Perfect partnerships: building relationships

Innovation / 09 January 2012

Like any relationship, a successful business partnership involves compromise, communication and commitment – on both sides. Nick Martindale finds out what goes into a good partnership and how managers can make it a success

The concept of turning to a third party to take on some or all of an organisation’s back office or even core processes has been established in the UK’s private sector for over two decades now. The motivations and methodology of these partnerships have varied wildly, however, as has their degree of success.

The public sector has also begun to embrace this concept in recent years. With deficit reduction being a major goal of the current UK government, the move towards scaling back the size and role of the state means that third-party involvement is firmly on the agenda.

“Partnering” or “outsourcing” – it lacks a definitive term – has been the topic of much academic discussion, encompassing everything from offshoring transactional functions to far-flung parts of the world, to collaboration in the form of profit-sharing schemes, and everything in between.

The challenge for business leaders is to make such relationships work in practice, both in terms of how they are established and how they operate on a day-to-day basis.

One example is ACCESS, a joint venture between Glasgow City Council and international service company Serco, which aims to shave over £70 million from the council’s IT and property management spend over 10 years.

The goal is to improve performance and increase efficiency in a framework that will limit the council’s exposure to risk, and to do so in a context that is politically acceptable, says ACCESS chief executive Duncan Mackison. “The council wanted to retain a level of involvement in the governance of the vehicle, and maintain some control of its strategic direction,” he says.
 
For Mackison, the overriding factor in determining whether such arrangements work is if both sides are open with each other about what they want to get out of the relationship, particularly where one party is a private, money-making entity.  “I’ve tried to be very open about describing the different drivers and we’ve developed a plan that takes those into account,” he says.

Be realistic

“You can’t hide from the fact that a private sector provider wants a return, but at the same time you need to accept that the public sector is looking for high quality services and performance improvement, as well as the ability to transfer risk and accountability,” he adds. “You must foster an environment that accommodates those agendas, but at the same time celebrates the differences between them.”

Where you end up with problems it’s often because the two sides aren’t really understanding or engaging with each other. If you’re going to enter into these relationships, it takes time to build things up.

Duncan Mackison, chief executive, ACCESS

Anthony Hesketh, senior lecturer at Lancaster University Management School, says that having clear documentation of exactly what is expected should be a pre-requisite at the start of any arrangement.
 
“If you have a filing cabinet full of all the protocols and agreements outlining what will happen if things go wrong, it means you’ll have thought about them and will try to avoid them,” he suggests. “You have to be very clear about what you’re trying to achieve and be realistic about what’s achievable, so that both sides are equally respectful in making sure that they deliver on those targets.”

Agreement on exactly which responsibilities lie with which party is important at a day-to-day level, says Mike Robinson, director of specialist management advisers Berkshire Consultancy. “You have to agree on the extent to which you’re going to collaborate and must know exactly where your responsibilities start and finish. The client typically has a good knowledge of their business and how the supplier can best support them, but it can’t step in and help the contractor because that actually takes the burden off the contractor and back to the client.

“What it shouldn’t be is hands off and fingers in,” he adds. “There’s a wonderful phrase about ‘long-handled screwdrivers’, where senior managers meddle in contracts way beneath their pay grade because they’re frustrated engineers and like to get their hands dirty.”

Nicola Eldershaw, apprenticeship training manager at mobile phone specialists Phones 4u, oversees the company’s outsourced apprentice training programme, which is provided by Elmfield. Last year the method of delivery shifted from a conventional outsourced arrangement to one in which Phones 4u, with Eldershaw as a sole point of contact, now has much more involvement at both
operational and strategic level.

Sharing control

“We understand apprenticeships and the objectives Elmfield are trying to achieve, which enables them to approach it in the most efficient manner,” she says. “By going through this process, we have gained more control and it’s been massively beneficial for us with regard to the day-to-day training and experience of our learners.”

The relationship has also benefited from both sides being better able to share ideas and more willing to listen to suggestions for improvements, she says. Whichever way a partnership is set up, a level of trust is essential.

“No relationship is perfect and it’s when things go wrong that it is tested, just as it is in a marriage,” says Robinson. “When something goes wrong, that is when the leaders’ mettle is tested – particularly on the client side – and when you see whether they’re prepared to live by the partnering principles or whether they revert to type.
 
“Quite often there’s a bit of a hiccup and they reach for the big stick in the cupboard and beat the contractor with it, rather than realising that there’s probably a sound reason why there has been a default.”

The solution to this involves regular meetings and demonstrating trust through behaviour, he adds. Asking someone to report back in two months’ time implies they’re trusted to do their job, whereas asking for an interim report in two weeks suggests a perception on the client side that without this deadline they will not start work on it until late in the day, says Robinson.

Adam Turner, education development manager at NHS West Midlands Workforce Deanery, believes in a partnership-based approach. “My preferred method is engaging with stakeholders, making the agenda theirs so they own it for you and take it forward,” he says.

One recent example he cites was when his organisation brought together various stakeholders involved in health education to attend a meeting. They collectively agreed a common purpose and made a series of pledges as to how they would help to achieve that aim.
 
“One of the key things is being able to engage with different stakeholders and value them all, because if you don’t do that then it basically becomes about the contract or service level agreement and you might as well just communicate by email,” he says. “It breaks down all the barriers and makes you want to work together.”
 
Adapting a style or message for a specific audience is also important, he says. “If I go to an NHS Trust I might deliver the same message in a very different way than I would to an academic sector,” he says. “You have to be politically aware of who you’re dealing with, and adapt the language you use to help them understand where you’re coming from. If you do this, they will work with you in a much more streamlined way.”

Open relationship

At Phones 4u, Eldershaw believes the most important skill in her role is the ability to build a rapport with her team at Elmfield, four of whom report directly to her. “If you can do this, whether it’s with a trainer or someone at head office, it makes your job an awful lot easier,” she says. “The first thing I did was get to know the people I would need to work with to enable me to achieve my goals. Building this rapport, and allowing them to get to know me, too, makes the whole journey a lot more feasible and enjoyable.”

This is particularly important when working across different cultures such as forging a public-private arrangement, says Mackison. “You need people who are a real hybrid,” he says. “You require the commercialism that comes from the private sector, but these people also need to appreciate the constraints and challenges that are generated by the public sector.

“What is really unhelpful is if you get people who just apply cold, hard logic to operational challenges. You need people whose personalities aren’t going to clash, and that comes down to very careful selection of the right individuals.”

And it is important to recognise that relationships won’t be perfect all the time, says Andrew Kershaw, technical director at IT and business consultancy Waterstons. “There can be problems in the early days of an outsourced arrangement and what’s important, certainly for the supplier, is that this is responded to in an appropriate way,” he says. “Customers need to realise that they are dealing with people and that there is a learning curve.”
 
Trying to do too much too soon is another common failing, suggests Mackison, particularly on the client side. “Where you end up with problems it’s often because the two sides aren’t really understanding or engaging with each other,” he says. “If you’re going to enter into these relationships, it takes time to build things up.

“Often projects come unstuck when organisations try to go too far too fast and everyone gets a bit spooked. You need to start with a base level of activity for a year or so and then, once you’ve got to know each other and are confident, you can start to grow.”