Procurement teams are second only to operations in managing change in their organisations, according to 2022’s Indirect Procurement Report. But change management can be daunting, so how do you get started?
Employee resistance and a lack of management support are the main reasons that 70% of change projects fail to achieve their goals, according to consultancy firm McKinsey. At first glance that’s an off-putting statistic, but also one that offers opportunities to learn: how can you ensure that your transformation efforts succeed?
It's a highly relevant question, because the survey conducted jointly by RS and the Chartered Institute of Procurement and Supply (CIPS) for the 2022 Indirect Procurement Report found that procurement was second only to operations as the department managing change in UK organisations.
Most of the procurement people in Maintenance Repair and Operations (MRO) who responded to the survey felt they had an opportunity in their existing roles to drive change in their organisation.
However, the ability to influence change varies significantly by seniority – 71% of those in advanced professional roles felt they had a good or significant opportunity to drive change, while 53% of those in tactical roles said their influence on change was limited.
So how do you go about initiating and driving through transformation? The starting point of any shift is creating a clear understanding of what you want to achieve, says Bernhard Raschke, Chief Transformation Officer at RS Group.
“You need to know what good looks like,” says Raschke. And it’s important to create “a winning alliance” of senior-level project sponsors to ensure that a change project is supported through all its stages.
“You need the people who will actually operate those processes, live and breathe them every day, to be the ones who get to say if a tool works or not.”Kate Davies, Global Head of Indirect Procurement at RS Group.
As well as high-level support, don’t forget the people who are going to have to operate new processes and systems, says Kate Davies Global Head of Indirect Procurement at RS Group .
“You need the people who will actually operate those processes, live and breathe them every day, to be the ones who get to say if a tool works or not,” she says. “It should be the people who have to live with the consequences who sign it off .”
“The most important thing in any change project is to be clear from the outset about where you want to get to,” says Emma Botfield, Managing Director for the UK & Ireland at RS. “Focus on the destination to make sure everyone shares the goal,” she adds. All people across the business need to be clear about their roles, says Botfield. “It’s vital to get buy-in because, if you don’t, you’ll find out down the line that some people are not using the new process because they weren’t convinced in the first place.”
Change leaders should focus on the big picture and connect their transformation clearly to the organisation’s purpose and strategy. Creating a narrative of why and how things will change can help generate a sense of common purpose across teams.
A robust plan for change
Once you’ve set out your project vision and goals, it’s time to get down to detailed planning.
“A successful change management programme in procurement needs a solid plan to get it safely over the finishing line,” says Renata Rybak-Pazdur of consultancy firm Cap Gemini.
Robust planning is critical because of the reach of procurement across organisations. “These programmes implement new ways of working, and leverage new technologies and processes to establish more effective operations,” she adds.
Procurement transformations affect all stakeholders, so involving them in the project from the outset is essential to getting new processes right and ensuring buy-in.
“Processes that are poorly designed or don’t meet end-user requirements make adoption difficult,” she says.
You need to understand how these changes “look and feel” to stakeholders, says Rybak-Pazdur. Giving stakeholders a sense of ownership and “getting personal about change” are important ingredients in any change or transformation, according to McKinsey.
“Change causes conflict, it always has and always will,” says Amenallah Reghimi of eProcurement provider Jaggaer. “How you respond to that conflict, however, determines the rest of the story. People should always be the priority, which boosts digital adoption and, ultimately, creates smoother organizational change.”
Neuropsychologist Dr Theo Tsaousides points to the paradox that although people often say change is hard, many also want to see change happen. But because the status quo is comfortable, it’s important to keep a focus on why things need to change, he says.
That’s not to underestimate the challenges. As one respondent to the RS/CIPS 2022 Indirect Procurement survey said: “Stakeholders are from different parts of the business, each with a different view – resulting in protracted approval processes”.
‘Change is an evolution’
The people challenges will not be just in your own organisation. Rybak-Pazdur of Cap Gemini says the effects of changing people’s roles is often overlooked, both within the organisation and on day-to-day supplier relationships.
Although the key to overcoming conflict and confusion is good communication, messages do not always fall on receptive ears – as this person interviewed for our survey said:
“Sometimes other teams do not think about the bigger picture and the company as a whole. Thinking can be quite myopic, and people like to stick with what they know.”
Helen Alder, Head of Knowledge & Learning Development at CIPS, says procurement teams need to get better at trumpeting their successes to the rest of the business.
“Market yourself effectively, show the value you can add, and continue to get that buy-in from the rest of the business – because once you do something that’s really good for somebody, you can shout about it,” she says.
Rybak-Pazdur agrees that it’s important to showcase the benefits of new processes and digital tools. “Change shouldn’t stop at the end of the project – it needs to be continually reinforced by end-user support functions, which should provide the proper training and reinforcement needed to maintain the change while driving process compliance,” she adds.
“Above all, change is an evolution not a revolution. It takes time, patience and hard work to build something truly durable you can be proud of in years to come. Something that has a good finish to it and can adapt to whatever environment it finds itself in.”
But what about the risk of failure, even if you follow all the best advice? Dr Mark Hughes of Brighton University thinks the dangers have been overstated. He examined the claims of a 70% failure rate and concluded: “there is no valid and reliable empirical evidence to support such a narrative”.
Dr David Wilkinson, a lecturer at Oxford University and Brookes University Business School, says the true failure rate is closer to 6%, although around half of all projects were only rated as “somewhat successful”.
So, take heart. The majority of transformation projects are not automatically doomed to fail after all. The extent to which they succeed, however, will be down to how clear your goals are and how well you engage and communicate with stakeholders across your organisation.