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!
Andrew Daley was invited by Philip Ideson from the excellent Art Of Procurement podcast to discuss two of his favourite topics, Talent Attraction and Career Development, both of which should be of interest to the modern Procurement or Spend Management professional.
The Rules Of Talent Attraction should be of particular interest to any hiring manager who is focused on recruiting the best people they can find into their team. It covers key areas like recruitment processes designed to attract as well as assess strong candidates, the supply and demand of various core procurement skills and how to avoid some common recruitment mistakes.
The Strategies & Tactics You Need To Secure Your Dream Procurement Job is geared towards the procurement professionals personal career objectives. Philip and Andrew discuss the importance of networking, how you present yourself to the external job market and what skills you will need to develop to progress your career.
Both interviews have been very well received by the audience and have resulted in some excellent feedback.
If you would like to discuss any of the issues raised in either interview, please get in touch directly with Andrew via email@example.com
Want to read more about recruitment market conditions – here’s the latest Procurement & Spend Management Quarterly Update.
One of our Directors Peter Brophy has previously worked as Head of Recruitment / Resourcing in organisations such as Rolls-Royce, BDO and Proxima as well as for Manpower the global recruitment and workforce solutions business. He has also worked within specialist Executive Search and Selection recruitment businesses. He has experienced and implemented different recruitment models and processes across a number of sectors at a senior level giving a deep insight into the strengths and weaknesses of these from both sides of the fence.
Here he offers his expert opinion on the merits of the various recruitment models available to large organisations.