Unlike a dog, people’s loyalty needs to be earned.

IT is not all about technology; the most critical component is the people that create functionality. As has been noted, productivity has been the engine of the world economy for at least the last decade.  The continual introduction of new technologies plays a major role in generating the productivity gains our economy needs.  Many technologies require workers to acquire new skills to design and operate the processes they engender.  The new skills require not just greater computer use but also more complex decision-making skills (a circular process that smacks of perpetual motion machines).  This results in inducing a reshuffling of workers with different sets of skills across jobs.  Globalization and improvements in telecommunications have created a scenario where reshuffling means that jobs flow to the geographical area lowest cost (education, language and security requirements taken into account).  Job and skill churning has created greater job mobility for skilled workers.  While this has a short-term negative impact within job categories, it creates substantial sharing of information and knowledge across organizations and countries.  In the long run, this benefits the global economy. The juxtaposition of people, organizational culture and the churning of jobs and skills provides a fertile ground for outsourcing myths.

There are so many of these myths that we’re breaking it into two parts.

Myth:  “Our employees are loyal to the organization; they will understand that change is needed for the organization’s well being.” Loyalty is an often-used term that describes relationships between an organization and its employees. Depending on your point of view, loyalty means many different things.  When used by an organization, the term typically means that an employee acts in a manner that enhances the bottom line.  From an employee’s point of view, it means that the business will take care of/support them if they put the organization on the top of their internal priority list.

Sourcing decisions can and do have an impact on loyalty. Sourcing decisions can significantly reduce loyalty.  Reduction in loyalty can negatively impact productivity, quality and time-to-market, if loyalty and morale are linked or if loyalty and stability of the workforce are linked.

Loyalty and trust are inter-related.  Most organizations with change processes prescribe communication as a tool to manage loyalty by building trust through the judicious use of information.  The broad-based, open communication required to build trust and loyalty is not typically considered possible while determining a sourcing strategy.  Open communication while a tool build trust with your employees can also disrupt the negotiation process by exposing too much information to the sourcer.

Myth:  “Loyalty is an old concept.”  Does loyalty matter?  In tight labor market or in situations where your internal knowledge is important, the answer is obvious; in other scenarios, perhaps not.  Many organizations do not consider how to address loyalty across the entire organization.  They decide it does not matter or focus only on the groups that are most intimately impacted with a particular change.  Progressive organizations leverage and promote loyalty across the whole organization, not just their retained IT personnel.  Team building techniques are used to build inter-group relationships. Interfaces are a means of spreading the organizations message and to actively manage loyalty, but to be effective they must be build on the inter-personnel relationships that comprise trust.

Myth:  “Communication is merely spin control and is needed only when change is imminent.”  Back in the days when I worked in the corporate world, we could always tell when something was up.  The presence of the corporate communications group became overbearing.  It was the signal to update my resume. Communications is a long-term method to build trust, turning it off and on implies a level of disingenuousness that is hard not to recognize.

In order to be effective, communication must be focused on providing all constituencies within the organization (internal and external components inside and outside of the effect areas) with the understanding of the sourcing strategy and its requirements. Communication is a powerful tool for managing change.  The value is reduced if it becomes a predictor of change or is perceived as disingenuous.

Myth:  “Time heals all wounds.” Corporate memory is an important component in understanding the impact of sourcing decisions. Managing perception of each project that uses sourcing is important in making the process work.  A CIO related his first experience in using sourcing to me.  This experience formed the foundation to his approach for using sourcing. It was merely one project, and all his subordinates admitted it was flawed.  The wrong project was chosen, and the relationship between the company and its source was actively undermined.  The outcome was inevitable; however, what has been remembered is that it didn’t work. Therefore it probably will not work in the future.  The options available to this CIO have been severely hamstrung.  As a side note, the story among the employees is that sourcing strategy can be manipulated at the cost of a single project.

Changes in sourcing can affect many people’s livelihoods. I surveyed folks within two organizations that had significant sourcing changes within the last year (both had over 6 months of experience with change).  Over 60% of the respondents felt that overall organizational stability had been reduced.  Additionally, approximately 15% of respondents felt they would leave the company within the next year.

Myth:  “If I don’t let anyone say anything negative . . . “  This is the antithesis of the time heals all wounds myth.  The premise is if we ignore the change, the impact will pass.  This myth tends to take hold in organizations that use rigid hierarchies for managing and control.  In extreme cases, belief in this myth causes the voicing concerns or anger to be viewed as anti-team spirited (forget the grief cycle).  Recently, I have seen these tactics taken a step further with personnel making anti-team-spirited comments being summarily terminated.  While a radical approached, it did serve to stop public discussion (for pretty much everything), but it did not serve to make people forget.  The discussion of how change impacts an organization must be address and managed.  Driving the discussion underground is dangerous and must be viewed a desperate last resort.