Service performance issues require fast action. Left unattended, what might start as a minor missed expectation can become a serious performance outage resulting in replacement of the Service Provider.
If you have established the proper Governance Process, the Client Leader and Service Leader are meeting regularly and reviewing progress on commitments. But something is just not right… Perhaps the Service Provider does not perform or behave in a way that matches the client culture and perception. Communication, proactiveness, thoroughness, acting with urgency, etc. are behaviors that are hard to define. Describing them via a range of acceptability based on the client culture can short circuit misunderstanding.
Common Causes of Performance Gaps:
Lack of complete understanding of need. Unless the Service has been Outsourced, where current Service Provider employees are performing tasks previously delivered as employees of the Client, the Service Provider may not be aware of company culture, norms or the way the work got done in the past. Or the Statement of Work is insufficient.
Lack of proper local management to ensure proper, systems and sustainable performance. Service providers may lack the scale and depth of expertise necessary to ensure consistent Service delivery in all Client locations or across all Client projects.
Lack of proper client engagement and possibly sabotage. Depending on the nature of the Service, there may be internal Client disagreement on the selection of the Service Provider or the need for an outside firm to deliver the scope.
Market dynamics that are either within or outside Service Provider control. The availability of skilled labor, innovation that changes the way services are provisioned, political change that impacts taxation, regulation or other aspects of Service delivery will typically require different action than what was envisioned at the start of the Service Engagement.
Performance Improvement Plan Where service performance continues to not meet contractual commitments, definitive action must be taken. A Performance Improvement Plan (PIP) is a formal but simple process to return both Service and Relationship to satisfactory or improved levels; it requires effort by both the Service Provider and the Client.
Step 1. Outline the areas where performance is missing expectations. Use performance data, scorecard results, survey responses or audit findings to document the outages. Prepare formal communication to the Service Provider that the outages require senior management action.
Step 2. Host a formal meeting with the Service Provider to discuss findings and establish the PIP. The plan should outline specific actions, targets and timing committments of the Service Provider and client. The formality of signing the PIP adds a level of accountability that assures success.
Step 3. Provide formal written contractual notification and the expectations aligned by both parties. Be clear in communication that the failure of the Service Provider to act could result in cancellation of the contract or other penalties.
Step 4. Set a formal review approach to ensure progress and to address any barriers. Provide the support the Service Provider needs to be successful.
Step 5. Close the PIP process with final documentation on the actions taken and the results achieved. If there is insufficient improvement and the business is at risk due to Service Provider performance, the Buyer must formally notify the Service Provider of the contractual impact.
The intent of the PIP is to achieve rapid and definitive resolution of the performance outage. Even though it is in the best interest of all involved for the Service outage to be remediated, there is a chance that the Service Provider is unable to comply with the needs and expectations of the business. In this case, the Buyer will need to be ready to replace with current provider with an alternate solution.