JLL, P&G Reveal Five Rules of Successful Business Relationships
- Dec 05, 2012
Jones Lang LaSalle Inc. and client Procter & Gamble know the secrets to their partnership’s success and they’re not afraid to share them.
At the top of the list: Unlike a typical outsourcing relationship between a real estate services provider and a client corporation, where the former focuses on daily service and the latter focuses on strategy, these two companies are equally “vested” in driving cost savings while maintaining guaranteed service levels, according to JLL’s Corporate Solutions Global COO, Bill Thummel.
During the course of the companies’ nine-year collaboration, they shared the risks and rewards of the business with a “what’s in it for we” approach and focus on mutual success, which author and business consultant Kate Vitasek outlines in her newly released book, “Vested: How P&G, McDonald’s and Microsoft are Redefining Winning in Business Relationships.” Vitasek wrote the book as a project for the U.S. Air Force, taking a look at the world’s most successful buyer-supplier relationships to see what could be learned and what valuable lessons could be taught at the same time. P&G and JLL were one set of partners to make the cut. In the book, Vitasek settled on the term “vested” after studying the underlying practices of effective outsourcing partnerships.
“When we stumbled upon P&G and JLL, it was through our reaching out and saying, ‘Who has amazing outsourcing deals?’ JLL and P&G raised their hands and said, ‘We love our relationship,’” Vitasek told Commercial Property Executive, adding that P&G rewarded its service provider with a Supplier of the Year award two years in a row. “They were enthused at the value they were receiving from this relationship. We studied many companies, and included only our favorite ones in the book. We’re glad P&G allowed us to tell their story.”
Jones Lang LaSalle provides P&G with real estate services including facilities management, occupancy management, project management and transaction management for its leased corporate facilities portfolio.
“My client (P&G) and I have to think together about what outcome we want out of our collective teams and out of our portfolio,” Joe Stolarski, the Jones Lang LaSalle global account executive who handles Procter & Gamble accounts, told CPE. “In other relationships, in my role, I’d be very worried about what my client is thinking every day: Am I keeping that person happy? Whereas we think more about the outcome that we are both working toward.”
Through the two companies’ collaboration since 2003, JLL was able to deliver on P&G’s goals of achieving cost efficiency while exceeding customer satisfaction targets for six consecutive years. During that time, P&G’s Global Business Services division reduced cost as a percentage of sales by 33 percent for its outsourced operations, including the work with JLL, according to P&G’s testament in the book.
“Strategic goals are a shared focus in our model, and incentives are aligned for both P&G and Jones Lang LaSalle. We trust JLL to figure out how to accomplish the work and achieve specific outcomes,” said Larry Bridge, facilities and real estate governance manager for Procter & Gamble. “In turn, they trust us to communicate openly and to compensate them for achieving the goals. The more successful we are together, the more we save—and the more JLL is rewarded.”
In her book, Vitasek outlines the five key rules for a successful vested relationship for any company:
- Rule 1: Focus on outcomes, not transactions. JLL’s compensation was based on its success in achieving specific outcomes established in collaboration with P&G, not on property commissions.
- Rule 2: Focus on the what, not the how. Instead of defining service minutiae in the contract, P&G delegated these details to JLL.
- Rule 3: Establish clear and measurable desired outcomes. JLL worked with P&G to define the big picture results instead of measuring the program against task performance.
- Rule 4: Create a pricing model with incentives. Four key components define the incentive model in the JLL-P&G contract.
- Rule 5: Insight versus oversight. The companies incorporated a proactive governance structure into their contract to ensure an ongoing “win-win” relationship, establishing both companies as co-owners of the corporate real estate function, with shared goals and communication processes aligned in both organizations.