The Greatest Challenge is Internal: Stakeholder Relationship’s
Procurement is often perceived as an EXTERNAL facing function. After all procurement negotiates with suppliers and works with them to reduce cost and improve efficiencies doesn’t it?
Well this may be true in part, but procurement’s ability to achieve its objectives is strongly impacted by the strength and quality of its INTERNAL relationships with its stakeholders. Procurement’s stakeholder relationships therefore impact what it can deliver for the organization. Despite this, formal training in stakeholder relationship management is rare.
Developing and maintaining healthy stakeholder relationships can sometimes seem like procurements greatest challenge. Procurement leaders must therefore understand the organizational conflicts and process challenges that will inhibit successful procurement delivery.
Why should this be the case?
Organizations are driven largely by the political agenda and the budgeting process. Out of this process “turf wars” ensue and particularly in organizations where procurement is poorly aligned with its stakeholders, decision rights, roles and responsibilities and budgets are often vaguely defined. These issues have to be resolved by leadership through strong governance.
The benefits of strong governance include:
- Increases management efficiency, and corporate control, which are aimed at providing long term value and improved compliance
- Promotion of trust among internal and external stakeholders
To achieve strong governance requires organizations to develop and put in place formal governance structures to provide strategic direction, allocate priorities and resources, and ensure risks are identified and managed.
At the operational level, the more demanding requirements of a role in procurement these days requires a much broader range of skills than it did even 10 years ago. Today, procurement is increasingly strategic to the business and is no longer involved in merely transactional activities. This shift requires procurement staff to have the not just “soft skills” but also a wider range of “political skills” to effectively manage stakeholders and build effective relationships.
Today, deep listening skills and a multi level dialogue are required to manage the multiple interfaces where stakeholders and procurement touch. To ensure these relationships are effective requires:
- Mutual understanding
- Mutual persuasion (rather than coercion)
- A Balance of reason and emotion
- Good communication
Issues must be separated to identify both problems and solutions, and active listening, empathetic responses and emotional reframing must replace self proclamation, disinterest and disagreement. Procurement staff must be trained in stakeholder management, taught to deal with difficult people and equipped with appropriate tools to assist them in this.
The ability to identify the political landscape, develop strategies and deploy suitable tactics are key success requirements very few procurement staff receive formal training in today. This must change if procurement is to continue its drive up the corporate ladder.
We welcome your views and comments.