<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=216325208750910&amp;ev=PageView&amp;noscript=1">

The Powerful Influence of Company Culture on Procurement

June 21, 2016 by 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.’”


company_culture_influences_procurement.jpgThe 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.”

 

Download the Strategic Sourcing Guide

 

This article first appeared on PASA.

Hillary Ohlmann

Written by Hillary Ohlmann

Hillary is DeltaBid's resident writer, copy editor, researcher, and all-around procurement enthusiast. She holds a degree in Journalism and Spanish from UW-Madison.

SIGN UP TO RECEIVE PROCUREMENT TIPS AND STRATEGIES

New Call-to-action

FOLLOW US

Facebook Twitter LinkedIn Google+

POPULAR POSTS