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Few people who create their own company are quite as excited about maintaining their accounting books or updating their HR policies as they are about the product or service that inspired them to start a new venture. In parallel, “fractional” services are becoming more common, both overseas and in the United States. As a result, an increasing number of small and medium-sized companies have outsourced a variety of functions, including IT, Marketing, Legal, HR, Sales, and Finance. Bringing in experts allows the founder and core team to focus on the elements of their business that inspire the most passion and differentiate the product or service. But leveraging these third party services can also introduce collaboration challenges. Building trust and accountability across organizational boundaries can be difficult enough within a company and only becomes more complicated when different departments are actually different businesses altogether. Fortunately, as small businesses in their own right, fractional services have a vested interest in the success of their clients. Many strategies are available to leaders who wish to outsource execution while maintaining a unified vision, strategy, and close collaboration across business functions.
When you stop and consider the fact that a third party company has their own bottom line to worry about, the notion of handing over critical business functions to a potentially distracted vendor may seem daunting. Leaders might be skeptical that trusting crucial elements of a growing company to another business, who may be struggling with their own growth challenges, will really be worthwhile but the rewards can be tremendous. Consider a therapist operating in private practice. The years of schooling and hours of practical experience required to become certified as a therapist (in most states) create qualified and effective mental healthcare providers. Yet little, if any, of this training focuses on effective billing practices or navigating the complexities of insurance codes and even less focuses on expense planning to minimize tax burdens. One of my dearest friends is a therapist whose practice saw a huge boost just from the simple decision to outsource billing and accounting. The work was suddenly being done more effectively with less mental drain on her, allowing her to feel comfortable scaling the practice. Replacing her previously billing-focused hours with patient care more than covered the costs of outsourced accounting, making the decision both a fiscal and emotional win.
The goals and needs of a solo-practitioner are quite straightforward, allowing the outsourced service providers to slot neatly into any gaps. More complex organizations, however, may require more active leadership to make outsourcing effective. First and foremost, the leadership of an organization must recognize the value of outsourcing specific functions. Next, the leaders need to be able to trust that the fractional resources have similar cultural values and will address the company’s goals and health with the same passion and dedication of a full time employee. Philosophically, a service provider who allows their clients to flounder will soon find themselves out of business. More practically, however, part of the vetting process for any “new hire”, whether an individual or an entire organization, should be a reference check. There is no need to take a business development representative’s word on how dedicated a provider may be to your business’ needs when you can ask their other clients. Certainly, quality of service should also be a topic of conversation but many providers will be technically proficient. The vetting process should focus on finding a partner who holds the same values you do and plans to work closely with your team over time to maintain a shared vision of success.
Beyond the basic concern of aligning motivations across leadership roles, building trust and personal accountability across teams are additional challenges that must be overcome to successfully integrate an outsourced service into an existing business. Unless different departments learn to trust each other, the organization’s growth will be stymied regardless of any outsourcing. Information hoarding and miscommunications can run rampant, particularly in cases where the functions need to be closely aligned such as sales and marketing. Consider the specialty product distributor that experienced exponential growth for the first five years of business. As the growth curve slowed, the owner looked to boost her sales through targeted marketing efforts but recognized that she did not have the expertise in house to do this well. When she met a marketing professional at a networking event and decided to outsource her marketing efforts, she initially experienced startup challenges between the sales and marketing teams. She did not realize that her sales team, who considered themselves sales and marketing, felt threatened by this new relationship. Their fear caused them to resist the research of their new partner that indicated an opportunity for sales in an emerging channel, nearly resulting in the company missing a significant growth opportunity.
Having made the decision to outsource, the key to a successful partnership is making the leap to including your partners as full members of the team. To build trust and accountability, first build a culture that treats all members of the team as true partners, regardless of who will be generating their W2. This means trusting that your outsourced service partner can be included in your strategy discussions without fear that they will be sharing your “secret sauce” with their other clients. Such trust is demonstrated with open communication and when some contributors are only on site certain days, for example, this means carefully planning sessions and announcements to encourage further integration across the internal and external teams. Many of the same best practices for unifying collocated and remote employees and teams are equally valuable when combining in-house and outsourced talent. There are responsibilities on both ends of the equation. External partners who are clear on the scope of their work will more easily avoid the appearance of “not pulling their weight”. Internal teams must include their external partners in plans, even when those partners are physically absent. For those companies who embrace a workforce composed of internal and external partners, and choose those partners based on a proven track record of accountability and loyalty, the culture created will help to smooth the trust and accountability issues. Coming back to our specialty product distributor, she established shared goals and recurring strategy sessions, which brought the internal sales and external marketing teams together before they lost the emerging opportunity to the competition.
When building or scaling a company, relying on outsourced teams with additional resources already on hand to take over foundational business functions can be a game changer. Enabling your team to focus on the “secret sauce” that makes your product or service unique without having to make the step-function changes inherent to hiring full time employees in every department provides an invaluable degree of freedom. Finding experts whose skills supplement the core leadership team can reduce mental fatigue, leaving more energy for core business growth while likely producing better results. But choosing the right partners is key to making this model a blessing rather than a curse. When outsourced resources understand that their clients’ success is completely aligned with their own survival, collaboration and shared visions will be more straightforward to develop at the leadership level. Within the employee ranks, team building is just as fundamental across in house and outsourced employees as cross departmental efforts would be for a monolithic company. Basic leadership skills and best practices are the solution regardless of whether the decision is made to build in house or lean on the experts. Bringing in 3rd parties takes their functional execution from a company’s shoulders but leadership is the one function that should never be outsourced.