Outsourcing: ‘Doing It Right’ Provides Resources, Capabilities and Focus
By Jonathan Howe and Ken Monroe

Associations are under growing pressure to identify new resources that can help offset the current pressure on dues revenue and to align programs and services to be more responsive to changing member needs. These issues have lead to the growing trend to outsource activities or functions—the process of opting for an external provider of a product or service. Every department, function, service and product of the organization should be
open to scrutiny as a candidate for possible outsourcing. Outsourcing offers three important benefits. It allows you to:

• Focus staff and financial resources on your core competencies (i.e., areas that provide the greatest competitive advantage to the association and value to your members);

• Achieve greater effectiveness and performance in your operations than you might be able to produce on your own (e.g., access to the latest information technology tools); and

• Realize improved efficiencies and cost savings. While some associations have experienced problems with outsourcing—including employees who are less member oriented, longer response times, and loss of control—we believe that 90 percent of all problems can be avoided by ‘doing it right.’ That includes thinking through the strategic issues of what and how to outsource. It also includes implementing a number of practical issues and addressing legal concerns in a correct manner—including such matters as identifying expectations, building accountability and establishing performance measures in the contract.

BEGIN WITH A STRATEGIC OUTSOURCING PLAN
Outsourcing is of such great importance to an organization (i.e., it enables you to focus on your core competencies and strategic business goals) that it should be identified as a strategic initiative in your strategic plan. The strategic plan then becomes the driver of what will be reviewed for possible outsourcing, and the umbrella under which the organization creates a separate ‘outsourcing strategic plan.’

An outsourcing plan explains how outsourcing will help the organization achieve its vision, goals and strategies. It includes a careful assessment of each function to be outsourced and explains how its outsourcing will affect the organization. Every outsourcing activity should be taken directly from the strategic outsourcing plan.

Consider all activities—core and non-core. While outsourcing has typically been thought of as opting for an external provider of a product or service that is non-core or not mission critical, an increasing number of organizations have successfully outsourced activities that are also vital to the operation of their core functions. The outsourcing of core activities can be considered under certain conditions, including when you can find a provider that:

• Has more experience or different skill sets than you do;

• Can bring economies of scale that you cannot achieve; and

• Has already made capital investments that you have not, and that would save you resources that you could re-direct to other higher member-value areas.

Freeing-up the “ultimate resource.” One benefit of outsourcing as many functions (core and non-core)
as possible is that it frees the CEO/executive director from many day-to-day operations and allows him/her
to focus on the mission critical/high-member value functions of the association, like advocacy or
professional development.

Co-sourcing as an option. If you’re reluctant to completely outsource a core activity, you might consider it
as a candidate for co-sourcing. This can be especially effective when you have a need for special expertise,
skill sets or knowledge to supplement your own. Good candidates for co-sourcing include lobbying, public relations, legal services and information technology.

Join the trend. If you’re already outsourcing, you’re in good company. Recent data suggests that 90 percent of all associations are outsourcing at least some of their functions/activities. If you’re not outsourcing yet, chances are you’re missing the trend created by outsourcing toward improved organization focus, effectiveness and efficiency.

FOLLOW-THROUGH FOR SUCCESS
Outsourcing can’t take place in a vacuum within your association.

First, as discussed earlier, care must be taken to make sure any outsourcing you undertake reflects and is driven by your strategic plan and is a good fit with your organization goals and objectives. This involves writing a separate ‘outsourcing strategic plan.’

Second, you have to select the right service provider or partner. In addition to the obvious questions concerning each candidate’s commitment to quality, price, references, and the scope of their resources, a checklist of outsourcing considerations should be developed to consider the relationship items discussed in the following paragraph.

Third, effort has to be made to create a relationship with the outsourcing partner—one based on compatibility,
good fit/chemistry, agreed upon expectations and excellent communication. Both parties have to have the same expectations for and understand what will constitute success in the relationship; have a clear agreement on why the outsourcing is being done; and a commitment to the all important transition and implementation phases of the project.

Fourth, flexible contract terms, including price, schedule, performance targets, etc. need to be negotiated and agreed upon, with the help of an attorney with outsourcing experience and a proven project manager. See Figure 2.

SUMMARY
Many associations are turning to outsourcing as a means of focusing their staff and financial resources
on core competencies, achieving greater effectiveness and performance in operations and realizing
improved efficiencies. It’s critical, however, that outsourcing be conducted in a proactive manner,
based on the needs expressed in the association’s strategic plan and not in response to a current problem.
Rigorous methodologies must also be employed to make sure the correct vendor is selected for the
project and that a relationship and contract are developed that help assure project success.

Jonathan Howe is president of Howe & Hutton, Ltd. Ken Monroe is president and CEO of Bostrom Corporation.

FOOTNOTE
* Andrew S. Lang, “The Art of Outsourcing” (Association Management, Washington, DC, February 2000).