Sub-contracting out your to mitigate the risks

An increasing dilemma for many companies is managing the risk of having third party contractors providing services under their brand name.

This becomes especially critical when the contracted companies are having direct contact with your customers.  An example would be a financial institution that uses an independent call centre to respond to customer inquiries for sales or service.

The use of third party specialist contractors is a reality that can’t be avoided for many companies – especially in the delivery of large infrastructure projects or in periods of rapid growth.

So how do you mitigate the risk?

First, protection of the brand needs to be one of the key drivers of the contract negotiation process with prospective suppliers. This means that the cheapest provider isn’t necessarily the best.  Although the finance team might be driven by the cost-saving potential, the marketing and communications team needs to ensure that potential "monetary" saving is balanced against the risk of damage to brand and reputation.  (ie, the company might save money in the short term but ended up losing big time in the longer term if something goes wrong).

For this reason, during the negotiation process insist on references from other companies who have used the third party contractor to provide customer-contact services and check claimed performance against reality. (Ideally go and visit these sites and observe directly).

Second, the contract needs to include specific clauses that dictate that the successful contractor must abide by the same behaviours expected of an employee.  Ideally, I would recommend including a specific schedule to the contract that sets down protocols to protect your brand integrity.

Third, there needs to be a mechanism within the contract management system to ensure that the third party provider is living up to the standards set down – otherwise there is no point.  This should include some form of regular auditing or market research tracking to ensure quality control.

Fourth, the contract should make it clear that failure to comply with the “brand behaviour clauses” will result in the instant termination of the contract.

There is always some risk in using third parties to transact with your customers from a brand perspective but following these pointers can reduce the chances of a reputational disaster.