What is the Spend Manager Made of?

The other day, I was thinking about what separates my colleagues in Spend Management who excel and rise in the ranks (either as practitioners or consultants) versus those who do not. And what I've concluded may surprise you a bit: background and credentials matter little. A CPM designation or a graduate degree in operations research might land you a job, but it will do little to help you rise in the ranks without a core set of skills and capabilities that I'll describe below.

To wit, I believe that what matters most to excel in Spend Management is a balanced skill set built around three key areas: analytical capability, a high EQ (or high interpersonal skills), and a generalist acumen to understand and relate to all facets of the business. I will discuss each of these three briefly below, and will explore each area further in future posts at Spend Matters.

First, highly developed analytical skills are a critical ante to get into the highest levels of the Spend Management game. Why? A procurement leader must be at home not only with numbers and spreadsheets, but must be able to intuit ideal outcomes and roadmaps, developing working hypotheses about what it takes to get from point A to point B, understanding all of the potential dangers and opportunities in between current and future states. Simply put, being able to describe a process and working steps about how a decision is arrived at and executed is more important than the actual outcome itself. The answer matters less than the journey itself. And being able to articulate and describe that journey is key. Those with strong analytical skills tend to be the process-driven thinkers who are so valuable in creating sustainable savings and opportunities in procurement.

Second, EQ or "emotional intelligence" is a necessary trait. A "high EQ is exhibited by the ability to acknowledge and value feelings in the self and others and to appropriately respond to them, e.g., tolerance, empathy and compassion for others and resilience to bounce back from emotional upsets, such as disappointment, anger, jealousy and fear." EQ, in contrast to IQ, is not about absolute intelligence or cognitive skills. Rather, a high EQ represents itself by enabling a Spend Management leader to communicate with, influence, and empathize with colleagues and peers (e.g., internal management, business units, suppliers, partners, consultants, etc.). In one particular case, I know of an individual with a high EQ who was able to convince suppliers who were incredibly hostile to competitive bidding to participate in the process because it was in their best interest. Coercion, in this case, would never have worked. Rather, it was the persons' ability to empathize with the supplier’s situation and describe why it was in their best interest to join the process.

The third skill-set that I believe is critical to success is a generalist understanding of all aspects of the business. The Spend Management leader has a solid understanding of how products get developed; how order quantities, cycle times, and lean manufacturing and operations drive the business. These individuals can quickly process the ramifications of a change in one area to its downstream impact in another area. If I were to pin down the key functional areas to dig into to, I would argue that those who excel at Spend Management should have a strong appreciation for -- and understanding of -- R&D / engineering, operations, sales, finance, and accounting. This third-skill set is the one area where formal business training (either through an apprenticeship executive program or an MBA) can be invaluable. A few years in consulting can also help develop a diverse understanding of the different areas of the business as well.

Can these three skills and qualities be learned? Certainly it's possible to develop some of the skills over time. Analytical skills, for example, can certainly be worked on and developed. Building a strong working knowledge of various functional areas and key performance metrics can also be learned "on the job". But others are somewhat predetermined (such as EQ) and are hard to change. For organizations reading this blog and thinking about the implications for their organizations, I'd argue that identifying and bringing over these types of leaders who may be sitting in other functional areas of the organization could be the difference between average results and exceptional ones.

Jason Busch

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