Tuesday, October 8, 2013

Caveat Venditor

In a post last year I discussed the topic of vendor management.  From the perspective of the purchaser I listed how important it is to treat your vendors with care, respect, and diligence.  In other words, treat others like you want to be treated and you will typically have the basis for excellent relationships with your providers.

That is all well and good, treating others with respect and kindness, but consider this thought.  When you, as a leader in IT or any other function, engage a vendor/partner/provider, you are doing what I like to refer to as "domesticating the wolf".  Have you ever tried to make a pet out of a wolf?  Almost no-one does and for good reason.  The wolf is interested in several things:
  • Getting fed
  • Establishing a hierarchy
  • Building territory
  • Fighting for leadership
There is really no way to tame a wolf.  It is genetically coded to act a certain way and you can only keep it contained - never change it.
It may be a bit odd to compare vendors and wolves, but there are some real similarities.  Just like dealing with a wolf, to get good results from a vendor you have to constantly and continually reward good performance (behavior) and dis-incent negative actions.  This involves giving negative feedback and occasionally entering into conflict.  Yet it is an absolutely integral part of getting the best results from the relationship.

Always remember that even the biggest service providers are still made up of individual persons, each of whom have different personalities and agendas.  No person brings their "A" game every single day.  In fact, the larger the provider the more likely that they are filling out their workforce by "secretly" hiring 3rd-party resources to work under their brand name.  Do you think that these large companies are closely managing and coaching their consulting resources or the people who spend all their time on the road creating billable hours?  The answer, if you didn't already figure it out, is no.  So that means the burden for ensuring the best possible daily performance from your vendors falls squarely to you.

There is a six sigma (6σ) maxim that describes the behavior of people when it comes to dealing with bad service or performance.  Basically it goes like this: For every one person that complains, 26 people are dissatisfied and don't say anything (but take their business elsewhere).  Translating that into the business environment, what happens is that managers become dissatisfied with their vendors and just fire them.  They don't really give feedback, they just stop doing business with them.  While this handles the problem related to dissatisfaction, it doesn't benefit the company in the long run.

Back to what I said before, vendors are not "companies" per se.  Vendors are groups of people.  When you fire the vendor that is an action more against specific people than it is a singular (emotionless) entity.  If you want to be really good at vendor management you have to start focusing on the people representing the vending company and not the company itself.

Managers who are truly excellent at vendor management are actually handling the relationships with the people who are the "face" of the entity.  When you see the vendor as a group of people rather than a black-box entity it allows you a great deal of flexibility to improve performance and ultimately the relationship.  But what does it mean to get better?

Develop and nurture the relationships with the people you are dealing with on a daily basis.  Give continual feedback - tangibly reward great performance and specifically call out bad performance.  Rather than an all or nothing proposition, actually train your vendors how to best serve you.  By realizing that they are human and will be both good and bad at times, you can get in the mindset of reinforcing in the vendor what you need by coaching and mentoring their people.

Of course, there are times when vendors do need to be fired.  Relationships do not always stay positive.  But make those people manifest to you that they are incapable of being what you want.  Often you will find that vendors you thought little of actually turn out to be pretty good when they know exactly how to serve you.

Vendor management, when done right, is hard work.  But it is work that always pays out handsomely in the end for both your organization and theirs.

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