Chickens Come Home to Roost

About a year ago, I wrote a blog that predicted what would happen as a result of a specific (unnamed) corporation’s outsourcing strategy. http://habaconsulting.blogspot.com/2010/10/no-crystal-ball-required.html

It’s time to say, “I told you so.” I do not relish being right in this circumstance, as many hard-working, loyal professionals lost their jobs to overseas workers. But the chickens are coming home to roost, and I must say that I don’t have any sympathy for the big guys that have been calling the shots, who are now scrambling for a solution.

Here’s the update on the situation:

MY PREDICTION: “Customer satisfaction will erode with the quality of support provided by the call center(s).”
WHAT HAS HAPPENED: According to insiders, call response times have increased from seconds to many minutes. Once someone answers the phone, the interaction is frustrating and solutions are elusive. Customers are angry.

MY PREDICTION: “Dissatisfaction with support services will foment into serious complaints to senior business management outside the IT/support arena.”
WHAT HAS HAPPENED: Business owners and managers have been complaining vociferously to the people in power in the business, demanding that something be done to improve the quality of support.

MY PREDICTION: “The relationship between IT and the rest of the company will deteriorate.”
WHAT HAS HAPPENED: Although it was the executives on the business side who made the decision to outsource, the CIO entrusted with implementing the strategy has become the whipping boy for the failure. If the CIO is in bad graces, his organization suffers as well.

MY PREDICTION: “At least some support functions will be brought back in-house.”
WHAT HAS HAPPENED: This is where it gets really interesting. The outsourcing contract is being revised. The vendor has sent letters out to support employees who were laid off early this year to solicit their application to be hired (by the vendor, not the corporation) to establish a support escalation organization.

Where this all goes long term remains to be seen. Once in place, will the escalation group staffed by former employees of the corporation end up handling all the calls, making the outsourced first contact group redundant? How many people, burned once by the corporation’s layoffs, will accept a job with the vendor? Will the change in direction and additional services placate the business customers? Will the CIO’s career with the corporation survive?

This would make a really interesting outsourcing case study. I’m staying tuned in.

No Crystal Ball Required

I’ve learned a thing or two in the course of a long corporate career and survived a handful of business cycles. Thirty-plus years of experience sometimes outweighs the value of a bright, shiny Ivy-League MBA when it comes to making common sense decisions. It's not all about the balance sheet and short term profits, friends and colleagues.

This fortune-teller knows that no crystal ball is required to predict exactly what is going to happen as a result of recent misguided business decisions being made by a real corporation that I prefer to leave unidentified. I can tell you what is going to happen and how. Alas, it’s a curse to be able to see the future…

THE SITUATION
Several years ago, an infamous private equity firm (“The Firm”) acquired a renowned publicly-traded company (“The Company”), and took it private. Based on The Firm’s track record and M.O., it was understood that The Company would be reorganized, downsized, squeezed mercilessly for profit, and either sold or re-introduced into the market as a whole, or in surgically-fragmented parts. The big guys stand to make mega-millions this way, although it may take a little longer than planned considering that The Firm paid top dollar during financial heydays.

THE DECISIONS
Select service functions, managed successfully within The Company for years, are now seen as undesirable corporate expense and are being outsourced. It looks better in The Company’s financials to have fewer “head count” and lower labor-related expense (i.e. pesky costs like employee health care and payroll taxes). Scores of jobs with The Company were eliminated and large contracts with external vendors were executed. Most notably, several IT support functions were outsourced to vendors, with current middle-management tasked with implementing the decision dictated by senior executives.

MY PREDICTION

1. Customer satisfaction will erode with the quality of support provided by the call center(s). The vendors will resist providing metrics that facilitate apples to apples performance comparisons to obfuscate that fact, but the truth will come out.
2. Call volume will drop, because customers will begin to realize that they won’t get the help they need if they call. Why waste time trying? Vendors and senior IT management will declare the reduction in call volume a sign of success. When coupled with the reduction in cost, they will consider themselves geniuses for their outsourcing decision.
3. Dissatisfaction with support services will foment into serious complaints to senior business management outside the IT/support arena. When challenged, senior IT management will respond by torturing the middle management responsible for implementing their outsourcing strategy, demanding that they “Make it work”.
4. When flogging middle-management fails to improve the situation, other support functions will pop up within the business, outside of IT, to compensate for the lack of effective support provided by IT. Support expenses will rise, but they will be hidden by their distribution within the business, and by creative naming of the new business functions.
5. The relationship between IT and the rest of the company will deteriorate. IT will revert to its natural status of corporate Whipping Boy.
6. Finally and eventually, at least some support functions will be brought back in-house. Having dismantled a mature, successful organization, senior IT management will have to find someone willing to build a new one from scratch (an expensive undertaking). Seriously now, did that save any money? (Of course, “The Firm” won’t care if they are able to stall until The Company is sold.)

OUT ON A LIMB
One last thought that is more a risk management consideration than a prediction: Support costs are being reduced and systems development has all but halted. Customers are not receiving the product enhancements to which they have become accustomed and are entitled – to which a substantial portion of their maintenance fees has historically been allocated. The Company’s maintenance expenses are substantially lower. Support was never defined as a revenue center. Are the fees charged to customers being reduced accordingly? Savvy customers could unite and demand an accounting and/or file a class-action lawsuit. I’m just sayin’…

Customer Service Issues? Look to Management First

If you have systemic issues with your customer service organization, it may very well stink from the head (just like a dead fish). You need to assess some of the basics controlled by management.

IS THERE A WELL-DEFINED SERVICE PHILOSOPHY? Management should be able to articulate a mission, and how they intend to go about fulfilling it. Leaders should be passionate about their service philosophy. If they don’t have one, then their team doesn’t have a guiding force.

ARE YOU HIRING THE RIGHT PEOPLE? Check your interviewing and hiring practices. This is particularly important if you are receiving complaints from your customers about “attitude”. Some people may just not be cut out for a customer service role, or they may require more training and coaching.

HAVE PEOPLE BEEN PUT IN THE POSITIONS IN WHICH THEY WILL BE MOST EFFECTIVE? If necessary, adjust your jobs and procedures to make the best use of people’s skills. For example, you could have someone who is technically able, but does not communicate well with customers. You may be able to adjust their role to better take advantage of their abilities.

ARE GOALS AND MEASURES IN PLACE? You must have benchmarks and measures, and know how you want your organization and people to perform. How fast do you answer the phone? Is it fast enough? How many calls/chats/whatever should one rep be able to handle in a shift? How satisfied are your customers? Everyone on the team should be aware of the goals and measures.

DOES MANAGEMENT EMPOWER THEIR TEAM TO DO WHAT’S RIGHT? If people feel like their hands are tied, the customer is probably going to hear about it. When the service team knows what the philosophy is – give them the freedom to take care of the customer within those guidelines.

IS YOUR MANAGEMENT TEAM “HANDS-ON” AND OPEN TO SUGGESTIONS AND CHANGE? Does your manager spend a lot of time in intra-departmental meetings, on conference calls, sending CYA emails, having lunch with vendors…? Be sure they are truly connected with the day-to-day operation and know what’s going on. Who is really running the organization?

DOES THE TEAM HAVE THE TOOLS THEY NEED? Management is responsible for ensuring that their department has the tools they need to do their jobs effectively. This may be technology, communication, information, training and/or education.

DO YOU SEE EVIDENCE OF POSITIVE REINFORCEMENT? The best way to reinforce the service philosophy and make continued progress toward goals is to recognize and reward team members when their performance is “spot on”. Recognition and reward doesn’t have to cost a lot of money. It can be as simple as a note, a thank you, or a mention in a team meeting. Management should be creative about positive reinforcement and change up their techniques, in order to remain effective.

Haropulos Bailey Consulting is experienced in establishing and operating world class Customer Service and Support centers. If you are interested in obtaining consulting services in this discipline, email us at habaconsulting@comcast.net.