Hires That Make You Go Hmmmm....

Lot of banter on the blogs recently about the pros and cons of hiring staff from internal departments to fill positions on indirect procurement teams. Over on Supply Excellence, Justin Fogarty in his piece Category vs Procurement Experience: Which matters more? talks about several presentations he has seen from senior procurement executives who in each case saw "great results by actively recruiting for new procurement headcount from other functional areas of the company". Justin specifically mentions AXA CPO Dr. Heinz Schaeffer and Heinz VP Procurement Chris Stockwell, both of whom achieved significant headcount increases in their organizations by transferring in people from Marketing, IT and other departments.

The most common argument in support of hiring internal stakeholders into procurement is that the new recruits bring deep category expertise and ready-made stakeholder relationships that could only be acquired by hiring directly from the area in question. By providing crash courses in purchasing and contracting practices these individuals will immediately become "uber-buyers" capable of creating value even in "sacred cow" categories. They will mesh their newly acquired sourcing capabilities with pre-existing domain knowledge and work seamlessly with their ex-colleague stakeholders to implement bleeding edge sourcing strategies that simultaneously drive innovation, quality, service and lowest total cost of ownership.

And all this time I thought that building a world class procurement organization and was such hard work! All that search for procurement talent, all that investment in strategic sourcing best practices , and all that relationship building with internal stakeholders. And all I had to do was......HIRE FROM OTHER DEPARTMENTS???? Oh dear, something don't smell right and it ain't the burgers. First of all, are there cases where internal transfers into Procurement have worked out excellently? Of course! Very many. But does that mean it should be utilized as a formal strategy for building a procurement team? Nah, and here's why.... My Top Ten Reasons For NOT Utilizing Internal Transfers as a Formal Strategy for Building World Class Procurement Organizations:

Reason 10. As a formal organization building strategy it won't always be available anyway - hiring from within is almost always driven by budget pressure and the need to shuffle people internally rather than hire from the outside. When times are good again the source of internal hires will dry up.

Reason 9. Internal customers usually leave their departments for a reason. Either because they had no option (as in #10 above) or because they are bored or disenchanted with their current work. They are very unlikely to be people who have "always wanted to be in procurement". Consequently they will not necessarily be enthusiastic about their new role which is something a Chief Procurement Officer would presumably want to be the case.

Reason 8. Closely linked to #10 above, a Chief Procurement Officer needs to be very careful that he/she doesn't set a trend of being prepared to forego hiring from the outside. Regardless of whether it makes sense on some occasions to hire from internal departments, there will come times when the correct decision is most certainly to hire from the outside. If you've convinced yourself and your CEO/CFO that hiring from within can always be the right decision then your chances of bringing on board that stellar external candidate when they become available is very slim.

Reason 7. The influence that internal hires into procurement will have in helping garner stakeholder support from their ex-colleagues is usually overstated. Again, people who leave departments to join procurement will not usually be the movers and shakers and will usually have cast small shadows among their peer groups.

Reason 6. Paradigms and mindsets can be hard to break. In my aerospace industry days we hired an extremely capable design engineer into our sub-assembly procurement group and one of the main reasons he struggled was his tunnel vision about specs and unwillingness to consider new supply sources for critical components. Just one example I know but nevertheless one to bear in mind when beaming someone in to fill a supply management slot.

Reason 5. Crash Training Don't Work. Never Has. Never Will. The thought that you can take an internal customer and over the course of a few weeks "brain helmet" into this person all of the thought capital that has been developed in the field of strategic sourcing and procurement these last 10-15 years is quite frankly insulting to, well, all of those who developed this thought capital.

Reason 4. Bringing someone into procurement to leverage their expertise in one category seems a bit inefficient doesn't it? Top notch sourcing professionals in most best practice procurement organizations are perfectly able to leverage their expertise across several category areas. Even if a company has a very high spend in say, advertising, parachuting someone in from marketing to talek advantage of their media buying expertise will mean that individual will either have to take on other categories as well (negating the stakeholder expertise argument) or you've just tied up a whole FTE on one category.

Reason 3. The hire from within strategy makes the basic assumption that differing viewpoints, disagreements and even a measure of conflict are bad things. I question that assumption. Conflict can be good. It airs opposing points of view. It throws out alternative solutions that can be kicked around and evaluated a bit. One of the highest value adds that procurement brings to the table is to challenge stakeholder specifications and requirements. Not to call them wrong, just to push back a bit, engage in some give and take. By simply rebranding stakeholders as procurement folks we're saying that this particular role holds no value. That's plain wrong.

Reason 2. World class procurement organizations from HP to P&G to Disney have achieved high performing supply management processes by leveraging in an integrated end-to-end fashion the unique capabilities of all stakeholders, including procurement. One of procurement's key roles is orchestrating the interaction of suppliers and various internal customers to maximize service and quality at lowest total cost. If an internal hire truly sees this a role they wish to aspire to through rigorous professional development and job experience in the procurement field then that's wonderful. But again, if it's a Hobson's Choice, then procurement, the individual in question and the whole organization have created negative value.

And now....The Top Reason For NOT Utilizing Internal Transfers as a Formal Strategy for Building World Class Procurement Organizations.....

Reason 1. Building a World Class Procurement Organization that is respected and held in the highest esteem by internal departments is hard work.........BUT ISN'T ANYTHING WORTH HAVING HARD WORK? Don't compromise. If you're a CPO looking to create game-changing bottom line savings for your company then market the business case for a world-class procurement organization to your CEO and then BUILD IT!