Can teach an old dog...

Expensive air tickets, unauthorised orders – maverick spending is the bane of the procurement director’s life. But just how do you make sure staff follow the correct procedures? Mark Whitehead investigates..

Young people, with the recklessness of youth, are more likely to disregard policies dictated by their bosses than their more senior colleagues. They are, after all, typically against red tape and the burden of rules and regulations. Older people are much more likely to follow official policies. In procurement, for example, young people in an organisation are likely to flout senior management, while more long-established personnel are more likely to conform.

That, at least, is what common sense would suggest. But it’s actually the other way round according to a new piece of research. A survey of procurement professionals of all ages by consultants Marrakech has come up with the surprising finding that it’s the “Young Ones” who tend to follow the rules and the “Oldies” who are more likely to break them.

There is a certain logic behind the seeming paradox. Young people are the new kids on the block, so they know that much less about what they are supposed to do and what the consequences could be for doing something else instead.

Their older workmates, however, have been around long enough to know how the system works. They know the relative seriousness of different kinds of wrongdoing. They know some things – booking their own flights instead of going through the official travel management agency, for example, or buying in from a supplier they have personally dealt with for several years despite a policy saying only approved suppliers should be used – are frowned upon. But they also know that nothing much will happen if they flout the rules. They are more likely to take advantage of the flexibility in the system because, quite simply, they know what they can get away with.

Marrakech CEO John Bantleman says he found the results surprising. “It goes against the image of young people as rebels,” he says. “What this survey has revealed is that young people tend to be serious about company policy. We were surprised that the disparity was so significant, but it was very clear that young people are more likely to take instruction at face value because they tend not to understand the difference between big crimes and little crimes.

“As you get older you’re more likely to recognise the difference between capital offences and trivial offences. People see that they may gain in terms of what they want to achieve while ignoring the official policy, so they judge that it’s worth taking the risk.” Jo Sanderson, lecturer in business strategy and procurement at Birmingham Business School, believes that persuading people to follow company policy is still a huge challenge for many organisations. A two-year study in the shipbuilding industry, involving several companies including BAE Systems and VT Shipbuilding, revealed that some staff showed considerable resistance to conforming with official procurement policy.

Sanderson and his colleagues have also carried out a good deal of work in the UK’s National Health Service (NHS) where, again, there were big gaps between what people were expected to do and what they chose to do when it came to procurement. “It strike me as surprising that in large well established organisations we are sometimes still talking about fairly basic stuff,” he says. “Getting people to comply with procurement policy in the NHS can be a struggle. Getting doctors, for example, to understand that good procurement can help the patients they treat by saving money and using better suppliers is sometimes difficult.

“It’s a question of building respect that good procurement is about market knowledge and commercial understanding. It’s not just about nit-picking over prices.” The central question is how you make sure people follow company policy on procurement instead of just doing theirown thing. The results, after all, can make a big difference. A good procurement policy being followed by most, or all, the personnel in an organisation can provide huge savings in terms of time and money and is more likely, if pursued properly, to tap into innovation in the supplier marketplace. All this can benefit customers as well as shareholders and, ultimately, the staff of the organisation themselves.

Failure to integrate procurement policy in an organisation means senior management are unable to reap the dividends of aggregated spend and often have little or no control over vast areas of purchasing.

They may be left in the position many organisations are still in, where the bosses have no idea who is spending money on the company’s behalf, who they are spending it with, and how much they are spending.

Much has been written about the various ways managers can attempt to implement their procurement policy within their organisations. Most people agree there are various styles ranging from a so-called soft approach in which persuasion is key, through to outright enforcement, with penalties for those who fail to comply. The consensus is probably that a “consultancy” approach – gentle persuasion – is better than enforcement, but that ultimately, if all else fails, enforcement may be necessary.

Emmott, adviser on employee relations at the Chartered Institute of Personnel and Development, says the Marrakech survey does not accurately reflect the situation in most workplaces. Older workers, he says, are generally better “corporate citizens” than their younger colleagues. They are more loyal to the employer, more constructive in their approach, and enjoy more work satisfaction. They are not the villains of the piece, he says. It’s just that they understand their position better than younger employees.

“Older workers are generally better at playing the game,” he says. “They are more knowledgeable about their work environment and confident of their own judgments. They are better at making decisions about value for money and getting results. Older workers have learned to distinguish between management messages that require to be actioned and those which are less crucial.” The essential point, he says, is to make sure that people understand the official policy and can see the benefits it will bring to the organisation.

“Purchasing rules and people’s willingness or otherwise to follow them are not necessarily an indicator of their attitude to management instructions,” he says. “If you want to change people’s behaviour you have to change their perception of their own behaviour. You have to convince people by explaining the basis on which the rules were decided. They don’t want to be told what to do, they want to be convinced.”

But how do you convince them? Christopher Barrat, a consultant with the Greystone Partnership, says: “If you understand the mechanism that causes people to do something or not to do it, then your chance of influencing that decision improves dramatically.”

There are three factors involved, according to Barrat. First, there is the individual’s “inner character”: those drivers that you are born with telling you what you really want to do.

These are hard-wired in, and will not be easily changed. Second, there are received values. These are the drivers that society – parents, friends and workplace – instill in people.

As an example of received values, Barrat cites ICI, his previous employer, where there was an extremely powerful culture of health and safety. So everyone consciously held the handrails when walking up or down stairs. They were not necessarily born cautious but rather that the importance of health and safety had been instilled into them.

And finally there is the situation in which the individual is placed, which can radically affect behaviour. You may well behave very differently at the Christmas party, for example, than on a normal day in the office. “The way I behave is made up of my inner character, my received values and the situation I find myself in, Barrat says. “ All of those drive my behaviour in a certain way, and if any of those factors becomes very strong, it will start to change my behaviour.

Purchasing directors need to realise they can’t make everyone into an automaton, Barrat says. People have a choice as to how they react. You cannot hard-wire people into always working the way you want them to. You can only influence two of those factors: the situation people are in and their received values. So you should include those two andthen you will start to bring around those who are not readily complying with the rules.

For example, you can influence a situation by making things difficult or embarrassing for someone who is not complying with policy, by ringing them up and telling them off, or delaying their orders for example. This can have an instant effect, and is also more short-term.

Or you can influence their received values – in a positive way by offering praise, for example, or in a negative way, by telling them that their behaviour is not acceptable. Over time, changing the situation or the received values will transform the individual’s behaviour. “The only thing you can do is affect a person’s values and their situation,” Barrat says. “So as a purchasing manager you should be giving people positive reasons why they should comply with policy and the negative consequences of not doing so.”

This will build a dual pressure, and while it usually takes a bit longer to achieve, the resulting changes in behaviour can be longer lasting. This analysis may also help to explain more clearly the results of the Marrakech research. Older people tend to have more fully-formed received values. Younger people are still on the look-out for how their values can be influenced – essentially how best they can fit in so that they can move on and up the career ladder.