The executives are involved in many activities and have to play many roles. They cannot do everything by themselves and require employees to executive the myriad of activities required to run a smooth operation. In order to do this people must be empowered, have the appropriate level of authority especially when dealing with external partners. However, before we tackle this topic we need to look at all the players involved with an organization.
Ownership
It is understood that the ownership of the organization greatly influences the culture and practices of said organization. Let us use the most common types of ownership namely sole proprietor, private corporations, publicly traded organization, non-for profit organizations and all levels of government and agencies.
What they all have in common? Someone is ultimately accountable for the actions and results of the organization. At this time, we are not looking at compliance or governance for we have to look first at the structure of an organization including its suppliers and partners.
Partnerships
Every organization has an organization structure and architecture. In addition to this, organizations rely on other organizations for products and services. A partner or a supplier might be an internal group or a separate legal entity.
Internal partners and suppliers can be a different department within an organization located on the same floor or in the same building or it can be another office (including other retail locations), a warehouse, a manufacturing facility, or even a franchise.
Looking at external partners, we have four basic categories such as strategic, tactical, operational and commodity suppliers.
A strategic partnership is a signification relationship that involves senior managers sharing confidential strategic information to facilitate long-term plans. These relationships would normally be managed by senior management and/or executives
A tactical partnership is a relationship that involves significant commercial activity and business interaction. These relationships would normally be managed by middle management.
An operational partnership is a relationship that involves suppliers of operational products or services. These relationships would normally be managed by operational managers.
A commodity supplier provides low-value and/or readily available products and services, which could be alternatively sourced relatively easily (e.g. office supplies)
Vendor or Sourcing Strategy
The ownership or executives of an organization must decide, define, document, and communicate the partnership strategy to the people involved with the selected or potential partners.
Outsourcing is the moving of a value-creating activity that was performed inside the organization to outside the organization where it is performed by another company. A service strategy should enhance an organization’s special strengths and core competencies. Each component should reinforce the other. Change any one and you have a different model.
In its most basic form, a sourcing strategy looks at the following
- What to source
- Sourcing structure
- Multi-vendor sourcing
- Relationships
- Sourcing governance
- Roles and responsibilities
So what often happens? People have their hands tied on both sides of the partnerships because of miscommunication, poorly defined roles and responsibility, lack of delegated authority, lack of empowerment, poorly worded contracts, missing clauses because the customer did not know exactly what they wanted and made too many assumptions. Additionally, both sides may use the contract as a club to bash the other when something goes awry or they may hide behind it as a shield to defend their position often using phrases like “we did what’s in the contract.”
Where is all this going?
To run a smooth operation the personnel on both sides of the relationship must be empowered, and have the appropriate level of authority. However, what is authority?
The Merriam Webster online dictionary (http://www.merriam-webster.com/dictionary) defines authority and the following terms as
[The] power to influence or command thought, opinion, or behavior
[The] freedom granted by one in authority (right)
Synonyms: Influence, power
This leads us to empowerment, which is defined as follows
[Giving] official authority or legal power to act on one’s behalf
Being empowered by a higher level of manager to have the authority to make decisions on their behalf is one thing. Because with authority, comes accountability, which is defined as follows
[The] obligation or willingness to accept responsibility or to account for one’s actions
The delegation of authority must be communicated and explained to the personnel. Providing clarity of roles should help prevent resistance. Additionally, it should contribute to fewer issues between partners or quicker, more effective and efficient resolution of issues should any arise.
A few final notes
Yes, there are organizations where the above ranges from “this works very well” all the way to “are you kidding?”
Yes, there are politics and favoritism in any organization.
No, organizations do not always communicate who is in charge
Yes, senior managers and executives are often reluctant to relinquish power or to delegate authority.
Yes, people will make decisions and beg for forgiveness after the fact instead of asking for permission in the first place.
Yes, people are often reluctant to accept authority.
Yes, people are often critical of any authority – these people are usually the naysayers about anything and everything anyway.
Yes, people will protect their area of influence and refuse to acknowledge someone’s newly received authority.
Why is it so difficult to do any of the above? One it is human nature, and two, it is usually embedded in the culture of the organization.
This is why so many initiatives to improve “how” an organization does things often fail. It is called resistance to change and it is present at all levels. Without real and accepted empowerment and delegation of authority, organizations will have a hard time changing the way they do things.
So, before embarking n any process or service improvement initiate, take a good hard look at how the organization operates because changing the culture of the organization will be the arduous and longest component of your initiative.
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