I have to admit, up to this point, my customer centric mindset has led me to believe that if there is one area of your business that you should not outsource, its your front line. These teams are the people interacting directly with your customers and delivering ‘moments of truth’, delight or misery to them every day. They are essentially your brand. But the fact is, many business units and organisations do outsource their internal and external front lines, generally for cost reduction purposes.
But as this interview with a Vodafone Spain executive demonstrates, it is possible to outsource your front line and deliver a great customer experience in line with your brand promise. And its no different to how you should align all your teams inside your organisation to deliver successful customer outcomes. So hold off on the ‘in-sourcing’ and ‘re-shoring’ and read this interview undertaken by McKinsey with Vodafone Spain’s, Carmen López-Suevos Hernández.
Vodafone Spain started with a situation that looked like this:
- almost fully outsourced (onshore & offshore)
- large number of vendors as each customer service function had outsourced individually
- often short term contracts
- ranked last for service levels among major Spanish mobile providers
- cost pressures made it hard to in-source
- first contact resolution rates were low
- call volumes were growing
- costs were actually increasing (despite the goal of outsourcing)
- vendors found it difficult to work with Vodafone
- focus on costs meant relationships were transactional with an emphasis on volumes and fixed prices
- vendors disliked the constant price pressures
- vendors with multiple contracts found it was like working with different companies
Vodafone realised it had to refocus on quality of service, not just cost and reevaluate vendor relationships and front line agents who serve their customers.
Vodafone always had goal to reduce overall cost to serve and reducing cost per call is one avenue to do this but when you squeeze vendors on price, they squeeze back by:
- reducing the quality of people,
- reducing the ratio of team members to team leaders,
- reducing the attention given to development & retention
Attrition increases while skills fall and the result is fewer calls resolved on first contact and up front cost benefits are essentially lost as call volumes rise.
The other way to reduce the overall cost to serve is to reduce volumes by solving more calls at first point of contact. This could allow a higher price per call which vendors could re-invest in further quality improvements while Vodafone still comes out in front.
Vodafone realised it needed to change a lot about how they operated, their mind-sets about the role of vendors, performance expectations of them and how they interacted with them. And while they indeed needed to reduce number of vendors and sites, what they really needed was a new operating model.
Fundamentally Vodafone wanted call centre agents whom could turn customers into brand advocates, not just handle calls.
After a 3 year transformation Vodafone Spain was now ranked first for customer satisfaction among major Spanish mobile providers and operating costs fell by double digits. Not a bad turnaround.
And for all the gory detail on how Vodafone did this, you can read how Vodafone did this here.
I recently came across an article by Josh Bersin, whom is linked to Deloitte, discussing the results of a worldwide Deloitte survey into organisational design and the changes afoot in companies worldwide.
The conclusion reached by the report “is that today’s digital world of work has shaken the foundation of organizational structure, shifting from the traditional functional hierarchy to one we call a “network of teams.” This new model of work is forcing us to change job roles and job descriptions; rethink careers and internal mobility; emphasize skills and learning as keys to performance; redesign how we set goals and reward people; and change the role of leaders.”
Surprisingly, at least to me, was that only 38% of companies claim to be organised along functional lines. Many respondents believe they are already working in a “network of teams” – at least from a day-to-day perspective – but I think some of those have considered the informal networks that inevitably exist across functional domains to get things done, as evidence that they are working in a team-based model as opposed to a functional one.
Of course working in a formal network of teams where functional silos no longer exist brings with it its own challenges. As articulated by Bersin, the problem becomes “how we coordinate and align these teams, how we get them to share information and work together, and how we move people and reward people in a company that no longer promotes “upward mobility” and “power by position” in leadership.”
Bersin believes there are four key ingredients to success for a ‘network of teams’ model:
- “Shared values and culture: As people operate in geographically dispersed teams which are closer to customers, they need guidelines and value systems to help them decide what to do, how to make decisions, and what is acceptable behavior.“
- “Transparent goals and projects: People operating in teams and small groups have to work with other teams, and they can’t do this unless goals are clear, overall financial objectives are well communicated, and people know what other people are working on.“
- “Feedback and a free flow of information: As teams operate and customers interact with the company, we must share information about what’s working, what isn’t working, what’s selling, and what problems we have to address. While local management and team leadership (i.e. a plant manager or sales leader) should take immediate responsibility for errors, others need to know what problems are taking place, so they can respond to support the team. This takes place today in digital information centers, analytics dashboards, and free flowing feedback systems that have replaced annual engagement surveys and performance reviews.“
- “People are rewarded for skills and contribution, not position: Finally, the network of teams rewards people for their contribution, not their “position.”The days of “positional leadership” are going away (i.e. “I’m the boss so you do what I say.”) to be replaced by growth and career progression based on your skills, alignment with values, followership, and contribution to the company as a whole.“
Organisations based on purely functional lines are being replaced. So too are those early attempts to break down those silos with “matrix organisations” that were essentially a ‘paper over’ or band-aid and not an adequate response to the problem, Bersin explains…
“Many of us remember the old fashioned “matrix organizations” which were popular in the 1980s. Well today the “matrix” makes a company look more like a series of Hollywood movies, where people take their skills and functional expertise, they work on a “project” or “team” or “program” to get work done, and as they learn and the company adapts, they move into another team over time.”
As Bersin articulates, its not as though executive positions disappear – although no doubt many middle management ones would – but their roles are also changing.
“While there are still senior executives in the company, leadership now becomes a “team sport,” where leaders must inspire and align the team, but also be good at connecting teams together and sharing information.”
You can read the full blog post here, including links to the research.
Want an example of a “network of teams” model already implemented in a corporate environment? If so, then check out this interview with two executives – one current, one former – from ING banking group in the Netherlands, on its transformation to an ‘agile’ way of working.
In a previous post, HR Departments Have To Change, I highlighted an article on LinkedIn encouraging companies to follow in AirBnB’s footsteps and replace traditional HR with a capability focused on the employee experience.
Now a HBR article, Design Your Employee Experience As Thoughtfully As You Design Your Customer Experience, authored by Denise Lee Yohn, argues that companies already know how to improve their employee experience. They simply need to use the same tools and techniques they apply to customer experience and apply them to their HR processes.
I’m not sure I agree with that view as I know first hand there are still many large companies that are not customer centric – they may pay lip service but in reality they are not – and have no immediate plans to become customer centric.
But I do agree that many of the tools and techniques are transferable should they learn them and apply them. These include:
- applying needs-based segmentation to your employee base rather than simple and, generally irrelevant, demographic factors;
- understanding the employee journey through the use of journey mapping while recognising that employee journeys, just like customer journeys, are seldom linear;
The best customer experiences bring the company’s distinctive brand values and attributes to life, and the same is true of employee experiences.
Read the full article here.
Just as businesses start focusing on being ‘customer centric’ and developing a ‘customer experience’ that will ensure customers want to repeatedly do business with them, there are many arguing that to be ‘customer centric’, is really to be ‘human centric’ and the same can also be applied to staff.
Some companies, like Airbnb, are redefining the role of the HR department to be broader and replacing the senior most HR role with a ‘Chief Employee Experience Officer’ role.
Mark Levy’s new role of Chief Employee Experience Officer at Airbnb combines traditional HR functions of recruiting and talent development with marketing, real estate, facilities, social responsibility, and communications.
What is clear is that this move quite visibly positions the employee experience as critical to the business, not HR. This is absolutely right, in my view, and gives practitioners the confidence and belief to know that HR is no longer a support function within the business, because the employee experience, to a large extent, is the business.
…how easy would it be for you to follow Airbnb and co in creating a function dedicated to the employee experience that brings together multiple functions (or silos if they are starting to hinder collective progress), which all play a major organisational role and get them all aligned and driving your business forward?