Procurement people are constantly seeking ways to boost the success of their functions and themselves as individuals. And there is ample evidence that Procurement’s stature has grown remarkably. The global economic downturn compelled organisations of all sorts to focus on ‘costs’ and seek ways to optimise their purchasing capability. This has helped shine the spotlight on Procurement and given the function greater exposure.
The number of organisations undergoing Procurement transformations is another indicator of the increased recognition of the importance of the function in the enterprise.
But, in truth, there are still too few Procurement functions achieving sustainable success.
Trade publications, surveys and blog comments continue to show that majority of Procurement folks are still struggling to find success in their job roles. Typically they are beset by ‘soft issues’ which negate their efforts. For example, IBM’s global survey in mid-2013 indicated that 65% of CPOs identified internal collaboration with other departments as a vital requirement for success, yet only 15% of Procurement functions excel in the important dimensions of success.
Another survey publicised by Iasta© in 2012 revealed that 41% of procurement professionals indicated “a lack of culture that accepts Procurement as strategic” as the number one roadblock hindering their success.
Many Procurement functions are finding lasting success elusive because they fall into the trap of relying entirely on technical tools like spend analytics, SRM and so on. But they forget that wonderful meals are never created by the cooking tools or ingredients; it’s always the chef that’s the key factor. So too are people the key factor in creating Procurement success. Because it’s people that do the work, and it’s people that create performance, good or bad; not computers, strategies, fancy presentations or “world-class” tools.
Some Procurement transformation initiatives fail to deliver true success because the underlying premise is misguided, often focussed entirely on increasing financial benefits like cost savings or Procurement ROI. Such efficiency measures never reveal the true picture – you can be very efficient at doing the wrong things.
Unsurprisingly, such transformation efforts are often flawed. And a year or two later, yet another “transformation” initiative ensues.
Focussing solely on financial measures belittles Procurement’s true value-add potential in any organisation. Critical elements like building risk resilience, boosting organisational capability and improving internal customer satisfaction are just as important.
So how do Procurement functions that achieve sustainable success do it? How do they strengthen their internal capabilities; deliver tangible business results; and nurture positive perceptions of the Procurement brand in the wider enterprise?
The key is in focussing on Procurement effectiveness – taking the right actions to achieve the desired outcomes.
Purchasing folks seem to agree that the success most Procurement functions want – the outcomes that will put smiles on the faces of CPOs and Procurement staff – boil down to three things fundamentally;
- The capability to deliver on their functional obligations
- The ‘organisational space’ to get on with delivering those obligations, and
- Recognition of Procurement’s aggregate value-add across the wider enterprise.
Experienced Procurement executives and business leaders recognise that it is imperative to enhance Procurement effectiveness to achieve these outcomes optimally – delivering better financial performance for the enterprise and simultaneously leveraging Procurement’s true value proposition.
Enhancing Procurement effectiveness demands a number of specific actions focussed at the critical levers of success. But chief amongst these is the need to build ‘people capability’.
Organisations that are successful in the long-term continuously invest significant resources (time, capital and leadership effort) on building and maintaining their people capability. The most fundamental reason for this is something I mentioned earlier: it is people that do the work, so people matter most. You can never enhance Procurement effectiveness and create sustainable success without developing your people capability, even with best-in-class processes and systems and a sound strategy. People are the only true asset any Procurement function has. And talent that is well nurtured and harnessed sensibly is the soul of an effective organisation.
I often try to get this critical point across to clients by explaining that if you take the strategies, processes, computers and so on out of any business but leave the people in, the business will still find a way to function; after all, businesses and non-profit organisations existed before the invention of computers, PowerPoint and whatnot. But do the reverse – take the people out and leave the computers, strategies, et al. behind – and the enterprise will come to a halt!
Unquestionably, without investing in people capability the search for “world-class performance” or “procurement excellence” will become like the pursuit of a mirage.
Building people capability in Procurement is not purely about sending people on training courses. Training can be an efficient mechanism for improving technical know-how. But the challenges that hinder most Procurement folks in the workplace tend to relate to the ‘human factors’ – the ‘soft’ issues like relationships; attitudes; behaviours; and organisational dynamics. Unsurprisingly, the best purchasing people, especially in management roles, are those who demonstrate highly-developed soft skills through their behaviours and thinking patterns.
So talent development in Procurement should place more emphasis on soft skills rather technical competency.
Think of technical purchasing skills as ‘Qualifiers’ – skills that simply qualify you to play in the purchasing sandpit; whereas, soft skills are ‘Order-winners’ – the key intrapersonal and interpersonal competences that enable you to excel in the job. You can’t possibly be a half-decent Procurement professional without the right technical skills. But to be effective and outclass your average peers, you must have highly-developed soft skills.
Procurement people who really want to excel, and be better than average, must take responsibility for their own growth and development. But any efforts to help people expand their capabilities in the workplace is an added bonus.
Such efforts must include helping Procurement people create the right thinking habits and behaviours to manage relationships more effectively, especially with internal stakeholders and suppliers, and with themselves; effective self-leadership is a fundamental prerequisite for success. This is a key aspect of nurturing Procurement talent.
Talent acquisition or competency development in Procurement isn’t just about those in management roles or senior buyers. Rather the approach must be cohesive. Even the clerical staff who oil the wheels of the purchase-to-pay cycle form part of Procurement’s people capability.
Also, other elements are just as important, e.g., the interlinks between people’s job roles; giving people opportunities to learn and grow; and maintaining the talent pool through shrewd recruitment and good succession planning.
A sound way of ensuring cohesiveness is to take a structured human resources development approach. This must incorporate some vital considerations, including the following;
- Start with the structure of the Procurement function – Is the organisational structure clear? Does it make sense – is it appropriate and effective? Does it facilitate an efficient and seamless flow of work? Is it reflective of our functional responsibilities and current goals? Are job roles properly defined, with clarity of responsibilities, interfaces and deliverables? Do individuals have job objectives aligned to Procurement’s goals?
- Look at the competences required to fulfil each job role effectively – Are these clearly defined, both technical skills and behavioural competences? Do incumbent staff have the requisite levels of capability for their roles; and is this evident from the results they achieve and, importantly, the attitudes and behaviours they exhibit in achieving those results?
- Review the approaches taken for recruitment; training and development; rewards and recognition; and succession planning – Are they consistent and aligned? Do they aid our people capability as regards talent acquisition, development and retention?
- Examine the communication approach – Do we communicate formally across the Procurement team on a regular basis? Does each person in Procurement understand how their individual work contributes to the function’s success and the corporate priorities? Does our communications approach augment our talent development; does it engender the right mindset and behaviours amongst Procurement people?
This isn’t meant to be a definitive list, but it highlights many of the most vital points for consideration.
It is often valuable to apply related tools and techniques, like a competency model; talent assessment; or personal development plans. But such mechanisms must be geared towards the end-goal of building people capability in a simple and cohesive manner.
Failing to invest adequate time, effort and capital in building people capability and expecting to achieve sustainable success is like refusing to eat or drink and expecting to stay alive.
The Procurement function is an organisation. And people are the molecules of any organisation. Building people capability directly boosts Procurement’s functional abilities. It also achieves the same end-goal indirectly through the positive sentiments and motivation it engenders.
The importance of such vehicles to nurture staff engagement cannot be overemphasised.
Procurement people will treat internal customers and other stakeholders in a way that reflects how they, themselves, are treated and how they feel about their work. Talented and engaged Procurement people who feel part of something special, something that feels magical, will always seek to recreate that magic in their interactions with others inside and outside the function.
Such orientations drive the desired performance and behaviours in individuals, which, ultimately, create Procurement’s functional performance and reputation. Because people are the lifeblood of the Procurement function.