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Outsourcing's Marriage Counselor

More and more companies are hiring a new kind of chief to keep an outsourcing relationship in harmony.
Michelle Gabrielle, | US
August 1, 2001

"Outsourcing is similar to a marriage."

Time and time again, you will hear this analogy used by experts when they describe outsourcing relationships.

In other words, hard work and attention to the little things are critical to a successful arrangement. It's not that smooth-as-silk road to riches.

It also has it warts, conflicts and tension. And misunderstandings.

As a result, a growing number of companies are hiring a chief resource officer (CRO) to manage this sensitive relationship. Whereas in a marriage, a counselor may be consulted when a problem arises, in an outsourcing relationship a company would rely on its CRO to prevent a problem from erupting altogether.

If you aren't familiar with the CRO title or position, you're not alone. According to John Challenger, CEO of Chicago-based outplacement firm Challenger, Gray and Christmas, creating the position of CRO in a company is relatively new.

Still, "as more and more companies look to outsource a wide range of their departments and/or division functions," says Challenger, "it appears more necessary for them to hire someone who understands how the outsourcing partnership will work — someone who will work to apply consistent values and know-how to keep those relationships strong."

"The CRO, when empowered as the focal point of all outsourcing strategy, implementation and relationship management, can ensure that all outsourcing relationships live up to expectations," says Frank J. Casale, CEO of The Outsourcing Institute in Westbury, N.Y.

In many cases, departmental managers share the responsibilities of managing the outsourcing relationships. However, sometimes there are too many cooks in the kitchen, says Challenger, especially when more than one function of the company is being outsourced.

Creating a role within the company that will specifically serve to monitor and mediate the outsourcing relationship enables both the buyer (the company) and the supplier (the vendor) to focus on their chief responsibilities and job functions, with the comfort of knowing that the line of communication is not only open but being closely monitored.

In addition, if a problem does arise within the marriage, it has a better chance at being resolved in a civil manner if you have one person within your company whose sole responsibility is to keep the spark alive. Otherwise, you can wind up with a messy divorce.

Typically, a CRO reports to either the CEO or CFO directly. However, since many outsourcing arrangements are made for financial reasons, the CRO is more likely to report to the CFO.

The CRO position is not an easy one to fill, however, since it is somewhat of a new concept. Therefore, you cannot easily advertise for one. If you can find someone within your organization who has the critical skills to perform this function, then you are one step ahead. The person is already familiar with your company's operations. Otherwise, you can search for a CRO as you would for other top executive positions.

So, what kind of person qualifies for a CRO? According to Casale, a CRO should possess skills in the following:

"The potential is enormous for the CRO — as a top-level career executive — to change the way outsourcing is bought and sold," says Casale. "And the CRO can help to enable organizational transformation, which results in increased competitiveness, globalization and shareholder value."