Posted on | April 22, 2010 | CLICK HERE TO COMMENT OR ASK QUESTION
In previous posts, I have talked about differences in what is needed to manage time-driven projects, and metrics-driven programs. That is, the difference between Project Managers and Program Managers, and set out a broad range of common skills and knowledge required to manage outsourced work.
This post is for a tailored planning approach, or what must be factored in by Departments, HR/OD/Talent Management, Sourcing or Procurement Departments, and Sourcing Governance teams. Tailoring the set of required competencies focuses on the results or outcomes required, how the roles are defined, the overall process for outsourcing within the organization, the nature of the work, and the structure.
How do you assess the specific skills and expertise a vendor manager will need? Not all projects or programs are the same, not all companies are the same, and not all vendor relationships are the same. There is not a universal skill-set to be an effective vendor manager. Many factors determine what competencies (or capabilities) are needed.
Factors for assessing competencies
Below are ten typical factors that are more influential in determining competencies needed, in what priority, and to what depth. Think180 has identified a further twenty key factors that are part of the assessment and planning of competencies required in vendor manager roles.
- Lifecycle responsibility – whole process or a single phase (mostly delivery)
- Relationship with vendor – transactional or partnering (collaborative)
- Project or program – deliverables and milestones vs. service levels and quality
- Extent of integration of vendor work into client business
- Balance of expertise – with client or with vendor
- New or ongoing project/program – kick-off vs. maintain (or fix)
- Project complexity, size, budget, depth
- Location (and culture/language) of vendor – same city, same country, remote, global
- Governance requirements, structure and process
- Level of responsibility, discretion and accountability of vendor manager
Look at the factors as a set, not one-by-one. For example, a complex project, large budget, and a high level of accountability, means the vendor manager needs expertise in financial management and analysis. A project that is integrated with company business, with multiple stakeholders and a complex governance structure, means the vendor manager needs strong communication skills in liaison and negotiation.
Key competency areas (typical, broad categories shown – refer also to previous posts)
Competencies are built around the job to be done, and the combination of key factors and variables in the work, department, subject matter, team, business, expectations, and processes. These are the ten most crucial competency areas that apply to some degree to most roles:
- Business and financials – budgets, analysis, forecasting, cash flow
- Governance – contracts, risk, metrics
- Management and leadership skills – as applied to outsourcing
- Communications – explanation, meetings, negotiation
- Relationship management – ranging from transactional to partnering
- Project management – by timelines, milestones and deliverables
- Program management – by service levels, quality and value
- Problem-solving, including other stakeholders
- Operations – logistics, processes, integration
- Subject matter expertise – for the work and the processes
Benefits of strong capabilities
When employees are skilled at managing vendors, or there is strong collective expertise in teams and the sourcing and management chain, there is higher Leveraged Employee Value (see previous post), and greater overall results from outsourcing. Some potential benefits are:
- Better control of projects and programs – time, cost, quality
- Earlier identification of problems and emerging risks
- Greater ability to contain and solve problems quickly
- Improved vendor relationships, that help smoother delivery
- Identifying opportunities for cost savings
- Stronger ability to see and implement operational improvements
- Insight into vendor operations for greater efficiencies, or early warning signs
- Stronger base when negotiations are required
- Less time wasted in assessing what is going on in a given situation
- More effective and efficient review of deliverables and/or service levels
Risks of competency shortfalls
Conversely, there is risk from low expertise in key aspects of a project or program. Some aspects are crucial, some are low risk, and some have tolerance to “just get by” without too much consequence (or at least not ones that are obvious). These are just a few of the risks:
- Missing warning signs of problems looming
- Giving away advantages to vendor
- Allowing vendor to control things that client should control
- Reduced ability to assess vendor delivery
- Time wasted doing things clumsily
- Spending (or allowing spend) unnecessarily
- Potential costs by allowing quality to slip
- Slippage in timelines and deliverables
- Time and goodwill lost through conflict or combative relationship
- Frustration by internal stakeholders and governance team
The following are some of the sources of learning for vendor managers:
- Professional education/course (such as project management, finance, logistics)
- Required study program driven by employee development, or employee initiative
- Coaching by manager or experienced vendor manager
- Internal Training and Development courses, or brownbag lunch events
- External public courses or other events
- Online and media-based learning (podcasts, e-learning, videos, audio)
- Special in-house workshop or team event on managing vendors
- Webinars and videoconferencing
- Supervised on-job experience and feedback
- Tradeshows and industry outsourcing events
A competency model and series profiles for vendor managers should be driven by what is needed to get the results and outcomes specified by the business needs and strategy. Deviations, compromises and shortfalls will tend to reduce effectiveness of a particular role.
Think180 specializes in profiling and developing competencies and leadership skills specifically for Vendor Manager roles. For establishing a company-wide program of competency assessment and development across all roles, and comprehensive libraries of competencies, we refer you to companies such as Kenexa (an IBM company).
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Kenexa Competency Solutions.
Kenexa also has a helpful White Paper paper on Competency Assessment.