The Emerging Partnership: Contractors and In-House Departments

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CIDM

August 2000


The Emerging Partnership: Contractors and In-House Departments


CIDMIconNewsletter Katherine Brennan Murphy, Best Practices Editor

Information-development departments routinely use external contractors, independent consultants, and contract agencies to extend and, sometimes, replace the resources of their internal departments. Because of the extensive downsizing and outsourcing that began in the late 1980s, contractors have come to be viewed as being anything from interlopers to saviors.

When contractors were viewed as interlopers, it was because the full-time staff feared that their jobs would be lost or were envious that the contractor worked on the high-profile, new-technology projects while they were “stuck” with maintaining the old ones. As it happened, these career-related fears often became reality when outsourcing or layoffs occurred. However, effective information-development department managers can mitigate these fears through honest communication about the goals that the department is trying to meet through the use of contract help.

At the other end of the continuum, when they viewed contract help as saviors, many companies found that they lost control of their information projects when turning them over to a contract agency. These problems increased when the contracts were written by managers with little knowledge about information-development processes or products (for example, engineering managers more concerned with budget and schedule than quality or usability). It is very difficult to give the contract agency the necessary information about audience, style, review cycles, and so on if you have never been involved in developing a professional information product. Many organizations found that they had information products that could not be revised, that were produced on tools that no internal person had access to, that didn’t meet end user needs, and that the time they spent bringing contract employees up to speed had to be redone with each new contract because they did not have continuity of personnel.

As this first article discusses, the best contract agencies and independent contractors work with their clients to mitigate these issues; they believe educating clients is a key responsibility. This two-part series looks at the contractor/in-house department relationships from both sides through interviews with long-time practitioners. We hope that these interviews spark extensive debate at our conferences and on the Listserv and serve as a foundation for describing contractor and in-house manager best practices.

Roles Contractors Play

In his book, Flawless Consulting: A Guide to Getting Your Expertise Used, Peter Block describes the three basic roles that contractors-internal or external-play when working with functional area managers:

Expert role: The manager outlines a problem and essentially states “You are the expert. Figure out who and what you need and fix the problem.” Block says that “In this case, the…

[contractor] becomes, in effect, a member of the manager’s staff with delegated authority to plan and implement change programs subject to the same restrictions as other members of the manager’s staff” (Block, page 18).

Pair-of-hands role: The manager diagnoses the problem, finds a contractor with appropriate skills, outlines the problem for the contractor, details the solution, and expects the contractor to use expert knowledge to achieve the goals of the project. In this role, Block says that “the manager retains full control” (Block, page 20).

Collaborative role: Block recommends this relationship as the most effective for both sides of the contract. He says “When consultants work through a collaborative role, they don’t solve problems for the manager. They apply their special skills to help managers solve problems. The distinction is significant…the manager must be actively involved in data gathering and analysis, in setting goals and developing action plans, and finally, in sharing responsibility for success or failure” (Block, page 21).

As information-development managers, we often must choose a contractor in a time-critical way and, sometimes, we contract at the direction of our management or internal clients. Even in these time-critical choices, we should take the time to consider which role we expect the contract agency to play.

Expert Role

Information-development managers frequently need to ramp up their departments quickly to make the most of new technology. Hiring an expert gives managers two benefits. First, it puts an expert in the new technology onto the project with little or no technology training time. Second, it allows you to structure the contract to include the expectation that the experts train in-house staff. In information development, we often hire experts on a shorter-term basis, and they often come from information-development, e-commerce, or advertising agencies. Because of the narrower definition and shorter timeframe, you can often build staff training into the contract.

These benefits must be balanced against four drawbacks. First, the expert may have little or no knowledge of the company’s organizational structure, goals, or products. Second, functional managers may have little background in the new technology, including how long it takes to implement it, what infrastructure needs to be in place, and how long “typical” projects take with the new technology. Third, existing employees may feel threatened by the “expert” because they fear that their jobs may be at risk. Fourth, many staff members are very effective at managing their own work but have no experience managing another individual’s work.

Information-development managers should be able discuss these issues with the expert prior to signing contracts. Richard McNeill, WASSER, Inc., points out that the primary responsibility of the individual contractor or agency is to understand and manage expectations. This management begins with and relies on clear and unambiguous proposals and change orders. A related responsibility is education. The agency has the obligation to understand the client’s expectations and to educate the client on what information and internal resources the agency needs to fulfill those expectations.

Managers must also educate their employees about the roles they expect the experts to play. For those employees who wish to increase their versatility, offer them the opportunity to interact with the expert. Use this time as a way to let them grow in two divergent skill sets. While working with the expert, the in-house employee gets a front-row seat to watch the new technology unfolding. At the same time, the employee has the opportunity to develop mentoring skills by introducing the expert to in-house contacts, politics, project management techniques-learning about and being able to present the “big picture” while supervising the daily details.

Pair-of-Hands Role

Supplementing our staff with extra people for the “short term” has been, perhaps, the most traditional use of contractors. In the past, we employed former employees or other independent contractors to fill in during the peak times. However, due in large part to Microsoft’s use of contractors in the 1980s, the government has cracked down on the use of independent contractors. At Microsoft and elsewhere, contractors became de facto employees; they worked for only one company and at that company’s location; they used the company’s infrastructure, computers, and so on to accomplish their work; and, most important, they worked on these contracts for years. The US government found out that a significant percentage of these contractors were not accurately reporting their earnings, which became a tax issue.

In response, the government issued some guidelines on the use of independent contractors. They must be able to meet the following conditions:

  • Demonstrate that they have more than one client in a calendar year
  • Work for a period of no more than six months for a single client in a calendar year
  • Complete a significant amount of work away from the client’s work place

These conditions have encouraged companies to hire contractors from staffing agencies. The company hires the staffing agency to find people to do the work but the workers are employed by the agency. To some extent, these guidelines have worked to the disadvantage of both independent contractors and the companies who formerly hired them. For independent contractors, many doors closed to them unless they signed on with a staffing agency, which could mean reduced income and flexibility. For the companies, they had to decide whether to hire the former contractors as full-time employees or to dispense with experienced, well-trained extra staff.

However, the conditions favored staffing agencies. The staffing agency provides appropriately qualified extra staff members to companies that, for whatever reason, do not wish to add full-time staff. Because the staffing agency employs the staff members directly, they can work for a single client for as long as they are needed.

According to Mac Katzin of Idea Integration, the critical responsibility in this scenario is to hire, screen, and train the best possible work force. Katzin looks for people who have a technical background and well-rounded communication skills. This combination can be challenging to find, especially for specialty or new fields. Sometimes, the staffing agency has to supply someone who will need training to become stronger in the subject matter; in this case, Katzin negotiates their technical training into the proposal.

The agency employee must be able to meet expectations of several “clients.” First, they have to remember who is writing their paycheck and make sure that they are looking out for the contract agency. Second, they must meet the expectations of and develop strong bonds with the in-house clients and subject-matter experts. Third, they must keep the end user in mind, alerting the contract agency and the client when more time, information, or training might be needed. Training his employees to work in a matrixed client environment is something that Katzin feels is very important:

“They need to have the right attitude and to be flexible. The end user is the implied customer in every contract. When I work with a client, I assume the same responsibility as if I owned this particular business. That’s what has always driven me-what do the client’s customers expect from the information and how is it presented. Sometimes, because they work so closely with the engineers, our writers begin to operate under the same assumptions [as the engineers]. My role is to remind our people always to learn more about who is going to do what with this product.”

Both Katzin and McNeill point out that their “staffing” employees are integrated into the in-house functional manager’s team. They expect the information-development managers to supply the appropriate training, introduce these team members to internal and external contacts, provide appropriate resources, and include these team members in team meetings when appropriate. The in-house managers have the right to interview potential team members and to request different team members if there are performance issues.

Perhaps the trickiest area for the staffing agency in this scenario comes with the pricing. One huge advantage for the clients is that they can keep the same team members working with them for long periods of time, which increases staff competence and experience with the clients’ organization, products, style guidelines, and tools. However, those team members also expect that good performance and increased versatility entitle them to salary increases. Many times the staffing agency has to renegotiate their rates to keep up with inflation, salary increases, and the cost of doing business.

Katzin notes that the information-development managers should plan for increases of this nature during their annual budget cycles. He encourages in-house managers to use these budget cycles to ask whether the team members he provides might be better as full-time staff. We all face this dilemma: how many people do I need to meet my normal workload? And, has my “normal” workload permanently increased over the past year? What would happen to my ability to meet schedule, cost, and quality goals if I lost one or more of the contract agency’s employees? What risks do I carry here? Am I using contract employees to cover for in-house performance or training issues? Am I failing to give my full-time employees opportunities because it is easier to use the contractor? Or, is my business changing so rapidly that the only sensible solution is to outsource the work?

Even if your company does not require you to review your contracts on an annual basis, both Katzin and McNeill suggest you follow this practice. The annual contract review also gives you the opportunity to give and receive feedback and to ask the staffing agency for information that you can use to educate your management about the information-development business.

One problem that sometimes occurs is that the hiring company sets a dollar cap on outside services for various skill categories. This cap can put information-development managers in a bind; they can lose the “experienced” team member from the staffing agency because the agency wants to maximize the fees for their most experienced people. If the staffing agencies increase salaries for good work but cannot get the rate structure adjusted, they have to either pull out from the contract or provide “less experienced” team members. These measures leave the in-house manager with new problems.

When adding “a pair of hands” to your staff, you should be able to rely on the contract agency to act as a bridge or ambassador between your organization and the larger organization. Katzin remarks that “Information development is usually not the focus of the client’s company, which means that sometimes these departments fail to get the assets they need to do a good job. When the company pays an outside company for assistance, they often pay more attention to requests and recommendations. Often, the information-development managers partner with the contracting agency to put together arguments to acquire resources-even internal ones.”

If you find yourself in a bind over rate structures versus experienced team members, ask the staffing agency to help you put together proposals to increase rate structures based on your requirements for the contract team members. You should also be able to explain, from a business perspective, what it costs you to use less experienced or less qualified team members. Again, the staffing agency should be able to help you put this information together.

Collaborative Roles
Contract agencies and in-house departments both benefit from intense collaboration, regardless of the role you want the contract agency and its employees to play in your work. As Peter Block notes, this collaboration starts with the first meeting you have with the contract agency:

“…Most every event and action carries with it a message about what this project and what this client are going to be like. The personal interaction between the consultant and the client during the initial contracting meetings is an accurate predictor of how the project itself will proceed. If you can accept this concept, you will pay close attention to the process of those early meetings” (Block, page 55).

Psychologists have done significant research on the validity of first impressions and, while the jury is still out, they have amassed considerable evidence that first impressions often seem justified in hindsight. How much this phenomena depends on our reactions to our own impressions (self-fulfilling prophecy) and how much our intuition or “sixth” sense is involved, continue to be hotly debated. Whatever the answer, the initial dealings you have with a new vendor are critical to developing a collaborative relationship.

Most large corporations are moving to elaborate supplier evaluation and partnering agreements because establishing fruitful relationships is so time consuming. However, if your organization does not understand the business of information development well, you may have a more difficult time getting support from your purchasing or human relations staff to help in the selection process. In any case, you should have a clear idea of what you want to accomplish in the end-in other words, what is the ideal outcome for this relationship. You need not develop every detail before your initial meeting because those details will emerge through your collaboration.

McNeill has considerable experience and training in project management. He suggests that, whenever possible, the contract agency and client begin their relationship with a small project that is not part of any larger critical path. In this way, the client and contract agency can develop mutual understanding, vocabulary, and trust:

“…even the best communicators and project managers cannot really know the underlying assumptions of every word used. Only by working together can we expose the implicit expectations and assumptions we all bring to the table. Then, when that big, critical project comes along, we will be on the same wavelength and efficiently get the work done.”

Clarity of purpose, scope, and deliverables can be a hard thing to accomplish-especially in high tech areas like e-commerce or web development. Change orders give WASSER the opportunity to manage expectations. McNeill said that when he managed projects in the past and was asked how he was doing, he always said “I’m on budget and on schedule.” “Of course,” he continues “that could mean that I’ve renegotiated the deliverables, budget, or schedule ten times! But, yes, I am on target according to the last change order.” Look for contract agencies that use some variation of change orders, a best practice in any information-development department. We renegotiate our documentation plans internally, and we, in turn, should expect contract agencies to renegotiate with us when we make changes.

You should expect the contract agency to provide a clear project proposal, a description of how they hire staff, and methods they use to update the project scope over time. If the contract agency fails to discuss these issues proactively, then you should bring them up. You have every right to review the resumes of proposed staff members and to interview prospects. You should be able to clearly delineate, though, the contract agency versus the internal staff list of responsibilities. Take your earliest opportunity to communicate problems. In fact, make sure that you require regular updates on progress and deliverables, especially in the early stages of the project.

In a collaborative relationship, you rely on the contract agency to supply expert skills and advice, but you must supply information about your organization, products, and users. User data continues to be the single most critical information that we need to deliver effective information products. Learn from the contract agency how other companies analyze their audiences and test their products. They will often provide this information in a compiled or anonymous form to protect proprietary information they have access to. Even in consolidated form, though, this information can be vital when you are managing up and around inside your company. Use this information as background or supporting data when making the case to change your processes, tools, or information products.

Recommendations
Information-development managers hire contract agencies for many reasons and tasks. Firms with short schedules, new technology, and an uneven workload often rely on contract agencies more than those who have more established users and products. Take the time to determine where you are on this continuum.

Take a look at your staff, their skills, and their interests. If you are planning to have a mix of contract-agency and in-house staff, clarify for everyone the hierarchy and responsibilities. If you are moving to an outsourcing model, say so-honestly and early. Take the time to work with your in-house staff to develop new skills and explore career alternatives.

Be sure that you understand all of the costs you will incur by hiring contract staff. Lower out-of-pocket expenses do not always guarantee lower overall costs. If you ask internal staff members to supervise contract staff, make sure they have (or get) appropriate interpersonal, project management, technical, and tool training. Supervising contact staff can be an excellent learning opportunity for staff members who express interest in becoming managers. Make sure that you explicitly tell the in-house supervisors what percentage of their time you expect them to spend in the following areas:

  • Helping the contract staff members become oriented to products, organization, and tools
  • Dealing with the internal infrastructure to get access to computers, buildings, and so on
  • Checking on progress and reporting status
  • Editing or reviewing work for quality and style guidelines
  • Assessing the impact of the contract staff members’ skills and knowledge

Then, take the time to find out if your estimated percentage is accurate, especially if the person is new to supervising. One of the areas where in-house employees become most frustrated is when having the contract staff seems to be “more work than they are worth.” If you hear these comments, take the time to find out why the supervising staff member feels frustrated. Is it the contract staff skills, knowledge, abilities, orientation to the company, and so on? Make sure that you address these frustrations because many contracts can suffer if the internal and outside team members are at odds. Model the listening, coaching, and facilitating skills you expect your supervising employees to use with contract staff.

These implicit costs should be less depending on the degree of independence you work out with the contract agency. At one extreme, the contract agency is, in effect, the information-development department. In this case, they manage the project for your company with few internal requests except the normal ones for product information and reviews. At the other extreme, the contract agency acts as a staffing agency, providing you with skilled staff members to augment your staff. In this case, you manage the resources and work with the contract agency only on performance problems or the need for additional resources.

At times, our managers and internal clients look at our in-house costs and those of outside suppliers somewhat simplistically. It is then your job to educate your managers and peers about the value of information developers and to draw the analogy to original equipment manufacturers’ (OEMs) contracts. Many high tech firms offer products built by OEMs. On paper, the development costs appear less than developing these products in house and, strictly from an engineering or manufacturing perspective, the cost is lower. However, for support organizations such as customer support, sales, and information development, the costs are at least as great if not greater than for products developed in house.

If the OEM contract calls for strong collaboration between the OEM information-development department and the in-house organization, then the costs are lower. Similarly, if you establish strong ties with your agencies, you lower your overall costs and increase your ability to meet shorter time-to-market requirements, develop new types of information products, and increase the versatility of your organization.

In the October Best Practices, we will hear from several information-development managers on this emerging partnership. CIDMIconNewsletter

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