In our careers, we’ve all seen the amazing things that can happen when effective leadership has the chance to spread its wings. Unfortunately, many have also experienced what happens when that leadership is ineffective. In today’s Argentus Blog, we’re exploring what weak leadership in procurement looks like, and the costs it takes on organizations. What can companies do to fix these situations, and how do you avoid them in the first place?

Everyone knows that a bad hire can be very costly to a business. When you account for hiring, training, and onboarding costs, plus the opportunity cost of not hiring a successful employee—not to mention the impact on workplace culture—hiring the wrong person can set a company back tens of thousands of dollars. This is something that people have written about widely across the vast array of blogs about talent.

But what are the costs of hiring the wrong employee (or employees) at the leadership level of a business?

It’s something we’ve been thinking about recently at Argentus. As a firm that helps companies hire at all levels, we have our ears to the ground about the costs that companies bear when leadership issues have hurt their reputations in the marketplace. So particularly in Procurement, which is one of our core areas of recruitment expertise—what’s the cost of hiring the wrong leadership?

In short, it’s this: a bad hire at the junior level costs lots of money, but a bad hire at the leadership level has the potential to upset the apple cart and sink a company’s reputation, making it difficult to hire at all levels below it. Having the wrong leader in place can create a noxious effect that filters down into senior managers, managers, sole contributors, and junior employees. Procurement sometimes struggles to get buy-in from executives and stakeholders, and having mishandled leadership can make this task even more difficult for everyone in the organization.

Even if it’s a company with a storied history and a powerhouse brand as an employer, word always gets out if the wrong leadership is in place within any specific function. It means that individuals won’t apply for jobs. They won’t respond when recruiters contact them about certain opportunities. At a certain point, it becomes hard to find recruiters who are even willing to help hire for open roles at the company. Given that recruiters, especially those who work on a contingent basis, are usually all over clients trying to send them candidates, if a recruiter won’t work with a company, you know something must be wrong. 

Despite the current political factors roiling global supply chains—or perhaps because of them—the marketplace for Procurement and Supply Chain talent remains particularly tight. Companies are battling to bring in star performers who can enact business transformations, implement total cost of ownership models, boost their vendor and risk management, and modernize their Procurement as the function evolves for the future. And if your Procurement leadership develops a negative reputation in the marketplace, attracting those individuals becomes simply impossible.

We should clarify what we mean by bad leadership in Procurement: We all know it when we’ve seen it, but there are a few traits that ineffective leaders have in common: quite often, they’re individuals tasked with leadership of a Strategic Sourcing organization who don’t have boots on the ground experience in Procurement. They often don’t have the war wounds to understand the function from bottom to top. Strategy and vision are important, but subject matter expertise helps leaders gain credibility with the managers and analysts who are expected to execute that vision.

It’s not absolutely necessary for a CPO or VP of Procurement to have done every job in the function. But if they haven’t, it’s important for them to be able to be humble enough to recognize the subject matter expertise of the people they’re working with, especially if they’re expected to bring changes to the organization. A great leader will admit the gaps in their own knowledge, and work to figure out how they can combine their strengths with those of their team. A bad leader will act like they understand every detail of every Procurement process and category, even if they don’t.

Beyond that, in our experience, the biggest issue with troubled Procurement leadership often comes down to soft skills. For a function that often comes down to negotiation, relationship-building, and getting buy-in, people skills are everything. Ineffective leaders will micromanage, yell, and show a lack of respect for junior employees. How can a leader expect to get buy-in from executives if they can’t build relationships with their own team members? The best leaders in Procurement will empower their teams to pursue cost savings, minimize risk, and increase value without watching them like a hawk.

Leadership is a topic so complex it’s inspired a cottage industry of books and academic research, so we can’t hope to address everything about how to hire effective leaders. But what can companies do to make sure they don’t risk the almost-priceless commodity of their employer brand by installing bad leadership? Be very careful about the leaders that you hire. These individuals should either be subject matter experts, or be very willing to learn from their team-members. When interviewing prospective hires, try to assess their ability to be empathetic and build consensus, and be wary about boasts that they can enact sweeping changes through their force of will alone.

If you can’t, you might be risking more than just the time it took to hire. 

As always, if you have any immediate or upcoming hiring needs in supply chain management, contact Argentus! We’ve spent the past 25 years building the most robust network of supply chain and procurement professionals in Canada—people who have the combination of deep procurement subject matter expertise, as well as soft skills and business acumen needed to transform functions, break down silos and drive overall business strategy.

Whether you’re hiring for procurement and supply chain talent at the leadership level, or looking to upgrade your bench strength for mid-career procurement professionals, reach out to explore how we can augment your internal hiring process. Call 416 364 9919 or send an email to recruit@argentus.com outlining your needs!