Politicians and entire governments have fallen, through failing to recognise the views of stakeholders; Chairmen, CEO’s and whole boards have lost the initiative by ignoring how those with influence feel; you too could fail in your procurement leadership role, if you choose not to engage the entire subject of stakeholders.
You can also fall fatally on your sword if you pay lip-service to stakeholders, or patronise them, or, even worse, seek their views and then dis-regard them.
And if you really want to brass them off, talk about stakeholder ‘management’, rather than ‘engagement’; talk about “mapping” them; label them as ‘negative’; describe their views as “irrelevant”…are you getting my drift?
I come from a school of thought that in the process of successful procurement, there is a mission-critical requirement to embrace and engage the people who can or will be affected by what you are trying to achieve, in business-as-usual, and in the development of new strategies. Pass this opportunity over at your peril.
Who then, is a stakeholder? Let’s use an example.
In the travel and meetings category, who are the stakeholders? Those who make bookings? The actual travellers or meeting organisers? Their functional managers? All of the above? What’s your view?
My belief and my experience tell me that anyone in the organisation who has the power, influence, or authority to either ENABLE the success of your strategy, or DISABLE it, is a stakeholder.
In my travel example, the Sales, Finance, and HR Directors, may well be stakeholders, because a policy of classes of travel or hotels which meets the objectives of convenience, budget control, corporate image, and attractiveness to their staff, has been adopted. That policy has been communicated and is being enforced.
The sales-force, however, are not stakeholders – they are users, or internal customers.
In this example, the sales-force’s requirements need to be collected and taken into account, and their boss has to sign these off as legitimate requirements.
Your procurement job is to devise a strategy that fulfils their requirements (and those of others), implement and roll-out the strategy, and measure the benefits and the compliance.
If you devise a strategy that the Sales Director doesn’t buy, or that fails to meet the sales-force’s legitimate needs, you are doomed! That strategy is going nowhere!
A stakeholder then is a key influencer in the organisation; you need to identify them, and you must embrace them in your day-to-day activity, and in the process of making changes.
I am continually asked how many stakeholders should be engaged in a sourcing strategy’s creation, and how they should be engaged.
On the ‘how many’, there is no standard answer – there is instead good practice for identifying the stakeholders, and for establishing what they need (their legitimate business requirements), and for building a picture of how receptive they are to your approach.
There could be 2 of them, there could be 22, but if you think you have identified 222, you have not understood what you’re trying to do here – do not plan for early retirement!
How stakeholders should be engaged is more formulaic, at least in process terms, but your success will ultimately be determined by your behaviours and your personal style in engaging these people.
Starting at the top, do you have a clear mandate for your intervention in the category of spend, and do you have clear sponsorship? If you cannot answer “yes” to both of these, take a step back (although as a caveat, your sponsor may also be a key stakeholder).
Next, do you know how the category currently works? What is the policy and strategy, and what actually happens? What are the metrics, what are the market dynamics, what are the technology drivers in the category, what are competitors doing, is the spend forecast to rise or fall, how critical a category of spend is it to your organisation, who are your current suppliers, what are their strengths and weaknesses, what is our current relationship with them, and so on?
Your category team, the people you have enlisted to help you develop and deploy a new strategy, are key in all of this. They must work with you to identify the stakeholders and to assemble the facts and data.
Then, with the knowledge you have amassed, welcome to the world of stakeholder engagement, the world in which you and the team decide who engages which stakeholder, and how you ensure that the engagement is a truly bilateral process.
I advise you against megaphone communication – that is for crowd control, not for stakeholder engagement. You and your team must ensure that the way you engage your stakeholders is mature, consistent and drives the debate constructively. Your role in stakeholder engagement is to bring their legitimate views and concerns to the party, keep them informed with progress, and involve them in key decision-making (without turning the whole thing into a debating society).
The overall objective is to ensure that in the actions you take, and the strategies you develop, your stakeholders willingly take ownership – they can identify with what you are proposing, they recognise it, they are happy to take the baton, and move forward into implementation. That is your initial measure of success – clearly speed of deployment and subsequent compliance also matter.
This is also the route to building constructive ongoing relationships with your stakeholders, who, over time, will become increasingly appreciative of your inclusive approach, and the value of your activity.
Remember though, that there will be some turnover in your stakeholders, and their priorities may shift – in either case, you will need to re-engage.
The overall point is, that if you devise an approach, and then you have to try to sell it to your stakeholders, you have not understood the subject.
Go back to the top of the article, and read it again!
Thanks for your reaction to our first article.
Many of you appreciated the distinction that I described between leadership and management, and a number of respondents asked us to explore a topical leadership challenge, relating to change management, and particularly applicable to procurement – effective governance.
I loathe bad governance…and I get really mad at those in business who don’t understand the role of effective governance in the procurement setting, and confuse it with authority and power.
The failure of some of the most successful organisations, and a number high-profile CPO’s, to embrace and engage the value of effective governance, is utterly astonishing.
I had a recent conversation with a colleague in the Asian group of a global procurement team, in a complex business, in which she confessed that “we don’t really invest much in getting governance right in this business”.
That sentiment is tragically endemic, and I just fail to comprehend why intelligent people, with sophisticated business and influencing skills, cannot grasp the significance of good governance.
Procurement, in a dynamic and fluid environment, requires the design and implementation of effective change.
Reliance on power and authority alone, to orchestrate that is crass and wasteful, whereas the investment in setting up good governance is always worthwhile.
Think about it like ensuring the oil is in the engine before it is first started, or, in the work setting, understanding exactly what your objectives, limitations and authorities are, prior to commencing a negotiation.
What, then, is governance?
Well, you’ll be able to find lots of definitions and opinions, but checking the word’s antonyms or opposites, is more amusing and instructive. They include impotence (not in the medical sense), incapacity, opposition, and weakness, all of which nicely help me with my proposition.
Attempting to drive change, using only your authority, is futile, in a complex and fluid organisation. Experience and history show us that engaging all legitimate stakeholders in change is essential to successful change, whether these stakeholders are in your chain of command or not.
We shall explicitly cover stakeholder engagement next time.
Meanwhile, a decent governance model will enable and mandate the steps of a change project, un-block barriers, allocate resource, provide advocacy and legitimacy for change, and importantly take a co-ordinated view across multiple work-streams in a complex change programme.
Sound too hard?
Here’s an illustration to bring the subject to life.
A de-centralised PLC with autonomous divisions decided to embrace strategic procurement, for the first time, designed and driven from the centre. A small number of categories of spend, like packaging, marketing, and IT hardware, were selected, to test the theory that the combined spend across three divisions could drive larger benefits than the individual businesses could achieve.
But, how to run these categories, when each division had its own procurement head and processes, stakeholders, specifications, pricing, suppliers, and managing directors? And each division had a different attitude to the initiative.
The answer, after a bit of trial and error, was a governance body, led by the person at the centre who had been charged with trialling the new style of procurement, supported by a change governance specialist, and including the MD’s and heads of procurement of the three participating divisions, and an internal data analyst.
Each of the heads of procurement led a category of spend, with sponsorship from one of the MD’s but not their MD.
The heads of procurement pursued their respective projects with a tailored procurement category management approach that the governance body had signed off.
Each project had a charter, a set of objectives, and a timetable, and each reported their progress against a set of agreed criteria, using a project-management RAG (Red, Amber, and Green) methodology.
Having established terms of reference for the governance body, and communicated the entire process effectively and consistently around all the divisions, the programme was out of the starting gate at a gallop, with all the players determined to illustrate their value and effectiveness to the process, and with any barriers and objections being tackled fast and constructively, as they arose.
Each category over-delivered, on value and time, and in all cases the whole was greater than the sum of the parts.
In addition though, the biggest benefit of this approach was the visible demonstration of the value of good governance, and the breakthrough of achieving collaboration between divisions who had previously managed to avoid any motivation for working together.
The example may ring a bell with some readers, and it is a model that has been replicated many times over, with local variations.
All the divisions acknowledged willingly that they could not have orchestrated the changes from the inside out, and could not have achieved the benefits that the combined effort achieved.
In the absence of robust governance, impotence, opposition, and weakness can prevail, and probably will, due to the lack of common purpose, or leadership.
In my opinion, this perfectly captures and explains why so much ‘big-ticket’ change fails to deliver in the private sector, and more visibly in the public sector, where the only motivation for change is an edict from the centre, often Westminster, and an expectation of local delivery.
Sorry folks, change just doesn’t work that way – in the private sector, we need more enthusiasm for good governance and less politics; meanwhile, maybe we need a new approach in the public sector, where government promotes good governance, to facilitate success, and maybe even an increase in capability – but I’m not holding my breath!
I have worked for some truly admirable people who make me proud that I had the privilege of playing in their team, and of learning my trade from them.
They range from a City Grandee, to a turnaround expert, to one of the best and most inclusive corporate players I have ever had the pleasure to serve.
Probably like you, I have also seen and worked for some desperately poor bosses, over the years, people who are memorable for all the wrong reasons.
There have been bullies, alcoholics, megalomaniacs, liars, and those who were just plain useless; some had been placed in their positions of authority by others, whilst a number had found the way into their posts by generating a lemming-like following of acolytes, who thought they could do no wrong.
There is almost nothing as debilitating and demoralising as sharing a work environment with someone who is professionally incompetent or behaviourally inept, and who has earned a position of responsibility for reasons that are forever a mystery!
Today I operate as a volunteer, in an environment where that type of person could mean the difference between survival and death; in my opinion, the dedicated and skilled front-line staff often keep the service afloat, in spite of their managers.
In the business and commerce world, we all need to care about how we avoid professionally inadequate people from prospering, and how we ensure that we avoid attracting criticism about ourselves.
Professionally, I have had considerable success in my career; I have also made some poor calls, and certainly exhibited room for improvement. Because of my ‘type’, I have always tried to identify where I have gone wrong, fix it, and avoid a recurrence.
That level of self-awareness, the ability to be analytical and self-critical, and the humility to invite and absorb constructive criticism from others, is essential. I was brutally coached on this point in my early career, when I was told I had a level of self-awareness similar to a “run-away JCB”.
Let’s start then, by distinguishing between the differing roles in the workplace.
The Doers are the essence of many organisations; their actual productive grunt work is required to make the place function – on the forecourt, someone has to clean and polish the cars; in the call centre, someone has to handle the phone or web-based traffic; in the baggage hall, someone has to move the passengers’ luggage; in the utilities sector, someone has to dig the hole to reach the fault.
Happily many Doers are satisfied with their lot – they are content to arrive on time (but not much earlier), hop on to the treadmill, and jog diligently through the day, before leaving on time, and returning home, with very little thought for the workplace, until they rock up for their next shift.
The Doers follow process that is established, proven, and measured for them by someone else – they are relatively dis-interested in stepping away from that process, they may only give feedback on their work content if and when asked.
We would all be in a bad place without the Doers, and there is nothing whatsoever wrong with being a Doer – in fact, it’s a pretty important piece of the formation and learning for all of us.
The Doers, however, need to be motivated and supervised by a different being, one who controls the treadmill, provides access to it, and decides when the speed needs to be changed, to meet organisational goals, or when additional coaching is needed because output is not good enough.
This is the Manager or Supervisor role, the place in the organisation for those of us who know the processes, know what the levers and drivers are, and have the will and the skill to lead others in pursuit of the outcomes.
Managers and Supervisors are the translators; they accept the legitimacy of the organisation’s goals, lead their teams to deliver the required outputs and targets, and contribute to the process of shaping future goals.
There are two angles to this role, operational capability, knowing the processes, as described earlier, and behavioural skills to motivate, communicate, observe, and to exhibit pastoral care and respect for their teams.
Not everyone has the potential to be a Manager; many do not want the responsibility, many others abuse it, and some just get it wrong; others are excellent in the role, and become completely indispensable to their organisations, their leaders, and their teams.
A good Manager is someone we look up to, respect, follow, and often even like, because of their elegant and inoffensive, but knowledgeable style…becoming one requires accumulation of knowledge, skill, and behaviour.
In contrast, working for a poor Manager can be a misery – these people can sap the energy and motivation of fired-up, eager, and intelligent people, in a heart-beat.
A great Manager is constantly prepared to push their sleeves up and get stuck into the job, hands-on, when needed, and to provide visible support to their team.
Have you recognised yourself yet?
Not all Managers have the potential to be Leaders; organisational leadership is a different beast – this is the role for those who have vision, resource and strategic thinking ability; they also need the capability to assess and quantify risk, because they take decisions that affect everyone else.
Leaders can decide that an additional call centre is needed, because of approaching capacity, or that an emerging new technology means we need to change the organisation to survive when it arrives, or that we should acquire a weaker competitor, or that we should be expand into new markets, products, or services.
Leaders do not always make good Managers – many do, and have worked their way up from the ground-level in some capacity, often acquiring a working knowledge of varied disciplines; others have essential qualities, characteristics, and facilitative skills, which do not lend themselves top day-to-day management.
Politicians can be an example of people who have found themselves in a position of leadership without serving their apprenticeship as Doers or Managers – we hear political leaders trying to illustrate their humble roots to us, trying to prove that they were once like us, so they know exactly what we’re going through…often the silver spoon in their mouth was so large that they couldn’t see over it!
Those who have come up through the ranks in business and commerce are proud to exhibit their provenance, while those who are just natural or born leaders seem to have an empathy and a sense for what makes the organisation work, and what is needed to deliver on their strategies.
Those people though must have the humility to recognise where they need to augment their operational knowledge – that’s why leaders “return to the shop-floor”.
One of the great leaders of my career was a CEO under whom I served as a Director. When he was not fulfilling his CEO role, his Board and City duties, and his leadership of essential meetings, he was out and about, constantly on the move, amongst the workforce, the customers, and the suppliers, finding out what was really happening, observing opportunities for operational as well as strategic improvement.
Consequently, Directors’ meetings tended to contain a few surprisingly accurate insights, from a man, some of whose peers in competitor organisations seldom left the comfort of their sedan-chair!
All of which leaves the Maverick – and you’re all wondering what that is, and what role exists for these ‘off-the-wall’ characters in a ‘structured organisation!
Within reason, organisations need mavericks, those who will not or cannot do, or manage, or lead, whose behaviours may not be particularly inclusive; they may be happy to be excluded from the day-to-day business, but may also have a knack of spotting ideas and innovations that could be breakthroughs.
Vision and great governance is required to attract and integrate Mavericks successfully into an organisation, combining freedom, tolerance, resource, and some checks and balances to avoid chaos!
We should all try to have some good ideas and original thoughts – mavericks though, are the potential game-changers, some will succeed, others will fail; others will turn out just to be work-shy and not maverick at all!
Which are you, what are your plans to progress from your current role, and what does this mean for Procurement?
First, build and maintain a self-portrait of which type you are, through knowledge of your skills, your behaviours, aspirations, shortcomings, and attitude to risk; then augment this with good, objective feedback from those who know and trust you.
Next, you’ll need a personal development plan, and, an appetite and motivation to self-improve; in many cases, a professional external coach will add value.
You will also need to build-in some KPM’s; a Manager, who is too devoted to experimentation and inadequately interested in day-to-day performance of their team, is at risk of not delivering.
A Leader, who is too far into the operational detail, is unlikely to become famous for their leadership; instead, such leaders may place their organisation at risk from competitors and market forces.
Can you progress from one to the other? Absolutely – look at my current favourite example, David Abney, https://www.pressroom.ups.com/pressroom/ContentDetailsViewer.page?ConceptType=Biographies&id=1426319280274-279 who worked his way from the bottom to the top of UPS.
Others have stumbled and struggled with Manager to Leader progression; the worst have gone on to break their organisations.
Still others like Branson and Dyson, are born Leaders, who would struggle with the constraints of day-to-day management or operations.
They are the Leaders who inspire us, and typically amaze us with their vision and level of strategic thought, when we hear them speak – go to www.TED.com, or www.HBR.org, for some outstanding material and videos.
In Procurement, there are some fascinating examples – many of the best Procurement leaders have come up through the operational ranks, they have experienced and succeeded in transactional and strategic spend areas, they have developed technology and process, suppliers and markets, they are relationship experts, they understand risk, and they have a deep grasp of an organisation’s strategy and drivers.
Others are woefully average, and just would not/did not inspire me.
I have always looked for the thought-leaders, the innovators, who in addition to their innate and developed people skills, have a real feel for the levers that will create competitive advantage; they instinctively develop an environment and reward structure which enables people in their teams to express themselves and succeed.
Think about it – which and who are you? How does your self-portrait compare with your ambitions, and what’s your plan? Are you happy to be average, or do you want to be remembered for your achievements and your behaviours?
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