What is Compliance
So what exactly am I talking about when I use the word compliance? There is the pure procurement use of the word that refers to ensuring arrangements, contracts, established purchase orders or panel arrangements are used rather than striking off on separate procurements. There is no doubt that this use of the word, related to terms such as spend control, maverick spend and leakage, has a direct impact on performance of a procurement function, but in this blog I am referring to the effectiveness of compliance with policies and procedures. These are the tools of real efficiency, effectiveness and control within an organisation’s procurement capabilities. Evolving from quality control systems, these critical documents have a direct link to the culture and performance of sourcing in the company.
My first exposure to quality systems was in the early 1990’s when the royal Australian Navy decided to implement them. I was one of the lucky Able Seaman tasked with documenting the minutia of steps required to be a systems maintainer on a wide range of complex weapons and navigational systems. The result was a spectacular document that filled multiple binders and took up half of our one little bookshelf.
When I was working with a large Government organisation, one of my favourite past times was debating the various components of the 87 page procurement policy with my team, but I think I was in the minority.
So what is the point of these enormous documents and how do they get so far out of hand?
The Challenge
Quality system theory was first developed by an American and then implemented most effectively by Japanese manufacturers. The benefits were increases in the consistency of outputs, agility to adapt to change and, believe it or not, efficiency.
It is my belief that it is the second point that has caused the bulk if the trouble. Agility to adapt to change is achieved by documenting the process required or the policy to be applied so that a new resource can quickly become proficient. Alternatively process changes can be communicated rapidly through changing and disseminating new versions of the documents. But as management becomes more concerned with achieving alignment with their wishes and less confident in the capabilities of their resources, the documents get more detailed and sadly, less usable. This then becomes a self fulfilling prophecy as the auditors spot non-compliance, so more detail is added. Then an area is found that can’t align to the policy as it stands, so another section is added. The beast just grows and grows.
Once a document gets beyond a certain size, it is unlikely to be read and even less likely to be understood, so expectation of compliance becomes a mockery of common sense. In this era of information overload, research has found that people will only read 10% to 28% of the text in a web page, so what chance is there that they will read a 10,000 word document? What if the 20% they read is just the padding that makes the document look good? The practitioners are being set up to fail. When this is realised, often the reaction is to simplify the content of the documents by stripping out sections and pairing it back to basics. Unfortunately this is invariably a short term fix and the whole cycle will start again.
Organisations must, must, must aim for 100% compliance with policy. Anything less is lost opportunity.
The Benefits
Despite all of this, the benefits of compliance are real and will significantly advance the capabilities and effectiveness of any organisation. It reduces time spent deciding how to do a task, it improves stakeholder perceptions and relationships through consistency and it enables the management team to achieve minor and major change through altering a few lines in a document. Organisations must, must, must aim for 100% compliance with policy. Anything less is lost opportunity. Achieving compliance cannot be achieved through training, repetition or mandating alone. The policies and processes must be current and aligned with the real world practices of the team. Processes change for three key reasons; a change in legislation, standards or strategy; a better way to do something is found; the practitioners didn’t know or couldn’t remember how to do something. Policies and procedures must have a structure that enables the team and allows easy reading, understanding and maintenance to provide the agility benefits.
As Mark Twin said ” I didn’t have time to write a short letter, so I wrote a long one instead”, often large cumbersome documents arise out of a failure set aside time to really reconsider the objectives of the organisation and how they can be communicated in the fewest possible words.
…focus instead on the key points, the essence of what success would look like.
Keep it Simple
One answer I have covered off in previous blogs called Its the principle that counts and Living by the principle. These blogs outline the new approach of the Queensland State Governments Queensland Procurement Policy that focuses on six key principles to articulate the complex objectives of State procurement. The concept of simplifying the actual framework and not just the content of the framework is where the real gains lay. Instead of focusing on the granular details of what should be done to complete an optimal process, focus instead on the key points, the essence of what success would look like. Transform these into dot points that are concise and highly accessible, and then enforce them stringently. Fine grained detail is not the solution to consistency and capability. The solutions to those issues lay in leveraging the capabilities spread throughout the team and by embedding the review and audit functions seamlessly into the routine processes. Consistency is enabled though shared knowledge, open communication and peer reviewing.The best solution to enforcing procurement policy (or any policy for that matter) is to integrate them into the processes and templates used to complete the work. The documents used to approve the process should include a requirement to outline how the process achieves the principles embraced by the organisation. Deviation from the principles should be challenged from the highest levels in the business to demonstrate the importance of compliance. As such, only principles that will genuinely advance the strategies of the organisation should be included. Just as critical is remembering the adage that if you don’t measure it, you won’t fix it. Any deviations from the policy must be captured in a way that permits review and reporting. Deviations could be due to poor practices or a weak culture in an area of the business, but equally, non-compliance may be due to a misalignment of the policy with the actual needs of the business, or because a better way has been identified.So relaxing compliance or even the controls is generally not the path to more effective and efficient procurement, ultimately it will lead to confusion and frustration. Instead, deep dive the real aims of the organisation and communicate the detail of the objectives, not the steps.