No man is an island. It’s a well-known phrase, but one that many people fail to take on board. Especially in business. Business owners, boards and decision makers too often try to take on too much themselves. They don’t appreciate how helpful – and how easy – it can be to bring outside expertise into a company.
Family businesses, scale-ups and SMEs are the biggest culprits. Their boards and management have often handled everything to do with the firm from the get-go. That makes it tough for them to relinquish any kind of responsibility. At a certain point, however, firms need an outside perspective. They need some external expertise to rise to the next level.
Outsourcing senior positions is a great way for a growing company to get the extra push they need. It can sound like a daunting prospect. Turning over any responsibility to an outside contractor is no small thing. That’s why we’ve put together this guide to outsourcing senior positions.
It will take you through just what outsourcing is about. As well as what benefits it could bring your company. It will also look specifically at the strategy of hiring non-executive directors or other part-time board members. Finally, it will talk you through how to make the process work as an outsourcer.
Outsourcing: The General Principle
Outsourcing is a broad yet simple term. It refers to the practice of hiring a party outside of a company to handle certain aspects of the firm’s operation or to perform specific tasks. It’s usually used when the tasks were once or could otherwise be performed in-house.
The strategy of outsourcing first came to prominence in the late 1980s and early 1990s. It’s now a strategy adopted – in one form or another – by a huge number of companies. Often, outsourcing involves taking advantage of foreign labour. The term is most associated with the idea of large firms moving call centres or manufacturing to sites abroad. This is only one example of outsourcing in business, though.
Smaller businesses are a long way away from having the budget to move parts of their operation abroad. They can still outsource, however, in an effective way. They don’t adopt the strategy to seek cheap labour. They hire outside contractors to bring additional expertise and knowhow to their firm. By hiring an interim COO, a part-time MD or other non-executive directors.
Hiring such part-time board members is still very much an example of outsourcing. It’s hiring an outside party to perform tasks that would otherwise be handled in-house. The tasks are simply higher level ones. The process still delivers the same kinds of results. It provides advantages which help a business to improve its profitability. Let’s take a look at exactly how that can work.
How Outsourcing Can Improve Profitability
A business’s board is crucial to its progress and success. As an overall entity, its responsible for setting and implementing company direction and strategy. Break that down and individual board members play a range of critical roles.
They’re tasked with ensuring the efficiency of day-to-day operations. They must control costs and expenditure. They need to ID and jump on any business opportunities as soon as they arise. In short, board members are responsible for all the things which – if done well – serve to improve a company’s profitability.
It stands to reason, then, that having the right people on your board is crucial to improving profitability. Outsourcing senior positions is a way for even smaller businesses to achieve this. If they don’t become an outsourcer, a smaller business has two other options. Keep their board as it is or look to make permanent hires to key business roles.
Outsourcing has a number of significant advantages over either of those alternatives:
The budgets of SMEs or scaleups are far from unlimited. It’s critical that they get as much for their money as possible in all areas. Hiring an interim director or part-time board member is far more cost-efficient than making a permanent hire.
Part time directors demand a lower wage from companies than a full-time alternative. As such, higher quality candidates are suddenly within a business’s price range. They can afford to get the interim help of highly skilled individuals. Individuals they could never afford to hire on a permanent basis.
That’s not all, either. Bringing a new member onto a board often incurs hefty recruitment fees and related costs. These aren’t relevant when hiring non-executive directors or other interim board members. Firms also don’t have to fork out for benefits packages, bonuses or other remuneration.
Flexibility & Convenience
Outsourcing a senior position is quicker and easier than a full time hire. An interim director or even a part-time CEO is likely to be able to start in a matter of days or weeks. It’ll be months at best before a new, permanent hire is able to start work.
What’s more, a part-time board member can be utilised as and when you need. You can hire them on a fixed term or monthly basis and review performance regularly. That let’s you hire an interim contractor to solve a certain problem. It also means that if someone doesn’t prove a good fit for your firm, it’s far easier to end your association.
Expertise & Focus
Bringing in an outside contractor is about broadening the expertise of your company. You can add someone to your board who brings knowhow or a certain skillset that your current board lacks. That way, they’ll be able to find solutions and strategic directions that current staff wouldn’t think of.
An interim board member can also deliver a two-fold benefit in terms of focus. They will often have a narrow sphere of responsibility within the company. As such, they can give that area focussed attention and often get a full week’s worth of work done in a couple of days.
Fresh blood on your board will also boost the efficiency of current board members. With someone else picking up some slack, they’re able to give their areas of expertise greater focus. That will make them more efficient and help the firm’s overall profitability.
Which Senior Positions Could You Outsource?
You might by now be intrigued by the benefits of outsourcing senior positions. If so, you’ll want to know which positions you could actually outsource. You may be surprised to learn just how many positions on your board you might choose to fill on an interim or part-time basis:
- CEO – Part-time CEOs can be invaluable to a scaleup or SME. A CEO with extensive experience will help boards to get their major decisions right. They offer leadership and decisiveness to help break logjams and ensure progress.
- MD – An interim MD is a great choice for firms that want to tweak day-to-day operations or make them more efficient. They will come on board and take charge of that element of the business. Thanks to their outside perspective, they can make tough choices that others may baulk at.
- Strategy Director – Outsourcing the role of strategy director is particularly useful for scaleups. These individuals will come into a firm and assess where it needs to go and how best to get there. Working with current board members, they can help to find the best path toward future success.
- Non-Executive Directors – Non-executive directors sit on your board like other directors. They are not, however, members of your executive team. Their role is to add their knowledge and expertise to planning and policy making. Hiring interim non-executive directors is a good way to challenge your board. It makes sure things don’t get stale and board members aren’t complacent.
How to Make Outsourcing Work For You
You’ve now learnt why outsourcing senior positions could benefit you. You also know your options in terms of which positions you might outsource. What’s left is to offer you a little guidance on how to make outsourcing work if you do decide to go down that path.
The key to the outsourcing process is ensuring you bring the right people on board. The benefits of outsourcing are nullified if the individual you hire isn’t up to the job. What to look for when outsourcing a senior position will depend somewhat on the exact role. In general, though, prospective interim board members should share some characteristics. The following are some examples of traits that you always want to see:
- Relevant Experience & Knowledge
Any interim or part-time board member should bring extensive knowledge and expertise to the table. Specifically, experience and knowhow that your firm don’t already have. That includes experience in the role you’re asking them to play. It may also include specific expertise related to the exact problems you’re looking to them to solve.
- Creativity & Strategic Thinking
You’re bringing an outside contractor in for a reason. You need some impetus to help your firm grow or move forward. As such, your part-time hire must be able to think creatively. They need to look at your firm and industry and devise strategies that you hadn’t already thought of.
Board-level positions in a company – part-time or otherwise – are leadership positions. Any interim director needs to have the ability to take charge when required. Especially, if you’re going to ask them to oversee or manage staff.
It’s also important that you allow them to be leaders. Make sure to include them in any and all relevant discussions and empower them to make decisions. You’ll only get the most out of any interim or part-time hire if you give them the responsibility required to do the job.