Managing Performance / Setting Goals

Seven Tips for High Performing Captive Offshore Centers

Mike Mcgarry asked:

While many offshore centers have been around for decades, high performing offshore centers seem to be about as common as common sense—which seems to be quite a rare commodity.

Following are seven tips for operating a high performing captive offshore center.

Tip#1: Sense of self. First, the center/unit must have a sense of self. In other words, it must be structured in a way that allows the members to view themselves as an individual and unique entity unto itself. If the offshore center serves many different parts of the Parent Corporation and/or different clients through various regional organizations, the sum of all of the parts must still come back to the middle.

Tip#2: Sense of belonging/importance. Despite needing a ‘sense of self’ high performing centers have at their very core strong unifying themes and aggressively promote a sense of belonging with other corporate entities that goes beyond the barriers of its own organizational domain. To be truly successful there must be line of sight to higher-level management in the parent organization and a clear mission that is fully supported by executive leadership.

Tip#3: Do not compromise on center management. When hiring the center management team in the offshore location, be very particular. There are many schools of thought regarding the use of expats. I tend to lean toward using an expat team to start things off and get the culture established, then gradually replacing expats on a selective basis with strong local management over time.

When going the expat route, don’t assume that a common heritage automatically guarantees success. In some cases that I’ve seen, individuals who were Indian by birth but removed from the continent for many years put into local management teams only to see those individuals revert to very old-school Indian management techniques. While those techniques might have worked well twenty or thirty years ago, they no longer do because in-country management styles and processes are considerably advanced over techniques applied twenty of more years ago.

Tip#4: Appreciation for different cultures. In addition to building a ‘sense of belonging’ in a captive offshore center, it is important that the head of the business unit to which the offshore center reports, also be evolved in their thinking about other countries and cultures. Selection criteria for potential expats need to include additional attributes like a genuine open-mindedness to different cultures in general but to the target culture in particular. Both the parent organization leader and expat manager must be on the same page and agree that they are not going to run the business as if it existed in the home country and will seek to understand the best ways to blend the core values and cultures of the parent and local companies.

Tip#5: Blended culture. In addition to having an understanding of the local culture, a key objective should be to establish a blended culture within the center. Similar to a joint venture, you want to utilize the best of each organization and throw away the parts that don’t work.

If you start a captive offshore center that is entirely operated under the local culture, it will be a very foreign environment for employees of the parent company that come to work in or visit the captive offshore center. The reverse is likewise true for employees of the captive center when they go on assignment to other locations of the parent company. Perhaps of greater consequence is the risk of having clients visit the captive center and leave with the feeling that the location and its’ team are too ‘different’ or ‘foreign’ and thus more difficult to work with than other captive centers where they feel more comfortable. The objective again, is to work to develop a blended culture that embraces and nurtures the best of both worlds.

Tip#6: Communication in the context of the culture. Assuming that high performing captive offshore centers are at least partially dependent on expatriate managers to get started, communicating with local staff is extremely important and a critical success factor for the business. Before arriving in country expats, should spend time with other expats and/or people who are from the target country and who have operated successfully in both cultures. The operative word here is ‘successfully’. Merely spending time in a foreign country does not assure the parent organization that the individual has assimilated the intricacies of managing and working with people who do not share the same heritage. Cultural awareness and understanding are critical components of successful communications in an expat environment.

In addition to shadowing and learning from others who have been successful doing what the expat manager is expected to do, there are a number of good cultural primers or guides available. I recommend asking those whom you know understand the target culture to recommend one or more of these guides and then read them before arriving in country.

Tip#7: Measures and Balancing Measures. Measuring performance is an important and critical attribute of high performing captive offshore centers. However, personal experience suggests that in creating a measurement system for captive offshore centers it is important to do more than simply establish a set of primary measures. To ensure that the organization achieves what it hopes to achieve the business should consider developing at least one balancing measure for each primary measure that is established and tracked.

For example, let’s say you want to improve the time to close a ticket for call-center agents. With only a “time to close” measure in place you could see customer satisfaction dip and the number of new incidents rise unexpectedly. Why? Because the agent may be incented to get the caller off the phone as quickly as possible and may even close the ticket in the call system before the caller hangs up.

Personal experience demonstrates that extraordinary things can and do happen if a balancing measure is not in place for each and every primary measure you hold people accountable to. If a measure impacts their performance rating, speed of advancement, and/or compensation you will see extremely creative ways to drive measures to their benefit. In most cases, this kind of behavior is not beneficial to your company or its’ clients.

Finally, don’t forget the basics…. The Tips presented above are representative of areas to be considered when setting up a captive organization in an offshore location and creating a high performance work environment. Of course all other normal good business practices still apply in building and managing captive offshore centers.

The high performing captive offshore centers I have seen are successful for many reasons but most of them have thought through what it means to be ‘best in class’ and have put into practice many of the suggestions in this article.

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