Why is a strong procurement culture so rare?
Just as every individual has a personality, every organisation has a culture. Cultures usually come from the top, starting with the ideals and actions of the senior leadership, which then influence the rest of the business, consciously or not. They can be positive or they can be poisonous, but one thing’s for sure – organisational cultures are a very powerful force.
It’s unsurprising, therefore, that there’s a whole industry of books and blogs and TED Talks out there dedicated to helping companies create great cultures, from building inspiring visions to improving employee engagement. You’ve probably read or watched one or two yourself; but I bet you’ve rarely come across one that mentions procurement.
Which is, if you think about it, pretty bizarre.
Create a procurement-minded culture, and you add tangible value to your business, every day. When it becomes second nature for your people to strive for the best possible value in whatever area they’re working in, whether that’s through a supplier discount, a cost avoidance project, operational streamlining or collaboration with other departments, the impact is huge – and measurable. With a shared mindset around procurement, an organisation can become far more powerful than the sum of its parts.
So why is a strong procurement culture so rare?
I’ve worked with dozens of organisations from UK start-ups to global corporates, in both public and private sectors, across industries including telecoms, healthcare, financial services, manufacturing, utilities, and government. In only a handful of examples have I encountered a culture where all the employees could be considered truly engaged with procurement.
The majority of the time I find a compliance and/or savings target model that has been championed by finance and rolled out by procurement, but which everyone else is highly resistant to. Most employees feel wary or confused of the policy, and most business units either continually seek out reasons as to why they are exempt, or figure they can do it better themselves. If you’re familiar with the CIPS Six Building Blocks to Bolster Procurement Capability, this is the opposite.
Why does it happen? A dehumanised corporate approach, siloed departments, lack of time, and competing business priorities are just a few of the common culprits behind a procurement-shy culture. But whatever the reason, you can take some clear and proactive steps right now to break the deadlock and encourage every single person in your organisation to make procurement part of their everyday work.
1. Nail the basics
It may sound obvious, but it’s tough to kick-start a procurement culture if you don’t have an inhouse or outsourced procurement function of an appropriate size and capability (whether centralised or decentralised), with a strategy that is supported at executive level, and key policies, guidelines, mandates and targets that are clearly communicated and maintained.
You have to get this in place if you’re to spread the mission throughout the business. If you’re not quite there yet, start developing one right now, or identify where you need to make improvements. You can still take our other actions while it’s a work in progress, but you won’t get anywhere if you haven’t set off in the right direction yet.
People love to work together. But the key word here is together. Fostering a spirit of togetherness takes far more than just putting people in the same room. It requires a climate of trust, and a company-wide willingness to listen – which is harder to establish than it sounds.
Togetherness is particularly rare when it comes to procurement. All too often, procurement is seen as a compliance function or enforced requirement that’s a hindrance to, rather than a driver of, value (unless you can find a loophole!). With this in mind, your procurement people need to be regularly visible and available, fostering the impression that they’re there to support, help and add value to their busy colleagues. By connecting regularly, the various procurement stakeholders can understand each other’s strategies, pressures and needs. This will help them forge collaborative working practices with levels of control, empowerment and ownership that work for everyone.
3. Model values and behaviours
If culture starts from the top, then it’s up to the leadership team to model the procurement values and behaviours they want to see in the rest of the business. All too often, leaders ask employees to observe top-down policies and guidelines but then create a mass of exceptions, usually driven by internal politics rather than good business rationale. Either that, or they just let their tick-box policies collect dust on the shelf.
So if you’re rolling out a travel policy, everyone should observe it and be encouraged to directly call out others who don’t. If you have a training framework, you should stick to it, refusing to allow a siloed individual or department to bring in their preferred supplier of choice without due diligence and alignment to group strategy.
Whatever the scenario, this is about being clear on how the entire business should think and act around procurement, as one unified front. This won’t just ensure internal consistency and drive results, it will as a powerful piece of external brand-building. And it’s even more important if your procurement function has been decentralised. If most of your sourcing activity has been delegated to individual business areas, and periodic spend is only accounted for by budget numbers rather than value within the budget, it is incredibly easy to end up with inefficient inconsistencies.
4. Share successes
Procurement is a boring, specialised skill-set, owned by an unlucky few… right?
Wrong. Try sharing stories and facts about how individuals or departments have used procurement to add value or mitigated risk, and thereby contributed to the stability or growth of your business. Use newsletters, meetings, emails, podcasts – whatever works best for your organisation. Just ensure you communicate these successes on a regular basis, and you’ll provide a constant reminder of just how much procurement matters. You’ll also make people feel ‘they’re in it together’, and inspire them to play their part.
However, don’t be tempted to share scare stories about how procurement failures have detrimentally affected your business and employees. Although this might seem a helpful way to explain how mistakes could have been avoided, it will simply reinforce to employees that procurement equals compliance, and shroud the topic in a cloud of negativity and fear.
What great accomplishments have ever been achieved without a sense of challenge?
Your departments will doubtless already be struggling to hit budget targets or labouring under cost-saving pressures, so you need to make the procurement challenge feel enticing and fun. Work with senior management or finance to introduce initiatives that celebrate and reward examples of success. If an individual has identified an outstanding cost saving or avoidance, or spotted a powerful innovation or risk mitigation, the cost of rewarding such success (which could be as simple as a tasty meal or a must-see theatre ticket) will be far lower than the return.
Organisations that adopt corporate certifications like CIPS, BS 8903 or the more recent ISO 20400 create a company-wide formal framework to follow – which is incredibly helpful if you’re attempting to build a consistent procurement culture. OK, you might ask, how is that different to the usual procurement capability or compliance? Well, in the best examples I have encountered, these frameworks help foster pride in employees and a genuine hunger to maintain the badge. It’s a way to show their clients that they follow sustainable and best-value procurement, a sign that they can be trusted – and they strive to live up to their promise.
James Ball is a consultant at Retearn and has extensive procurement, supply chain and operational experience across learning and development, IT and healthcare industries.