Spend Matters welcomes this guest post from Pramod Sethumadhavan of GEP.
“Procurement doesn’t get it!” Sounds familiar? Unfortunately, this is the perception many within the HR organization across industries have. They are not to be blamed in most cases. Evolution of the purchase function into procurement with a strategic outlook happened earlier in other business functions, compared to HR. To compound this, procurement within many companies have still not been able to demonstrate a value driven approach versus purely cost reduction. So how does one break the ice with HR after all?
If possible, it pays to assess how HR is sourcing in absence of procurement. There could be better or worse, but for most part, the purchase process is driven by suppliers rather than buyers. Identify gaps and opportunities. For a few categories, HR consulting agencies assist with sourcing as well and it is important to understand those relationships. With the initial assessment done, procurement can focus on building better relationship and involvement with HR by leveraging four principles: Educate, Participate, Communicate, Facilitate.
Educate: Don’t assume HR knows what procurement does! In a top down manner, it is important to educate HR on procurement’s role/processes/terms and get rid of any misconceptions. Procurement neither wants to take away decision making nor has an agenda to disrupt relationships with existing suppliers or consultants. The purpose is to partner with HR and its partners strategically and collaboratively drive efficiencies and value. Leverage success stories from other departments within the organization to build confidence.
Participate: Get involved! Understand what the sourcing pain points are and collaborate on finding solutions. Analyze the budget allocations and plan ahead for projects. Establish procurement’s “right to play” in HR sourcing projects. I am not saying confront, but rather collaborate with confidence. To build trust early on, it is better to focus initially on less complex areas such as background screening, HR software tools, temp labor, etc. Once good results are delivered, HR would be more willing to engage on high impact areas such as employee benefits and retirement services.
Communicate: Frequent communication between HR and procurement is critical – be it weekly meetings on projects or quarterly business review meetings. It is better to be there, to address questions or doubts quickly than let them start eroding trust. It is also important to clearly define roles and expectations upfront, for each step in the sourcing process. Procurement should clearly identify and communicate what it brings to the table.
Facilitate: Don’t get in and get out! Any support with implementation of projects is highly valued. Can procurement replace a benefits administrator? No. But procurement can definitely take the lead on project management during implementation, assuming a central role in coordinating efforts with suppliers, IT, HR consultants, etc.
Procurement should not expect an overnight success in ramping up involvement with HR. Some might get lucky, but most face initial challenges. The good thing, however, is that many HR executives have started acknowledging procurement’s impact and are open to test the waters!
For more interesting thinking on procurement, visit the GEP Knowledge Portal.