All Things To All People

By March 24, 2014January 3rd, 2022Archive

Why Shared Services And Outsourcing Stakeholder Management Fails

Everyone wants to be seen as an individual, stakeholders included

By Deborah Kops

Ask any leader trying to transform his organization through shared services and outsourcing who his stakeholders are, and he’ll come up with the standard list—the business units, executive management and perhaps even his company’s external customers. For good measure, he might throw in the retained team and suppliers. But are all stakeholders in a shared services or outsourcing model created equal? How do you know who really matters? Are we overdoing the stakeholder bit?

I am the very last person to say stakeholders don’t matter. In fact, I think in the euphoria of moving to shared services or outsourcing models, we focus too much on the deal or the business case, taking the attitude “stakeholders be damned.” It’s due to what I regard as enthusiasm entering into the “act” of sourcing, rather than the basic reason we’re doing all this—the “fact” of sourcing—delivering value to stakeholders.

In many sourcing endeavors, stakeholders are an afterthought or a footnote, obviously a customer but more often a source of noise that implementation just needs to tamp down.

Few of our stakeholders feed into a sourcing strategy, becoming the object of communications after the strategy is developed, a sort of do as I say ex post facto — outside of the enterprise– are either rarely front and center in any strategy, or they are relegated to becoming the object of communications.

Part of the problem sourcing leaders have is the tendency to paint stakeholders as one monolithic mass to be moved by the concept of sourcing. We refer to Stakeholders with a capital S—like a homogeneous voting block that have to handled the same way.

But here’s the secret: nothing could be further from the truth.

What are the mistakes we make when deal with the all-important sourcing stakeholder?

  • Believing everyone is a stakeholder. We tend to classify everyone affected by the act of sourcing as a stakeholder. Yet just because someone is on the receiving end of a set of actions doesn’t mean that they have skin in the game, or an opinion that matters. As a result, we sourcing folk try to manage too many constituencies, often with the same level of intensity. The best approach: more may be less.
  • Thinking that all stakeholders have a voice. Even if a stakeholder is identified as such, it doesn’t mean that they all have a voice. Sometimes it’s critical to listen to a stakeholder intently, and act accordingly, while at other times, just gauging the stakeholder’s temperature—and moving on– is sufficient. Manage stakeholders in the communication version of a RACI is a good bet.
  • Forgetting that stakeholder balance of power changes over time. Stakeholder opinions have a lifecycle; some stakeholders influence at the beginning of a sourcing strategy, while others have a voice during transition, and still others matter during business as usual. And taking it a step further, there is always a class of stakeholders wielding influence that is disproportionate to their involvement.

How do you sort through the stakeholder classes? 

By putting each class—or individual—through a series of screens, it’s easy to identify the folk who really matter.

Ask yourself five questions:

  1. Does the stakeholder have a voice in deciding what you are delivering? We all tend to put our two cents into any decision because we think it makes us look smart and powerful. But often the “stakeholders” who want to opine on a service or a sourcing structure really don’t have a voice. Take, for example, the CFO whose finance operation won’t be in scope for several years, if ever. Right now s/he doesn’t have much purchase in the sourcing decision, even though he might have a surfeit of opinions.
  2. Is there an implication on your operation if the stakeholder is not aligned? If the response is yes, it means that sourcing performance is dependent upon lining up with the stakeholder. Both sourcing entity and stakeholder have common needs and success factors. However, if your stakeholder is way out in left field, or really has no say in the matter, strike them off the list.
  3. Do you know what you want from the stakeholder? If you want nothing tangible from the stakeholder, other than a peaceful life, chances are that he/she/they are not a stakeholder. The relationship is not key to sourcing success without a stream of benefits-both ways.
  4. Can you deliver without the stakeholder?  If the stakeholder can be replaced easily, they are not a stakeholder per se. Take for example a vendor who provides a commodity service; if the contract is easy to replace, he doesn’t fit in a key supplier cum stakeholder category.
  5. Is the relationship dynamic? If all you are asking for is a once-and-done rubber stamp seal of approval, chances are that the stakeholder…isn’t. But if you are depending upon the stakeholder for your scale and scope, and it’s certain to change over time, it is a different story.

Bottom line, it’s critical to have a bit of discernment when dealing with stakeholders. Not all of them are created equal.