10
of upcoming legislative or other regulatory changes. Contracted staff
are also responsible for their own training and often work across a
number of similar organisations so they can bring in considerable
expertise not available from a staff member working only in your
organisation. Some benefits may be seen in other functions of
the organisation. Perhaps managers will be able to concentrate
on managing and developing the organisation more effectively
and supervisors can concentrate on providing better services with
distracting tasks removed from their role. Perhaps boards will be more
confident and proactive with better financial information. Whatever
the benefits you are looking for, write them down and be explicit
about them to yourself and then when negotiating the outsourcing
contract.
Map the process
Before you start talking to contractors, map out the process that you
wish to outsource in great detail. Understand every stage; what is
done, who does it, what do they need and how long does it take.
Even if you decide not to outsource, this kind of close examination
will often highlight parts of the process that can be easily improved
in-house.
Check out your prospective contractor
Ask around. Other community organisations that are receiving the
same or very similar services from your proposed contractor are the
most useful referees. Explore their experience in detail; how easy
was it to set up, what were the problems, how responsive was the
contractor, how easy are they to deal with day-to-day, did they deliver
on the promises in their contract? Check out several referees. Check
to see how much of this sort of work your prospective contractor does.
As with undergoing major surgery, you don't want to be their first!
Be very clear about service levels
Having service levels, ie. what is to be done, when and to what
standard, spelled out in great detail in your contract is as much about
clarity as enforcement. Both you and the contractor need to know
exactly, in advance, what is expected of both parties before you start.
If you have done the process mapping exercise discussed above, you
will be in a good position to do this.
evaluate!
Getting together with key staff after the first month of the outsourcing
arrangement will identify immediate issues, and there are sure to
be some of those, before they become set in practice. Be open and
reasonable with your contractor but always negotiate on the basis that
the service levels in your contract will be met. At about nine months
into the contract, evaluate the outsourcing arrangement against the
benefits you expected. Is the Board getting the information it wants?
Are the staff happy with the payroll service? How does the cost of the
contract plus the effort you put into managing it compare with your
expectations?
In the end, your decision to stick with or end outsourcing or to shift
to another contractor will often come down to the question `does this
arrangement work for us?' Good outsourcing should be barely visible.
Once bedded down, it should simplify not complicate the already
complex task of running a community organisation. n
Andrea Petersen and Brenton Cox are from Not For Profit Accounting
Specialists, an Adelaide-based accounting practice that works solely with
not-for-profit sector clients. The services it provides include accounting
& bookkeeping, payroll, audit, funding submissions & acquittals,
BAS/GST and general consulting advice. Andrea and Brenton can be
contacted on (08) 8215 0022 or by email brenton@nfpas.com.au.
MaNageMeNt
P
erhaps you are working out how to cope most effectively
with a sudden expansion of your services. Perhaps a key staff
member has left and you are wondering about a restructure.
Perhaps you are looking at saving some money or bringing
some new expertise into your organisation. Perhaps the management
or Board are asking for more detailed and sophisticated reporting or
maybe some of your back-office staff or volunteers struggle to provide
services through holiday breaks or illness.
For these situations and others, outsourcing is one of the options worth
considering. Outsourcing is nothing more than contracting another
entity to perform some functions that it is not convenient or efficient
for you to perform yourself. Many organisations already outsource
some functions, such as cleaning or IT-support but, rightly, think much
harder before outsourcing functions closer to their core business.
Commercial organisations will sometimes outsource key parts of their
product or service delivery, but typically community organisations are
less likely to do so because they believe that their close connection to
and ability to serve their community is one of their main strengths and
reasons for being.
Community organisations most often find outsourcing attractive in the
provision of accommodation, finance/administration and back-office
functions. Typically these include:
}
office and reception services
}
financial administration or financial management services such
as bookkeeping, payroll, accounting, insurances, tax compliance,
financial planning, budgeting and reporting, grant acquittals, etc
Steve Lowe is the CEO of Country North Community Services, a
not-for-profit organisation which has chosen to outsource its finance
and accounting functions. Steve says that "outsourcing is good for an
NGO provided you find contractors you can build a trustful, proactive
relationship with. The cost of consultants for us is probably a bit less
than having an in-house finance department or hiring our own CPA.
The Board gets assurance of external advice and the organisation gets
to focus on service provision."
He goes on, "I would recommend organisations our size and smaller
outsource. Even larger organisations could have a quarterly external
review of the books to give the Board and funding bodies that extra
level of checking."
Some small community organisations have also found benefits in
other solutions such as:
}
developing a relationship in which a larger, like-minded, community
organisation provides some of the services
}
going into partnership with a similar community organisation
}
sharing space and some administration services with one or more
small community organisations
}
sharing back office functions with one or more small community
organisations
As well as providing practical solutions, these cooperative
arrangements can have strategic advantages by encouraging the
participants to develop other forms of cooperation such as in service
provision or tendering. This sort of arrangement, however, tends to
have major implications in the long-term and so should not be entered
into lightly.
Outsourcing, or simply buying in the services that you need, seems
more straightforward and involves less ongoing commitment. For
small community organisations it may well be more efficient than
employing permanent or even part-time specialist staff.
here are some tips:
Know exactly why you are doing it
The cost savings, if any, are only one consideration. It may pay off in
timelier, more accurate and more reliable services; by outsourcing the
payroll function staff get paid on time no matter what, by outsourcing
the accounting function the Taxation Office gets its cheque each
month and the Board gets timely and informative reports, issues get
identified in a timely way and the organisation is notified in advance
Outsourcing
aNd tHe
Community
SeCtOr
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outsourcing is a well established practice in the commercial world but how
relevant and useful is it to the community sector? In this article we explore
some of the potential benefits and pitfalls for community organisations.