All posts by The Faculty

Making It Stick #1: Tarkan Koman on Benefits Realisation

The Faculty Roundtable Members speak about benefits realisation and how to Make it Stick.

Hear Tarkan Koman talk about Benefits Realisation in the first of four videos from The Faculty.

The Faculty Roundtable is pleased to release its new research report, “Making it Stick”, on benefits realisation for your Procurement team.

Five reasons why procurement savings don’t stick

Earlier this year, The Faculty Roundtable commissioned an investigation into best-practice benefits realisation, and its researchers have conducted a series of interviews and data analysis to unearth the factors that prevent Procurement’s savings from hitting the bottom line. The results were boiled down to five key hurdles to Making savings Stick.

Download your free copy of this exclusive research on Procurious today.

Dr Karen Morley Asks What’s YOUR Leadership Narrative?

X Factor Research from The Faculty

Dr Karen Morley – Executive Coach, Associate Dean at Mt Eliza Education, expert on gender-balanced leadership and registered psychologist, took the stage at this week’s CIPS Australasia Conference to give a brilliant presentation on setting the bar for world-class leadership. 

Procurement professionals love hard facts and figures. That’s why it was so satisfying for the audience to see that Morley based her analysis of what makes a good CPO on an excellent paper produced by The Faculty Roundtable in 2012 – The “X Factor” Leadership Research. The X Factor model breaks down what is required of a world-class CPO to deliver competitive advantage for their organisation into four key areas: functional excellence, leadership attributes, people leadership, and commercial leadership.

In line with the conference theme of “Raise your game, raise your voice”, Dr Morley discussed the vital need for CPOs to be able to share their stories about the difference they’ve made to their business. She shared with the audience the stories of four past winners of The Faculty’s CPO of the Year Award, all of whom demonstrated strength and balance across the four categories of the X Factor model. Importantly, the four winners (all highly-regarded Australian CPOs) were able to successfully articulate and promote their achievements. The message is clear – don’t be shy to shout about your accomplishments. 

Having set the bar for what distinguishes a leading CPO from the pack, Dr Morley challenged the audience to step back from their day-to-day concerns and begin crafting what she called the “leadership narrative”. A leading CPO takes time to focus on what their story is and crafts a consistent message to help people understand where they’ve come from, what they’re focused on now, and where they’re going. Dr Morley puts it this way:

“Imagine you have lived your life as the leader you want to be and you are at your retirement party. How do others regard you?” 

Shape your story through:

  • Setting 3–5 year and 5–10 year goals
  • Creating a tagline – what’s unique and special about you?
  • Shaping your story by thinking consistently about capability, identity, values and core purpose.
  • Focusing on what’s critical – the X Factor model points to commercial leadership and personal attributes as the most critical areas for a CPO.

Dr Morley gave the audience some very practical advice on how to raise their voice. It’s all about “executive presence”. To increase your executive presence:

  • Project a calm and relaxed manner
  • Keep your conversation focused and to the point
  • Connect through sincere emotion
  • Adopt a “power pose” to give you confidence (“fake it, and become it”)
  • Attract and hold the attention of others – in Dr Morley’s words, “attention is the currency of leadership”.

To boil Dr Morley’s advice down to three key points, procurement leaders who want to stand out from the pack should firstly understand exactly what it takes to be a leading CPO (using the X Factor Research), create a leadership narrative to craft their own story, and finally, raise their voice by increasing their executive presence.

Read our previous interview with Dr Morley here.

Are You Sick Of Your CFO Asking ‘Where’s The Money?’

Where’s the money? – Marisa Menezes launches The Faculty’s Making it Stick research at the 2015 CIPS Australasia Conference.  

Marisa Menezes launches The Faculty’s Making it Stick research at the 2015 CIPS Australasia Conference.

Consider this – you’re a successful CPO with a world-class Procurement team that’s brilliant at negotiating great savings and other value. Six months ago you successfully identified and negotiated contractual benefits worth millions with a critically-important supplier – at the time, there were plenty of high-fives and back-slapping amongst the team as you signed the contract and handed it over to the business owners… but fast-forward six months to the end of the financial year, and your glowering CFO calls you into his or her office to ask those three dreaded words – where’s the money?

Marisa Menezes, GM of The Faculty Management Consultants, has made the assembled procurement professionals at CISPA 2015 very uncomfortable. She’s describing a nightmare situation that has kept many a CPO awake at night – millions of dollars in identified value won by procurement failing to make its way to the bottom line, a despairing CPO and a furious CFO. The potential consequences of poor benefits realisation are frightening – apart from the obvious anguish of seeing savings going down the drain, it damages the procurement function’s credibility. Strategically-vital supplier relationships also suffer, as maverick spend damages vendors’ margins and restricts the purchasing organisation’s ability to negotiate future contracts in good faith.

But it’s not all bad news – The Faculty has a solution for Making it Stick.

Earlier this year, The Faculty Roundtable commissioned an investigation into best-practice benefits realisation, and our researchers have conducted a series of interviews and data analysis to unearth the factors that prevent Procurement’s savings from hitting the bottom line. The results were boiled down to five key hurdles to Making savings Stick, namely:

  • A lack of enterprise-wide ownership and alignment with Procurement’s targets;
  • Silo-style working environments rather than true cross-functional collaboration,
  • Maverick spend and other non-compliance that undermines Procurement’s gains and damages supplier relationships
  • Unclear benefits definitions, measurements and validation processes that haven’t been agreed upon across the organisation, and
  • An immature cost-conscious culture that hamstrings CPO-level efforts to expand the value Procurement contributes to the organisation.

No wonder CPOs are having trouble sleeping at night – as much as 50 per cent of contracted savings are not making their way to the bottom line of Australia’s leading companies, which is equal to $138.5 million dollars across the 16 major organisations that participated in this research. Overseas, the figures are even more disheartening: a report by Aberdeen Group in 2011 revealed an industry average of only 8 per cent, an incredibly low figure.

The Faculty’s Making it Stick research a call to action for CEOs and CFO to support their Procurement functions to dramatically improve benefits realisation. It requires no less than an organisation-wide change management program to drive the right behaviours around compliance and cross-functional collaboration, and this must be driven from the C-level if organisations intend to fully realise the benefits of their supplier relationships.

Marisa takes the audience through six different “levers” a CPO can pull to drive savings all the way to the bottom line:

  • Prove it – moving the Procurement team’s focus from projected to validated savings
  • Drive cross-functional collaboration, focusing on shared goals and language
  • Expand the focus beyond costs – only possible once a cost-conscious culture is in place
  • Align to business targets – without alignment, CPOs risk having their hard-won benefits dismissed as irrelevant
  • Build rigorous benefits definitions, measurement and agreed-upon validation methodologies
  • Focus on compliance – without a culture that values compliance, nothing will stick.

The Faculty’s Making it Stick report is now available for free to download. Armed with this call to action, CPOs have the tools they need to drive meaningful change, make savings stick, and sleep better at night.

What is causing Aussie CPOs to lose sleep?

What’s causing Aussie CPOs to be sleep-deprived? Talking-points from The Faculty Roundtable’s latest round of discussions reveal all…

What's keeping CPOs awake at night?

Following on from the success of Tania Seary’s recent article ‘The Five Disruptive Forces that will Keep CPOs Awake at night in 2015,’ The Faculty Roundtable (a series of CPO meetings held in Australian capital cities and in Singapore) decided to put the same question to some of Australia’s leading CPOs.

The issues below are summary of the discussion that took place on this topic in the recently completed August Roundtable series.

  1. Cost vs. Customer Centricity Dichotomy

In Roundtable meetings across the country, CPOs discussed the challenge they faced in finding a sustainable balance between meeting the expectations and requirements of its internal customers, while at the same time ensuring corporate cost cutting objectives were achieved. CPOs discussed how providing value-add services often flew in the face of traditional cost-saving procurement and that one of their greatest challenges was to navigate this tricky dichotomy.

One Sydney CPO highlighted creating close links with the C-Suite as the best means to achieving this balance. He linked the challenge to a business analogy discussed in the Harvard Business Review, claiming that CPOs needed to have a sound understanding of the legwork and operational challenges their team faced while stressing the importance of taking a step back and viewing the team’s performance “from the balcony” and linking every activity and strategic decision directly to corporate objects.

CPO discussions in Perth centred on the increased spotlight the procurement function has found itself under since global commodity prices started to slide. CPOs there said they had been asked to not only cut costs but also to identify and define new revenue streams.

The discussions in Perth covered the necessity for procurement teams to drop the procurement lingo and start speaking about the business more broadly. Melbourne Roundtable members suggested procurement teams need to address how we as a function can help achieve organisational success not procurement metrics. Perth Roundtable presenter and 2015 Procurement Leader of the Year, Kylie Towie has previously discussed this on the Procurious blog.

  1. Developing Talent

Talent continues to be a major cause of concern for Australian CPOs. One CPO went so far as to say “Capability building is the biggest issue facing Australian procurement.”

Throughout the roundtable series, CPOs discussed the fact that as the role of procurement continues to grow and change within our organisations, so too does the required skill set of procurement teams. A Brisbane CPO claimed that attracting and retaining top corporate staff needs to remain a top a priority for procurement. He went onto to say; that while the functions image is improving the battle to attract top corporate talent is as ferocious as ever.

Another Brisbane-based CPO made gave some interesting insights into the disconnect between talent management theory and practice. He claimed that theories alone couldn’t motivate teams to do something; only actions can do that. The same CPO claimed that implementing talent management processes required constant attention and commitment. The example of a mentorship program was used to describe the challenge. The organisation had decided that implementing a mentoring program would be a great way to motivate and develop junior staff. This was in fact true. However, the challenge lay not with motivating junior staff to participate, but rather in encouraging senior staff to act as mentors. Many leaders either were unable to see the value in the project or did not feeling comfortable acting as a mentor.

  1. Proving Procurement’s Worth

This fear has long been with the CPO and it seems it’s as strong today as ever. Across the country, CPOs highlighted the constant need to validate and prove their worth. There was general agreement amongst the Australian procurement leaders that this will (and should) continue to be the case.

CPOs, particularly those working in the resources sectors, mentioned that they were under increasing pressure from CEOs to not only identify savings, but to track these benefits all the way through the P&L. To this end, CPOs expressed great interest The Faculty’s upcoming research paper “Making it Stick” which is designed to ensure that CPOs and procurement teams realise all negotiated savings. The paper, which will be release on 17 September, highlights that more than 50 per cent of savings negotiated by procurement teams fail to find their way to the bottom line. The report provides a road map and points out pragmatic strategies that procurement teams can implement to ensure these savings are realised. Stay tuned to Procurious for more information about this highly anticipated research paper.

  1. Managing the Rate of Change

“The pace of change is so intense, it can be a struggle just to keep up,” claimed one CPO. This sentiment was echoed by most of the CPOs we spoke to as they discussed the importance staying on top of technology trends and tried to understand how this rapidly changing environment might impact their operations.

Discussing the need to leverage new technologies, a Brisbane based CPO claimed, “its not enough to just carry on running tenders, we need corporate game changers.”

The CPOs went into some detail discussing the challenges procurement teams faced when it came to adopting new and disruptive technologies. A lot of it boiled down to procurement professionals having a strong fear of failure.

“Some of our staff are scared to fail and this impacts what we can achieve,” said one CPO. While this aversion to risk may be beneficial in many areas of procurement, when it comes to implementing new ideas or ‘game changers’ its can hinder progress.

Pulling reference from the tech and start-up sectors, one CPO stated that, “In order to take full advantage of new technologies and operating processes we need to be ready to fail fast and fail often.”

The Faculty Roundtable comprises of an elite group of Australian and Asian procurement leaders who gather to share their experiences and insights, to achieve greater commercial success for their organisations.

Meetings are held throughout the year in Melbourne, Sydney, Perth, Brisbane and Singapore. To find out more or to get involved click here.

The War for Talent – Battleground Asia

The Faculty Roundtable lands in Singapore

The Faculty Roundtable lands in Singapore

The Faculty was in Singapore this week for the launch of its Asian Roundtable Meetings. This series of events brings together a carefully selected group of elite procurement leaders to share experiences and insights within the specific context of the Asian procurement environment.

Wednesday’s inaugural event focused primarily on talent attraction and retention, an area of great debate across the region.

Attendees stressed that competition for talent not only occurs between firms but also within the functions of your own business. “Procurement isn’t always the first choice” said one CPO.

Also addressed, was the need for a shift in the competencies of procurement staff. It’s time to move away from traditional purchasing practices and take a more strategic commercial perspective on our business challenges. The assembled procurement leaders agreed that now the function is being seen as a source of ongoing revenue, there is a requirement to shift our competencies in order to fully realise this opportunity.

Attracting top procurement in Asia

One of the key challenges outlined when it comes to attracting top procurement talent in Asia was the need to appeal to a very broad spectrum of employees. One CPO detailed that his team comprised of ten different nationalities, from Chinese Singaporean nationals through to European expats and that each of the groups present in the workplace had a different set of factors that motivated and drove them to succeed at work. There simply isn’t a single management technique that can be effectively applied to all members of such multinational teams.

Another interesting point raised throughout the day was the reluctance of employees to accept failure. One CPO pointed out that “if innovation and growth are the goal, you have to experiment and experimenting involves failing”. This is not something that sits easily within the context of some Asian cultures.

Guest speaker Tom Verghese, who has contributed to the Procurious blog in the past, went into great detail highlighting the importance of cultural sensitivities within the diverse workplaces of Asia.

Tom stressed that procurement bosses need to be cognisant of the affinity bias (selecting employees from a similar background to one’s self) when constructing teams. Operating in a culturally diverse market requires forming opinions based on the inputs of a culturally diverse team.

Mentoring too was highlighted as an area of critical importance for the development of talent within the Asian procurement space. The Faculty has committed to work with the attendees of the Asian Roundtable to establish a mentoring network that will ensure the development of the next generations of Asian procurement leaders.

The Faculty Asian Roundtable will be returning to Singapore in September to kick off its mentoring program and once again connect the region’s brightest procurement minds. To find out how your organisation can get involved get in touch with Max Goonan or Chris Roe at The Faculty.