Already a Bloomberg.com user?
Sign in with the same account.
Coaxing commitment from vendors and others contractors takes serious effort but pays off, says John Baldoni
Posted on Leadership at Work: June 29, 2009 12:27 PM
The other day a good friend of mine called to express the frustration he was feeling about working with his current IT vendor. My friend is in the pre-launch phase of an e-commerce start up and he was discouraged with the lack of progress the vendor is making. He was tempted to pull the plug on the project and award it to someone else. Entrepreneurs feeling frustrated with subcontractor work is nothing new. I know of another start-up executive who is expressing similar feelings about a manufacturing vendor.
While the problems entrepreneurs experience with vendors are different, there is a commonality. Many start-ups, and mature businesses too, are working with vendors who do not consider themselves to be collaborators; they are mere contractors. Collaborators feel ownership for their work; contractors just want to get the job done. The latter is not a problem for small projects, but when the contracted project is integral to the future of the enterprise, the contractor mentality will not do; the big project demands commitment.
Coaxing commitment from a contractor is not a straightforward proposition. The contractor is not part of your organization; you lack line authority over their employees. However, they are part of what many of us call the virtual organization and need to be treated as contributors. Otherwise, you are managing by checkbook rather than by commitment. Stirring commitment in any employee is a challenge but doing it for people who do not report or work for you is doubly difficult. But not impossible! Here are some suggestions for addressing the human equation in your supply chain.
Get people on board. When the contracted project is important, you want your employees to understand its impact on the organization. The same rule applies to your vendors. Communicate the significance of the project to the vendor principals, that is, those responsible for managing your project. Talk about what you hope to accomplish. Get their input into how to do it efficiently. Ask them how they want to be managed and how you can be a good client company for them. Dialogue lays the foundation for establishing trust.
Communicate for knowledge. Vendors need to keep their clients informed of progress. Establish regular communication points. For example, ask for an update via email every couple of days and a phone call once per week. Make a habit of meeting face to face occasionally. Clients might even want to spring for lunch or dinner. Doing so opens the door to open communication. Make it clear that you will not tolerate the withholding of bad news, but at the same time earn the trust of your supplier so they give you an honest appraisal of work to date.
Insist on accountability. Once the timeline is established, hold people to it. Correlate payments to project milestones. Easier said than done since many projects involving technical expertise are subject to slippage, not because the vendor did anything wrong but because the scope of the project changed. So a savvy manager will work with the vendor to incorporate the new parameters and pay them for work done to date and write a change order for new work. Open communication is essential; it is fundamental to keeping the project rolling forward.
Sometimes it does become necessary to seek another vendor. The current vendor may not have the capability or the capacity to deliver on the agreed specifications. And so you must part ways. While this may incur some cost, it is not as difficult (at least emotionally) as terminating an employee. You are terminating a contract, not a person.
Working collaboratively with your vendor is becoming more essential in our downsized economy. Core competencies are retained but everything else is subject to outsourcing. This creates great opportunities based on excellence. That is, the company and vendor both focus on what each does best. Suppliers are free to hawk their services to a broader customer base and in the process grow their businesses. Paying attention the human equation in the supply chain is vital; ignoring it will only lead to missed deadlines, overblown budgets, and missed market opportunities.