or a series of interventions aimed at different areas of the business) can have a massively positive impact on your business performance if done well; it can also possibly have a negative impact if delivered in a way which alienates the audience and doesn’t focus on key commercial issues.
The art of delivering a good programme is in being able to relate generic India-based cultural points to the strategic and tactical objectives of the business – if these links are not made, the training might prove pointless.
If you would like to discuss how Global Business Culture could develop and deliver meaningful training programmes for you, please contact us.
Argentina is the second largest country in Latin America and the eighth biggest countries in the world. It is a high-tourism location and a hub of industry. Expansion, investing in a business or simply wanting to find out more about the corporate culture in this country will require you to have some knowledge of the role of women in business in Argentina. Understanding the beliefs of the local culture, along with the underpinning values of the country is key as they can impact anyone looking to do business in Argentina.
Since the return of democracy in 1983, women in business in Argentina have achieved a relatively good level of equality. While women who do business here should not have to deal with any major gender bias, there are still far fewer women in senior positions than their male counterparts. Statistics indicate that more than 50% of businesses in Argentina have no women whatsoever in their senior management team.
Although significant progress has been made, it is public knowledge that in specific contexts, there is still a noticeable level of inequality between men and women in the workplace. In the 2018 Global Gender Gap Report, Argentina ranks reasonably well, considering its past, and takes its place in the upper section of the table, ranking 36th overall out of 149 countries.
With around 70% of women being employed in unskilled jobs, women in employment in Argentina hold a disproportionately high level of lower paid positions. This is still the case, despite the fact that more women than men have obtained university degrees. However, it is still more challenging for women to obtain a good position, with more being demanded of women in terms of their educational attainments than is demanded of men.
Women who hold senior positions in Argentina still report there to be a significant level of sexist stereotypes in play. For instance, when in a room with other senior managers, the people who address management will usually address the men directly. For business trips or projects that might require travel, because women are still expected to manage and organize their households, men would often be chosen over women. This prejudice still exists largely because cultural conceptions about men and women are translated from the home and into the working environment. In terms of gender roles, there are no specific legal impediments that prevent women from performing most roles yet there remains limited access to positions of power.
On a slightly darker note, there is still a highly macho culture in Argentina, and this is something which cannot be overlooked when discussing the place of women in business. Outside of the workplace, the country has serious issues with domestic violence. Inside the workplace, it is commonplace for women to be subjected to supposedly harmless everyday sexism. Males in Argentina feel entitled to deliver somewhat lewd comments or whistles of intent, and while in many corporate cultures there are efforts being made to wipe out this behavior, it still happens, and it is a real challenge for women in business here.
The early retirement age for women in Argentina can limit the potential opportunities for advancement and career development; it also reduces the value of their pension or social security benefits. Women will normally retire at least five years earlier than men.
In Argentina, and indeed, many Latin American countries, one’s family is the most important part of life. Both men and women alike are expected to be fiercely loyal to their families, and the needs of the family unit are always placed before the needs or career aspirations of the individuals.
Due to the macho culture that prevails, men are expected to provide for their families and be the primary earner in their respective households. The specific structure of the households will vary somewhat depending on their social classes. In the lower social income groups, you can expect the household to be larger, and the mother will usually stay at home to raise the children while the father will go out to work. Government subsidies are still provided to help financially with raising children. Middle and upper social income groups will usually have only 1-2 children, and for the more affluent, regardless of whether the mother is in paid employment, there will often be maids or childcare providers hired to care for the children. All childcare, maids, and babysitters are notoriously positions held only by women, which further increases the gender bias towards women at work.
Global Business Culture runs China cultural awareness training programmes for a wide range of different clients. These clients come from a variety of sectors but all share one thing in common – they have all realised how important it is to understand the local business mindset when doing business in China.
China is always in the news whether it is due to an apparently slowing economy, political and trade tensions with the USA or Chinese companies being seen as the ‘enemy’ in the West. There certainly seems to be very little good news coming out of China at the moment – at least as reported through Western media. Nonetheless, the Chinese economy continues to grow quite quickly (at a slower rate than previously but all economies do that as they mature) and so massive opportunities remain in what is the world’s second largest economy.
Global Business Culture strongly believes that the macro-economic trends – be they positive or negative – are not the reason a company will succeed or fail in China. What is really key is developing the right mindset, skills and knowledge to work effectively with local business partners, customers and employees.
In the following blog posts I will explore some of the key cultural elements which we place emphasise on the China cultural awareness training sessions we run – issues which should be factored in when doing business in China.
Some cultures tend to put business before relationships whereas other cultures very much put relationships before business.
China is strongly on the relationship-first side of this equation – in fact only Japan and Korea are possibly ahead of China in terms of relationship-orientation. Therefore, the development and maintenance of strong, long-term ties are vital. You will often hear the word Guanxi used when people talk about Chinese business culture and it is worth looking into this concept in a little more detail.
We are often asked what exactly ‘Guanxi’ actually is. Putting it simply, Guanxi describes the relationship between two individuals. It codifies the way in which they interact together, and their ‘right’ to prevail upon each other to ask for favours or services. Guanxi relationships need not be between individuals of the same hierarchical status (but often are) and when you are in a Guanxi relationship it is virtually impossible to refuse to agree to do something you have been asked to do – regardless of how difficult it might be. (Bear in mind that due to concern for other people’s ‘face’, people are unlikely to ask for things which cannot be delivered.) Favours done must always be repaid which results in people entering life-long cycles of obligation and repayment.
Guanxi not only relates to a person-to-person relationships but can be used to describe a spider’s web of relationships between extended groups of people who are, in some way or another, linked to each other. These Guanxi relationships can include connections with family, school and university peers, members of common clubs or organisations (the largest of which is the Communist Party) and work colleagues.
Interestingly, these Guanxi relationships are personal and cannot be transferred. This is of considerable interest when considering lateral hires into organisations in China as they can often bring with them considerable Guanxi networks – the problem is that these networks will probably leave with them if they move on at a later date.
It is interesting to ponder whether a foreigner can ever really have real Guanxi relationships and experts differ in their response to this. The truth is that a foreigner can probably never have real Guanxi relationships simply because they are not Chinese – or more accurately that it would take a lifetime of effort to develop such a deep network of functioning relationships if you are not Chinese to begin with. Having said that, some foreigners develop better relationships with the Chinese than others and those who work hard to develop and crucially maintain those relationships over long periods of time are the ones who will probably succeed in China.
What does all of this mean in terms of day-to-day business dealings?
Small talk should never be seen as unproductive or irrelevant as it is a key ingredient in the relationship development process. Do not show impatience if lots of time is spent talking about non-business or seemingly trivial issues.
Generally, people from relationship-oriented cultures do not appreciate frequent changes in key contact people within supplier organisations and partners. They do not want to have the burden of continually going through the relationship-building process. As a result, continuity of contact is crucial. Key contact people should be selected carefully and kept in place over long periods of time.
Less emphasis is placed on the importance of contracts when the basis of business is seen as the relationship underpinning that business – the relationship itself is seen as far more important than anything written in a formal contract. In China a contract is often seen as a statement of the best set of circumstances at a certain point in time but that, if circumstances change, it would be unreasonable to expect partners who have a good relationship to abide by the exact terms of the contract. A contract is more of a statement of intent that work will be done together going forward.
As business is relationship driven, business contacts are friends and friends should be available as and when I need to speak to them or whenever I need to meet them. I expect you to stop what you are doing and help me, and I expect you to answer my phone calls even if you are in another meeting or if it is the weekend.
The strength of our relationship means I expect you to respond immediately to requests – even if these requests are last minute or seemingly unreasonable. A common comment made by people working with China is that they wait an age for a response to a question they have sent but that when a response is finally forthcoming, the Chinese expect everything to be completed by yesterday.
Much of the relationship-building process happens through informal and formal entertainment events. Never view an invitation to a lunch, dinner, drinks or a formal function as dead time – it is key to the relationship-building process and often more important (at a senior level) than the actual business meetings you may attend.
Why are things like this in China? Well, in the next blog post I will explore the key concept of ‘face’ – what it means and how it impacts on business dealings.
If you are looking to do business in Belgium, you will most likely already have an appreciation for the country’s open, globalized, and diverse economy. It is a highly multicultural and multilingual nation that performs significantly well in the ease of doing business across borders index, and for effectively supporting start-up operations.
While other countries across the globe are only just beginning to make gender pay gaps public, in Belgium this has been standard practice for many years. Interestingly, any companies who have 50 workers or more need to report their pay data every two years as a minimum. In other countries, such as the UK, regulations usually only apply to employers who have more than 250 staff.
Across Europe and beyond, Belgium boasts one of the lower gender pay gaps, surpassing other countries such as Iceland, Norway, and Sweden. For anyone looking to employ women in Belgium, parity in salary between men and women is standard practice.
The history of women in business in Belgium is quite different from the current state of play. It has taken a deliberate and intentional intervention from the Belgian Government via changes to legislation and policy over the past few decades to create today’s environment.
Trade Unions play a significant role in this, and if you want to hire people in Belgium, you should be aware of their involvement. Almost 60% of all Belgian workers belong to a trade union. However, there are collective bargaining agreements that are signed by almost 95% of workers in the Belgian workforce. These agreements mean that instead of an individual having to negotiate their salary directly with their employer, there is a framework in place that determines who gets paid what for the specific type of job they do and the tasks they perform. In terms of salary increases, these are typically indexed to the cost of living in Belgium. This avoids employees having to request salary rises in order to meet with the rising cost of living in the country.
These agreements and their somewhat unique way of determining salaries means that regardless of whether you employ women or men, wages are non-discriminatory. While the gender-pay gap is one of the lowest across the globe, there are still some industries, such as the Insurance and Finance sectors where pay differences are still quite apparent.
Women in management and senior-level positions are still somewhat unequally represented. In fact, this is one of the only areas of business where women do not have equal or even near equal representation. Nine out of ten CEOs in Belgium are male. The number of management positions that are filled by women is one of the lowest in the whole of Europe. The reasons behind this are nothing to do with wages, but rather point to a number of economic and social factors at play. Childcare prices, adequate childcare facilities, and a lack of flexible working hour arrangements are some of the major reasons cited for this.
If you are considering hiring staff on a part-time basis, then these positions will most likely be more appealing to women in Belgium. Roughly 40% of employed women work on part-time contracts. The retirement ages for men and women in Belgium has remained constant at 65 for both. Again, unlike other countries where women get to retire earlier, this is another example of just how equally men and women are treated.
Additionally, if you are sending female employees or management over to Belgium, you can expect that they will be treated with the utmost of respect.
In this blog, we look specifically at the position of women in business in Brazil. Whether you are expanding, investing, or starting a new business venture there, this blog will tell you some of the core issues that are relevant to your needs right now.
The women of Brazil have made significant leaps forward over the past few decades. Ever since Brazil’s first female President, Dilma Rousseff came to power in 2011, the position of women in business has significantly improved. Women have been able to significantly reduce the education gap, and they are in fact, now graduating at a faster pace than their male counterparts. In the business world, however, specifically when it comes to holding senior level positions, Brazil is still falling behind from a global perspective.
Looking back at the history of women in business in Brazil, in 2011 almost 45% of the total workforce was made up of women. However, most of the roles taken up by women are considered to be from the unskilled sector, and where seniority levels are concerned, there are still far fewer women in the middle to senior management positions overall.
Women in business in Brazil find it much harder to break into the workforce than many other places in the world. This is probably why they are still only ranked in 95th place on the World Economic Forum Global Gender Gap Report.
Looking specifically at Europe and the U.S, women were primarily introduced into the workforce during the great world wars, and while the men were off fighting women took up their jobs in factories and offices. Because Brazil barely participated in these wars, there wasn’t any significant change in the workforce ratios during this period where men and women were concerned.
Industrialization in Brazil was initially focussed on the Sao Paulo and Rio De Janeiro states. Both women and children were viewed as ‘cheap labour’, and this was how their integration into the workforce began – primarily within the weaving and spinning industries. However, with further changes to the industrialization of Brazil, women were forced out of their jobs so that these positions could be given to men. Society has also played a huge role in telling women that they needed to be at home, raising children and tending to their needs, rather than in the workforce.
There are still gender imbalance differences that exist within both society and the business world itself. Women will typically earn 30% less than men who are in the same job, and this is something that does not look like it will change anytime soon. Due to what can only be described as a culture of permissiveness, one of the major barriers to progression in business is workplace discrimination.
There is still an underlying requirement for women to stay at home with their children. For this reason, the vast majority of the very few senior women in business in Brazil will either have no children or will be of an age where they have already past their childbearing years.
With all of this in mind, there are many women in Brazil who fight with tenacity and tact to work their way up the corporate ladder. This fight for female empowerment, coupled with higher academic attainments, mean that some employers, are able to onboard incredibly talented, hard-working, self-motivated females. This, if anything, should be seen as an opportunity for international companies wanting to do business in Brazil.
While there are laws which prevent gender discrimination in pay and career advancement, the reality faced by women in business in Brazil is starkly different. Although public commitments have been made to reduce inequality in the workplace, there are no systems in place which mean that business owners need to reveal any salary data at present. Companies are given the option to opt-in to pro-equality programs, but very few actually do so.
Out of all the countries in Latin America, Brazil still remains one of the most difficult markets for women in business. For anyone employing women, it is expected that the pay will be less, and they will have to work harder in order to achieve success.
If you would like to discuss how Global Business Culture can help you improve your success when working with Brazil through targeted Brazil cultural awareness training please get in touch.
Global Business Culture has been heavily involved in a number of large-scale global outsourcing projects over the past decade. We deliver consultancy and training packages to clients at every stage of the global outsourcing process.
What have we learnt over the years? Here are a few thoughts on getting outsourcing right:
For an outsourcing programme to work, it needs to be a clear priority within the overall strategy of a business and there must be a clear reason as to why it is happening. A clear strategy allows people at all levels in the organisation to make daily decisions about how to balance time spent on competing priorities. A key leadership role is to articulate the strategy so that it that builds the clarity people need to be able to make trade-offs. The business case needs to get to the heart of what it will mean for clients, for employees and for the expected outcome on the cost and quality of service. All this maybe common sense but it is often not that commonly found in outsourcing programmes. Often the approach is clear at the outset of a programme but then gets lost or diluted along the way as the organisation works through the challenges of implementation.
Although the most important factors will depend upon your situation regarding clients, employees and markets, here are some of the common reasons why outsourcing could be an effective part of your strategy:
The need to be clear about why you want to outsource and how it fits in with your overall strategy is a good test to see if it is the right thing to do. It is critical to do this at the outset but also to ensure that there are regular check-ins to see if the programme needs to change.
Deciding on the geographic destination for any outsourcing project could be both the most critical and most difficult decision in the whole project. If your decision to outsource in the first place has been almost solely based on cost reduction considerations, then your location destination decision is likely to be also almost entirely influenced by pricing issues – but this could result in you making a series of costly and almost irreparable mistakes. The damage you do through wrongly identifying the most appropriate location might far outweigh any benefits accruing from the transition.
Therefore, it is imperative that you balance other considerations against a simple price-to-price comparison. The following issues should be weighed against any simple cost comparisons:
This list is not exhaustive but gives a flavour of the type of considerations you need to factor into any outsourcing location decision. Look way beyond comparative pricing calculations – it just isn’t that simple.
Clients are often in two minds with regards to their own customers when embarking on a global outsourcing programme. Should they keep their clients in the loop, or should they remain secretive about their plans? Will clients react badly to being informed about the changes to come and even more worryingly will they expect any potential cost savings to be passed through to them?
There can only be one response in this situation – clients must be informed and ideally should become involved in the process. Any transition of work will very likely impact on them in one way or another and you have a duty of care to keep your clients fully informed throughout your journey.
Clients need to be in the loop for several very good reasons:
Ensuring continuity in levels of client service are critical during any outsourcing process and having your clients feel comfortable about the changes is essential. Your messaging needs to be well-thought through and consistent and everybody within the organisation needs to be fully aware of what is being communicated to clients at all times.
If you are thinking about outsourcing as a key part of your business strategy, then you need to give careful consideration to exactly what work to outsource. Going through the process of outsourcing is a great opportunity to create a big picture map of your processes and which ones are most valuable to your clients. Creating awareness and alignment around this and getting all stakeholders to buy-in to it will serve you well throughout the programme. It will help inform decisions, such as what to move and what not to move and when to use third parties versus your own captive centres. If you design a programme well, the first experience will be positive, and this might increase the appetite to do more. At this point knowing what is on or off limits becomes critical. As you build that big picture of your processes here are some of the factors to consider:
Building that big picture map of your processes along with clear criteria for making and assessment of what to move and what not to is an important step in a programme. We would love to work with you to see how we can help.
When embarking on a transformational outsourcing programme companies will need to focus very carefully on the use of Metrics and the linkage of these with the appropriate Reward systems to deliver a successful programme. Establishing these metrics is probably the most important workstream of the whole programme as they will underpin a successful transformation to an outsourced and/or offshored process environment both for the home teams and the new partner.
It is critical to get these metrics mutually understood before starting the transformation…otherwise you could get a mismatch between yourselves and your outsourcing partners in the measurement of the process performance. There are some things to watch out for:
We will be following up this initial blog on global outsourcing with some more ideas over the coming weeks but if you would like to pick our brains at any point please get in touch.