Keeping the Powder Magazine Doors Closed and the Gun Turrets Firing: A Lesson in Talent Management

Spend Matters welcomes a guest post from Michael Fuller, Director at Archstone.

In May of 1916, World War I was at a standstill. The Russian Revolution, which effectively closed the Eastern Front, had not yet occurred. Americans had not yet entered the war, and unrestricted submarine warfare by the Germans was still on the horizon. Thoughts of a quick end to the war had long since vanished. But Germany could see the writing on the wall. The British naval blockade was slowly starving the country. Admiral Scheer, who commanded the German High Seas Fleet, pursued a strategy of splitting up the British Grand Fleet into pieces and destroying it one piece at a time.

The Battle of Jutland was the grand trap that Admiral Scheer had layed in hopes of destroying a large piece of the British fleet in a single blow. At the beginning of this engagement, British Vice-Admiral Beatty's Battlecruiser Fleet pursued and engaged German Vice-Admiral Hipper's Reconnaissance Fleet. The Germans, despite being outnumbered, scored hits of almost a 3:1 rate over the British. In addition, two of Beatty's battlcruisers were vaporized when they were hit directly on their gun turrets. The loss of a potential third battlecruiser led Beatty to famously remark, "There seems to be something wrong with our bloody ships today." As was later found out, it wasn't that there was something wrong with the ships. There was something wrong with how the ships were being run. In pursuit of speedier reloading, the doors between the powder magazines and gun turrets were left open during battle. When pierced by a shell, rather than simply destroying the turret, the entire powder magazine exploded, thereby destroying the ship.

Which finally brings me to my point. As my colleagues and I work with our clients, one of the things we often hear is how can CPOs develop and retain talent or paraphrasing Vice-Admiral Beatty, "There's something wrong with my people today."

Talent Management has become one of the key buzzwords used in organizations today. As the demand for highly skilled people has increased, the supply of these types of people has not kept pace. This gap is felt keenly in procurement organizations, which require both wide and deep skill sets. A wide skill set consisting of analytical skills, relationship management, communications, and understanding of the businesses they support and a deep knowledge of categories and the marketplace are all critical skill sets to building a World Class procurement organization.

Apart from hiring professionals with 10-15 years of experience, CPOs don't have many choices when they are building their organizations. The challenge then becomes spotting raw talent that has the potential to evolve into the complete package. Developing and retaining talent go hand in hand. The more an organization develops its people and provides challenging opportunities for them, including leadership, the more likely an organization will retain them.

A key challenge for most procurement organizations is that many of their people lack training in procurement methodologies and best practices. The Hackett Group has seen an increasing shift in World Class procurement organizations toward the ability to not only execute transactions, but to also lead in the transformation of the business. A recent Hackett Group study showed that World Class procurement organizations spent seven times the amount of time in continuous improvement training and almost double the amount of time in leadership training.

To win the talent war, procurement organizations must identify raw talent and then develop and challenge it. Practically, this means a greater emphasis on leadership, business understanding, spend analysis, category management, and supplier relationship management. As the working environment becomes more collaborative and project based, developing these skill sets and formal continuous improvement programs (e.g., training, mentoring) will be the keys to retaining them. The CPO who continues to say, "There's something wrong with my people today." should instead be asking, "What can I do to improve my people today?"

-- Michael Fuller, Director, Archstone

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