In our day-to-day lives, we encounter a myriad of individuals from different walks of life. Some become life-long friends, others a casual acquaintance and some merely pass by. It is easy for us to understand when a person is a good fit in our personal life as our judgment is fundamentally rooted in our individual preferences, personal values, and interests. We foster relationships we wish to continue through frequent interactions and development of mutual trust. When looking at business relationships, our perspective and general approach is different and must include alignment of organizational and departmental objectives.
Outsourcing continues to be a key component of clinical development for most Pharmaceutical companies. The need to build effective service provider relations outside your organization will become ever more important as reliance on outsourcing increases. Pharmaceutical organizations need to demonstrate sound judgment, fair and impartial motives, and focus on corporate business needs when interacting with service providers. In building business relationships the rules for interactions will inevitably differ from how individuals pursue and manage personal relationships, and in many instances, require establishment of a formal governance structure and process.
There are varying degrees of governance and oversight that can be employed in any business relationship; not all service provider engagements warrant the same level of oversight and formal governance. Regardless of the level of governance that is appropriate, good business relationships require an open line of communication and a shared goal for achieving quality results while meeting compliance requirements for all parties involved. Maintaining compliance expectations for external relationships is always essential but in light of the complexities involved, and individual company-specific view points, compliance expectations will not be covered in this article. To ensure you are conforming with requirements, seek input from your compliance group on your governance plan.
This article is focused on governance between Pharmaceutical organizations and Contract Research Organizations (“CRO”); however these principles are broad enough to apply to other service provider relationships. Aside from the first assessment step below, the remainder of the principles can be formulated within your organization or in conjunction with your CROs.
Assessment: Consider the outsourcing strategy of your organization. What services do you outsource and who do you outsource these to? Establish a manner to categorize and assess each CRO with an understanding that the results lead to the next stage for governance planning which involve: objective setting, membership selection, and measuring success. A sample of basic criteria that can be used to categorize and assess each CRO is outlined in Table 1 below:
Invest time in researching what other organizations are doing with respect to governance and don’t limit your research to Pharmaceutical companies; CROs are also a good source for information. Determine what level of time your committee(s) who is responsible for CRO oversight will invest and how you will decide which CRO may require a greater level of oversight and formal governance over others (i.e., Do you focus on relationships that have long-term commitments? How do you handle relationships that are not performing up to expectation? Are you looking to establish a new relationship? etc.).
Objective Setting: Once you’ve completed your assessment for each CRO, begin to envision what objectives your governance committee will accomplish. Are you seeking clearer insight into your CRO’s operations? Are you looking to align long-term goals? Is there a need to implement process efficiencies? 
Do you need to address performance issues? Has the relationship changed since inception, which may warrant a change to the competitive arrangement? Your answers to these questions will formulate the agenda items for your internal and joint governance meetings (and ultimately inform membership selection). Potential standing agenda items that can maintain focus on objectives are outlined in Table 2. Consider these a “menu” which you can pick and choose based on the objectives you wish to achieve.
Membership Selection: Clearly defining the objectives of your governance committee(s) is essential to determining who should participate in a governance committee. Who are the essential personnel from each organization that will contribute and are these individuals in a position to effect change? Should you have more than one committee, each with a different focus (i.e., An Operational body and an Executive body)? 
How does the member selection and governance change based on the different engagements with different CROs? Are there transient CRO relationships that won’t warrant a governance committee? With answers to these questions, you can begin to formulate tailored governance process and structures for your organization and the CROs with which you work.
Once the objectives and membership selection are ironed out, operating principles and logistics can be easily handled. A charter should be written to identify roles and responsibilities, issue escalation process, group expectations, frequency of meetings, and forum for meetings (e.g., in person, web meeting, teleconference, etc.). Also consider, establishing metrics specific to the committee’s undertakings, which measure whether or not you are achieving your established objectives.
Measuring Success: Success can be measured in many ways, not all indicators of success are obvious or easy to quantify. For example, will you be able to measure improved communication between organizations based on the establishment of governance committees, and if so, how? What happens when certain functional areas show improvement while others decline? Governance committees may want to focus on return of investment (“ROI”) but what defines ROI? Table 3 depicts several metrics that can measure ROI but this is merely scratching the surface on any number of metrics that could be useful. Metrics related to quality and timelines are generally captured on most projects so it is important to separate the governance level metrics from the project level metrics.
Finally, you will need to identify what will motivate governance committee members to continue meeting and investing their time to the continuous improvement of outsourcing performance. Early on in the process, ask members to provide their expectations and agree to re-visit these expectations throughout the relationship. A common pitfall for governance committees is that they start off with a great deal of excitement but lose momentum for any number of reasons (e.g., organization’s assume having a governance committee equates to avoiding all future issues, committee is not able to implement required changes so participants no longer wish to invest time, unrealistic expectations were established from the start, early issues that were once resolved resurface, etc.).
In the end, no relationship is perfect. All relationships personal or professional require commitment to grow and prosper. Committees must work together as a team. How and what your organization does to implement governance committees is up to you but remember the words of Andrew Carnegie, “Teamwork is the ability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives. It is the fuel that allows common people to attain uncommon results”
Karen A. Zuklie has worked in the Pharmaceutical industry for over fifteen years at both Contract Research Organizations and Pharmaceutical Manufacturing companies holding various positions in Clinical Operations, Project Management and Outsource Management. Karen is currently Director of Planning and Outsourcing Management at Purdue Pharma L.P. where she has been employed since 2001. In her tenure she has been intricately involved in process development, service provider relationship management, financial planning, and contract administration and management. Karen holds degrees in Business Administration and Public Health.