Fond memories of outsourcing

With a new state government having taken the reins last week, I'm sure they'll be looking everywhere for savings and efficiencies. I can't wait for someone to pop up and mention "outsourcing".

Don't get me wrong - I'm a big fan of contracting out certain government functions to the private sector. However, I've had more than enough experience of doing that to know that if you're not careful, all it leads to is higher costs and lower service levels. The last government certainly fucked it up plenty of times - we just never got to read about it in the papers.

I'm currently dealing with a private company that's outsourced a certain function - they can get bitten just as badly as the government. In fact, big companies and big government are often as bad as each other when it comes to inefficiency, waste and plain silliness. The difference is that if the big company does it for too long, it soon becomes either a small company or a no company.

Anyway, I recently needed the outsourcer to provide us with a new service. The outsourcer doesn't provide that service itself though - it contracts that out to a supplier. That supplier then sub-contracts that out, and the sub-contractor then subs it out to the bloke that actually does the work.

So we outsource to A, who subs to B, who subs to C, who gets D to do the work. In the pre-outsourcing days, I just called D and got the job done.

D charges $100 for the service.

But in the brave new world, D sends his quote to C.

C adds 15%, making it $115.

C sends the quote for $115 to B, who also adds 15%, making it $132.25.

B sends the quote to A, who being a big international outsourcer, adds 20%. We get a quote for $158.70.

That process now takes about a month - by the time we get the final quote from A, the original quote from D is passed its 30 day time limit.

We now have to raise a purchase order for A, who then has to raise one for B, who has to raise one for C, who has to raise one for D.

"A" doesn't raise their purchase orders onshore - that's been outsourced to another company "E" overseas. The country that E is based in had problems last year - a bit of civil strife. They couldn't raise orders for weeks as their staff couldn't get to work.

So it took us a month to get a quote, and two months for all the POs to be raised so that D could finally start work.

When it comes to arranging the work, I can't contact D directly any more - I have to email A, who emails B - you get the picture.

You have to factor my time into this as well, and my time is definitely money.

I'm not sure where they're making savings in all of this - I know that when the smart sales people from A sold this to the executive, they promised bucket loads of savings. However, they forgot to add that almost every service that we require costs extra money - lots of money. Need to have an onsite meeting with D to discuss getting this thing done? You can rent a tiny meeting room - for $100 an hour. Tea and biscuits are extra. At least they supply chairs. Funnily enough, the cost savings don't seem to have allowed them to reduce their budget at all. They saved a lot up front, but they then get gouged a thousand times on the little things, and if you get lots gouged often enough, it soon adds up to a whole lot of money.

Willing and able - a tale of two sectors

I was having a chat with a work colleague recently, and he was raving on about the concept of "willing and able" - or if you're talking about the public sector, "unwilling and unable". For the benefit of Cav, I will now ask my "brother", the management consultant, to take over this post. (For the rest of you, just ignore the fact that I now have two voices in my head arguing with each other).

After 20 years of working in the public and private sectors, I'd have to say that the biggest difference in performance between the two is how they treat the dullards. The private sector has them, but they tend to get rid of them on a regular basis and they also tend to not allow their numbers to build up to the point where they become a risk to the company. Any operation can afford a couple of idiots - but when the number of clowns gets so large that they take over the circus, then the place turns to shit. The public sector doesn't do any regular house cleaning of staff, so over time, the number of oxygen thieves builds up to a point where they reach a critical mass, and then the performance of the whole department goes down the toilet.

As far as high performers goes, I've met plenty in both the private and public sectors. In fact I'd go so far as to say that at the top level of performance, the proportion is about the same across both sectors. There are some very bright, very hard working people in the public sector - unfortunately, they are dragged down by some absolute boat anchors.

I'm not saying that the oxygen thieves and WOFTAMs are stupid (Waste of Flipping Time and Money) - in fact many of them are exceptionally bright. Their problem is generally that their priorities are not aligned with the aims of the department. They go off on tangents and do their own thing, and sometimes work like mad to sabotage the work of anyone that isn't following their tangent. Others are manic empire builders, or serial organisational reshufflers, or followers of every management fad that ever made it into paperback. Some are lazy as hell, or spend all their time running a business on the side. I have met a few genuinely thick people in my time, but they are pretty rare. The rest are smart people doing very stupid things.

This is where we get to our "willing and able" matrix. Anyone who has ever seen a BCG matrix will recognise where I stole this idea from. Your top class performers - the "A" crowd, are willing (motivated) and able (skilled, educated, experienced) to get he job done. The "B" performers are a bit less motivated or don't have the top level skills of the "A" crowd. Those in the "C" group are just getting by - doing enough to earn their pay, and not much else. The "D" group are both unmotivated and unskilled.
I worked for one government department that looked like the above - it was quite new, so it hadn't been around long enough to accumulate any barnacles on its hull - and the CEO was also ruthless enough to sack anyone that failed to perform. That was a once-off performance; I have never seen another public sector CEO with the balls to do that (and our CEO was a woman). That department was a great place to work - it really got things done, and morale was excellent.

I've also spent a bit of time in a department like the picture below - it had been around for a long time, been through endless restructures (which always resulted in the good performers leaving) and was completely hamstrung by a huge dead weight of under performing numpties. In fact a massive amount of organisational time was spent in trying to prevent the oxygen thieves from sabotaging and destroying the entire place. Sacking them was not an option, so management spent all its time putting out the fires that the WOFTAMs deliberately lit on a regular basis. They work very hard to create a crisis, then sit back and watch the fun start. It's how they got their kicks. I suspect a fair few of them were psychopaths. Working there was the pits.

Since leaving that sinking ship, I've worked for a wide array of private companies. I spent some time with an well known entrepreneurial company - the owner deliberately employs young, enthusiastic people, and the image of the company reflects that. Unfortunately, those young staff tend to be wet behind the ears, and are not as highly skilled as older, more experienced workers tend to be. They're as motivated as hell, but sometimes they don't have a clue what they're doing. It's an interesting strategy, and it would probably work really well if the youngsters were leavened with a few older, wiser grey heads - but that wouldn't suit the hip, young image of the company, so they are left to blunder on regardless. A fun place to work, but a bit tiring after a while.
Another mob I worked for went through a takeover and about 40% of the staff were made redundant. Unlike the public sector, the redundancies were involuntary. If there was one job and two candidates, the candidate who failed got the boot. They were paid well on their way out the door, but the process had a pretty shocking impact on those that survived. Essentially, they did just about nothing for 3 months except work on ensuring they got a job. Their regular work was put aside - if they failed to get the job, they wouldn't have to worry about catching up on it, would they? Many of them ended up with jobs that they didn't really like, which upset them no end. In short, a lot of willing and able people were turned into unwilling and able - skilled, but annoyed and thus underperforming.
A company that I recently worked for laid off 10% of its workforce when I was there. They did the same a few years ago when I did another job for them. (I'm sounding like the kiss of death, aren't I?) Management worked pretty hard to ensure that they got rid of the dead wood during that process. In some cases, they had to get rid of people who were quite good - it was simply a matter of letting the bottom performers go in each team. In other cases, a team was carrying quite a bit of dead wood, but they only got rid of the worst cases, leaving a few useless ones in place. Each team had to get rid of 10% across the board. It didn't matter if one team had 5% useless and another 15% - 10% had to go. I didn't hear anyone complain too loudly - the payouts were very good, and since the object was to save money, they got rid of the most expensive people first (the CEO and a couple of other top managers).

The public sector does it all arse about though by offering voluntary redundancy. A lot of people in the "A" and "B" groups take the money and run, knowing they will get a job elsewhere very quickly. Those in the "D" group hang on like grim death - and they always seem to survive every purge. The department is then faced with recruiting more top performers (always a difficult task) and getting them up to speed in a hurry.

I'm not saying that sacking lots of useless public servants tomorrow is the answer. One challenge of being a manager is working out why people are not performing, and then trying to turn that around - either through re-training, putting an unhappy person into a different job or even moving staff around (some people just can't stand sitting next to certain personality types). If you can't fix them, then it's time they looked for a job elsewhere - they're either in the wrong industry, or the wrong company within that industry. (eg, a boat builder might be unhappy with the boss at one boat building company, but perform much better with another boat builder - that's moving between companies within the same industry. Other boat builders might just be jack of building boats - it's time they tried another industry, like running a florist or a cafe).

Here's the number one difference between the public and private sectors; in the private sector, managers are generally held accountable for the performance of their teams. That means they either motivate or improve the skills of their staff, or they sack them. If they fail, the manager gets the sack. In the public sector, managers never have to worry about losing their jobs. They really aren't under any pressure to make tough decisions - like getting rid of people.