In his third blog of the series, Peter Smith discusses how best to go about managing successful procurement change. Read on to learn why it’s of vital importance to make sure you’ve got the right team, the right stakeholders involved, and an open line of communication.
In our first post in this series, we quoted the immortal words of Nicholas Machiavelli, as he explained why change is so difficult to implement. Paraphrasing, people worry about it—particularly those who feel they might lose out. While those who should gain keep quiet until they see that change is really going to happen. And what applied in 16th century Italy applies to every procurement transformation or change program I’ve seen in the last 30 years. Taking people with you is a challenge but is also a critical success factor.
Procurement’s fear of change
After being a CPO, I moved into consulting and I remember an early assignment which was a typical change program; new systems, processes, upskilling procurement staff… you know the score. I kicked it off by standing in front of the 40-strong procurement team, giving the big motivational speech. “We’re getting rid of all that boring processing of purchase orders and approving invoices, and you will all be doing exciting strategic sourcing next year”, I announced. “Won’t that be great”?
It suddenly dawned on me from the expressions of horror as I looked around the room that at least two-thirds were thinking, “No, it won’t! I like processing POs; I know how to do that. I might not be any good at this strategic wotsit….”
Digitization can provoke uncertainty in all
But it is not only procurement staff who can be fearful of change. Users of procurement – budget holders, commissioners, order placers – will wonder what that change means to them. Will they need to learn new ways of doing things too? Give up cherished suppliers? Even the finance function may worry about whether they will still get the information they want, or whether your new systems will integrate with theirs. Again, if systems are part of the change, the IT team might see this as more work and hassle. Top management may see it all like a bit of a distraction.
5 steps sure to make your procurement change a success
So, don’t assume everyone will automatically embrace your change program. But there are several steps you can take to get the support you need and avoid any rear-guard actions or outright hostility!
1. The senior procurement team must be visible and supportive.
I’ve seen change programs fail because half the senior procurement team was never on board. Indeed, the program mentioned earlier ultimately failed because while the CFO was driving it, the Procurement Director sat on the fence. If I were a CPO leading a major program today, I would have my senior team signing up to it in blood. And if they weren’t fully behind it, I might suggest it would be better if they just go quickly.
2. Nurture your key personal relationships – inside the team, your key internal colleagues and stakeholders, even key suppliers. Don’t rely on the weekly program update newsletter but talk to people. If they can see your integrity and enthusiasm for the change, that will really help if (and when) things get tough.
3. Reassure people whose jobs are likely to be affected (if you can).
If you have no intention to lose headcount, say that and explain how any changes will happen. If you are going to reduce numbers, my experience is that the more honest you are, and the sooner you tell people whatever needs to be told, the better. It is the uncertainty that is most stressful.
4. Building a business case for change is a valuable tool to help carry your team with you.
But it’s key to include the benefits of the program in terms that matter to your stakeholders rather than talking high-level aspirations or procurement geek-speak. You are selling here, which doesn’t come easily to many buyers! And as we used to say at Mars (one of the greatest marketing firms in the world), “You sell the benefits, not the features.”
The budget holder in marketing doesn’t really care about the new technology that will give 90% first- time automated invoice matching. She does care if she can save the hour a week she currently spends hassling with invoice approval, or that she’ll have access to a new catalogue that’s “just like ordering from Amazon”! The factory manager doesn’t care about exactly how you will develop your new category management approach. But he does want to know that he will be fully involved in choosing suppliers of raw materials and that you’ve got a great new process and tool to help you both monitor their performance.
5. So, keep communicating, but tailor the communication to the audience.
That audience does include suppliers in many cases, I should say, but even internally, the Board wants different information about the progress of the change program compared to the users or the procurement team. Communicate success but be honest where things aren’t going to plan. I talked about the benefits of quick wins and a modular approach to change in the last article; regular “wins” through a program certainly make the communication job easier.
One final point though, going back to Machiavelli. He was a great believer in pure power, as well as the subtlety of approach when appropriate. So, taking people with you on a change journey is always easier if you have the visible backing of top management. However skilled you are personally, if your colleagues know that the CEO “has your back”, your journey will be easier.
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