Reputational Risks in Your Organization - Part 11

Copyright (c) 2010 Peg Jackson

Vendors and Outsourcing

All organizations deal with vendors for some form of product or service needed to operate. Outsourcing has become an efficient method of dealing with necessary functions that would be too costly to maintain in-house. The use of vendors and outsourcing has potential for creating reputational problems if employees engage in illegal or unethical transactions such as kick-backs or arranging to have the vendor or outsource organization provide the employee with products or funds.

Some common problem areas include:

Who in the organization deals with the vendors?

How are vendors screened and supervised in terms of presenting the proper insurance coverage, invoicing, and provision of services per the terms of the contract? Just as financial operations duties should be segregated, procurement functions should also be segregated to ensure that vendor relationships are transparent.

Are any of the organization's functions outsourced? If so, how financially stable is the outsourcing vendor?

If the organization outsources its payroll and/or HR functions, it is essential that the vendor is screened carefully to ensure financial stability and security measures are in place. Vendors should be required to provide proof of insurance. Call the vendors insurance provider to verify coverage every year and/or policy period.

Checklist for vendors and outsourcing

- List the functions in your organization that are outsourced to vendors.

- Who in the organization deals with the vendors? List the employees and their supervisors.

Identify the person responsible for verifying the vendor's insurance coverage.

- List the steps that are taken to segregate procurement functions within your organization.

- Vendors must provide:

Appropriate insurance coverage and proof of insurance. Vendors must also provide contact information of his/her insurance provider so that the organization can verify that coverage is active. Verification of invoicing and provision of services per the terms of the contract.

Your insurance professional should review the vendors proof of insurance.

The Organization's Customer Service Model

As was noted in a prior Technology article, clients and customers readily access online evaluative sources such as Yelp, Facebook, or even email to express displeasure with a company, nonprofit or academic institution. As complaints about customer service in your organization increase, damage to your reputation worsens.

Some common problem areas include:

Your organization does not have a customer service process that addresses and resolves complaints. There is no mechanism to refer the complaint to a higher authority in the organization.

Just as it is important to have a grievance process in place for employees, it is also vital to have a system in place to effectively deal with customer complaints. Customers who are frustrated in dealing with the organization will turn to other, more public, measures to voice their disapproval.

The number of complaints against your organization has resulted in a failing grade from the Better Business Bureau or has alerted state/federal regulators to investigate your organization.

Your organization's reputation cannot afford to have a trusted third party, such as the Better Business Bureau, issue this type of condemnation or have regulators or law enforcement begin to investigate.

Clients or customers have the opportunity to rate you on sites like Yelp. How can you neutralize a negative review or get it moved?

Dissatisfied customers often turn to web-based resources to express their frustration. While they have the right to express an opinion, often the negative evaluations result in lost sales or overall decline in the organization's reputation.

Checklist for customer service:

- Describe the type of customer service training that your employees receive.

- Are employees trained in techniques to de-escalate an agitated customer or client?

- Are employees trained in conflict resolution techniques?

- Are employees empowered to offer organizational resources to resolve a customer service issue? In other words, if resolving a customer complaint would require offering a refund or a discount on a future service, does the employee have the authority to offer these solutions?

Supervision

- Are supervisory personnel readily available to assist an employee in a customer service matter?

Incident history

- How often are customer service complaints lodged?

- Is there a pattern in terms of the specific complaints, i.e., defective products, customer does not feel that they received value for their money?

- In a nonprofit organization, do clients complain that the staff is rude, condescending or that the quality of the services are poor?

- Has the organization received negative ratings on a website such as Yelp?