As employees look across the breadth of departments in your enterprise, do they think, “I really want to get into that group. Procurement is where the movers and shakers are?” Here’s the acid test; do other departments look to the procurement organization to find talent for themselves? Most often this is not the case. But talk with any Chief Procurement Officer (CPO) or procurement head, and they will wish it were so.
To be sure, procurement is a vital component of any large company. It supports every department and employee in the company; it engages with every service provider the company does business with; it executes contracts that help manage the risk to the company; it commits sometimes significant financial obligations on behalf of the company; it leads supplier diversity programs; it has a holistic view of the spend of the company; and it has the ability to manage consumption. No other department has as much reach both internally and externally.
Yet, in most companies, procurement is not seen as the “go-to” department.A variety of challenges can dull its reputation, including the transactional nature or history of the group, the perception that it is bottleneck in the company, a lack of leadership or mission, a lack of technology and process investment, or the perception that procurement is simply a necessary evil (much like the legal department.)
However, fear not. You can turn these perceptions on their head. Work on building a few essential characteristics for your procurement group, and you will be well on your way to building the “go-to” department that you and others around the company want to be part of. Let’s discuss five of the key attributes that procurement groups must have to become a “go-to” impactful organization.
You must begin at the top - literally. The procurement group needs a strong leader who instills confidence and trust within the team and with the business, and who has strong relationship and communication skills plus business acumen. An effective procurement leader is not a “procurement person.” Rather, he or she is a sales and business leader who focuses on business objectives, leveraging procurement skills as a means to support them. The sales skills are important as s/he will have to build buy-in and engagement. A strong procurement leader needs a “service” mentality to develop a culture that enables the business units versus fostering the units’ perception of procurement as the company “police.” Because procurement is in constant evolution – moving from a startup group through varying levels of maturity – and is impacted by the company’s performance, the leader needs to demonstrate the flexibility and adaptability to develop people even as roles change. Having the right leader sets the tone for the procurement organization.Without this person the other attributes will be difficult to achieve.
But a good captain can only go so far without a mission. A vibrant procurement organization needs a clear set of meaningful (and measurable) goals. The procurement team needs to know what it stands for, what it is trying to accomplish, and what to communicate to the business units and service providers. While the groups’ goals may include the standards of cost reduction and savings reported, more importantly, the goals need to align with the company’s larger imperatives and demonstrate how procurement enables the business units to deliver on the company’s mission.
Let’s face it: colleagues can be ho-hum about a group that is not visibly supported by leadership or engaged by its constituents. Procurement needs buttressing from the C-suite level. A consistent executive message that declares procurement as a core resource for achieving the business imperatives will go a long way to build confidence from all realms of the enterprise. Business unit executives need to invite procurement to business unit meetings agendas and to participate in department planning sessions. Executive level support provides a credible platform for procurement to demonstrate its value and, therefore, build buy-in from the business.
Meanwhile, people on the inside need to be empowered, too. While team goals are essential, motivated individuals want to own their outcomes and be recognized for their contributions. Well-developed roles and activities will give procurement team members a sense of ownership of their actions and the outcomes they generate. People are attracted to jobs where they can be in charge of their decisions and their relationships; and the business units want to work with people who are empowered to solve their problems. Of course, goals for individual employees will need to align with the procurement group’s goals to drive the appropriate team actions.
All of this transformational work will help build procurement’s new reputation. A great reputation begins when you become known as the group to call when someone needs to get something done. Even when procurement can’t solve the inquiry, let people know you are the group who will point them to a solution. When these calls start coming in, procurement is becoming recognized as a partner for the business units. People want to be associated with the problem solvers, the team that gets invited to meetings, the group that makes decisions.
The right reputation will also depend on procurement’s ability to effectively execute and market itself. The group must consistently deliver on what it promises and keep its customers at the center of its work. At the same time, procurement must continue to reach out to the business units and share success stories. The nature of reputation-building is that once it starts, it will snowball, driving more procurement demand from the business…and perhaps more interest from people who want to be a part of the procurement group.
Even though these steps may seem straightforward, many groups have difficulty completely reinventing themselves. For those that do, a domino effect brings other positive changes. Attrition will increase as other parts of the company look to hire people from procurement. Demand to get into procurement will increase as others realize its broad reach and influence. And business unit demand will increase, driving the need to assess procurement’s growth and focus. These will be exciting new times.
With a strong leader, solid goals, executive support, empowered individuals, and the right reputation, the procurement team will see high quality people knocking on the door and evolve into the “go-to” team it should rightly be.