Finding the Right Chief Procurement Officer – Higher Education
BY STEVEN LUTZER ON JAN 07, 2015 — Published in Supply and Demand Chain Executive
The leadership at universities and colleges has started to look to the for-profit sector for innovative procurement practices and solutions to cut costs and save money. Chief financial officers (CFOs) within these academic institutions often seek a new breed of external change agent to transform the institution’s procurement organization with the goal of reducing spend. Financial executives at universities are increasingly bringing on board a chief procurement officer (CPO) from the for-profit sector to take on the role of change agent.
A highly successful CPO from the for-profit sector may not always be compatible with the higher education culture. The CFO should assess whether the external candidate will be successful in three major areas: internal stakeholder engagement, aggregation of spend and creation of a center-led procurement model.
Stakeholder engagement at a university is frequently the heavy lifting for a CPO. A hiring manager needs to select a procurement executive with certain key traits and interpersonal skills in order to ensure successful stakeholder engagement. These skills include the following:
1. Great Listener and Trusted Adviser
A procurement leader who talks excessively is likely to come across as a proselytizer to stakeholders. A CPO who can empathize with stakeholders’ procurement pain points is more likely to build stronger interpersonal relationships. This becomes the glue that solidifies the relationship between the procurement organization and the internal customers.
A CPO who is a good listener will often be perceived as more adept at problem-solving and a valued trusted adviser. If a CFO encounters a candidate with weak listening skills, that may be a red flag of challenges that are likely to occur down the road between stakeholders and that procurement executive.
2. Being Resolute and Tenacious
The journey of collaborative engagement with stakeholders and sustainable change in higher ed procurement is often a long and gradual process, Change within a university often occurs at a slower rate than in the for-profit sector. A CPO in higher ed needs a high degree of tenacity and determination; otherwise he or she is likely to get discouraged along the journey of transformational change.
A hiring manger should look for a candidate with a long record of wins with resistant stakeholders in their previous roles. This track record will often demonstrate whether the candidate has the tenacity and skills required to win over reluctant stakeholders.
3. Degree of Humility
A candidate with a high ego often needs to be the smartest person in the room. These types of leaders may be focused on simply conveying that they are the expert on procurement to academics and executive leadership. This may perpetuate the myth that the procurement organization is unresponsive to the needs of stakeholders. A candidate who can leave his or her ego at the door is likely to come across as a trusted adviser and not an adversary.
4. Patience for the Culture of Higher Ed
If a candidate for the CPO role has a low tolerance for an organization with a slower rate of change, he or she is likely to become frustrated early on with the pace of change. A CPO at a university needs to know when to push and when to wait for the organization to progress to the next level. Stakeholder support often progresses gradually, one stakeholder at a time. A CFO needs to explore this issue (rate of change) with candidates to ensure that they don’t end up with an impatient leader who may antagonize stakeholders because of unrealistic expectations or an impatient nature.
5. Passion for High Ed
A candidate who has a passion for the culture of higher ed is more likely to take the wins and losses with stakeholder engagement in stride and not get discouraged prematurely. A CPO role at a university may not always be as financially lucrative as one in the for-profit sector. If a candidate is only interested in the extrinsic or financial rewards, he or she is more likely to jump ship for a higher-paying role in the for-profit sector down the road. It is essential for the CPO to perceive some intrinsic benefits and have a degree of passion for the mission of higher ed.
Aggregation of Spend
Many universities and colleges historically used a very decentralized approach to procurement with weak data on how the money is spent. One of the early tasks for a CPO is to develop meaningful spend analytics. Solid spend analytics can enable the procurement executive to identify categories across the university where spend can be aggregated. In addition, a leader can also present these spend analytics to internal stakeholders as a compelling reason for changing procurement practices.
CPOs who are highly quantitative are more likely to be develop meaningful spend analytics from the ground up. However, a procurement candidate who is quantitative with weak interpersonal skills is likely to neglect building strong relationships with internal stakeholders. A CFO therefore needs to identify a candidate who is equally strong in both spend analytics and stakeholder engagement.
Creating a Center-Led Procurement Organization
The model of center-led procurement utilizes strategic sourcing with the use of strategic categories and centers of excellence across the organization. However, the tactical execution of procurement remains in the decentralized units. This model of center-led procurement is found to consistently deliver significantly more cost savings than a decentralized or completely centralized approach.
Center-led procurement has been utilized for many years in the for-profit sector, but it is still relatively new within the higher ed sector. If a university seeks to achieve significant cost savings, it is vital to implement a center-led procurement model. The hiring manager needs to recruit a candidate who is already seasoned in center-led procurement.
Creating a New Procurement Infrastructure
Some procurement executives lead organizations that are center-led and highly strategic, but may not have developed them from ground up. It is vital to hire a CPO who has the vision of what it takes to create a brand-new organizational infrastructure. The best leaders know how to restructure existing staff to maximize this skill set while concurrently bringing on additional talent.
It is essential for the CPO to have a clear vision of what type of procurement infrastructure is needed to achieve the goals of a center-led procurement organization. In summary, the ideal candidate for a CPO at a university will be skilled at building strong relationships with internal stakeholders, highly quantitative in spend analytics and have a long history of building center-led procurement organizations form the ground up.
About the Author: Steven Lutzer is the president of Lutzer Global Inc., an executive search firm that specializes in procurement, strategic sourcing and supply chain management. Lutzer had a 20-plus year career in supply chain management and global sourcing before founding Lutzer Global. For more information, please visit www.lutzerglobal.com.