The Cost of Collaboration: More than budgeted for?
Collaboration is a popular and often routine exercise for the public, private and community sectors to develop a common purpose, as well as co-design and/or co-deliver policies or services. But the costs of these interactions are often underestimated. Robyn Keast*, Michael Charles* and Piotr Modzelewski** argue that a detailed cost-benefit analysis should be undertaken before undergoing collaboration.
*School of Business and Tourism, Southern Cross University
** Faculty of Economic Sciences, University of Warsaw
Collaboration remains the ‘go to’ or ‘gold-star’ strategy as governments, business and community look to break down silos, cross boundaries, build partnerships and generate collective impact. All of which leads to collaborative advantage. It is likely that this preference will continue well into the future. The allure of collaboration is seen as self-evident: by leveraging the synergies formed from working together, innovation is possible, new knowledge is built, and complex, intractable social and economic problems can be resolved. In addition to these social benefits are the expected cost savings to be had from working in more connected or integrated ways.
Often the social and economic value expected of collaboration haven’t materialised, with some research showing failure rates of between 50-70%. This is due primarily to process failures, such as not reaching the requisite strength of relationship, collaboration taking place in the wrong form, turf issues, and insufficient collaborative competency or commitment to work in new and different ways.
Given the challenges inherent in undertaking successful collaboration and the high rate of failure, it makes sense to consider the cost of collaboration before engaging in this mode. This is particularly relevant as it is frequently assumed that collaboration does not incur additional or ongoing costs involved with working in new and different ways. The fact is that, similar to other forms of social organisation, collaboration has significant transaction costs related to the coordination of people, effort and resources. It is just that these are different and embedded primarily in relational exchanges.
Here, we have identified four areas of collaboration cost that warrant consideration:
Collaboration is based on relationships. These are the connective tissue linking people, resources and commitment together. Since collaboration is based in relationships, coordination of effort comes from interpersonal means: cost of time spent in meetings and travelling to these meetings, talking on the phone, building relationships, engaging in joint projects, etc.
In particular, collaboration demands strong relationships based on high trust, reciprocity and interdependence. But this strength of relationship can take a significant amount of time to build and nurture before it can be leveraged. Research suggests it can take up to 3 years, or even 5 years, to build the requisite relational capital needed for successful collaboration. While it is possible to limit the time commitment through turbocharging processes, they too come with additional time cost and expense of participation.
Relationships are also vulnerable and can easily be disrupted, or even destabilised by practices such as turf protection, withholding or not sharing resources, clients/customers or outcomes, as well as fence-sitting, free-riding or rent-seeking behaviour. This resistance to collaboration requires even more time and often a specialist facilitator to help with finding common ground and terms of agreement.
Some collaboration members may have conflicting priorities or may resent being tasked with the extra work required of a collaboration, including what is often described as ‘going the extra mile’. Bringing them around to the collaborative way of doing things or alternatively diluting their toxicity can also consume additional interpersonal and organisational effort and resources. Complaints relating to time expended in collaborative work are regularly made both by participants and their parent bodies.
Depending on the scope of the collaboration, it is possible that a number of personnel positioned at different organisational levels will be involved in the work, not just practitioners. Time and effort is required to a) learn about the needs, expectations and capabilities of collaboration members operating at different levels, b) find areas of agreement, c) reach agreement on what and how to work together and d) establish appropriate communication processes.
Data collected in the human services sector has shown that collaborative initiatives involved spending many hours a week on collaborative initiatives – some workers are attending upwards of six network meetings a week, and these people often carry the bulk of collaborative effort. This result tallies with the experiences of the business world, where researchers Cross, Rebele and Grant (2016) found that the time spent by managers and employees in collaborative activities increased by 50% or more over the past two decades.
Research is also showing that these primary collaborators are often drawing on their own resources, using their own time, resources and networks to get collaborative endeavours underway and to keep them going. For example, dealing with an opportunity to collaborate might entail travelling interstate, with much of the transit time, and often even the collaborative activity itself, taking place outside work hours, which could ultimately impact on the ability of collaborators to perform their core organisational responsibilities.
Systems Change Costs
Cost of systems and resources set up to support collaboration are often considerable as they require the development of new procedures and the allocation of additional resources; for example, co-location spaces, travel for the purpose of relationship building and continuity, seed funding for joint projects, workshops and venues, new data and information sharing systems and increasingly new, specialised software and video links to facilitate collaboration across space, together with training. Yet, these costs are often overlooked in accounting considerations. It is also important to bear in mind that being able to collaborative effectively must be regarded as a skill, and collaborators on any project will likely have varying levels of collaborative skill.
Lost Opportunity Costs
Collaborators will often forego other opportunities by devoting resources to collaboration that may not attract the highest returns or, worse, will not result in anything tangible. The opportunity cost is the estimated cash flow from the most attractive project not undertaken. So, determining which collaborations to pursue emerges as a particularly important skill.
In any case, the costs and benefits of any collaboration can be difficult to identify and quantify (especially before the project is underway), and these will in any case vary depending on the collaboration experience and culture of the participating bodies – both individually and collectively. In particular, it is a mistake to underestimate or gloss over collaborative activity as ‘just relationships’.
As well as the upfront and ongoing operational costs, there are future costs arising from sustained actions, connections and evaluations. Estimates of the magnitude of staff and support costs are difficult to obtain because they are often embedded in the expenses associated with other tasks. Given how much time is invested in setting up and running a collaborative endeavour, surely equal thought and effort should be directed toward some kind of consideration of the expected return on this investment; that is, what benefits could this collaboration generate if it was implemented effectively and authentically? Alongside this, it also makes sense to take the next step of estimating the full costs of the collaboration, including the lost opportunity costs and determining if this prospective collaboration is the best possible option.
Some time ago, Leutz stated that integration initiatives cost organisations in money and effort before they pay off. The same can be said for collaboration given that it is clearly a long-term game, with winners and losers, and those that come in somewhere around the middle of the pack. From a pragmatic perspective, collaboration should not be entered into blindly, particularly without taking into account the costs and weighing up if the perceived value exceeds the combined costs. Collaboration Decision Support Tools are available to help with this assessment process (see for example, https://www.qcoss.org.au/collaboration-decision-support-tool). But sometimes, despite the costs, collaboration is simply the right thing to do!