I interviewed Chris Arnold who discussed 'Should the Chief Procurement Officer be a Board Level Position?'
Chris, can please tell us briefly about your business and your involvement with the Supply Chain community.
Thanks Dustin, Annona Search is an executive search business, and a business line of the global integrated engineering services company Fluor Corporation. We help our internal and external customers identify, assess and attract leaders and future leaders in Supply Chain & Procurement, Manufacturing and Engineering functions. Our customers are typically multinational companies with physical supply chains often with highly capital intensive process or production centric operations. Over recent years we’ve been supporting many customers which are transforming operations to become more integrated and strategic within their businesses, which has, unsurprisingly, included a lot work with procurement organisations.
What are the trends that you see in the Procurement world?
That’s a good question Dustin. I turned my attention to Procurement as head hunter as a result of the financial crisis in 2008. It seems that a lot of companies back then were also turning their attention to the function for survival critical savings and the industry of Procurement grabbed the opportunity. Fast forward to today and the profile of the procurement function is on the rise with many businesses elevating the level of the Chief Procurement officer or CPO to the executive board.
Should the CPO be a board level position?
That’s not a question that can be easily answered, as board level appointments come with a complex array of factors. However if we wanted to simplify the view for the purpose of providing an answer I would say that there are two key considerations.
The first being the characteristics of the individual and the alignment with the characteristics of the specific board. Each company will compile a board with the people they need to create a productive team. Communication and leadership style are often key considerations and the procurement career path hasn’t been producing an abundance of c-suite potential candidates historically – partly because it hasn’t been attracting enough fresh talent into the function.
Secondly, the question is about the value that the procurement function is bringing to the business at a level that contributes to the thinking at the executive level. Commercially the value of the procurement agenda is supported by the executive and performance can significantly impact profitability, however the influence at board level needs to come through intelligent abstract from the data procurement gains through profound integration across the business and an advanced market/supplier perspective. Without company-wide strategic relationships between procurement and business stakeholders as well as progressive techniques such as supplier enabled innovation and supplier relationship management, SRM, it’s a challenge to justify the elevation of the CPO to the exec.
And when these two perspectives are combined there are sometimes consequences to the incumbent CPO. We’ve seen a few examples recently where the procurement function has reached an advanced maturity, the CPO position has been elevated to the board yet the individual in that seat has been replaced by someone else – possibly someone nurtured over a long-period for such an opportunity.
What advice would you give a CPO today with ambition for a board-level appointment?
Again there’s no straightforward answer, however if we consider the answer to the previous question there are two key strategies.
The first is one of personal development. Many leaders, including many top CEOs, have mentors or coaches. Find someone who can help you develop your communication and style to be more like the members of your board, and practice these in the engagements with the executive committee. The more you think, talk and act like them the easier it will be for them to see you as a peer.
Additionally gaining perspective from outside of Procurement can help. A secondment into another department or role in the business can help you understand how procurement is perceived and develop your empathy with other leaders. This might also open up other opportunities on the board such as COO and give you the personal elevation sooner than the procurement role could.
Secondly the investment in people, systems and processes within the procurement organisation is key. Building capability and bringing the benefits to business as a whole are important factors in every board level position.
Through your contributions strategically to the board level thinking, progressing your company’s competitive advantage, and communicating in a way aligned to the style of the executive will plant the seeds of thought that you warrant consideration as a future member of their community.
Thank you, Dustin.
About Chris Arnold
Helping great companies identify and attract leaders and
future leaders in Engineering, Supply Chain and Manufacturing