Dr. Mark L. Vincent's Blog

The Organizational Development Muse

Subscribe to the Mark's blog

Outsourcing: the complete Outcomes interview with Mark L. Vincent

Posted by Mark L. Vincent on Jun 3, 2011 3:51:00 PM

 

4-financial-confusions-the-free-e-book

A recent interview with me in OUTCOMES Online can be found here.  Because of limited space for the magazine version of the interview, a significant amount of content needed to be trimmed.  The unedited version of the interview follows below:

1.    What is the best framework for deciding when to outsource certain ministry operations?

I’m delighted you used the word “framework” in your question, because the framework we tend to use is inappropriate for the outsourcing conversation, and that assumes we are actually conscious of it. A framework always exists, but if it is ignored decision makers cannot explain why they did what they did, and why it connects to the mission of the organization. And if the framework is consciously present but is inappropriate, then resulting decisions do not build the long-term effectiveness of the organization.

One inappropriate framework is too often that of “outsourcing is for when you cannot afford a staff position and need to spend less money.” This framework is inappropriate because it believes that reducing expense outranks ministry effectiveness and long-term ministry growth.

A better framework begins with an organizational metric. This can be found by answering the following questions:

  • What is the size of our organizational economy? Also, how much of this economy is in annual income we use for operations?

  • What is the healthy distribution percentage of operations money for staff, for program and facilities? This needs to add up to less than 100% because the difference is the carryover to keep building up cash reserves.

  • In accomplishing and expanding our mission objectives, what staff tasks must be performed?Of these tasks, which must be carried by employees that embody the mission and values of the organization, and which ones are best carried by vendors who share a passion for our mission and values? The key in such a decision is the regularity of the task, interaction with the constituency (employees), versus irregularity of the task, expertise, continuous learning, and efficiency (vendors)

  • How will we distribute our staff budget in such a way that accomplishes and expands our mission objectives, while retaining flexibility to respond to needs when they arise? This points to some money remaining unspent, or spent for only part of a year in order to take advantage of a vendor’s expertise or to cover the costs of a special project.

One obstacle that prevents organizations and leaders from moving to this better framework is that they are already spending everything and more that they have available for staffing. Thus, outsourcing requires extra money or is put in place to cover the tasks after having cut a staff position. This creates problems for the vendors because they are resented as job stealers, or because the expectation is to preserve an organization by cutting expenses rather than through mission fulfillment. By working ahead and working from a larger economic point of view, vendors become part of the organizational growth strategy rather than a last ditch choice.

2.   What are benefits to using vendors and consultants versus in-house staff? What are some drawbacks to this method?

Let’s assume it is a problem to use vendors and consultants too much and it is a problem to not use them at all. A total staff approach is rigid and bound to the confines of the budget. An organization has to postpone addressing specific needs if it has no money to hire the needed staff. Further, for large organizations, staff can lodge their loyalty with their division or department instead of the overall organizational mission. Conversely, a total vendor approach makes it difficult to build an organizational culture and loyalty to the organization’s mission is always suspect. Where staff might be perceived as entrenched, vendors and consultants might be perceived as mercenary. Employees cost less per day, but cost more to train, hire and replace. Consultants and vendors cost more per day, but most work for specific projects in a time-limited basis, usually cost less per year than an employee does, and can be more easily replaced.

An intentional mix of the two works best, especially with thoughtful responses to the above questions giving strategic guidance. Staff can then provide overarching perspective and continuity while vendors and/or consultants bring fresh perspective and targeted expertise.

The drawback of staff resentment for vendors has already been mentioned. Other drawbacks to avoid are hiring vendors or consultants who cannot detail their own sense of mission and values, consultants and vendors who use their platform to seek a job rather than practice a vocation, or consultants and vendors who structure their services in an attempt to keep their contract with the organization until the end of time. The best ones in the business detail the objectives they will help you reach and the time-frame in which they will do it with you. When it is done, they are done.

 3.    How can a ministry be designed to allow for both outsourcing and traditional staffing?

An organizational metric is key. If an organization does not make its staff budget flexible enough to build the mix of employees and vendors, it simply will not work over the long haul.

Depending on how an organization sets up its chart of accounts, certain facility costs can be outsourced too. Outsourced custodial services are one many organizations use. The core of this discussion, however, seems to be outsourced administrative and staff tasks that carry out the program in which the ministry organization invests. Depending on the organization’s size and resident expertise among the employees, items such as executive search, training, facilitating complex decisions or organizational development, capital fundraising counsel, payroll, event planning and others might be better served by a vendor. Many ask why so, and the answer is because trying to do these things in addition to the normal full-time tasks may make employees inattentive to the work they need to be doing. Many tasks best served by a vendor are time-bound and intensive. It becomes an inefficient use of donor dollars to delay or reduce a ministry program run by staff in order to engage other important, but nonrecurring tasks.

One co-worker I experienced many years ago was emblematic of the problem. She did not want to be shut out of anything, and she was on record that she would rather leave a task undone than entrust it to someone else outside the system. This stands in contrast, of course, to the many consultants I have known who think they can do anything better than anyone else and keep bullying their clients to let them do more.

4.    How can a ministry effectively make a smooth transition as tasks move from in-house to being outsourced? How can a leader effectively communicate these changes to the current in-house staff?

A smooth transition means working ahead, and I would again point to working through the metric establishing questions detailed at the beginning of this interview. Thoughtful answers to these questions help leaders build and then follow a trajectory rather than doing something abruptly. Working toward a trajectory brings in-house staff into the conversation and implementation of vendor roles. They become part of making it happen rather than it happening to them.

As to communication; this will sound simplistic, but I’ve found this following formula incredibly helpful in building toward significant change within an organization:  Talk about the fact you are going to talk about it, then talk about it, then talk about the fact you talked about it. Even after this, leaders should expect that some are still not going to track with it until changes actually begin. In some cases, a person might be criticized for not paying attention, but in many cases such a person is a tactile learner and needs to see the change happening before they can fully grasp it. Patient and persistent communication is more likely to be effective communication than outstanding PowerPoint slides or corporate-wide e-mail announcements released during the weekend.

 5.    Do you anticipate increased outsourcing in ministries of the future?

I believe we can expect that outsourcing will and should grow some, but I don’t think it will be like a rocket. Even as organizations begin to try outsourcing as a more efficient and quality way to accomplish organizational mission, too many consultants and vendors are entering the system. The recent recession put a lot of other persons in the mood to try their hand at being a vendor. As a result pricing, quality and definitions of vendor and consultative services are all over the place. This threatens the ability for good vendors and clients to find each other. It seems for every positive step forward, vendors and clients pull stunts that set the growth back for everyone.

Clients seeking vendor services are well-advised to check references, expect a contract that details the scope and chronology of work, along with an out if they are not satisfied, and to make sure they are not paying too much of the money up front. Consultants that want their work to be an honorable vocation do well to coach their clients to expect these things.

Mark L. Vincent, is the CEO of Design Group International, an organizational development firm that helps organizations and their leaders discover clarity and implement solutions.

GODFORSAKEN resized 600

Topics: organizational development consulting, Vendors, organizational metrics, Mark L. Vincent, Design Group International, Whorled Viewz, organizational design

MarkLVincent-2018-ConsultantPage

Posts by Tag

See all

 

Looking for something that isn't here? It might be in our publication archives or written by another consultant.