All Posts By

Eric Simonson

Eric Simonson has more than 10 years of sourcing strategy and global services industry analysis expertise, first as a consultant and then in ongoing management of Everest Group’s research practice. His overarching goal is to ensure enterprises, service providers, and investors have the combination of fact- and experience-based insight they require to make informed, actionable, impactful, and value-generating global services decisions. To read more, please see Eric’s bio.

Clues into Amazon’s HQ2: What Does the Vancouver Announcement Tell Us? | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

In early November, Amazon announced that it will expand its presence in Vancouver from 1,000 jobs to 2,000 jobs by 2020. Although this did not receive nearly the same attention as Amazon’s request for proposals for the 50,000 employee location dubbed “HQ2”, there are some valuable clues to glean (see our earlier detailed assessment on the viability of Amazon’s HQ2 strategy and potential locations for our more complete analysis).

We read three important clues in this announcement.

  1. Vancouver is not a serious HQ2 candidate. Although Amazon is clearly comfortable enough with Vancouver to continue expanding there, it is a signal that Vancouver is not a serious candidate for the second headquarter location. If Amazon felt otherwise, the announcement did not need to be made and lose leverage in negotiating incentives for HQ2. There are multiple reasons why Vancouver may not be a strong candidate – size or cost of talent pool, too similar to Seattle, no time zone diversification, or that the complexities of operating in Canada outweigh the benefits of mainly operating in the U.S.
  2. The targeted scalability of HQ2 is going to be REALLY HARD. Assuming that Vancouver and HQ2 will have roughly similar mixes of talent, we can see that Amazon is scaling at only 15% of the rate targeted for HQ2. After setting up in 2015 and reaching 1,000 employees in 2017, Amazon is planning to reach 2,000 employees by 2020. Let’s assume that is 2,000 people over four years for an annual rate of 500 net-new employees. HQ2 is targeting 50,000 employees over 15 years, which is over 3,000 per year – 6 times what is being achieved in Vancouver. This supports our earlier view that any city under 4 million in population is clearly not viable (Vancouver is under 2.5 million) and even the largest cities (which are 7-15 million) will struggle to consistently grow at the rate indicated by Amazon for HQ2.
  3. Hmmm…is Amazon truly serious about HQ2 as stated? For purposes of our earlier analysis, we assumed that Amazon truly intended to pursue its stated vision (up to 50,000 employees in 15 years with an average salary in excess of US$100,000 and the HQ2 acting as an equal to Seattle). The announcement about Vancouver is interesting and revealing because it is inconsistent with Amazon seeking to aggregate its scale into large locations. A 2,000 employee location is certainly large, but it is much smaller than currently located in Seattle or the planned HQ2.

If centers at much smaller scale are valuable to Amazon, why even pursue the HQ2 strategy?

First, Amazon might realize that a single 50,000 location is likely too big and contemplating whether it can make “clusters” (cities within very short distances from each other) produce similar benefits as a single location, which would be multiple buildings anyway. If Amazon believes this, it might be looking to select multiple cities within a cluster for the HQ2 strategy (think Philadelphia, Baltimore, Washington, DC).

Second, Amazon may have intentionally set a very, very large 50,000 employee target to get maximum attention and creativity, but is planning to structure the eventual single location agreement to only commit to 5,000-10,000 employees. Still very large, but something it has a much easier chance to fulfill and then potentially exceed as it so desires.

In summary, we believe these clues Echo many of our earlier perspectives and underscore that the eventual outcome may be quite different than stated – we remain Primed to hear what Amazon decides in 2018.

Breaking News: Everest Group’s Alternative Facts Research to Guide Global Sourcing Executives’ Next Moves | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

As disclosed in a pre-dawn Tweet this morning by President Trump, Everest Group has launched a new, alternative facts-based research service line. The goal of the “AlternaFacts” research team is to arm global sourcing executives with market and industry data, analyzed through a proprietary “interpretation lens,” that will enable them to creatively present their competitive capabilities, productivity, efficiency, and performance indicators to their C-suite executives. The AlternaFacts team is also open sourcing the company’s PEAK Matrix™, enabling service providers to position themselves wherever they choose, in whatever market they choose.

Trump Alternative Facts

Additionally…Happy April Fools Day! Of course, the above is all bunk. There is no such thing as alternative facts. A fact is, “A thing that is known or proved to be true,” or an “event, item of information, or state of affairs existing, observed, or known to have happened, and which is confirmed or validated to such an extent that it is considered ‘reality.’”

That said, separating fact from fiction (“Orwellian facts,” if you wish) in today’s exceedingly disrupted business environment is no easy task. Against the backdrop of globalization, automation, the Trump administration’s impending immigration reform and other game-changing policies, Brexit (it’s happening for certain), geopolitical issues in the Philippines, and other phenomena that characterize today’s uncertain times, it can be tempting to follow the bang of the most loudly played drum.

But when making critical decisions around service delivery models, location selection, digital, and workforce strategies, embracing the refrain of the most vociferous hype and buzz – rather than obtaining facts and insights – can lead to sourcing executives making significant mistakes. We’re talking about ones that result in multi-million dollar losses, market share erosion, or reputational damage. For example, they can place their enterprises at significant risk if they buy into service agreements priced for last-gen solution models, or make location investments in places optimized for yesterday’s talent needs.

To help enterprises cut through the hype and take proactive, informed steps amidst the uncertainty in today’s rapidly evolving landscape, Everest Group is hosting in May 2017 a two-day event entitled, New World [Dis] Order: Managing in Turbulent Markets. Sessions including “Globalization: Curve or Cliff?” and “Automation: Over-hyped or Under-appreciated?,” and speakers including Dr. Uri Dadush, former Director of International Trade for the World Trade Bank, will provide detailed, fact-based insights on how to thrive in the face of unparalleled disruption.

True that this event is being held at The Watergate Hotel in Washington, D.C. But there won’t be any scandal, attempted cover-ups, or clandestine agendas…just real facts! (And we promise not to tap into your smart phone!)

The Philippines: Future Foe or Long-term Friend? | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

With the uncertain political situation in the Philippines and the comments President Duterte has made about distancing from the United States militarily to align closer to China and Russia, many are concerned about what this means for the relationship between the Philippines and the U.S. And rightfully so – this would be a major shift, and over time could be a cause for concern.

At the same time, the Philippines has been quick to point out that the commercial and social relationships between it and the United States are very strong, and that it wants and expects those to continue.

And therein lies an important point… a rebalancing of military relationships does not automatically lead to poor commercial and social relationships between countries.

In a quick exercise to demonstrate how countries can have a variety of types of relationships with the United States, I did a super simple comparison of several military and social dimensions in the graphic below. In addition to the Philippines, I chose India, Malaysia, and Turkey to represent a cross-section of countries near Russia and China that have some level of meaningful connection to the United States. Turkey is a member of NATO, India is a major trading partner for services and goods, and Malaysia is an interesting mix of relations with China and the U.S. (not to mention the Malay flag looks very similar to the United States flag).

I looked at language, religion, sports, and use of NATO-sourced fighter craft (both trainers and actively deployed.) Those without NATO-sourced fighter craft tend to attain theirs from Russia or China. Most countries not in NATO and near Russia have some mix of fighter aircraft.

Philippines U.S. relationship

Based on this very simple comparison, many in the global services industry might be surprised to see that India appears to be the least well-aligned to the U.S. on most dimensions. In particular, India depends primarily upon Russia for various types of military equipment, beyond just aircraft, and India is an important export market for Russia.

By contrast, the Philippines is very closely aligned to the U.S. on all dimensions, which explains why the average Filipino has a hard time with the concept of weakened commercial and social ties to the U.S.

Time will tell what actually happens. But we should all remember that military, commercial, and social ties can operate somewhat independently. Relationships between most countries are complex and multi-faceted, so a change in one area may be slow to impact the overall relationship.

Is the Philippines More a Paper Tiger than a Real Tiger? | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

The Philippines has been in the news a lot lately, for a range of negative reasons. But is its risk profile becoming such that U.S. enterprises should stop evaluating it as a global sourcing destination, or that those already there should consider pulling out?

That depends on your perspective, especially when you look at both its risk and benefits profiles. I believe one can argue that the current dynamics in the Philippines are potentially a hidden positive for the global sourcing industry. Yes, this bad thing could actually be a good thing.

Before you tell me I’m off my rocker and should be put in a padded room, hear me out.

Among other things, Philippine President Rodrigo Duterte made statements regarding “separation from the U.S.” This understandably caused concerns among multiple global companies with one or another type of exposure to the Philippines. But the Philippine government subsequently tried to clarify that the statements were reflective of intent in foreign and military policy, not business ties. Although a general tilt in military and foreign policy away from the U.S. may eventually hamper business relations, there will probably be little impact in the near term.

That said, while the uncertainty and noise surrounding the Philippines will cause some companies to slow or moderate their exposure to the country’s labor market, a slowing of its offshoring industry growth could be incredibly helpful.

For example, with somewhat less demand for talent, attrition rates should decrease. With somewhat lower attrition rates, employees are likely to develop in their roles to a greater level of proficiency. Additionally, salary increases are also likely to moderate and, with likely less investment into the Philippines, the Filipino peso may weaken and lead to a more attractive cost base.

In other words, assuming that the actual work environment is not disrupted by the new posture, the labor pool should become more attractive – lower cost and more stable – for those organizations continuing to operate in the Philippines.

From an economic standpoint, despite President Duterte’s saber rattling and the unnerving optics, the ties between the two countries won’t be threatened any time soon. The IT and Business Process Association of the Philippines (IBPAP) reported that the IT-BPS industry represented revenue of US$22 billion to the Philippines, and employed ~ 1.2 million FTEs in the country in 2015. With those kinds of numbers, an economic split can’t happen.

Socially, there are very deep ties between the U.S. and the Philippines, much of which is rooted in the fact that English is one of the two official languages in the country. One of the strongest predictors of social ties is language, as the more easily you can communicate with each other, the easier it is to talk about family, share jokes, discuss vacations…topics that help forge bonds.

It’s true that the Philippines’ risk profile appears to be shifting, but largely in ways that seem unlikely to materially impact business ties. For enterprises willing to manage and continue to operate within that environment, it would appear that the benefits of more skilled, language- and culturally-aligned talent at lower prices could easily outweigh the perceived risks.

Of course, there are numerous things you and your location-scoping team should monitor when considering the Philippines as a sourcing destination. The top five are:

  • Trade agreements with the U.S.
  • Taxes and incentives for U.S. firms
  • Travel policies, including visa’s and travel advisories
  • Actions and sentiments of market participants
  • 2022 Philippines roadmap for IT-BPO; relative emphasis on the U.S.

Is your enterprise already offshoring to the Philippines, or in the process of evaluating it against other destinations? We’d love to hear your thoughts, perceptions, concerns, and experiences!

US$6/hr IT Developers? | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

In early August, I participated in the 13th Brookings Blum Roundtable on Global Poverty, which focused on “The future of work in the developing world.” Our earlier work on Impact Sourcing with the Rockefeller Foundation was one of the featured pieces of content for the roundtable. The event included discussions on the impact of new technologies (e.g., automation, cognitive) on the nature of work and how that changes the required skills, training, and placement in jobs. In addition to incredibly engaging discussions, I had the opportunity to meet some innovative and passionate leaders of companies seeking to address these challenges in the developing world, from places such as India, Malaysia, Pakistan, the Philippines, and South Africa. In this series of blogs, I will share some of the things I learned.

Sajid Shah is the co-founder of Empower Pakistan, an organization that utilizes freelancing platforms as a catalyst to nurture Pakistan’s nascent talent for digital skills. Upon graduating from college in Pakistan with a degree in electrical engineering, Sajid was unable to find a job. He started exploring the freelancing market available through digital platforms, and quickly began to grow a business that served clients globally. He also realized that many others could do the same thing if they simply had the right coaching and support to tap into global opportunities.

Understandably, geopolitical conditions have limited the attractiveness of Pakistan for multinational organizations. As a result, with a very young population of 200 million and an established education system, Pakistan can offer strong talent at highly competitive price points. Some organizations are indeed utilizing service delivery from Pakistan, but this is rare and tends to be for project work or non-critical business operations.

Empower Pakistan’s innovation is using the freelancing model to make global opportunities accessible to the talent in Pakistan, and doing so in a manner which helps accelerate the development of entrepreneurial businesses. To accomplish this, Sajid co-founded Empower Pakistan in 2014. The model works as follows.

First step – get “digital”

Individuals (already computer literate) are trained on “digital literacy” – the hot skills expected in the global market for contemporary technical development. This is accomplished through a series of workshops and exercises, and lasts about two months.

Second step – gain experience

Empower Pakistan coaches individuals on how to use freelancing platforms to find individual project work that helps them apply their skills plus learn from the work itself, e.g., project management, client management, and pricing. This approach also helps the individuals begin to develop entrepreneurial skills. This stage lasts for approximately a year.

Third step – the decision

Individuals have two basic options after gaining the relevant experience. One option is to receive further coaching from Empower Pakistan via its “LevelUp” program on how to expand the freelancing model to take on larger projects and become a business owner, typically employing other individuals to support completing larger and more comprehensive projects. LevelUp is world’s first accelerator for “digital nomads,” and Empower Pakistan aims to convert the independent entrepreneurs into business owners through this accelerator program. With over 2 million people in Pakistan registered on freelancing platforms, the potential is significant.

The second option is to join Grow Distributed, a service provider affiliated with Empower Pakistan. Grow Distributed provides distributed and dedicated teams to startups and major logos in developed countries.

This set of options allows individuals to either tap into their passion for developing their own entrepreneurial business, or pursue a deeper technical career. Regardless, both help the individual access opportunities for personal development and impact beyond the domestic Pakistan market.

In just over two years, Empower Pakistan has already conducted a series of nine freelancing starter workshops, with several hundred individuals participating. Over 13,000 freelancing projects (most fairly small) have been completed, providing a significant series of learning opportunities.

They aim to create 100,000 digital employment opportunities for Pakistani youth by 2020. Fresh college graduates employed in the domestic market of Pakistan typically earn about US$250 per month or roughly US$1.50 per hour. The freelancing work allows an individual earn roughly double this amount per month, while having a price point on the global market of approximately US$6 – a tremendous value for the quality of talent that is underutilized in Pakistan. The volume of individuals that can be impacted, combined with the increase in earnings potential and advancement of skills, can be a game changer for Pakistan.

So why might this be interesting to your organization?

For starters, this is a nice illustration of how freelancing work models are creating new ways to access talent and how work can be done. It not only globalizes the talent pool, but also enables small businesses to be built versus the typical assumption of just individuals working through a freelancing model. If you aren’t intentionally considering when to use freelancing models, you should be.

Further, with the increasing demands for digitization, talent is in short supply globally and a freelancing model is applicable for many digital marketing-oriented initiatives. At US$6 per hour, the cost of experimentation is exceptionally low – why not allocate several hundred or several thousand dollars to test out the model with a small project? Many marketing efforts are not subject to the same concerns about security (public-facing, easily separable,) and at such a low price point can be run in parallel with completing the work via a normal model.

A special thanks to Sajid for sharing the story of Empower Pakistan, and best wishes on the journey ahead!

Initial Reactions to Brexit and the Impact on the Global Services Industry | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

The uncertainty of Brexit is not good for any industry. This is particularly true for the global services industry, since it is based on aligning labour forces, regulatory and legal concepts, and economics across multiple countries. When one country faces such a fundamental discontinuity, it and others intertwined with it are certain to need time to determine how to realign against the new normal.

Our initial reaction to the impact of Brexit on the global services industry follows. We will publish new advisory notes as the UK government releases more details about its exit strategy.

Overall picture:

  • It is possible, but unlikely that Article 50 (A50) of the Lisbon Treaty is invoked very soon. This would mean that for two years there will be no significant change. When A50 is invoked, exit negotiations can potentially run until the next UK General Election. That is a period of three to four years of no real regulatory change. In both of these scenarios we will see the status quo largely unaffected for up to four years but investment decisions on-hold or shelved.
  • Slightly longer term, another Scottish independence referendum would be likely to succeed. Also possible is an independent Scotland being fast-tracked into the EU. For Scotland the appetite for investment north of the border looks good. Who would have thought a week ago that nearshoring would have meant Scotland?
  • Initially, demand for outsourcing services through new contracts is likely to stagnate, as UK companies digest and await government strategy on Brexit. Renewals of existing agreements are also now facing uncertainty – in particular, crafting legal frameworks that adapt to the changing conditions will be challenging.
  • The drop in the value of the Pound will increase sales of British manufactured goods and, thereby, boost the sector. We may see increasing demand for outsourcing contracts to power manufacturing growth within the UK. Service providers will need to show agility and innovation to take on this demand to make the most of an uncertain market.
  • Currency fluctuations will cause volatility in service providers’ contracts and business from the region. This could lead to different ways of hedging and potentially contract renegotiations (those that were pan EU).
  • Outsourcing by the large and mature UK government sector will initially slow down pending Brexit strategy decisions. The sector, however, also has to deal with severe budget cuts. The combination of Brexit uncertainty and budget cuts will enhance demand for services by outsourcing to companies such as Atos, Capita, and HPE/CSC that are already well established in the market in the UK.
  • The picture in the financial services market is a complex one and for the purposes of this discussion, we consider the UK-headquartered financial institutions. On the one hand, financial institutions might see some easing of EU-originated regulatory requirements. This could lead to changes in scope of existing outsourcing contracts. On the other hand, there will be a lot of uncertainty in the sector about its relationship and business with the EU. This could boost demand for cost-cutting outsourcing as banks batten down the hatches and brace themselves for a bumpy ride over the next few years. BFSI will also look to monitor risks better in very uncertain times. We may see increasing investment in big data for managing and monitoring risks.
  • International outsourcing companies will be assessing the number of staff that they have working in the UK and EU countries and will track Brexit to ensure that they have optimized the spread of people who serve EU countries and the UK, which accounts for the largest share of the market in Europe. They will watch for clues relating to how work visas are likely to be sorted out and how this impacts the onshore-offshore model – particularly for staff that might need to travel between the UK and European countries.
  • Uncertainty is often a trigger for economic slowdown and ultimately a recession. The usual outcomes of cuts in expenditure and job losses cannot be disregarded with consequences such as lowering of demand in HR-related services such as RPO. However, it may help increase use of contingent labour and we might see an acceleration in MSP.
  • As the approach to Brexit becomes clearer, we would also expect to see an increase in projects required to alter operating models and data storage/access to comply with the new regulatory constructs. In the interim, many current transformation projects which involve activities that might be impacts by Brexit will be delayed or managed to allow flexibility to adapt to changing conditions.
  • Once the dust has settled (and hopefully quickly), EU and UK leaders are likely go past campaign style rhetoric such as “out is out” and negotiate in order to moderate uncertainty through interim trade deals to allow business and commerce to flow. If the UK economy slows, it will tend to have negative impacts on others as well, so hopefully there should be some natural momentum to get key issues sorted in an expedited manner. However, given we are discussing a political process, that hope is likely misplaced.

Staff travel and working visas

Historically, the UK has had a long and successful sourcing relationship with countries that are outside the EU, for example, India and the Philippines. This is unlikely to change. A relatively simple visa system for outsourcing company staff who come to work in the UK has served the industry well and is likely to be duplicated for people from the EU. However, whether these staff can easily work across the UK and the EU is not yet clear.

Overall, visa and immigration-related costs will increase for service providers operating in Europe and with centers in the UK. This may lead to a preference for placing more work in Europe (such as, CEE) as service providers will be able to more easily tap into the European labor market, especially when requiring European-language support.

Delivery centres

The UK-based delivery centres mainly serve demand from the UK but some also offer services in different language to other EU countries. This is particularly true for Scotland and Northern Ireland. Staff coming from other countries with language skills are likely to come under any new working visa system that is set up.

The UK has been a popular destination for data centres to serve clients in different EU countries. The IT industry will no doubt campaign to have data protection laws that are approved by the EU. However, over time we may see some relocation of data centres to EU countries.

Nearshoring to EU countries will slowdown initially until the details of Britain’s exit from the EU are worked out.

The drop in the value of the Pound will make the cost of “importing” services from nearshore and offshore GICs higher for UK-based parent companies. This will push the need for increased efficiency and we will see increased demand for cost cutting through technologies such as automation.

Although the question of whether there will be a Brexit is now answered, the number of remaining questions just got more complicated and uncertain.

OnShore Disruption: Lessons in Talent and Culture Innovation from Liberty Source

By | Uncategorized

Liberty Source launched in 2013 as an impact sourcing provider in the highly competitive finance & accounting (F&A) outsourcing market. Toward the end of 2015 and into 2016, I had a series of interesting discussions with Steve Hosley, CEO of Liberty Source and a veteran of the outsourcing and shared services industries. We talked about Liberty Source’s disruptive approach to optimizing its talent model to align to its social mission, how its using automation technology in service delivery, and other key issues as it looks to compete in the market.

I hope you enjoy this unique view into what it has been like for Liberty Source to emerge as a new provider with an intentional mission to disrupt traditional models. Its unique approach to talent and culture is a story worth telling, and perhaps an example worth following.

Part 1 | Part 2 | Part 3 | Part 4 | Part 5

Part 1: Bringing Innovation to the Onshore Delivery Model
Back to top

Eric: What is Liberty Source and how is it unique?

Steve: Liberty Source is an onshore BPO provider of F&A services. Our differentiators revolve around transparency and flexibility with our customers. Business is changing fast and flexible agreements are important to keep up with the pace. By flexible, we mean being able to pivot quickly to a company’s evolving delivery needs with a mix of automation and human capital needs.

We have chosen to run our onshore center with a social compass. Our team members – or as we call each other “shipmates” – primarily have a direct military affiliation as spouses of active duty military members or they are veterans themselves. This represents over 70% of our employee base. Our culture continues to be built around the U.S. military community.  We believe that this community makes us look and operate much differently than a typical BPO operation. For example, we have “family meetings” instead of the more stereotypical “all-hands meetings.” Our conference rooms are named after famous U.S. military spouses with our Boardroom named after Martha Washington. Our transformation training revolves around the OODA Loop (Observe, Orient, Decide, Act) rather than the typical Six Sigma.

Lastly, we aim to create a business that is known as a transformation center – where customers come to transform their work and employees come to transform their careers.

Eric: Where is Liberty Source finding this military talent?

Steve: Our current operations center is in Fort Monroe Virginia, near Virginia Beach. It is located near five bases, home to over 70,000 active service members and the largest naval base in the world. 85% of our employees have college degrees and of them, 21% of them are holding Masters Degrees. This helps confirm that we have a talented workforce that is simply seeking big company, multi-national experience. The fort has a storied history and is known as Freedom’s Fortress. Under Union General Benjamin Butler during the U.S. Civil War, it became a beacon for tens of thousands of slaves to come and gain their freedom. We believe, that that in small way, we hope to continue in the spirit of Fort Monroe by providing real commercial technical skills and careers to a population of well-deserving and very talented U.S. military spouses and veterans.

Our spouses are allowed to take their positions with them when they are PCS’d (permanent change of station) so now with over 10 percent of our employees operating virtually, we aim to continue to expand our footprint of Liberty Source coverage to all the major U.S. military bases around the world.

Eric: How is Liberty Source structured, legally and financially?

Steve: Liberty Source was created to capture the growing commercial demand for onshore BPO delivery but do it in a manner that was socially responsible. We established ourselves as a Public Benefits Corporation, or a PBC. This allows us to operate as a commercially viable and market relevant for-profit enterprise, while also holding the company accountable to a social mission. Given that this structure and delivery model was new, we elected to initially go to market as a wholly owned subsidiary of Digital Divide Data, which pioneered the offshore impact sourcing market in the early 2000s.

Eric: What successes has Liberty Source had to date?

Steve: We are a little over a year old in terms of go-to-market efforts and have stabilized our first client, a very large contract with 15 different processes. These were brought back from India from an eight-year incumbent. We transitioned in 100 FTEs and have been live with the client’s work since February. Our first client attained the same price as it did in India, and now the work is only three hours away from them versus being in India.

We achieved price neutrality by doing the work more efficiently. The efficiencies have been gained through three primary drivers. As we stated previously the community we are building is loyal, resulting in single-digit attrition this year. What we have found is that this lack of attrition makes us more competitive in that we are not having to spend time and effort on retraining and extensive review cycles. We inherited an ingrained functional tower orientation and migrated it to end-to-end process teams, which really helped reduce rework. Lastly, we are benefiting from building a business in the era of “As a Service” and cloud offerings so our infrastructure is light and efficient. A combination of things like email from Office365, general ledger from NetSuite, payroll from ADP, and all workstations are laptops to provide DRP (disaster recovery plan) flexibility. Most importantly we strongly believe that we are in the people business and that our success in delivering quality service back in the U.S. on this tough economic contract, is due to the fortitude and dedication of our employees. This is most evident in that we successfully trained 100 people in 120 days with a limited background in SAP and SFDC applications to work effectively in those environments.

Eric: How has the organization and its business matured in the short time Liberty Source has been in existence?

Steve: With the monthly delivery to our foundational client, now stable and our second client underway, the Board of Directors of Liberty Source made the decision last month to exit the foundation stage and enter our next stage of growth given that we have proven the viability of the model and have positive momentum. This growth stage includes investing in pursuing other clients. Our second client, also a large Fortune 500 multi-national, is undergoing a transformation and wanted a BPO provider that was willing to be flexible as its strategy evolved. This translates into taking on work that is initially about providing performance-based labor, which they need now, while also working on a project to automate the work, and then eventually rebalance the delivery mix into the appropriate levels required to be done by humans after the automation is completed.

The market and customers have spoken to us, so we have pulled forward the training, building and management of Robotic Process Automation (RPA) in our business model and invested in it earlier than we had planned.

Eric: How does Liberty Source plan to compete in the market moving forward?

Steve: We are targeting the market through a couple lenses. We are starting in the F&A area. We typically aim for companies that share our social mission of employing military spouses and vets. Finally, we resonate with organizations that have already outsourced before and are able to understand the benefits of our model when we explain things like transparent governance, providing a pathway to outcome-based pricing and how we embrace technology.

Because we have proven the model in Virginia, we would like to continue to scale and grow this location. We are also open to creating another center near an existing military population that may align with some other company’s geographic delivery or customer base and shares our social mission of providing opportunities to U.S. military families.

Lastly, part of our social mission is about providing upward mobility to our employees and we believe that embracing automation will over time elevate the remaining work and fulfill this commitment. In turn, our customers benefit from Liberty Source’s pursuit of these technology solutions though continuous improvement.

Eric: What are some of the things on your mind as you look forward to the next steps of Liberty Source?

Steve: We know the market need – it is seeking agility and flexible arrangements. Ones that can provide innovation and benefit to both parties. We feel our model and culture position us well to provide these differentiators.

Further, we must marry up this to the human capital strategy – we are beginning to build a virtual spouse model, which will give us even more elasticity on how to access and deliver talent. We also believe that bringing RPA into the service delivery model will provide flexibility in how we manage operations and our talent pool.

Eric: Thanks for your time and insights – I look forward to hearing more about how the journey has progressed when we speak again.

Part 2: Using a Military Spouse Talent Model to Energize Onshore Delivery
Back to top

Eric: What was the original vision for the talent model? How has that evolved over time and what are the reasons for the changes?

Steve: BPO has undergone an incredible industrialization over the past 20 years in offshore locations. Our original vision of the talent model for Liberty Source was to leverage this industrialization and build a human capital experience back into the forefront of BPO. The very first step in the creation of Liberty Source was to incorporate it as a Public Benefit Corporation (PBC) – which is a sustainable commercial for-profit enterprise that is also “hard-wired“ to operate with a social compass of hiring and providing career “on-ramps” focused on leveraging the talents of an underserved, but very capable U.S. military spouse population. The fact that we incorporated our company based on our human capital model speaks volumes to how we value talent at Liberty Source. Flexibility is key to our employees, so we allow our military spouses to take their Liberty Source jobs with them and work virtually when deployed to another base. This vision and foundation has not changed one bit although our journey has taught us a number of things.

We are now much more skilled and informed on how to work towards this vision. Key learnings include, when you elect to work with a member of the military, it is more about the community than it is about one type of individual in that community. We naturally have expanded our definition to now be the military community of spouses and veterans. We also learned that when engaging with our Liberty Source “shipmates,” the company must remain inclusive and accommodating to their larger family to include active service members.

We have seeded our values, operating principles and employee handbook with many military cultural norms that translate well into a commercial environment. These learnings all culminated at our one-year anniversary, when we hosted the Liberty Source Board of Directors for the first time on-site at our operations center. A formal Board meeting and dinner with speeches was not in the cards after all the hard work and dedication of our “shipmates” and sacrifices from their supportive families. We had to make this about the whole family, not just our shipmates. It was time to roll in the snow cone machine, bounce house, and bring in all their family members, including any active military that were home on leave. It was our time to be inclusive and celebrate the Liberty Source Family as a whole.

Eric: How are elements of the people model different than for traditional BPO?

Steve: The differences are not fundamental, but calibrated to our specific employee model. When you want to go beyond industrialization, you begin to ask your employees to “figure it out” and gain the confidence to ask questions. We find this is the only way to go “beyond the green” and past what is expected from us daily. So with this population you get folks who are constantly transplanted into new military communities around the world while their service member is at sea, in the Middle East or in some unknown location. If their car breaks down, or a new appliance arrives and is not installed, they figure it out. This is a population that has been accustomed to figuring things out for their families. We leverage this strong proven skill and move it to the workplace culture. Let’s first discuss our employment value proposition. There are four quadrants we look at when talking about the employee value proposition.

  • Culture: The first is a sense of culture and a place to come home to. Our military families need a sense of place where they can continue to bond and contribute, so we build a family culture that creates a level of communication and comradery necessary to maintain the mission focus. Still today in many military circles, spouses are referred to as “and spouse” or even worse, “dependents.” At Liberty Source, the company and culture has been designed for the first time in a different sequence, “spouses and veterans.” This simple change in sequence and priority translates well to a strong and tight community at Liberty Source.
  • Benefits: While we offer standard benefits to all of our employees, we found that our employees carrying existing military benefits desired the ability to supplement certain aspects of their existing coverage. We, in turn deployed an a la carte menu approach allowing everyone the flexibility to supplement their existing coverage and still tap a meaningful benefits program. Additional time off and flex time benefits, in support of specific military events such as PCS – Permanent Change of Station and Veterans Day, along with a flexible workplace, and other virtual work strategies add a richer layer to our offerings that you won’t find in a typical enterprise.
  • Compensation: We look at our compensation programs as a total reward offering. We find ways to start them in at Liberty Source at the right place and salary even though the market, due to the impact of their frequent moves, may dictate a lower wage. We believe the career pathways to opportunity we offer are all part of our short term and longer term incentives when balanced with more flexible time off and supplemental benefits. In this way a larger need is still met in a rewarding total package.
  • Development: The largest value we offer is our development track. Think of the impact to a résumé when you now have work experience at a Fortune 500 brand (our customers) and when you don’t have to drop your career every two to three years. Because our employees no longer have to make that choice, they build a continuous development program through on-the-job learning, networking, and course work supplemented with internal and external training.

Eric: So how do you go about integrating that into your recruiting?

Steve: Like any employer we accept applications from all qualified candidates and give everyone full consideration based on their knowledge, skills, and experiences. What we have found is the group we are here to help most, our military spouses, does not have the typical résumé that shows solid career progression in all cases. The nomenclature and terminology used is also more conducive to small markets than large ones. We have developed a keen eye and supporting science that looks closer at résumés where large employers would not take the time.

Because of the unconventional résumés, we have developed pre-employment screening systems that are based on 100s of candidates and performance data that help us identify the proper, personal hard-wiring to be successful at Liberty Source and within the specific position. We have seen the “fit rate” improve by 47% over the past year as our pre-screening tool became more informed on performance results. We believe that our current 50% employee referral rate for new hires coupled with the development of our talent acquisition science that has taken place over the past year and a half will position us well for scale.

Eric: Is there anything unique about your training programs?

Steve: We design our work to be done from anywhere so there is a stronger commitment to documenting the processes and procedures, virtualizing the training materials and supplementing with online and third party partners to execute training and development via a virtual or blended learning setting.

Part 3: Using a Military Spouse Talent Model to Energize Onshore Delivery II
Back to top

Eric: Once an employee is onboard, what is the design for her or his development and career path?

Steve: Many organizations follow a typical succession planning and talent management process to aid in guiding their employees down their career paths in which they are aligned with the goals of the company. Where we differ is the frequency of this review and the involvement of our clients.

Because our mission speaks to providing job progression opportunities, our first client agreed to the formation of an employee development committee that meets on a quarterly or semi-annual basis to aid us in evaluating our talent management program for employees assigned to its account. This dialogue provides us with great insight into current and future required skills. While the jobs may be entry to mid-level careers at Liberty Source, the longer-term partnership we take with our clients allows us to create and grow “farm teams” to form talent pipelines that are extensions of our clients’ talent planning models.

Career paths are individually determined and then taken into account when we perform our regular talent review discussions. While employees may be in a role associated with a Finance and Accounting career path, some employees have indicated they would like to pursue other areas of responsibility. To support their development, we use creative networking and affinity groups in a different way to provide extra-curricular opportunities for them to pursue and grow their interests.

Eric: This is a fairly different type of people model. How have you adjusted the management model to reflect this?

Steve: First off, we commonly refer to our managers as coaches because we believe this is the kind of culture we are building. We have to focus on non-traditional techniques. Most of the BPO world is set up to manage in-person and face-to-face. The mission we are on changes the very nature of this relationship because the majority of our people are destined to relocate or telework. We have to manage virtually, create touch points that factor in different time zones and modes of communication, and manage client expectations differently.

We also allow for more independent and direct communication with the client. Ordinarily this is highly filtered by the BPO organization. We remove as much of the go between as possible to allow for the transparent process we promise to our clients. Once the employee is up to speed and producing, they own this relationship in most cases.

The typical command and control model that drives a directive, task-oriented communication style is replaced with a coaching and mentoring model. This view of leadership vs. management permeates how we engage employees to own their work more directly and learn how to transform it to a more efficient and scalable plan for the long term.

Eric: With all these modifications to normal people practices, it would seem that Liberty Source’s culture must be distinctive. Can you comment on what defines the culture?

Steve: Liberty Source is a place to come home to. Stable careers, flexibility in workplace and schedules, and with a common goal of being a place where employees come to transform their careers and customers come to transform their work. To achieve this, we have to translate what our employees may be used to and begin to train, teach, and coach on commercial culture norms and expectations. Some of our employees may be working in a sophisticated office setting for the first time, so we cannot expect everyone to come to the job without clearly defining rules of engagement and a structure to follow. We came up with a few simple principals to help guide a way of thinking and acting based on language they might already be used to. These six principles are:

  • Own it: We take personal responsibility to get our tasks done, meeting or exceeding both our clients’ and colleagues’ expectations.
  • Learn and lean: We look at every task or process as a learning experience, and don’t hesitate to lean on others for help.
  • Know our clients: We know what drives our clients’ success, and make decisions that support their business.
  • Know your numbers: We always know our performance metrics, and what we’ve committed to our clients.
  • No surprises: If something gets in the way of our performance, we immediately flag the situation to our management and our clients
  • No boundaries: Performance has no limits. We always look for opportunities outside our scope of responsibility to make a difference.

We also rely on a family approach to bring everyone to the table to resolve challenges. There is a level of honesty and support that comes from a family-centered view. You don’t get this in a commercial setting, and we tap in to it to gain trust and thus create strength.

Eric: What are the biggest opportunities and challenges you see for the talent model to continue scaling and evolving?

Steve: We still believe there is work to be done in better leveraging localized municipal community colleges as well as tapping into SaaS providers for training as well. Our size impacts the number of resources we can tap. To move past this, we are fortifying partnerships to expand our capability to expand learning and development goals.

The power of the Liberty Source family is in their sense of mission. It is easy to convey to this community that the success that you and the organization achieve now with our clients will create a wake of opportunity for future deserving spouses and veterans – and on behalf of those future spouses and veterans, we thank you for your commitment to Liberty Source. This message typically would not resonate in a BPO operation, but at Liberty Source it is “all hands on deck.” We strongly believe that the human capital model we have designed will directly translate to commercial differentiation in the market through low attrition and a committed workforce.

Eric: What are the benefits of the Liberty Source talent model in comparison to traditional BPO models?

Steve: Access to untapped, capable talent that fits – with our deep ties, affiliations and tools we have access to talent that is not readily apparent to the typical BPO. This is paying off in a couple ways:

  • Dedication: We have single digit attrition which is directly attributed to our dedicated military community and the culture we have formed. Typical BPOs have higher levels of turnover and much less social impact than we do. This retention creates the opportunity to transform work for our clients. We have a workforce that is highly engaged in the work of Liberty Source and wants to see us succeed like we’ve not seen in our previous commercial experiences. We’d like our current and future clients to see what can happen when full engagement is in action.
  • Agility: Our proximity to our clients and our EQ lends itself to less cycles and revisions. We get hand-offs right the first time.
  • Continuous improvement: This has long been an elusive goal of BPO providers. At Liberty Source we are committed to growing our employees and a big part of achieving that is through transforming our clients work so the type of Liberty Source work begins to elevate. This in turn elevates the abilities of our team.
  • Connection to Corporate Social Responsibility (CSR): Companies should no longer think of their CSR activities independently from the operation of their company. At Liberty Source, we deliver services at a commercial standard and our clients also get the benefit of evangelizing about our amazing social story as well.

Eric: What could others learn from Liberty Source’s experiences?

Steve: Major misconceptions are tied to spotty résumés and unrecognizable military terms and experiences. This is the primary reason the military spouse has challenges in achieving their full potential. If you focus clearly on what defines success in the role and manage to that in your selection, in your goal setting, and in your rewards you can really achieve a lot and help someone really deserving achieve their potential. Lastly, given that many of our staff originate from a command and control hierarchy, empowerment needs to be consistently reinforced to generate their optimal performance.

Eric: Thanks for sharing these insights with us. It is stimulating to think about how much a people model and culture can be designed to align to a particular targeted talent pool.

Part 4: Using Culture as a Powerful Retention and Engagement Strategy
Back to top

Classic business philosophy tells us (or at least the professors in b-school told us) that the organizational model should be developed to support the business strategy – organization (skills, culture, etc.) follows strategy, strategy doesn’t follow organization.

In a recent discussion with Steve, I began to realize that this fairly simple idea probably has its limits. In a fast-changing world, can complex organizations actually be fluidly re-aligned to deal with each change in the market and the associated business implications? Might this be especially challenging for knowledge economy business models in which people are most of the differentiating asset? And might a differentiated organizational model actually be an advantage to executing a new strategy over potential competition?

Liberty Source offers a unique perspective into how an organizational model can inform and guide business strategy. As a Public-Benefit Corporation (PBC), Liberty Source exists to generate business profits, but its articles of incorporation also require it to do that in a manner that creates a social benefit. Liberty Source chose to focus its social benefit on providing commercial opportunities to an often overlooked population of skilled U.S. military spouses and veterans. As a PBC, it must regularly report on its social impact (in this case its people) and, therefore, constantly think about its market and strategic opportunities from the perspective of how it impacts its people.

Before we turn to Steve’s perspectives on how this impacts its culture, I also point you to a recent speech by Bill Gross, a leading Silicon Valley entrepreneur and founder of Idealab, a leading start-up incubator. Bill has been associated with many start-ups such as tickets.com, NetZero, eToys, Picasa, WeddingChannel.com, and CitySearch and has a privileged perspective on what makes for a successful business. As he explains in the video below, he conducted an analysis of start-ups with which Idealab was involved plus other start-ups where he has knowledge of their histories. In his analysis of which factors most contribute to success, he found that the uniqueness of the idea was actually only the third most important factor, followed by the quality of the business model at fourth. The most important factor was timing (not too early, not too late) and then second the team who establishes the culture. If you can’t spare the seven minutes to watch the entire video, check-out the summary of this study at 3:30.

Eric: Steve, how did Liberty Source develop its culture and in what ways did its PBC status shape that culture?

Steve: Eric, when the Founder of Liberty Source and I were envisioning Liberty Source back in 2013 we had not seen the enlightening analysis and supporting TED talk from Bill Gross but it is reassuring to know that people still matter in the success of a company.

When we were planning out the design of Liberty Source, we knew that forming a company around a delivery model that centered on U.S. Military spouses and Veterans had an inherent advantage because by definition this community had a pre-disposition to serve a greater purpose. It is for this reason that we believe that our PBC (Public Benefit Corporation) indicator can actually translate into a competitive advantage if the right culture and environment is established.

Employee engagement is something that comes naturally for this community. When creating Liberty Source, we followed a step-wise path to ensure our PBC became a position of strength in the market and not a burden or obligation.

Eric: What were those key steps?

Steve: The first step was to reconnect human capital to the BPO industry. At Liberty Source one of our market differentiators revolves around our ability to pivot with our clients, remaining flexible to their changing businesses. We believed from the start that as the rate of change increasingly impacts various industries and business models, traditional BPO relationships will no longer be resilient to keep pace. In the design of the new Liberty Source delivery model we consciously fused our human capital strategy with our go-to-market strategy.

A large portion of our delivery team demographic is U.S. military spouses. This community, by definition, is somewhat transient due to that fact that their U.S. military active service members regularly get assigned to new bases. Spouses regularly find themselves in situations where they need to quickly plan family moves and when they arrive at their new base, figure out the new geographic setting, many times without the support of their service member because he or she may be on deployment. Adaptability and the fortitude to figure things out are assets this community generally brings with them when they arrive at Liberty Source. We have found that these life skills and the unique life lens and perspective, each of them possesses, translate well into the fluid commercial business space.

Step 2 is to ensure employees feel engaged and valued. I lived in Texas many years ago and regularly attended Friday night high school football. I remember how overwhelming the atmosphere was when I attended my first football game in Texas. In Texas, football is a production not just a game. There are football players, cheerleaders, a flag team, a cowboy team, the band, a national anthem trio, among others I am sure. I mentioned to a local Texan that was sitting next to our family how amazed I was by how large the football production had become since I was up in school in Connecticut. I stated that there must be over 250 kids involved in this “production” and wasn’t that a bit over the top. I will never forget his response. He said “each one of those kids out there has a purpose, and purpose is what it is all about.” Always love the simple wisdom that comes from a Texan! It made total sense to me, 250 kids each with their personal connection to their own smaller group, with all the groups connected on Friday night aimed at a common goal of representing their school brand and producing a win. The connection to the localized group as well as the larger high school enterprise is what companies pay millions for each year to ensure positive “Employee Engagement” measures.

Eric: Can you give some specific examples of the principles Liberty Source has adopted to align to this vision for the culture?

Steve: Over the years I created a number of captive shared service organizations as well as running a billion dollar outsourcing business and although each organization may have resided in different industries and focused on different services, each of them shared one common thread: people.

At Liberty Source we created a unique culture that blends elements from the U.S. military community as well as adopting successful operating practices that aided in the impressive industrialization of the BPO industry over the past 15 years. This is evident in our Operating Principles that echo “know your numbers” from the BPO industry and “find a swim buddy” from the U.S. military. Other structural design elements that aid in creating the right culture are: we believe in “coaching moments” not “PIP”ing moments. We treat career advancement of our shipmates inside and outside of the company as a community celebration. Our shipmates require unfiltered straight talk and our all hands meeting are family meetings or video conferences. Impersonal CEO communication emails do not work.

Lastly, company gatherings always include family. We learned early on that there is a reason that when the military has an event or ceremony spouses and family members are always included. At Liberty Source, we understand that the power of the culture we are building rests on all the supporting family members so their continued support of Liberty Source is integral to achieving our goals.

These groups are enabled through the mentoring and coaching provided by a Chief Ambassador of Culture who connects our leadership team to their needs and translates engagement in more real time fashion. Many companies would rest on their laurels that affinity groups are meeting and engaging for themselves. We’ve flipped the script and extended the reach of affinity groups into a career development and engagement model that advances our capability as a business too. The biggest goal of our culture program is to ensure that all of our employees have an opportunity to have a bigger role in the Liberty Source journey and our brand than simply their day-to-day duties at their desks satisfying their clients.

Eric: That is a meaningful goal and in contrast to the more limited focus on operations that permeates many BPO organizations. Where did this come from and how are you acting on it?

Steve: This goal emanates from the belief that if folks can understand the greater purpose of an organization and they are invested in it, the resulting culture will be a powerful retention and engagement tool.

So why do we think culture is important? I guess I could say in order to help us comply with our PBC indicator, but the real reason is that we think that in order to be responsive to our clients changing environments, we need a workforce that is resilient, empowered, invested and does not freeze each time they experience a new request or change. An engaged, tight, and personally invested workforce will have the confidence and capability to pivot, adapt, and be flexible, because they know that leadership will be honest with them and that they can lean on all their fellow Liberty Source shipmates, with the understanding that someone will always have their back. That lack of fear, coupled with empowerment in a workforce is a powerful force that we think all organizations can learn from.

Eric: Steve, thanks for sharing this context with me – it really resonates with my personal experiences at college with a strong military tradition and my first job after graduate school. Services is all about getting the hearts and minds of people focused on serving clients and Liberty Sources has a great model in place.

Part 5: Using Culture as a Powerful Retention and Engagement Strategy II
Back to top

Eric: In an earlier conversation, you described the culture that Liberty Source has intentionally adopted and why it has chosen to focus so much on culture. I would like to understand more about what Liberty Source has specifically done to structurally build the principles into how Liberty Source operates. What are some of those elements that have been designed into Liberty Source’s operating model?

Steve: The cornerstone of the culture program, and first group we kicked off, was our affinity group, LSVS (Liberty Source Veteran and Spouse) team. This group drives all of our community outreach activities as well as our internal engagement programs. It also allows spouses and veterans the ability to mentor other Liberty Source employees. A big part of ensuring Liberty Source continues to effectively scale, resides in our ability to access top talent, so the LSVS team created a Liberty Source Ambassador program, which is a volunteer rotational assignment where our spouses and veterans, represent Liberty Source at recruiting events on bases and within the community. Although we have a standard recruiting process, we encourage our spouses and veterans to simply be authentic and talk with folks, telling their Liberty Source story. Empowering our employees in this capacity is powerful and engaging. To hear spouses speak of their specific roles at Liberty Source and then speak about the company at the enterprise level is powerful and in the process, that simple exchange has placed their personal credibility and brand upon the enterprise brand of Liberty Source. It also is a big reason that, even after two years, we are still very proud that over 50% of our new hires come from internal referrals.

A second team we established is focused on getting the right tools and establishing the environment. We have an open, productive, and inviting work environment and our shipmates have all the necessary tools to be successful in their job. We are a laptop-driven open environment with no offices, which promotes our employees to exercise one of our operating principles of “Own it,” allowing folks to simply get up from their seat and walk over to another team to get something solved. Pretty basic, but once your employees feel empowered, this basic open concept can be a powerful instrument. Our operations center resides in Virginia, where southern hospitality is alive and well. This polite nature proved to be problematic at times because our shipmates were not culturally equipped to tell a fellow shipmate that they could not talk right now because they were in the middle of something. This committee developed flags for each desk and when the flag is up it signifies the “door is closed and I am busy.” This indicator helps prevent culturally awkward interactions.

Eric: Great idea! I need to get a flag for my office door to keep our CEO away while I am trying to get work done. Beyond the affinity and the committee for design of the environment, are there other elements you have designed into the operating model?

Steve: Yes, there are three other elements that come to mind – a training coalition, our monthly employee communication, and a medals and ribbons program.

Eric: Would you mind describing those in some more detail?

Steve: Certainly. At Liberty Source we have a standard training program that we continue to enhance each year in support of the skills we deem e necessary today and in the future. This group is chartered with developing a supplemental training program focused on tracking and managing on-the-job training experiences and skill achievements. They have targeted a few key areas, roles, and skills, and they work with the folks currently performing the functions to practice and formulate a way to convey what you do to others. They then schedule and arrange job shadowing opportunities for fellow shipmates to learn from each other. This group also finds opportunities for Liberty Source employees to exercise a development skill in “friendly” non-client facing situations, such as putting into practice their PMM certification by running and leading our annual holiday party. Although the military community embraces formalized classroom certificate driven training, and Liberty Source has its share of that, we believe the classroom work needs to be reinforced or validated from seeing and doing real work and achieving and demonstrating tangible skill development. In the works right now, this team is developing a new program to target and track when shipmates demonstrate skill achievement through the attainment of visible badges or metals. This will allow our folks to track their development inside formal classroom settings as well as skill proficiency achievements outside the classroom.

From a communications perspective, our communications team ensures that we have established outlets that allow personal and professional information to be shared on a regular basis among shipmates. One of the key instruments of this team is the monthly LSVS outreach publication that profiles individuals, accomplishments, what’s ahead, and how to get involved. This group also orchestrates quarterly skip level meetings to make sure there is a transparent exchange of information.

The last item I mentioned was medals and ribbons. In the military, they clearly know the value and importance of recognizing individuals for great accomplishments. The commercial world can learn much from the military in this area. What we have learned is that the way you deliver recognition of achievement is actually just as important as the reward that may come with it. Taking the time and thinking through the interaction and exchange of the actual recognition and reward is very meaningful. One of our biggest events is when we reach the first anniversary of a new client. We invite the client to our Operations Center located at Fort Monroe in Virginia for a formal “coin” ceremony. We have a special coin minted that honors the client and its dedicated delivery team at Liberty Source. In the ceremony, we “coin” the Liberty Source employees in honor of their hard work and dedication, which includes transitioning, launching, stabilizing, and delivering for the client day to day. In the same ceremony, we have our spouses and veterans “coin” their client counterparts and key client personnel in recognition of their thanks for all the support over the past year but, even most importantly, for their commitment and belief in the spouses and veteran community. Needless to say this is a powerful recognition event on many levels.

Libert Source Coin

Eric: Very interesting to hear these examples and how the alignment to the military culture has provided an opportunity to extend culture design into business operations. Thanks again for sharing, and I look forward to our next discussion. Might you be ready to explain the automation program and learnings for that effort?

Steve: I think we are about ready to share our learnings. We have automated processed at two different clients and are capturing some powerful learnings. Let’s speak in a few months and we will be happy to share these.

Liberty Source: Using Culture as a Powerful Retention and Engagement Strategy / Part II | Sherpas in Blue Shirts

By | Impact Sourcing, Sherpas in Blue Shirts

What if a service provider could build itself from scratch based on the learnings from the past two decades? Liberty Source, launched in 2013 as an impact sourcing provider, is trying to do just that in the highly competitive finance & accounting (F&A) outsourcing market. It has agreed to share its story with us as its business continues to scale.

Our first discussion with Steve Hosley, CEO of Liberty Source, provided an overview of their journey and in the second and third discussion we focused on the talent model. Our fourth  discussion focused on the principles behind the culture of Liberty Source. We continue the discussion on culture in this fifth blog.

Eric: In an earlier conversation, you described the culture that Liberty Source has intentionally adopted and why it has chosen to focus so much on culture. I would like to understand more about what Liberty Source has specifically done to structurally build the principles into how Liberty Source operates. What are some of those elements that have been designed into Liberty Source’s operating model?

Steve: The cornerstone of the culture program, and first group we kicked off, was our affinity group, LSVS (Liberty Source Veteran and Spouse) team. This group drives all of our community outreach activities as well as our internal engagement programs. It also allows spouses and veterans the ability to mentor other Liberty Source employees. A big part of ensuring Liberty Source continues to effectively scale, resides in our ability to access top talent, so the LSVS team created a Liberty Source Ambassador program, which is a volunteer rotational assignment where our spouses and veterans, represent Liberty Source at recruiting events on bases and within the community. Although we have a standard recruiting process, we encourage our spouses and veterans to simply be authentic and talk with folks, telling their Liberty Source story. Empowering our employees in this capacity is powerful and engaging. To hear spouses speak of their specific roles at Liberty Source and then speak about the company at the enterprise level is powerful and in the process, that simple exchange has placed their personal credibility and brand upon the enterprise brand of Liberty Source. It also is a big reason that, even after two years, we are still very proud that over 50% of our new hires come from internal referrals.

A second team we established is focused on getting the right tools and establishing the environment. We have an open, productive, and inviting work environment and our shipmates have all the necessary tools to be successful in their job. We are a laptop-driven open environment with no offices, which promotes our employees to exercise one of our operating principles of “Own it,” allowing folks to simply get up from their seat and walk over to another team to get something solved. Pretty basic, but once your employees feel empowered, this basic open concept can be a powerful instrument. Our operations center resides in Virginia, where southern hospitality is alive and well. This polite nature proved to be problematic at times because our shipmates were not culturally equipped to tell a fellow shipmate that they could not talk right now because they were in the middle of something. This committee developed flags for each desk and when the flag is up it signifies the “door is closed and I am busy.” This indicator helps prevent culturally awkward interactions.

Eric: Great idea! I need to get a flag for my office door to keep our CEO away while I am trying to get work done. Beyond the affinity and the committee for design of the environment, are there other elements you have designed into the operating model?

Steve: Yes, there are three other elements that come to mind – a training coalition, our monthly employee communication, and a medals and ribbons program.

Eric: Would you mind describing those in some more detail?

Steve: Certainly. At Liberty Source we have a standard training program that we continue to enhance each year in support of the skills we deem e necessary today and in the future. This group is chartered with developing a supplemental training program focused on tracking and managing on-the-job training experiences and skill achievements. They have targeted a few key areas, roles, and skills, and they work with the folks currently performing the functions to practice and formulate a way to convey what you do to others. They then schedule and arrange job shadowing opportunities for fellow shipmates to learn from each other. This group also finds opportunities for Liberty Source employees to exercise a development skill in “friendly” non-client facing situations, such as putting into practice their PMM certification by running and leading our annual holiday party. Although the military community embraces formalized classroom certificate driven training, and Liberty Source has its share of that, we believe the classroom work needs to be reinforced or validated from seeing and doing real work and achieving and demonstrating tangible skill development. In the works right now, this team is developing a new program to target and track when shipmates demonstrate skill achievement through the attainment of visible badges or metals. This will allow our folks to track their development inside formal classroom settings as well as skill proficiency achievements outside the classroom.

From a communications perspective, our communications team ensures that we have established outlets that allow personal and professional information to be shared on a regular basis among shipmates. One of the key instruments of this team is the monthly LSVS outreach publication that profiles individuals, accomplishments, what’s ahead, and how to get involved.  This group also orchestrates quarterly skip level meetings to make sure there is a transparent exchange of information.

The last item I mentioned was medals and ribbons. In the military, they clearly know the value and importance of recognizing individuals for great accomplishments. The commercial world can learn much from the military in this area. What we have learned is that the way you deliver recognition of achievement is actually just as important as the reward that may come with it. Taking the time and thinking through the interaction and exchange of the actual recognition and reward is very meaningful. One of our biggest events is when we reach the first anniversary of a new client. We invite the client to our Operations Center located at Fort Monroe in Virginia for a formal “coin” ceremony. We have a special coin minted that honors the client and its dedicated delivery team at Liberty Source. In the ceremony, we “coin” the Liberty Source employees in honor of their hard work and dedication, which includes transitioning, launching, stabilizing, and delivering for the client day to day. In the same ceremony, we have our spouses and veterans “coin” their client counterparts and key client personnel in recognition of their thanks for all the support over the past year but, even most importantly, for their commitment and belief in the spouses and veteran community. Needless to say this is a powerful recognition event on many levels.

Libert Source Coin

Eric: Very interesting to hear these examples and how the alignment to the military culture has provided an opportunity to extend culture design into business operations. Thanks again for sharing, and I look forward to our next discussion. Might you be ready to explain the automation program and learnings for that effort?

Steve: I think we are about ready to share our learnings. We have automated processed at two different clients and are capturing some powerful learnings. Let’s speak in a few months and we will be happy to share these.

 

 

 

Liberty Source: Using Culture as a Powerful Retention and Engagement Strategy / Part I | Sherpas in Blue Shirts

By | Impact Sourcing, Sherpas in Blue Shirts

What if a service provider could build itself from scratch based on the learnings from the past two decades? Liberty Source, launched in 2013 as an impact sourcing provider, is trying to do just that in the highly competitive finance & accounting (F&A) outsourcing market. It has agreed to share its story with us as its business continues to scale.

Our first discussion with Steve Hosley, CEO of Liberty Source, provided an overview of their journey and in the second and third discussion we focused on the talent model. We now turn our attention to the culture of Liberty Source and how it has been designed to align to the needs of clients and the military population that comprises its talent pool.

Classic business philosophy tells us (or at least the professors in b-school told us) that the organizational model should be developed to support the business strategy – organization (skills, culture, etc.) follows strategy, strategy doesn’t follow organization.

In a recent discussion with Steve, I began to realize that this fairly simple idea probably has its limits. In a fast-changing world, can complex organizations actually be fluidly re-aligned to deal with each change in the market and the associated business implications? Might this be especially challenging for knowledge economy business models in which people are most of the differentiating asset? And might a differentiated organizational model actually be an advantage to executing a new strategy over potential competition?

Liberty Source offers a unique perspective into how an organizational model can inform and guide business strategy. As a Public-Benefit Corporation (PBC), Liberty Source exists to generate business profits, but its articles of incorporation also require it to do that in a manner that creates a social benefit. Liberty Source chose to focus its social benefit on providing commercial opportunities to an often overlooked population of skilled U.S. military spouses and veterans. As a PBC, it must regularly report on its social impact (in this case its people) and, therefore, constantly think about its market and strategic opportunities from the perspective of how it impacts its people.

Before we turn to Steve’s perspectives on how this impacts its culture, I also point you to a recent speech by Bill Gross, a leading Silicon Valley entrepreneur and founder of Idealab, a leading start-up incubator. Bill has been associated with many start-ups such as tickets.com, NetZero, eToys, Picasa, WeddingChannel.com, and CitySearch and has a privileged perspective on what makes for a successful business. As he explains in the video below, he conducted an analysis of start-ups with which Idealab was involved plus other start-ups where he has knowledge of their histories. In his analysis of which factors most contribute to success, he found that the uniqueness of the idea was actually only the third most important factor, followed by the quality of the business model at fourth. The most important factor was timing (not too early, not too late) and then second the team who establishes the culture. If you can’t spare the seven minutes to watch the entire video, check-out the summary of this study at 3:30.

Eric: Steve, how did Liberty Source develop its culture and in what ways did its PBC status shape that culture?

Steve: Eric, when the Founder of Liberty Source and I were envisioning Liberty Source back in 2013 we had not seen the enlightening analysis and supporting TED talk from Bill Gross but it is reassuring to know that people still matter in the success of a company.

When we were planning out the design of Liberty Source, we knew that forming a company around a delivery model that centered on U.S. Military spouses and Veterans had an inherent advantage because by definition this community had a pre-disposition to serve a greater purpose.  It is for this reason that we believe that our PBC (Public Benefit Corporation) indicator can actually translate into a competitive advantage if the right culture and environment is established.

Employee engagement is something that comes naturally for this community. When creating Liberty Source, we followed a step-wise path to ensure our PBC became a position of strength in the market and not a burden or obligation.

Eric: What were those key steps?

Steve: The first step was to reconnect human capital to the BPO industry. At Liberty Source one of our market differentiators revolves around our ability to pivot with our clients, remaining flexible to their changing businesses. We believed from the start that as the rate of change increasingly impacts various industries and business models, traditional BPO relationships will no longer be resilient to keep pace. In the design of the new Liberty Source delivery model we consciously fused our human capital strategy with our go-to-market strategy.

A large portion of our delivery team demographic is U.S. military spouses. This community, by definition, is somewhat transient due to that fact that their U.S. military active service members regularly get assigned to new bases. Spouses regularly find themselves in situations where they need to quickly plan family moves and when they arrive at their new base, figure out the new geographic setting, many times without the support of their service member because he or she may be on deployment. Adaptability and the fortitude to figure things out are assets this community generally brings with them when they arrive at Liberty Source. We have found that these life skills and the unique life lens and perspective, each of them possesses, translate well into the fluid commercial business space.

Step 2 is to ensure employees feel engaged and valued. I lived in Texas many years ago and regularly attended Friday night high school football. I remember how overwhelming the atmosphere was when I attended my first football game in Texas. In Texas, football is a production not just a game. There are football players, cheerleaders, a flag team, a cowboy team, the band, a national anthem trio, among others I am sure. I mentioned to a local Texan that was sitting next to our family how amazed I was by how large the football production had become since I was up in school in Connecticut. I stated that there must be over 250 kids involved in this “production” and wasn’t that a bit over the top. I will never forget his response. He said “each one of those kids out there has a purpose, and purpose is what it is all about.” Always love the simple wisdom that comes from a Texan! It made total sense to me, 250 kids each with their personal connection to their own smaller group, with all the groups connected on Friday night aimed at a common goal of representing their school brand and producing a win. The connection to the localized group as well as the larger high school enterprise is what companies pay millions for each year to ensure positive “Employee Engagement” measures.

Eric: Can you give some specific examples of the principles Liberty Source has adopted to align to this vision for the culture?

Steve: Over the years I created a number of captive shared service organizations as well as running a billion dollar outsourcing business and although each organization may have resided in different industries and focused on different services, each of them shared one common thread: people.

At Liberty Source we created a unique culture that blends elements from the U.S. military community as well as adopting successful operating practices that aided in the impressive industrialization of the BPO industry over the past 15 years. This is evident in our Operating Principles that echo “know your numbers” from the BPO industry and “find a swim buddy” from the U.S. military. Other structural design elements that aid in creating the right culture are: we believe in “coaching moments” not “PIP”ing moments. We treat career advancement of our shipmates inside and outside of the company as a community celebration. Our shipmates require unfiltered straight talk and our all hands meeting are family meetings or video conferences. Impersonal CEO communication emails do not work.

Lastly, company gatherings always include family. We learned early on that there is a reason that when the military has an event or ceremony spouses and family members are always included. At Liberty Source, we understand that the power of the culture we are building rests on all the supporting family members so their continued support of Liberty Source is integral to achieving our goals.

These groups are enabled through the mentoring and coaching provided by a Chief Ambassador of Culture who connects our leadership team to their needs and translates engagement in more real time fashion. Many companies would rest on their laurels that affinity groups are meeting and engaging for themselves. We’ve flipped the script and extended the reach of affinity groups into a career development and engagement model that advances our capability as a business too. The biggest goal of our culture program is to ensure that all of our employees have an opportunity to have a bigger role in the Liberty Source journey and our brand than simply their day-to-day duties at their desks satisfying their clients.

Eric: That is a meaningful goal and in contrast to the more limited focus on operations that permeates many BPO organizations. Where did this come from and how are you acting on it?

Steve: This goal emanates from the belief that if folks can understand the greater purpose of an organization and they are invested in it, the resulting culture will be a powerful retention and engagement tool.

So why do we think culture is important? I guess I could say in order to help us comply with our PBC indicator, but the real reason is that we think that in order to be responsive to our clients changing environments, we need a workforce that is resilient, empowered, invested and does not freeze each time they experience a new request or change. An engaged, tight, and personally invested workforce will have the confidence and capability to pivot, adapt, and be flexible, because they know that leadership will be honest with them and that they can lean on all their fellow Liberty Source shipmates, with the understanding that someone will always have their back. That lack of fear, coupled with empowerment in a workforce is a powerful force that we think all organizations can learn from.

Eric: Steve, thanks for sharing this context with me – it really resonates with my personal experiences at college with a strong military tradition and my first job after graduate school. Services is all about getting the hearts and minds of people focused on serving clients and Liberty Sources has a great model in place.

Why Socially Responsible Sourcing May be Your Ticket to Talent Success | Sherpas in Blue Shirts

By | Impact Sourcing, Sherpas in Blue Shirts

“In our view, underutilized talent pools are an essential ingredient for optimizing the talent models for service delivery.” This sentence, from the foreword I wrote for the new book, “Socially Responsible Outsourcing,” speaks to the very essence of social impact sourcing.

As the global sourcing industry has matured and evolved over the last two decades, so have enterprises’ and service providers’ approaches to accessing, developing, and managing talent. And their quest for new talent has naturally driven them toward socially responsible sourcing – sometimes even unintentionally, according to research Everest Group conducted in tandem with The Rockefeller Foundation.

While socially responsible sourcing is not viable in all situations, the use of alternative talent pools can deliver a winning array of benefits in many cases.

  • Individuals in non-traditional talent pools – think those lacking economic or educational opportunities, military veterans, physically limited people, etc. – are underutilized, available, and eager to work, which can equate to success for the employer and the employee in the right environment with the right training
  • These alternative workers may have knowledge or experiences that enable them to perform better than traditional employees. Here, think those with certain medical conditions or diseases providing contact center services that support corresponding medical devices and services
  • As workers across socially responsible talent pools place more value on the job opportunity, the employer benefits from their greater levels of motivation, lower rates of attrition, and lesser total cost of employment
  • Organizations with successful programs can often attain a more sustainable and differentiated service delivery model than through typical approaches
  • Socially responsible sourcing has a positive social impact on employees’ families and the broader community in which they live.

Has your organization embraced social impact sourcing, or is it considering doing so? Please share your experiences, successes, and concerns with our readers.

And if you’re attending the IAOP’s Outsourcing World Summit on February 15-17 in Lake Buena Vista, Florida, please visit Everest Group’s booth # 31. We’ll be giving away copies of Socially Responsible Outsourcing, and would love to chat with you about your company’s existing or potential venture into this emerging alternative talent model.