Better Benchmarking: Getting Good at Governance

People & Governance: are the correct governance structures in place, and do the key people have the right attitudes and capabilities?

This is the final blog in a series of seven brief blogs on the subject of Value Assurance – best defined as an effective route to maximising value in a long term outsourcing agreement, through aligning service expectations, perceptions and realities. A Value Assurance exercise typically involves a review of both service provider and client in equal measure. It takes a more holistic view than benchmarking alone and includes and assesses 6 ‘Ps’. The sixth of which, ‘People & Governance’, is discussed in this blog.

If you’re currently managing an outsourcing relationship, analysing the ‘6P’ areas of a relationship is an excellent way to move the performance of the contract towards an optimal state – typically, but not always, this means from a transactional to a true partnership relationship. Organisations I have advised have found the process beneficial regardless of whether they’re at the beginning, middle or nearing the end of a contract.

‘Governance’

It’s important to invest the time in getting governance right. Your governance organisation and that of the service provider should have the right design and staffing for the relationship and service that’s being delivered – this then needs to be clearly documented and communicated, with decision making responsibility clearly identified.

When governance is good, your team will understand their role and responsibilities and that of their colleagues and counterparts. Governance structures should be efficient and effective at managing and controlling the delivery of the services and reflect the contractual governance arrangements. Finally, decision making should be supported by timely and accurate management information based on regular reporting.                                     

To assess the effectiveness of ‘People & Governance’ in your contract, consider:

Governance adherence to contract: Does your actual governance process follow the contractual governance framework?

Governance meetings: Are the governance meetings held?  Are they useful? Are the right attendees invited and are the meetings recorded?

Governance structure: Is the governance structure efficient and effective at managing and controlling the delivery of the services?

Governance purpose: Are the guiding principles of the purpose of your governance clearly documented? Is there evidence that there is strong operational and strategic alignment between your organisation and the service provider?

Decision making: Is there a clear understanding of how decisions are made and which role is responsible for making decisions?  Are decisions taken rapidly and without undue hesitation?

Organisation objectives: Does your organisation and its staff have clear objectives that are aligned to the success of the contract? Is staff compensation aligned to the success of the contract and is service provider staff compensation also aligned to the success of the contract?

Organisation staffing: Is your governance organisation staffed at the appropriate size and by people with appropriate skills and experience?

Governance tools: Are any tools used to support the effectiveness and efficiency of the governance process?

Organisation design and structure: Is your governance organisation appropriately designed and documented with detailed role profiles and clear accountability?  Is the organisation design communicated and understood by the organisation, the wider client organisation and the supplier organisation?

This concludes my series of blogs on the subject of Value Assurance. I hope it has given you food for thought about the many elements of an outsourcing relationship which can be improved, in partnership with your service provider, to optimise the services being delivered.

As I mentioned in my first blog on this subject, most importantly, for a value assurance exercise to be effective, it needs to be jointly owned by the service provider and client organisation. There also needs to be an appreciation of the fact that both parties typically need to make changes. But the reward for this effort is to get a contract back on track where there have been issues and optimise service delivery in a sustainable way.