I was running a 50K on January 28th through the trails and forests of Orcas Island in the San Juans. Over 6+ hours and 8,000 feet plus of elevation, I had some time to think. This word just kept coming back to me: absolution. Some of you may think of absolution in a religious context. I think about it from the viewpoint of being absolved, relinquishing responsibility.
Stride is in the outsourcing business. We outsource accounting services to companies to provide them with support to process transactions and deliver monthly financial statements. Seems easy enough, right? Well, here is the interesting challenge I have seen. Many CEO’s believe that by outsourcing, they are “absolving” themselves of the responsibility of owning the outcome of quality financial statements. It feels great. They generally hate finance, don’t understand accounting, and their value is better spent elsewhere. I get it. Trust me, I get it. But, outsourcing is not necessarily absolution. Here is why!
Outcomes vs. Outputs
Outsourcing is very often an outputs engagement. I am hiring a vendor to perform certain tasks. Great. That makes sense. But that’s very different than hiring a partner to own the outcome of making sure that financials are timely and accurate on a monthly basis. Do you see the difference (if it’s still a little unclear, I like this article on it)? If the outsourced partner owns the outcome, they are telling you what to do (required outputs) and what they need. If the outsourced vendor owns certain outputs, you know who owns the outcome? YOU! But that’s what you wanted to get off your plate in the first place, right? So first, figure out if you are hiring an outcome owner or an output owner. That will dramatically change the investment you should be willing to make (cue the question: “What is the value of your time and what is your highest and best use?”).
As the CEO of the business, your responsibility is to be looking out 2-5 years. Directors in your business may look out a year whereas managers and supervisors may look out a quarter and a month, respectively. Generally, outsourced bookkeeping/accounting is a supervisory level professional. So, when the CEO is getting involved in helping untangle certain internal accounting challenges or systems or processes, they are operating at manager level at best (cue the frustration and fists in the air). That’s fine if they see they need to wear that hat because no one else in their organization can do it. But it’s not fine if they are getting frustrated that they aren’t operating as the CEO because of a design of their own making. It’s essential when outsourcing, that proper leveling has been defined or there is going to be a consistent disconnect.
But I want to hire an outcome owner. What do I do?
Okay, now that we’re clear on outputs vs. outcomes and role leveling, let’s talk about your options.
Option 1: I want to outsource accounting outputs and will own the outcome internally
Okay, if that’s the gameplan, you’ll want to have someone internally who is coordinating the multiple process pieces of gathering and sending information accurately so that transactions can be processed. If there is more than one party involved, you also want to make sure that there is process coordination between the two organizations. You will be responsible for consistent check-ins, root causing issues and systemic solving of those issues. If there are technology integrations and systems maintenance required, you’ll want to make sure that someone on your team owns that.
Pros: Generally less expensive to just hire an output owner.
Considerations: You own the outcome which means you are coordinating the system and managing the effectiveness and efficiency of the process.
Where Stride supports: We can happily provide contained output support and have a strong depth of team to do so.
Option 2: I want to outsource my back-office finance and have someone else own the outcome
Okay, now you’re talking about a partner, not a vendor. This is an important shift! When this happens, there are a few pieces of the puzzle involved. First, yes, your outsourced partner will process transactions. Second, they will also work with you to design and set up process for how information flows. Third, they will work to set up technology systems in service to the desired process. And fourth, they will steward all of this with a high level senior finance professional who can be your guide and available thought partner so you can focus on your highest and best use. In this case, the CEO or internal resources are being told what to do, not the other way around.
Pros: You have a strategic partner in one of the critical areas of your business (how you get paid).
Considerations: Bigger investment that’s consistent with systems thinking, project management, analytical and experience curve skills.
Where Stride supports: Through our One Stride methodology, we have capability to provide comprehensive support to own outcomes for your company.
Option 3: I want to outsource my back-office finance and have an internal outcome owner
This can be a compelling option. What it requires is that someone other than the CEO is in-house for the organization and responsible for “owning” finance. They are strong at project management. They are senior enough that they can be held accountable to the CEO. They understand the content of finance and accounting. They are systems thinkers and know how to document process, root cause problems and drive continuous improvement of outcomes. Your outsourced partner can still process transactions, can provide some senior level finance support (i.e. fractional CFO), provide analytics technology, and can also be a guide on process design. But they don’t own the outcome. You have someone in your organization (often an accounting manager or director) that does.
Pros: You have a strong outsourced partner but also someone who is available to you day to day internally.
Considerations: Hiring that internal person is not easy and they need to be equipped (i.e. empowered) sufficiently for you to relinquish control.
Where Stride supports: Of course Stride can provide the bookkeeping/accounting outputs. In this hybrid fashion, clients can engage Stride Talent to source internal resources. We can also provide consulting support for your internal resource to get them trained and up to speed.
As you consider your move to managed outsourced services, consider the option that best suits your organization. If you’re not willing to invest in having an outcome owner, then that’s going to be you or someone you hire internally. It’s not a bad thing whatever you decide. It is an “IS” thing and the most important requirement? Awareness. We’re happy to guide and support on the option that is most suitable for the type of business you are building and the type of leader you want to be.
I finished that 50K and was pretty exhausted. I owned that outcome. What are you going to do in the race to run your business to achieve your dreams?