4 Ways Company Culture Influences Procurement

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Author: Hillary Ohlmann

According to a recent video from strategy+business, one way to define a company’s culture is as “the collection of self-sustaining patterns of behaving, feeling, thinking and believing that determine ‘the way we do things around here.’”

The way we do things around here. That phrase certainly brings no happy thoughts to mind. In fact, it conjures up the image of a middle manager who has spent the better part of his career with his heels dug in, resisting change. Company culture can be like that—deeply ingrained and difficult to change.

But “the way things are done” can also be a source of employee pride and job satisfaction. Company culture can lead to innovation, greater customer satisfaction, and an increase in profits if leveraged correctly.

The importance of alignment from top to bottom
Culture is a positive force when there’s alignment between the company’s “official” culture — what is said — and the company’s “real” culture — what is done on a daily basis. Misalignment can be the cause of confusion and disengagement at best and damaging to brand reputation and the bottom line at worst. For example, imagine your company makes an “eco-friendly” product (or so says the marketing), but the procurement function has been told cost is king. Consequently, they source from suppliers who provide what they need at rock-bottom prices but who have questionable environmental practices. Eventually, as we’ve seen time and again, the consumer finds out.

This puts procurement professionals in a unique situation. Not only are they in the position to support company culture through their personal behavior, they are also in a position to see to it that the culture is being upheld on the production side as well.

How does company culture influence the procurement function?

  1. Motivation – A positive, well-aligned company culture can be a great motivator. For example, if procurement professionals feel they are valued as strategic contributors to the organization, there’s a greater likelihood they’ll motivated and engaged. It also works the other way. Say collaboration and teamwork have been touted as the company way, yet the procurement team is only called in on projects at the last minute and then treated as an obstacle to be overcome rather than as a key partner. This example of culture misalignment could lead to a disengaged, isolated procurement function.
  2. Recruitment – New hires can quickly see whether the aphorisms they saw plastered on posters and brochures during the interview process connect with the day-to-day behaviors of their team members. This can be especially important for millennial employees. Studies have shown they value mentorship and collaboration and expect their workplace tech to be at least as advanced as the tech they use as consumers. If the procurement function is stuck with outdated technology and reluctant to implement more modern tools, the company may have a difficult time retaining quality team members. The same goes for collaboration and mentorship. If your procurement function is handcuffed to dotting i’s and crossing t’s according to instructions from on high, then employees may feel they lack the authority needed to provide excellent internal customer service.
  3. Objectives – Procurement can lead the way on helping organizations fulfill CSR and sustainability goals. However, if the “official” company culture espouses these ideals but the “real” culture emphasizes that it’s ok to break rules, cut corners or ignore red flags from suppliers, then organizations may soon find themselves face to face with a scandal the size of a Volkswagen.
  4. Incentives – Company culture can determine the incentives the procurement function receives, both positive and negative. Culture and value go hand in hand: what is valued in an organization gets institutionalized in the culture, what is not valued falls by the wayside or is minimized through negative incentives. If the company values savings above all else, the procurement function will be positively incentivized when it shows costs have been cut, perhaps through bonuses, verbal praise, or some other sort of recognition. These positive incentives will encourage similar behavior, further solidifying the culture that led to those actions in the first place.

If your company culture has not allowed your procurement function to shine, don’t lose heart: old dogs can indeed learn new tricks. Start small by working on your team culture or the procurement function’s sub-culture. Look for better ways to communicate with your stakeholders and each other. Enlist the help of “intrapreneurs” on your team and ask them to lead through positive example. Address alignment issues as they arise and encourage others to point out areas of dissonance. When you hire new team members, consider whether they have the soft skills necessary to represent procurement’s value within the larger organization.

Changing the entire company’s culture is a much larger task and requires a sea change led by upper management. However, since the P2P process runs throughout the entire organization, the procurement function will benefit from improved alignment. As Benjamin Franklin once said, “Well done is better than well said.”

Up Procurement’s value in your organization by downloading The CPO’s Guide to Strategic Sourcing.

PASA has declared 2016 to be ‘The Year of Entrepreneurial Procurement’. This theme will be reflected across the business as we focus on a new way of thinking and encourage different skills and attributes in the people working in procurement. Read more here:
https://procurementandsupply.com/2016/01/2016-the-year-of-entrepreneurial-procurement/ 


About the author
: Hillary Ohlmann is DeltaBid’s knowledge base developer. DeltaBid provides procurement professionals with user-friendly online tools designed to reduce the twin hassles of email and repetitive data entry, allowing them to focus on more strategic tasks.

About Author

Procurement and Supply Australasia (PASA) is the leading provider of information and education to procurement and supply professionals throughout Australia and New Zealand. PASA supports the largest community of engaged procurement stakeholders in the region, through its renowned series of events, publications, awards, plus various community and network building activities. PASA is a trading name of BTTB Marketing, for many years recognised as the leading producer of conferences and events for the procurement profession in Australia and New Zealand. Whether producing under the BTTB, CIPSA Conferences or now PASA brands over the last ten years, our events have consistently led the market in terms of both educational and networking opportunities.

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