Does Your Company Culture Impact Procurement?
Is your company culture confined to a blurb in the employee handbook, or is the cultural tone set by your company influencing your whole procurement team – for the worse?
Your company’s culture sets the tone for hiring and retaining talent and motivating them to excel. Each department within a company may have its own set of cultural norms as well — the sales department has different incentives and rewards than procurement, for example.
Finding and keeping top talent is a priority, and building a culture for success within the procurement function will help the function deliver value for the business as well as make it a desirable place to build a career.
What is a Corporate Culture?
Most companies talk about their culture and its influences on how they interact with employees, customers, and suppliers.
Your corporate culture is more than “Just the way we do things around here.” However, that’s part of it. It’s the collection of patterns of behaviour, thinking, and feeling that culminate in the way you do things. Of course, some of the culture is shaped by the countries where the company does business.
You’ll find the written version of the values your company holds dear on the About Us or Our Values section of the website. There’s likely a section of platitudes and aspirations in the employee handbook. These efforts are valuable, of course. Even the act of finalising what words to add to the cultural vision can lead to deep soul searching.
There are also unwritten cultural rules, which may vary by location or department. Some things the sales team in the U.S. get away with would get them fired in the London office, for example. The way meetings are conducted in Tokyo is vastly different to how conference rooms run in Sydney. Some people hang out with friends from work after hours, while others never see their coworkers outside the office.
The disconnect between the stated culture and how people work daily leads to cognitive dissonance. They say people go to work for a company but leave due to a bad manager. That’s because the values they learn in new employee onboarding don’t align with how they’re treated every day.
In the wake of the pandemic, this disconnect between stated values and real-life values has led to the “great resignation.” It’s not so much that people don’t want to work. They don’t want to work for a company that doesn’t live up to its values.
The procurement function occupies a unique role as a monitor and enforcer of the culture not only in their own lives but also in the company’s behavior.
Procurement professionals are involved in sourcing products that meet Environmental, Social and Governance (ESG) standards, such as sustainability and slavery guidelines. There may be a conflict between using a low-cost provider that doesn’t meet sustainability standards. The business partner insists on using the provider to meet cost targets. But the procurement pro knows that consumers or regulators will eventually find out.
How Company Culture Aligns with Procurement
If procurement pros feel like they have a seat at the table, it’s more likely they will be motivated to perform. If business partners see them as order takers or, worse, a roadblock to be overcome, they’re not as likely to perform their best. Engaging with business partners, finance, and operations will help procurement staffers feel like part of the team. And nobody wants to let their side down.
Walk the Talk
If the recruitment speeches are all about the company’s values, but new employees are stuck using old technology, and their new ideas get dismissed, they’re not likely to stay long. If the answer to any idea is, “That will never work,” people will stop sharing their innovations. If procurement is seen as an administrative function focused on following the rules, companies don’t get the benefit of engaged employees.
If corporate leaders spout sustainability and diversity platitudes in public but act and speaks differently behind closed doors, the culture will suffer. They may look the other way or even encourage shortcuts to meet regulations by any means possible. Think about automakers found to have cheated on emissions testing for their cars. The costs were in the billions. This is one of the areas with the most significant gap between the stated culture and the “real” culture people work in every day. Once trust is damaged, it’s very difficult to build it up again.
What’s valued gets rewarded. The company culture determines the incentives for employees—both overt and covert rewards. If the incentives for procurement staffers are based on savings, they will tend to look for ways to cuts costs rather than add value. Negative incentives can lead to shortcuts and poor decision-making to attain a bonus level, regardless of the total impact on the company. While automation and technology like online auctions have a role, they can create distance between buyers and suppliers that negatively impacts the business. If people and companies are treated like commodities, they will act like it.
The work-from-home boom during the pandemic rippled across many corporate cultures. The push to return to the office has led people to seek new jobs where they could continue to work remotely. There’s no one-size-fits-all answer, but it’s worth examining your culture to understand the future of remote work. There is value in allowing employees to work where they want and perhaps be far more productive. But there’s also the view that people are more effective in person when collaborating on solving complex problems. If your culture has a command-and-control approach that requires bosses have eyes on their employees all day, it may be difficult to retain and hire skilled workers who have become accustomed to more autonomy.
Under your company’s culture, procurement may not be positioned to perform at its best. Perhaps you’re in a start-up with an anything-goes culture. Or a large legacy company where any change is a considerable hurdle, like turning an aircraft carrier. Procurement organisations, by nature, are often risk averse. They must follow policies and procedures and abide by regulations while managing constantly changing market dynamics and business partner requirements.
Company culture is set by the leadership. If you can’t affect change within your company, focus on the procurement function. Align procurement’s objectives with the company’s culture, including incentives and motivations.
How have your own efforts relating to company culture panned out? Let us know in the comments below!