Negosentro | 5 Factors to Consider When Outsourcing Executive Positions | Outsourcing executive positions are more complex than outsourcing services like data entry or bookkeeping, and there are several factors to consider before choosing an outsourcing partner for a high-level role.
If you’re starting to think that working with a third-party service provider might be the best solution for your company—either on a temporary or long-term basis—these questions will help you find clarity and ensure that you find outsourcing partners who can help you achieve your goals.
1. What Is the Specific Need?
There are many reasons that companies outsource business functions and even executive positions to a third-party service provider. In fact, the global outsourcing industry was worth $92.5 billion in 2019 alone.
When looking for an outsourcing partner, identifying the exact need will help you find an outsourcing partner that’s an asset to your business. Are you looking for:
- A temporary consultant to help you review and improve your operations?
- Someone, to spearhead project management for a specific project?
- An experienced executive who can upskill your in-house leadership team?
- A long-term executive who can come on board on a fractional basis rather than being employed full-time?
Once you’ve identified the need, you’ll be in a much stronger position to choose an outsourcing company or individual who will help you reach your goals.
2. What Unique Skills and Resources Does the Outsourcing Company Offer?
A difference in skill set is one of the key factors in deciding to outsource an executive position. Perhaps you are highly skilled in your field but have little experience in business operations, high-level management, finance, or IT.
In these cases, outsourcing services give you the chance to benefit from the experience and expertise of a third party that is solely focused on the area of need rather than being a “jack of all trades.”
For example, a third-party chief marketing officer may have a team of highly experienced web developers, content strategists, content writers, graphic designers, videographers, and market research experts, and have previously led several Fortune 500 companies to success.
By outsourcing this executive position to an expert rather than raising up the skill in-house, you can take advantage of the combined experience and skills of the third party and free up your own resources to deliver the highest quality products and services to your customers.
3. How Do the Rates Compare with a Full-Time Salary?
While skills are an important consideration, outsourcing company positions to a third party is often a matter of optimizing operational costs. Small businesses, for example, might not be able to afford a full-time chief financial officer—with an average salary of $393,377 per year—but could benefit enormously from onboarding a fractional CFO to guide the organization’s fundraising, budgeting, project spending, and investments.
Before signing on with an outsourced executive, ask for a detailed explanation of payment plans and incidental costs. Outsourced executives usually charge an hourly rate, a monthly rate, or a per-project rate and may charge extra for additional hours or services that aren’t included in the original agreement.
You’ll also want to do your due diligence to make sure the executive is reputable and will achieve the desired results—low-cost providers may prove unreliable or damage your company’s reputation, negating any initial cost savings.
4. How Will Outsourcing Business Processes Affect Your Unique Value Proposition and Company Culture?
There is always some risk involved in outsourcing tasks—whether you’re outsourcing software development or an executive role. Delegating tasks inevitably come with a certain degree of loss of control.
The question when outsourcing an executive role is whether you’ll ultimately gain more control over your core activities by outsourcing and whether the third party can tailor its services to your values and needs.
Look for an Outsourcing Company That’s Aligned with Your Vision
In the best-case scenario, the outsourcing company that fills one or more executive positions will be aligned with your values and vision and offer a unique set of skills to help you achieve that vision more effectively than you could alone.
While you focus on your core activities and deliver your unique value proposition to your customers (like only you can), the outsourced executive can bring the operational aspects (technology, operations, marketing, finances) into line with best practices and propel you to even greater success.
5. How Will the Partnership Work?
Once you’ve compared several outsourcing companies and found the perfect match, you will need to write up a legal Service Level Agreement that outlines how the working relationship will proceed. This document can include such information as:
- The length of the contract
- The working hours
- The pricing structure
- Role descriptions and limitations
- To whom the outsourced executive will report
- A legal commitment to protect confidential information
- Contact information for both parties
At this point, it’s also essential to establish the points of liaison for both companies and induct the outsourced executive into your company’s history, values, and unique value propositions. Effective communication at the start is crucial to ensure that the outsourced executive helps you achieve your goals.
The Right Outsourced Executive Can Take Your Company to Greater Heights
At the outset, outsourcing an executive position could seem like a big risk to take, but once you find the right partner, it could be the change that moves your company forward. If you decide to outsource, do your due diligence at the research stage, discuss the terms and conditions in-depth, and draw up a legal contract that outlines exactly how the partnership will work.
Once you’re happy that the provider is aligned with your vision and has the expertise to make it happen, agree on the terms, put your best foot forward, and take advantage of all that your outsourcing partner has to offer. Sooner than you know it, you could be making big strides toward greater success.