A good cultural fit is one of the most important hallmarks between a successful and unsuccessful outsourcing relationship. Cultural fit assessment is far less structured than defined processes that help you quantitatively evaluate the service provider’s solution, capabilities and pricing. To decide whether your company and the service provider will have a comfortable cultural fit, you’ll have to assess their behavior during the bid, selection and contracting phases. You can use this article to help develop a series of questions to ask yourself and as a guideline on observable behaviors that are good indicators of cultural fit.
Cultural fit indicators when responding to your RFP
It’s actually pretty easy to assess flexibility, innovation, responsiveness and how hungry the provider is for your business at this phase. Some indicators at this phase of the process are obvious but meaningful.
Your assessment can be based on how the provider deals with your process. Do they ask intelligent, insightful questions? Can they meet your response deadlines without asking for a last-minute extension? Do they demonstrate a good understanding of your strategy and expectations?
Everyone says that they want innovative, flexible relationships that add value. So how much of the provider’s response delivers new insight and ideas, and how much of it is canned material created by their marketing department? Will you be invited to beta-test their new ideas with them? Is there any evidence of their commitment to learning and a continuous-improvement culture? Did they propose any process improvements, automation or money-saving ideas? Have they proposed meaningful metrics? Has any of this been quantified? Are they prepared to commit to any of this in your contract?
It’s likely important to you to be an important client. So when you ask them why they want your business, aside from the obvious, what do they say? Will you have regular interactions and access to their top executives post contract? Will they commit their key resources to your account on a long-term basis?
Are they open about their and your transition effort and costs? How and when will their costs be recovered in the contract? Have you been given the option to have the vendor amortize over the term of the agreement, or do they want full recovery up front?
I’m not a fan of protracted contracting. If you are like-minded, you may use or want to introduce a best practice that truly accelerates the contracting process. Include a draft Master Services Agreement and important schedules and proposed performance metrics, reporting and billing requirements in your RFP package. The objective is to ask the vendor to red-line your document and propose their changes. The acid test is how many changes they make and whether the proposed changes are acceptable to your organization.
On a separate note, does the vendor attempt to circumvent the process or personally influence key decision makers? You may recognize some of these annoying tactics: bundling with existing services or other bids to reduce costs, making an attractive but time-limited offer, inviting them to some spectacular entertainment during the bid process so they can press their value proposition on your senior leaders, dark hints about troubles within their top competitors’ organization, and so on. This type of behavior says a lot about their level of respect for your processes and protocol, and perhaps how they will communicate with your organization if trouble arises in the relationship.
Cultural fit indicators during the selection and contracting processes
The orals are your first chance to see how the provider’s team interacts with each other and with your team. These face-to-face interactions allow you to validate your impressions from the RFP process and take them to a whole new level.
The first thing you’ll notice is their team dynamics. How many people are across the table, what is their role at the table and inside their own company? Is their role during this process clear? Did they bring operations leaders and subject matter experts, or is their team mostly comprised of sales people? How well do they know each other? Is one person dominating the meeting, or are they behaving like a high-performing team?
Site visits are worth the investment. Be sure to also visit one of their clients. The first observation you can make is whether the client they chose has a relationship of similar size, objectives and scope as what you’re proposing. If not, then why not? When you’re onsite with their client, is the provider willing to leave you alone?
Negotiations are serious business, and an indication to both parties that they are potentially on the verge of a long-term relationship. Everyone is right down to business at this stage, so behavior during this phase is often a good indicator of what will come later. As negotiations progress, how many times do they switch out their players? Do the changes make sense to you? How much of the conversation is tactical, operational or strategic? What did you expect, and what are you hearing? Can the team at the table make binding decisions? Is their attention to detail at an appropriate level – too much or too little?
Looking ahead, do you have the chance to meet your proposed operations leader and key liaison? What about the transition leader? When you and they talk about governance, do they understand what is needed beyond operational management and reporting?
Finally, keep in mind that all relationships are built on trust. So start gauging your ability to place trust in this relationship right from the beginning.
As you get closer to finalizing provider selection, your evaluation process will evolve from a quantitative to a qualitative one. If you’re as prepared as possible at each stage, your critical listening skills for what is said – and what is unsaid – will be put to good use.
Assessing cultural fit with an outsourcing partner requires being prepared. Using these tips from my experience as a 15-year outsourcing professional, you’ll find it relatively easy to assess cultural fit.
Linda Tuck Chapman, ONTALA Performance Solutions Ltd., welcomes your comments. She can be reached at [email protected] or 416.452.4635.