Tag Archives: communication

How To Increase ROI With Clear Communication To Business Stakeholders

The Hackett Group’s, Nic Walden, explains how to improve your ROI through engaging and clear communication. 

Most stakeholders say that consistent delivery of core services is the principal requirement to consider procurement as a trusted advisor. Although many organisations are capable of filling this role, most are still viewed by internal customers as sourcing experts (i.e., focused on negotiation and supplier selection), or worse, as gatekeepers or simply administrators. In fact, only 29 per cent of procurement organisations are viewed as valued business partners by key stakeholders.

Does It Matter? Absolutely!

Analysis of Hackett benchmarks shows as much as a 2.5X ROI can be achieved from elevating the role of procurement, and aligning the goals and expectations of procurement teams to that of the business. That’s a hefty bump in savings or broader value terms in anyone’s language.

At Hackett we measure ROI as total cost reduction and avoidance divided by the cost of the function. As an example, professional sourcing teams can deliver strong savings performance when looking at percentage terms only, but when compared to the level of resource investment (i.e., ROI), they come up short.

Why Leave Money On The Table?

Let’s assume we have the capabilities to operate at a higher level (closing the capability gap is itself another discussion). One reason for misalignment is that procurement teams struggle to communicate their capabilities. Ineffective communication with internal customers, suppliers, and colleagues also causes confusion, delay, or leads to incorrect assumptions of what procurement can and cannot offer. With this in mind, Procurement teams face three main challenges to elevate their role:

  • Perceptions on historical performance cause resistance to change.
  • Internal customers are unaware of what procurement can offer.
  • Undergoing a major transformation results in confusion and inconsistencies.

The result is that successful procurement teams go to great lengths to build a compelling brand image, supported by a well-defined vision, services that meet or exceed expectations, and a formal measurement program to ensure ongoing improvement. If these steps are not taken, procurement groups can plateau in operational efficiency and effectiveness despite having the capabilities to operate at a much higher level.

Launching a New Procurement Brand

Defining a brand is an important concept for procurement because it makes their purpose and identity more comprehensible for stakeholders. The Hackett Group has outlined four major activities (understand, define, create, engage) that make up a successful brand transformation, supported by ongoing internal input. Everyone has a role to play in communicating and utilizing procurement’s new brand for effect: leadership, sourcing, buying, and operational teams.

  1. Understand what is most important to internal customers and stakeholders

The brand should highlight procurement’s desire to support stakeholders and its ability to act as a valued business partner. This means having a solid understanding of what is important to stakeholders. For example, they might want more help defining requirements, to run credible and achievable projects, to manage difficult supplier conversations, to bring new products to market faster, or reporting. Most often, they just want procurement to excel at delivering core services.

  1. Define procurement’s brand-management strategy

This is the time to clearly develop a clear vision and simple set of guiding principles to communicate goals, followed by defining procurement’s roles and responsibilities, and to make this information easily accessible to procurement and its stakeholders.

Other activities include:

  • Delineate the services that procurement provides to internal customers; ensure these align to their needs and requirements. Take this opportunity to de-prioritize or reshape what is not valued.
  • Provide clear definitions of the activities and tasks performed for each support service, along with the service levels provided (e.g., meeting frequency, cycle time, error rates).
  • Determine which business segments and departments that procurement can support.
  • Match staff and skill sets to procurement’s services.
  1. Create marketing materials and share initial communications

Now we match the desired stakeholder experience with procurement’s future behaviors. Since people respond differently to various methods of communication, consider creating an “omnichannel”, personalized stakeholder experience to allow broad access to the procurement process and enable the ability to buy/pay from all locations and get real-time information. Common activities include:

  • Develop a new brand identity, including a name, mission statement, a set of values and goals, and even a logo if desired.
  • Determine the way communication with internal customers and stakeholders will be handled, such as email, phone, in-person support, chat or robotic tools.
  • Deploy an intranet portal that lets internal customers communicate with procurement and conduct self-service activities. Consider setting up a similar site for suppliers.
  • Develop marketing materials for various stakeholder groups, making certain that overall messaging is consistent.
  • Define and document any related changes to the organization, such as new employee titles.
  1. Engage and continually communicate with all stakeholders

Multiple channels of communication should always be open for both internal customers and suppliers to reach out, get questions answered, or further develop relationships. There are various ways to engage with stakeholders, not all of which make sense for every company. Some of these activities include:

  • Face-to-face road shows with business executives, such as ongoing conference calls or one-on-one calls
  • Face-to-face road shows with middle management / operations followed by regular calls to ensure procurement is meeting objectives
  • Regular emails that include policy updates and metrics showcasing procurement performance

Nic Walden, Director Procurement and P2P Advisor, The Hackett Group works continuously with senior executives of the world’s leading companies to provide top performance insight, research and networking.  Nic is a regular speaker at conference events and a regular contributor to social media and online blogs.

Learn more about Hackett’s Procurement Executive Advisory Program

Big Ideas in Big Companies

Making significant changes in a business can be challenging and is often especially difficult in big companies where it’s hard to get your voice heard, and break through protocol and resistance at the top.

Big Ideas Big Companies

Here at Procurious, we’ve been asking for you to submit your Big Ideas ahead of our Big Ideas Summit 2016.

We firmly believe that every procurement professional has a unique vantage point in the industries, communities and businesses they work in. Your Big Idea, inspired by some of the amazing experiences and insights you have, could be the one to change the face of the procurement profession.

Red-Tape and Resistance

However, getting your ideas heard and implemented is often easier said than done. Change can be implemented more readily in smaller businesses or start-ups, where there are fewer employees and greater flexibility, and roles are more diverse or interchangeable.

In big companies there is more red-tape and resistance to change. It can be difficult to make your voice heard by the right people when there is a fixed hierarchy and more stakeholders to consider. If you want to be a game-changer in a big company, having communication skills and the confidence to assert your innovative ideas is key.

As for the people at the top of these organisations, it’s their task to ensure they are inspiring intrapreneurship and considering the potential for great ideas to come from anyone, and anywhere, whether it be a graduate or a supplier.

Communication

People at the top need new ideas and new perspectives, so the chances are they will appreciate an employee taking the initiative to pitch an original idea. If you are fortunate enough to have this opportunity, don’t be complacent. Prepare, rehearse and ask for feedback from colleagues and friends.

It is crucial to deliver a slick and compelling pitch, which captures the attention of those listening. How you sell your idea, and convey your passion for it, will make all the difference.

Your audience needs to know what is so great about your idea, how it stands out, and if it will be worthwhile. You should consider how this change can be implemented within your organisation, and how you can measure its success.

What problems does this idea solve for your business? If you can’t articulate these points in a concise and convincing way, your voice won’t be heard and your ideas will be discarded, no matter how fantastic they are.

Commitment to Your Big Idea

Excellent communication, despite its importance, might not be quite enough to seal the deal with your Big Idea. It often takes greater persistence than just one great pitch.

Big companies, and those at the top of those big companies, can be averse to change and reluctant to take risks particularly if the change proposed is a big one. Chris Lynch, CFO at Rio Tinto, believes that, in larger companies, “the bigger the idea, the greater the resistance.” A flawless business plan might not be enough to relieve any hesitancy your employers have.

Your confidence, passion and perseverance are key. If you give up at the first hurdle, your idea can’t have been worth fighting for, and colleagues or employers will doubt you ever had the courage of your convictions.

Additionally, you can demonstrate your drive and commitment by doing your homework. Don’t get caught out by not being up to speed and seeming unprepared. Make sure you’ve done the background reading, made contingency plans and considered every eventuality. Again, your audience will be impressed by your motivation.

It can take years for an idea to come to fruition within big companies, and you might face a series of hurdles along the way. Don’t give up on yourself or your ideas. Keep dreaming big.

Inspiring Intrapreneurship

It is not solely the responsibility of the employee to push for change in large organisations. Senior decision makers and those at the top can help by being encouraging and harvesting intrapreneurship.

Even if one particular idea doesn’t tickle your fancy, the person pitching it is someone to be encouraged and supported as a future innovator and game changer.  These are the people on the inside who can think outside existing limits, the ones with the creative skills to reinvent companies and drive change.

As far as procurement goes, there is always room for the intrapreneurs who will become leaders, influencing entire organisations and developing breakthrough solutions for a variety of organisational issues.

A Big Idea Can Come from Anyone

It doesn’t matter if someone is experienced or inexperienced, a recent graduate or a long-term employee, they can still contribute a great idea to a large company. The best ideas could come from someone or somewhere you least expect.

As procurement professionals it is important to listen to our suppliers as much as our employees. No enterprise is an island, and collaborative change can be the most rewarding of all. Our partners on the outside can see what we on the inside can’t, which is why it’s important to heed the advice and suggestions suppliers make. It is a valuable approach to perceive suppliers not simply as an expenditure but as value-adding co-workers.

As the pace of change increases in business and procurement, and new trends and technologies are developed all the time, organisations cannot afford to be close minded when it comes to new ideas. You never know what you are going to hear if you open your door and create a culture of innovation in your company.

If you’re interested in finding out more, visit www.bigideassummit.com, join our Procurious group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

Don’t miss out on this truly excellent event and the chance to participate in discussions that will shape the future of the procurement profession. Get Involved, register today.