
Stakeholder Management should not be ‘Us vs. Them’

In Collaboration with Ipsita Suman, Principal Analyst
Procurement for long has been blamed for not fully understanding business needs and, instead, placing savings before stakeholder interest and dictating standardized processes and policies.
Many organizations struggle to decide whether a dedicated Procurement function is ‘good to have’ or a ‘must have’, according to Rahul Devarakonda, Head of Product at Beroe Inc.
“One of the key reason why it makes the decision very hard is because of business stakeholders having to accept the fact that someone else would be guiding, monitoring and controlling their own budget with regards to external spending,” Devarakonda said.
Discrete spending, or being in a position to approve spending, represents power, authority and importance. This holds high value in the corporate world, where executives face immense resistance to letting someone else manage it, he added.
Unaware that Procurement can offer increased cost savings, internal stakeholders are usually reluctant to interact openly with the former. Procurement has mostly tried to consolidate the supply base, but the internal stakeholder is not yet accustomed to ‘global purchasing.’
There is no doubt that the only way for Procurement to be successful in any organization is by gaining the status of a trusted advisor. Hence, proactive reachouts are necessary in order to keep stakeholders in good humour.
Procurement's true value will shine through stakeholder management
Much can be accomplished with regards to stakeholder management.
Identifying stakeholders
Stakeholders are personnel who are very close to a project. The PMI PMBOK has categorised stakeholders into seven broad categories.
Stakeholder category |
Stakeholder description |
Designation |
Output delivery |
Individuals, groups or organizations responsible for the delivery of the project’s outputs |
Project team contractors |
Product usage |
Directly or indirectly use the project products; ultimately responsible for the achievement of business objectives using the project deliverables |
Business users |
Product support |
Responsible for ensuring that the project product is available for use |
Support/technical groups |
Funding authority |
Accountable for the outcome of the project and grant approval for release of funding and provision of resources |
Executive, project sponsor, business management |
Contributor |
Individuals or groups who provide inputs and services to the project |
Service groups such as legal, finance; suppliers and contractors |
Review/audit |
Groups or organizations that need to review or audit the project and its deliverables to ensure that proper processes are followed and the quality of deliverables meets appropriate standards |
Project manager, quality review groups, auditors |
Related projects |
Other project teams may provide inputs to or receive outputs from the project |
Other project managers and teams |
Performance Management
Stakeholder management aims at internal customer satisfaction.
Indicator |
Metric |
Accessibility to decision-making process |
|
Clear understanding of stakeholder interests and concerns |
|
Diversity of views represented |
|
Integration of interests and concerns |
|
Information exchange |
|
Project efficiency |
|
Decision acceptability |
|
Mutual learning/respect |
|
Cost avoidance, direct and indirect |
|
Key aspects to consider in stakeholder management
Identifying the right stakeholder:
Communicating with the stakeholders who matter is important. They might not always be the bosses either. The most important stakeholders will almost certainly change from time to time, so regular assessment is mandatory to find out the key influencer.
Identifying the needs of the stakeholders:
Mutuality is important. It is important to identify the common goals and work accordingly.
Customisation is key:
It is very important to communicate in line with the stakeholder’s requirement which includes the frequency and mode of communication. No one size fits all.
Attitudes change constantly:
People change their minds often. It is necessary to constantly reassess an important stakeholder's attitudes, and adjust the communication plan to deal with the current situation.
Communicate and collaborate with stakeholders
It is of paramount importance to address the stakeholder’s commitment level in the communication channel. The frequency and channel of communication will vary from stakeholder to stakeholder. Thus, Procurement must adapt according to such varying requirements.
Also, communication gap can be partially bridged through an effective feedback mechanism, which will help iron out issues between Procurement and business stakeholders.
Feedback
As per the Deloitte CPO survey in 2018, there has been an eight percentage point drop in Procurement using customer satisfaction surveys to understand business needs when compared to the previous year. It is time to ratchet it up.
Stakeholder feedback is one of the most essential elements in measuring success. Procurement teams can use the Likert Scale survey method where respondents specify their agreement/disagreement for a series of statements. A model template is given below:
TEMPLATE: MODEL STAKEHOLDER SURVEY | |||||
Date: | Stakeholder area (business/function/region): | ||||
Stakeholder name: | Stakeholder role/title: | ||||
Do you agree or disagree that Procurement is effective at: | Agree | Partially Agree | Neutral | Partially Disagree | Disagree |
Achieving important business results | |||||
Understanding key business priorities | |||||
Aligning procurement activities to support the key business priorities | |||||
Presenting useful supply options/opportunities that will improve business performance | |||||
Communicating with the company | |||||
Developing internal (company) relationships | |||||
Developing external (suppliers etc.) relationships | |||||
Open-ended questions | |||||
What actions or activities would you like Procurement to increase? | |||||
What actions or activities would you like Procurement to decrease? | |||||
What else would you like to share? | |||||
Is there any one employee, group, or team within Procurement you would like to recognize? | |||||
How would you like to receive feedback on this survey? (give suggestions/options) |
Source: The Global Procurement Leader’s Handbook, Erik Stavrand and Chris Shanahan
Regular feedback will act as a pressure release, as it would avoid any build-up of tense situations between Procurement and internal stakeholders.
Conclusion
With an effective two-way communication, Procurement can not only iron out key issues that bother their stakeholders, but will be in a position to add significant value to the business. After all, internal stakeholder management should not be viewed from an adversarial perspective—it is never ‘Us vs. Them.’
“Procurement, in most cases, reports to the CFO or CEO directly and that makes a lot of sense -- but they should always remember the importance of business stakeholder management irrespective of the functional reporting structure,” Devarakonda concluded.
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