Disarming forces of resistance
What happens when you face resistance to any change to the contracting process? Let's say you are hearing statements like, 'I've been in this business 30 years and change management is no different in this company than any I've worked for!' You could argue and get nowhere. Or your actions could disarm invalid resistance. The choice is yours...
Julie Brignac, Principal, Vantage Partners
If you could prove that gaps exist in the process and you have a strategy for blending contracting with change management in a way that achieves a successful outcome, you could push entrenched attitudes out the door!
When driving change in the contracting arena, it can be even more challenging to work with processes and procedures that are valid but rigidly imposed. Furthermore, contracting processes must be thorough and properly address the business needs, but it is often challenging – sometimes impossible -- to convince stakeholders that contracting processes will benefit from any type of modification.
Effective ways that change can succeed in a contracting environment
One of the first steps is to identify the critical elements of change management, so that you can formulate a plan accordingly. Although the identification of those critical elements must be specific to both a company's contracting processes and the company's culture, there are macro level change elements that can be considered when developing your strategy.
Example: experience with one utility company - One organization's recent experience with a major utility company should help clarify those elements. The utility was engaged to develop a strategy that would help the organization launch a centralized contracting function. The intent was to communicate to stakeholders about how processes and procedures would change as a result of centralization.
It would involve a unique approach designed to produce an effective and timely contracting function.
When outlining the approach, the critical elements became clear:
- Define the gaps – forecasting versus actual.
- Develop the communication strategy: Develop a roadmap that addresses short, medium and long term goal.
- Find your advocates: Identify the stakeholders for communication, support and training.
- Define current and future processes.
- Determine the right training program to achieve your goals.
- Establish clear contracting metrics, both tangible and intangible.
So what makes these elements uniquely successful for a contracting function? Let's explore key elements above, while discussing lessons learned and business impact.
- Define the gaps
The first place to start is to identify any gaps in understanding what needs to change or what is changing about the contracting function. Gaps can be uncovered through various methods - via interviews with key stakeholders as to what role the contracting function plays, discussions with internal clients about what they need from the contracting function, or analysis of the contracting team's daily work processes. It is also critical to explore how efficient those processes are in accomplishing the business's objectives.
In the case of the utility company, two primary gaps became apparent.
- First, although there was top down leadership support for centralization, it was sporadic and many senior executives did not understand the business value the contracting function would bring.
- Second, roles and responsibilities needed to be defined for the newly formed contracting team, and those responsibilities aligned with efficient contracting processes.
The lesson learned was to design contracting processes that aligned with the roles of each team member, assign goals and objectives to the team, and conduct a session in the executive staff meeting that clearly communicated the intent of the group.
- Develop the communication strategy
Developing material to communicate within the organization that provides information regarding processes, tools and techniques is important. However, it is equally important that a larger strategy and subsequent action plans accompany leadership expectations. It is also important to ensure that the contracting team knows what leadership expects them to do in driving culture change when they are formed as a function. The company can use tools such as the company internet and newsletters to communicate the function's charter and role in the organization.
In the case of the utility company, a documented communication strategy was published on their internal internet site under the Supply Chain/Contracting function that allowed anyone in the company to be informed about the changing face of contracting in the organization.
- Find your advocates
Identifying stakeholders for any effort is critical to success. Contracting organizations must be strict in their processes and strive to be flawless in their execution. A key component of driving change is to quickly identify which stakeholders are supportive from the start, and which are a bit slower to support the effort. Those who are quick to jump on board help influence the communication plan and as success begins to result, they influence other stakeholders who later realize that contracting change is for the better.
- Define current and future processes
The distinction between current and future processes for a contracting function undergoing change is the most critical element of all. The root of change lies in this distinction, and must be deeply embedded as the main focus of the organization's communication strategy. The organization is keenly aware of how the contracting processes work today, so if processes are changed, it is important to highlight what will be different in the future, how roles and responsibilities will change, and how this will impact specific stakeholders and/or functions.
In the utility company scenario, the contracting group was a new group, so their processes and roles were not yet known by the organization. The focus of the communication strategy was therefore to highlight how the company would be impacted by new contracting processes, who needed to interact with the new group, and the overall benefit to the company that the new contracting group would bring.
- Determine the right training program to achieve your goals
An important point to remember when developing a training program intended to communicate and educate is to get the right people in the room for the first session so they can be the forerunners for future training attendees. This concept ties closely to the point of finding your advocates – the stakeholders who are on board earlier in the change process will be able to influence other leaders who may be lagging in their support. A training program gives those stakeholders vital information to help communicate the change and ensure that the contracting effort is a success.
In the case of the utility company, it was clear that the culture was one where employees learned from leaders, and the leaders led by example. For the training development, the organizers chose the first session participants carefully based on who would make the biggest impact and set the best example for the organization.
It was also important in this case to choose an effective facilitator for their sessions. The facilitator had to demonstrate the ability to create dialog that brought into the discussion leaders and their experiences with a successful contracting function, so the delegates could clearly glean the value that the group would bring to the organization.
- Establish clear contracting metrics, both tangible and intangible
Metrics are a vital part of any organization, but are particularly useful for a contracting group to measure not only their performance, but also their impact on the business. Metrics ensure the organization does not lose focus on contracting compliance, forget the intent after training has occurred and/or measure savings that occur as a result of proper contracting processes. It is also important that a reporting system is developed and implemented so that again, it can become a vital part of the communication strategy. If the impact on the business is visible, it is easier to keep the organization on track for continuous improvement and hence, change.
For the utility company, two primary metrics that demonstrated success and drove change from the previous state before the contracting group was in place were:
- Cost savings – the group was very effective through the establishment of contracting processes and rigor of driving significant savings by leveraging key suppliers, rationalizing the supply base, and improving the skill sets of the organization through better negotiation tactics and consistent use of tools and templates.
- Compliance – utilizing the contracting group was a key element of success, as it minimized risk. This was reflected in a reduction of fines that the company had experienced the previous year because of engaging with suppliers who were not approved by certain regulatory entities. The company reached 87% compliance in year 1, with 100% compliance in year 2 after the group's implementation. As in many scenarios, reducing fines can be a strong motivator for driving change.
In summary, a centralized contracting function takes time to implement, and often more time to achieve success. It is important to build a comprehensive infrastructure, incorporating the elements discussed, remembering to give it time as change does not come immediately. It is a challenge to shift an organization in a new direction, but with compliance, communication and measurement, it will be a success.
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ABOUT THE AUTHOR
Julie Brignac is a Principal at Vantage Partners, and a member of the firm's sourcing and supply chain management practice. She has worked as a transformational leader in global organizations, with over 20 years of strategic and operational experience in supply chain management, international outsourcing, sales and operational planning, procurement transformations and business process improvement initiatives. Julie has held executive level positions with DuPont, Honeywell, Newell Rubbermaid and Australian-based Brambles Limited.
Julie's experience also includes launching and leading a boutique consultancy, Quantum Six Solutions, Inc. Her work there focused on the design and implementation of supply chain and business process improvement solutions to help companies sustain efficient operations and drive significant savings.
She is the inventor of The RoSS Model® an end-to-end project benefit financial validation process that helps organizations predict, report, and reconcile project benefits to financial statements, specifically in the supply chain arena. Julie is a graduate of the University of Virginia and University of Maryland University College, and holds certifications in Purchasing, Six Sigma and Lean.
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