People power

30 April 2008
May 2008

Confidence is the key to success in any role, but it can be a rare commodity. Patrick Dye looks at how E.ON gave its procurement operation a spark of self-belief.

Power supply depends on a strong network and good connections. Yet this was lacking in the procurement operation of power company E.ON back in 2004, says director of supply chain Colin Davis:

"Procurement staff were scattered across the country and reporting into many different points within the company. There was no single structure and no cohesion," he explains.

Procurement staff were still adjusting to the changes brought by the German company E.ON's takeover of Powergen, and were driven as much by habit as commitment to the task in hand. "There was a real lack of movement within roles. I travelled around the company asking people, 'what do you do?' and they'd tell me that they'd been doing the same thing for the past 20 years. It was a challenge for them to think about doing things differently," says Davis, who leaves the company this month to join United Utilities.

There was a crippling sense of corporate hierarchy and the procurement team's deferential attitude was actually getting in the way of their doing a good job. Self-belief was lacking both as individuals and as a department and an injection of confidence was badly needed:

"Procurement can only succeed if it's valued by the business," says procurement manager Paul Andrew. "Our success is often affected by the way in which individuals interact with the business stakeholders internally, and the supplier staff externally."


An initial capability assessment by the newly appointed Davis and his team revealed a need for training in 'softer' skills such as negotiation. "Initial training was about bringing people together, allowing them to build a bond and giving them a common language after working in a very devolved operation," says Trilloe.

Davis implemented the Procurement Functional Academy (PFA) to address this skills shortfall. One of the first tasks was to establish a procurement process model that staff could adhere to when dealing with internal stakeholders. "A robust procurement model gave staff the confidence to look at the process strategically rather than simply responding to the operational needs of stakeholders," says Trilloe.

Standing their ground in the face of demanding stakeholders was not something that came easily to many in the team. Hence Davis's conviction from the outset that his staff should move beyond their comfort zone: "As management we wanted people to create challenges but offer them the safety net of our support when dealing with stakeholders, because if they succeeded then the whole company stood to benefit."

A capability model was also established to give staff an indication of the skills levels they should aim for. This template defines exactly what is expected of staff in a procurement context. "If, for instance, you are looking at team player skills, it tells you exactly what sort of team player we as a procurement department need," says former procurement strategy and analysis manager Joanna Kinson.

This model helps staff to assess their development needs. Definitions of key roles within procurement and an outline of the behaviours and values associated with these roles are also supplied. The assessment process involves a detailed questionnaire and 360-feedback with assessment by the employee, their manager and their peer group. At the end of this process staff have a clear idea of their development needs.

"You can then say 'this is where I am, this is where I'd like to be, what opportunities do I have to develop myself within the PFA?'" says Kinson. "These findings are then fed into a personal development plan."


The training modules provided are dictated by a combination of business need - such as incorporating new software packages - management's assessment of what is needed to keep the business on track, and staff suggestions. Capability assessments often reveal similar weaknesses among staff members. "We run a module every three months focusing on common concerns for around a dozen or so people," says Davis.

Many of the core training modules reflect areas of operational weakness. Among these is the supplier development module. "Early on it was decided that we were weak in the area of market knowledge and understanding of global markets, so a supplier development team was established and knowledge gained from this was used to create a course for the wider team," says Kinson.

Long-term aims are also part of the programme. Last year the PFA introduced a leadership skills course for those showing leadership potential regardless of their place in the procurement hierarchy. "This was aimed at people across the operation, not just those on the verge of leadership roles" says Davis. "We wanted to give them accelerated leadership skills, the sort of tips that make all the difference when you start work out of university at 21 but usually don't learn until you're 35."

Not that age was a consideration when it came to acceptance onto the leadership skills course, only aptitude: "We had young graduates sitting next to men who had been with the company for 20 years. It was all about developing capabilities and potential," says procurement manager Paul Trilloe.


The cumulative effect of all this training has clearly had an impact on staff: "Several members of my team have visibly grown in confidence," says Andrews. "Rather than coming to me to sort out problems for them, they are doing it for themselves and taking more responsibility. A lot of this comes from the confidence they have gained in the PFA, and because E.ON has shown faith in them and been willing to invest in their development."

This positive impact extends to the management team who have undergone their own journeys of discovery. For Davis, working with an executive coach allowed him to address the issues raised by changes in the chain of command above him: "My bosses were constantly rotating and it became hard to build a relationship with them so I had to create my own approach to senior management. Working with an outsider helped me to do this."

Almost four years after the PFA was launched, Davis has no doubts that this investment in people is paying commercial dividends: "At the start of the process only 45 per cent of goods and services bought by the company were going through procurement. This figure crept up to 60 per cent and now stands at 93 per cent."

He is certain there is a direct correlation between these improved figures and the enhanced confidence among his staff.

"Just last week I heard a presentation from a staff member explaining how his role had changed in 18 months. He'd been in a subservient relationship with stakeholders in the company so he'd gone to them and said 'In our relationship you shout and I jump. I'd like that to change, to talk about working more collaboratively.' That wasn't an easy conversation for him to have but things changed as a result."

Patrick Dye is a freelance business journalist


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