IN-Sourcing Reality Check, Letter to Shareholders

After participating in a lengthy discussion on LinkedIn, Randy Kohltfarber wrote a clever and humorous letter from a ficticious CEO to his imaginary shareholders. The letter suggests that in-sourcing is not a solution for everything and that companies should really determine when it is best to hire companies for its needs that require specific and technical skills rather than relying on internal resources.

Download the letter here in PDF format or keep reading:

Dear Share Holders,

I recently spoke with a fellow on the phone who worked for an organization that developed training that seemed to be a good fit for one of our current corporate training initiatives. The level of experience, approach, methodology and price all seemed like a good fit for us, so I directed him to speak with our training director to further determine if leveraging his organization as a resource might make sense. When I followed up with our training director, I was surprised to find out the conversation lasted less than 3 minutes. When I inquired as to why this was, she explained to me that “we have very smart people and she was sure that we could develop as good a program internally.” She also explained that she was annoyed by the phone call and she is tired of sales people calling her, so she felt it was best to dismiss him right away. All at once, this “outside the box” thinking brought to me a moment of enlightenment.
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Now, I know in the past we have based most of our business model on “good logical decisions”, however after speaking with our training director it became evident that we need to put emphasis on our own interests and avoid speaking with greedy sales people. So effective immediately, we will be changing how we do business.

1. Since practically everyone has a car in the company, we will no longer be using our courier service to deliver packages. It seems we have good enough drivers with sound transportation so we see no reason to use this external service. Besides most of us really do enjoy a nice drive and an opportunity to get away from the stuffy office anyway.
2. Most of you know Bob Smith in accounting, well it turns out he is a pretty handy carpenter, so instead of purchasing new office furniture, Bob is going to take measurements and customize each work station to suit employees needs. Bob thinks he can have this project done before his retirement in 2015. In the interim we are hoping some employees will cooperate by standing or sitting on the floor for the next couple of years. We really think this is a minor inconvenience, because when employees finally do receive the furniture – it will be “Just Perfect”. This approach will allow us to avoid speaking with sales people and Bob will be doing something he really enjoys “being creative”!
3. Many of our employees have also been complaining about the variety of the snacks in the vending machines. We think it is time to have those removed! Instead we are going to have Betty Johnson from HR (who is an excellent cook ) setup a short order kitchen on the second floor. Each employee will be able to place custom orders and she will make them their favorite treat right on the spot. Once again, we will no longer have to deal with sales people making calls and asking us if we want to try a different vendor or product!

Now you may be asking yourself, “how is he going to pay for all of this?”. After all we are going to have to hire to backfill for Bob and Betty in accounting and HR. We will also need to bring on some temps to cover for each of us as we make our scheduled courier deliveries. Rest assured, I have already thought of this and I have the answer. I have told Jim Thurston, our sales director, that he is going to have to leave “no stone unturned”. We need our sales guys to double their efforts and call both new and existing customers to see if our products and services might be able to help them achieve their goals. Once they see our product, I am confident they will see it makes good logical sense.

We will continue to look for other areas where we can replace external vendors with home grown solutions. After all, we have many skilled, smart and capable people and by using their talents we may never have to deal with another greedy sales person ever again.

Best Regards,
The CEO


If you would like to comment on this article, drop me an email or you can reach Randy Kohltfarber, Director of Product Development for Convergence Training, directly by email or phone at 360-834-0991 x216.

Get Your Training Produced -Internal or External Resources, Training Context

This is the second part of an article written by Roman Battan, a co-worker of mine at Convergence Training. If you would like to contact Roman directly, he can be emailed at: rbattan@capstonetechnology.com or give him a call at 360-834-0991 x241.

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Internal Resources or External Resources?

Allocating resources for training is not an easy decision during tough economic times. Like everything else in business, it always comes down to money. By using internal employees to develop training, you spend money indirectly on wages and if you hire an outside firm or consultant there are direct contracting costs. These may both sound bad, but keep in mind that if you don’t spend money on training now, you’re going to lose money through poor product quality and downtime and be worse off in the long-run anyway.

Internal and external training resources both have their merits and drawbacks. For example, internal employees have an intimate knowledge of production processes, but usually lack the skills to develop an effective training program with adequate instructional design. They might be able to write a manual, teach a class, or design a PowerPoint, but the transfer of knowledge may be diminished or ineffective based on their inability to appeal to the diverse learning styles of other employees.

External training providers are usually located on the other end of the spectrum. They know how to design training in general, but may not have the intimate knowledge of your manufacturing processes. This is typically where we encounter the two different kinds of trainers providing Soft-skills and Hard-skills.

Hard-skills trainers who are specialized in your industry and have a proven track record are ideal candidates as an external training provider. They require little or no guidance from internal employees, they understand essential equipment and processes, and have working knowledge of proper instructional design. Trainers with these essential qualifications are more difficult to find than Soft-skills trainers that are willing to take a crack at building training. Don’t be fooled by these unqualified characters.

Training in Context

It is not surprising to find that most training vendors in the sea of providers have based their business models on teaching Soft-skills. Why? Because – in my humble opinion - Soft-skills are easy to teach, they don’t require an in-depth technical knowledge of a particular process, and they are usually based on common sense and theories wrapped in jargon. If by now you’re thinking that I don’t care for Soft-skills training, then you would be correct…mostly.

The decision to move forward with any training company or training consultant should be solely based on the context of your business need. If you have a poor management or leadership team, then Soft-skills might be the answer. If you have poor product quality then Hard-skills training for your production workers should be your focus.

All too often the rule of ‘training context’ seems to be ignored. Almost every new client that I encounter says the same thing, “Our current training provider relied on us to write the training. Then they charged us a boatload of money to turn it into a video or PowerPoint presentation.” When pressed, clients usually reveal that the trainer was a corporate preferred, soft-skills vendor that tried to develop training when they had no understanding of the subject matter. In other words, the wrong tool was used for the job.

Choosing a Training Provider

Choosing the wrong training vendor for the job is occurring at an increasing rate everyday as the workforce turns over and demand for ‘real’ training continues to grow. Companies are desperate for quality training programs yet continue to fall prey to bogus training providers. This is when it’s important to be patient and keep a few things in mind when selecting external training resources.

Just because you or your corporate office has a preferred vendor for training doesn’t mean that you should always use them. It’s important to scrutinize their technical know-how and demand that they are experts in your field of business. Always demand their qualifications and don’t be shy about evaluating some of their past work. Finally, be sure to shop around. There are plenty of competitive companies out there.