Attend this webinar to gain the latest insights on the global services industry, particularly the impact of the recent changes to the political climate in the Philippines. You will have the opportunity to learn more about the current landscape as you plan your 2017 strategies.
This one-hour webinar will focus on:
Major contributors to global services market growth in Q3 2016
Demand geographies contributing to market growth
New segments that are driving growth Supply geographies best suited to support incremental demand
The market outlook for the remainder of 2016
Presenters: H. Karthik, Partner – Global Sourcing Salil Dani, Vice President – Global Sourcing
Who should attend:
Executives: C-level and VPs looking to understand the latest developments in the global services space, decision makers involved in outsourcing, GICs, and delivery locations, and executives who need to understand the implications of recent political changes on Philippines Global services industry
Service providers: C-level and VPs who focus on competitor strategy, digital initiatives, and location activity
Anyone wanting to understand the impact of political changes in the Philippines on the global services industry
The general insurance (GI) industry has largely remained silent in a world where conversations either begin or end with the word “digital.” Products and services from the traditional GI providers have failed to keep tempo with the rapid technological developments happening everywhere else. One reason for this is that GI offerings are low-touch products about which customers interact with the provider just once or twice a year. Another is that GI providers have traditionally not focused on customer experience or value generation for their clients. They lag the Ubers and Amazons of the world by many miles.
However, the landscape has started to change recently due to the entry of disruptive start-ups trying to bridge the gap between service delivery and customer expectations. Areas gaining traction include price comparison services and mobile-based services. The real standout is peer-to-peer (P2P) insurance. It has gained more market buzz because the business model is not as opaque as the traditional model and provides clear benefits for the customers.
The P2P insurance business model P2P insurance is a novel model facilitated by social media. Customers form their own online networks, and each pools in money to build a corpus. They allocate some portion of the fund to the mutual pool and pay the balance to a traditional insurer. When a claim must be made, members pull money from the mutual pool. If a claim exceeds the mutual pool corpus, they approach the reinsurer. If the claim is less than in the mutual pool, the remaining amount is distributed back to the members.
What are the benefits?
There is less likelihood of fraudulent claims, as the small group of members who know each other share the risk
The members can select the risk level of their group, unlike in the traditional model
Non-operating cost optimization
Marketing and administration costs account for nearly 10-15 percent of policy premiums in the traditional model. These costs are nominal in the P2P model, as marketing is done by members personally. Hence, members pay less than usual premiums
Unclaimed insurance premiums are profits for traditional insurers. However, P2P insurance gives unclaimed money back to the members.
How does this disrupt the status-quo? In the medium to long term, as this model gains maturity and acceptance, customers may switch to the P2P model. This will shrink the market share held by traditional players. Reduced demand for traditional insurance plans, coupled with increased supply, will drive down prices. Thus, customers are likely to benefit in the end.
Who are the current prominent P2P start-ups?
These companies are the hot start-ups in this space for a number of reasons. First, they are the early movers that have leveraged cutting-edge technology tenets such as social media and mobility. Second, they are trying to tackle a real business problem and, in the process, are improving efficiency in the market. Finally, they are managing to raise substantial funding from prominent investors such as Sequoia Capital and Horizons Ventures.
An urge for innovation in the industry, coupled with high potential demand from the customers, will drive further disruptions in the GI market. Start-ups are likely to be the vanguard in this evolution, by introducing value generating products and services. Sooner than later, the traditional players will wake up to the new normal, and will try to catch up by either acquiring these start-ups or partnering with them. Ultimately, the end-customers will be the beneficiaries, as competition forces the prices down and innovation drives the quality of services up.
We are often asked by enterprises how they can maximize the value received from their service provider. Traditional methods to ensure value include building in benchmarking and gain sharing clauses into contracts. While providing reassurance to clients, these mechanisms are quite reactionary, focused solely on the cost of services or transactions, and lack the ability to bring true innovation to the relationship.
The market has, and continues to, evolve quickly. Enabling technology such as cloud computing or robotic process automation (RPA) alter delivery models and the business case, service providers acquire new capabilities, and the clients competitive environment, outlooks and targeted outcomes change to adapt to the market. Strategic Engagement Reviews (SER) can be a powerful, proactive tool to help service providers maximize their value to clients, address the changing market, and build on their client relationships.
A broad-based SER will comprise three key areas of focus:
Review the overall relationship and current state of the delivery model. This review will focus on how well the service provider is delivering to the clients targeted outcomes and to the contract. The objective of this area is to not only review current status and understand improvement opportunities, but also begin to understand how a client’s targeted outcomes are evolving and how to make the delivery model more efficient and effective. Specific areas of focus include:
Solution review – a review of the breadth and depth of the services delivered, leverage of technology and offshore resources, and review of governance performance
Contract assessment – a review of the pricing models, performance metrics, incentive sharing, and general terms and conditions to ensure they continue to meet the needs of the client
Delivery metrics – a review of areas such as productivity, attrition rates, and performance against the defined SLAs
Contract pricing – a review of current pricing, volumes, and development and understanding of how pricing compares to market norms
Explore improvements to existing delivery models. The SER provides the service provider and client the opportunity to discuss how delivery models are changing to improve. As regulatory compliance and technology evolves, so do delivery processes and models to accommodate those changes. An example of recent changes that have altered delivery capabilities is the incorporation of RPA. These tools continue to impact the cost and quality of transaction-based work activities that would benefit many delivery models. As service providers adopt these improvements, the SER creates an opportunity to discuss the business case for these tools and how to incorporate them into the client’s environment.
Uncover new opportunities. During this process, service providers have an opportunity to gain a greater understanding of the client’s current environment and business needs, which opens discussions to address those needs. Additionally, service providers’ capabilities change over time, and the SER provides an opportunity to showcase those capabilities and radiate from the existing delivery contract into new services areas.
Recently, we at Everest Group performed an SER for a large enterprise in the retail industry. In accordance with the three key areas of focus above, we were able to help them:
Understand technology and solution expectation gaps that were leading to poor SLA performance
Define solution enhancements driven by new technologies that the service provider is using in other areas of their business to improve service accuracy
Fine tune the geographic reach of the solution to better focus on key markets and service provider capabilities
At the end of the SER process, the enterprise and service provider were equipped with a prioritized listing of gaps and relationship improvement opportunity and were able to engage in a meaningful way to improve the solution and ultimately the relationship. The scope of services is being redefined to better meet the strengths of the service provider and the client, while new technologies are being implemented to provide improved transparency into the service delivery transactions.
When proactively performing SERs, it is important for both the service providers and the clients to remain as fact-based as possible, trust those close to the process being delivered, keep an open mind, and acknowledge there is always room for improvement. While dashboards may be green, remember they were created with a set of assumptions over a year ago, and desired outcomes, technology, and capabilities change. The solution that was aligned at contract signing may need to be adjusted and improved for today’s reality – there is always room for improvement.
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: 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.
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.