Is there a procurement seat at the management table?
Procurement has been tirelessly trying to claim its seat at the management table for years. Some of our colleagues managed to get there, while others were still waiting at the reception.
We will review the classical Stakeholder Salience Theory to weigh the procurement chances of getting noticed and respected.
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The vital role of procurement stakeholders
Stakeholders are personalities or entities that can affect the achievement of an organization's objectives or those affected by its accomplishment.
Obviously, they're not only customers but suppliers, social groups, government, and many more.
The crucial role of stakeholders can be explained simply. Companies succeed in the market if they create value not only for their customers but broadly for all stakeholders.
Procurement aims to become a source of value. Hence, we must remember all recipients of that value, i.e., stakeholders.
The Stakeholder Salience Model
Dr. Ronald Mitchell suggested in 1997 that stakeholder salience is:
- the stakeholders' power to influence the firm,
- the legitimacy of the stakeholders' relationships with the firm,
- and the urgency of the stakeholder's claim on the firm.
Perhaps, we may need some more definitions here, i.e.,
- Power is the extent to which a party has or can gain access to coercive (physical means), utilitarian (material means), or normative (prestige, esteem, and social) means to impose their will.
- Legitimacy is a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions.
- The urgency is the degree to which stakeholder claims call for immediate attention.
- The salience is the degree to which managers prioritize competing stakeholder claims.
Therefore, the procurement claim for a seat at the management table will be prioritized and attended to based on the mix of three critical attributes identified above.
A mix of stakeholder attributes
There are 7 possible combinations of such vital stakeholders' attributes. Thereby, the authors of the Salience Theory identified 7 categories of stakeholders, as follows.
Procurement attributes as a stakeholder
Our legitimacy is undisputed. It's supported by corporate governance and generic business values of transparency, integrity, and fairness.
Our urgency develops as the business demands quick and efficient procurement actions.
We lack one critical attribute - Power.
This leaves us with two stakeholder categories to match - discretionary and dependent.
Discretionary stakeholders belong to the Latent group along with dormant and demanding ones, which is suggested to observe only. Charitable organizations fall under this category, as well.
Being a dependent stakeholder isn't much better. These are the likes of the local resident community in construction projects - not more than potential trouble-makers.
The need for normative powers
Power becomes an inevitable attribute if procurement is to climb towards the top of the food chain.
Procurement isn't likely to ever gain coercive or utilitarian powers, which are well protected by top management and adjacent services, e.g., corporate security, internal audit, or treasury.
Therefore, we're to look for normative means to impose our will - prestige, esteem, and social.
Three principles of normative power
Normative power must be legitimate, persuasive, and socializing.
As we mentioned already, there's no doubt about procurement legitimacy.
Most importantly, the concept of normative power invites more holistic outside-the-box thinking because traditional means of brutal force or material wealth aren't available.
Procurement's recipe for normative power
The Stakeholder Salience Model gradually led us to the educated acknowledgment of the importance of the following procurement principles:
- constructive partnership,
- institutionalized relationships,
- open dialogue,
- social interaction,
- persuasion,
- holistic thinking.
Basically, this list is nothing new. It's meant to remind us that the procurement seat at the management table is achievable by becoming a capable relationship broker and resourceful politician.
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