The Myth of Trust

This article originally appeared in Spend Matters, March 2013

Last week I attended the Procurement Talent 2013 conference, and I have to admit I wasn’t sure what to expect from a single subject conference. I mean after all what more is there to say other than there isn’t enough talent, we should spend more time developing and nurturing it, and someone should go into the universities to promote Procurement as a profession.

But once there it became evident that the big advantage of focusing on a single subject allows for far greater development of a topic than the normal conference where we get a range of 45 minute sessions on subjects as diverse as eAuctions and Sustainability, which can only scratch the surface of the subject due to time constraints. Consequently there was good debate, helped by Peter’ flexible approach to timing and sticking to the agenda!

The presentation that really caught my imagination though was Chris Taylor’s of SAB Miller. They clearly expect a lot from their new young hires, with an expectation to metaphorically get their hands dirty analysing a category, and then to have spent time out in a different country, understanding how procurement works out in the field as well as the ivory tower of Group Procurement, before progressing to category manager. I think it is an excellent approach, requiring dedication, sacrifice, loyalty and commitment from its staff. But for it to be sustainable, that loyalty does need to be two way, reciprocated by the company, evidenced by a degree of protection during harder times and a policy to (nearly) always recruit internally. After all if their talent development scheme is failing to produce suitable successors for vacant roles, it is the company’s scheme that is failing as much as the employees that are in it.

This model was common in corporate life up until the late 80’s. I used to work for IBM at the time, and then, once you joined them, there was an assumption on the part of both parties that you were there for life. You became an IBMer. There were very few hires who were aged 25 or more, people came in from school, as graduates or after a couple years working elsewhere after graduation. Almost every single senior post was recruited internally. This model was based on mutual loyalty and trust, but it broke down in the late 80’s following 2 events. First IBM hired its new CEO from outside the company, in the shape of Lou Gerstner. Second IBM launched its first ever redundancy programme, the euphemistically titled Career Transition Programme.

IBM broke the bond of loyalty it had built up with its employees over decades in a couple of years. Inevitably pretty soon the loyalty those employees felt towards IBM (and therefore the commitment and sacrifice they were prepared to give) broke a few years later. But this is not just an IBM story. You could substitute IBM’s name with any large corporate.

This break down in loyalty also changed the perception a company had of its staff. In the past they were seen as long term assets, worth investing in (through training and development) and taking a few risks in the course of that investment. In the modern world those long term investments in people in the learning stages of their careers have largely gone. The first thing that goes when you are under budget pressure? The training budget. The result of that is our workforce is now less well trained and prepared than it could be and consequently we are all struggling to recruit from a limited pool of talent.

So I wish SABMiller well. There is no reason why it can’t succeed, but they will need to remember that loyalty and trust are two way streets and on occasion they will have to make some compromises to maintain its side of the bargain.