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A Good Spend Culture Is Not Just About Saving vs. Spending

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At the Procurify office in Vancouver, #SpendCulture is a tongue-in-cheek phrase that sometimes gets tossed about when we see someone being particularly thrifty. It’s ironic that we’d assign that meaning to the phrase when our own spend culture is very much focused on investing in rapid growth and creating an agile environment where we prioritize keeping our team comfortable, motivated and well resourced for continual development.

Our office in Vancouver is located in a prime downtown location. We have a kitchen well stocked with snacks (including cider on tap) and dedicated space for video games (including a VR station), among other perks. To some business leaders this seems like the opposite of a good spend culture. We would humbly disagree.

Spend culture, like the broader idea of company culture, is not one size fits all. What works for one company or industry may not work for another. For example, a spend culture that values decentralized decision-making, empowering lower-level employees to handle day-to-day purchases, might make sense in a biotech company where budgets and purchasing are managed at the lab level and supported by a rigorous reporting structure. It might not make much sense in a retail environment, where inventory and supplies are centrally controlled and access to information for front-line staff is limited.

A company’s spend culture is part of its personality, and how that is reflected is in the way it utilizes and controls its capital. It is generally agreed upon that the traditional view of company culture has a major impact in the performance of a business. However, whereas the culture of a business is often a documented set of principles and values that govern the types of behavior the business wishes to promote and see reflected in its people and brand, a company’s spend culture is often not something that is thought of at all. It probably evolved organically into a mashup of the experience and collected industry ideas of best practice that gradually took hold as the business matured to become a part of “the way things are done here.” Nevertheless, the effect spend culture has on the direction, efficiency and performance of a business cannot be understated. The processes, rules and behaviors surrounding the use of funds in an organization have a major impact in its rate of growth and long-term potential.

Spend culture is about investment: investment in people, processes and systems. Spend culture is a way of understanding how the way a company decides to spend its money can give insight into the overall company strategy and its management style.

A company with a spend culture focused on aggressive investment in “soft” assets like culture and people development might seem on the surface as the type of company with a culture of “money to burn.” However, many businesses are waking up to the reality of the very real hard costs associated with not focusing on investing in people. One could argue that such a prudent use of prioritizing strategic investment over short-term gain is a conservative approach to long-term value creation, and very far from a frivolous use of funds. Pinching pennies in this area of a growing business is unlikely to lead to dollars down the line, as employee retention and engagement could become greater challenges.

Low levels of engagement and high turnover lead to rising hiring costs, training costs, process costs and lower levels of retained knowledge and experience. It’s impossible to really gauge the impact that high turnover has on the bottom line and overall productivity, but it is clearly a big factor. The long-term impact that losing key players has on the overall level of “tribal” knowledge in an organization severely limits that organization’s ability to navigate increasingly complex business landscapes and facilitate the most coveted and immeasurable quality: the ability to execute. In the software development industry, the value of retained and engaged expertise is so much more important than a tight operating margin for long-term viability.

The biggest mistake you can make in thinking about your spend culture is mistaking fiscally conservative behavior with a financial strategy. It might be time to look honestly at your own business and ask, is your spend culture short-sighted or strategic? Reactive or proactive? Is it considered holistically as part of the company’s execution strategy or an afterthought dictated by finance? Spend management should not only be about blocking spend to force through cost savings but about enabling better spend decisions and the development of processes that actively support a spend culture that drives the company in creating value, rather than of stifling or undermining its strategic goals.  

Philip Gray is the director of operations at Procurify.

Procurify gives you greater visibility into your company's spend, helps you track purchases across your organization and report on your financial data with certainty. It has helped hundreds of companies become aware of their spend culture and transform it to bring them closer to their goals. To learn more about spend culture, check out our blog

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First Voice

  1. Jehanzeb:

    “Spend culture is about investment: investment in people, processes and systems. Spend culture is a way of understanding how the way a company decides to spend its money can give insight into the overall company strategy and its management style.”

    To me, this summarizes the ideals that I believe in. If you do not spend to keep the right kind of talent, you would spend to keep away the wrong kind. That will hurt more.

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