Posted on | January 14, 2011 | 9 Comments
Class or Grade of Vendor Manager
Not all roles of managing vendors are equal, or provide the same opportunities. For this article, I have used the concept of “grades” of role.
As an extension or expansion to his or her own role, an employee makes the decision to engage a specialist vendor for their expertise, business model, or ability to take on workload. They select the vendor, own the vendor relationship, and are personally measured by the results the vendor delivers.
A department adopts a leveraged model and engages various specialized vendors, assigning team members with particular disciplines to manage the respective vendors.
A larger department or function, as part of a strategic corporate approach, outsources key programs and projects. A relationship manager is assigned from within the department to manage the outsourced project, and the relationship with the vendor. That project may also have others within the department managing the deliverables.
Enterprise level management of large outsourced programs or functions is often done by a governance team from internal stakeholders and enterprise functions. Where an outsourced project spans multiple departments, there may be a relationship manager assigned to work at top levels with the vendor. Larger programs or projects may be broken into separate activities, with multiple vendor managers ensuring the quality of deliverables and signing off on payment on different elements in the contract.
The lifecycle of an outsourcing engagement goes from the decision to outsource, through selection and engagement, managing the relationship, and wrapping up the engagement when to work completes or transitions.
Five key factors in defining the role of vendor manager are:
- Size, value, and complexity of the outsourced program or project
- Breadth of ownership of the relationship by the vendor manager (how many of the lifecycle phases and segments)
- Scope for taking action, negotiating, solving problems, and implementing change
- Depth of subject matter expertise and experience required to manage
- Extent of integration of the outsourced work into the business operations
Career Impact for the Individual
So where does being a vendor manager lead to? How does it equip a person with skills for the next role? How does it look on a résumé? What unique knowledge insights does the job provide? What kind of visibility does it provide, and what opportunity to demonstrate performance. These are all important questions for a person taking on, or already in, a vendor manager role. They are also important questions for HR and more senior manages to look at from a development and talent planning perspective.
This depends on the background of the individual, and where they see their career going. In many situations, a person trained as a professional who does well at that is promoted to a manager role, even if they have not been prepared for it. This may be manager of a team, project or function. Where that is managing an outsourced project, there are times when this can have positive career benefits.
Other times not. Such as when the vendor manager role is very limited in breadth and responsibilities, and becomes more of an administrative role checking results reports and approving invoices.
For an employee with sights on more senior management positions, or greater professional responsibility in their chosen field, this latter type of role can have a zero or even negative effect on a career. The person no longer gets hand-on professional experience, has little or no management responsibility, and does not create visible results to get be able to demonstrate their abilities.
And for some functions or areas of specialization, the nature of that area may be pervasively outsourced, so a career will be from a job with one company to hopefully) a better job at another company, still essentially managing outsourced vendors.
Before a team member, project leader or manager is directed to take on managing an external resource, it is important to review their existing skill set and experience, as set out in an earlier post, and to assess the impact that the new role will have on their development and longer term career potential.
What a person can learn through managing vendors
One benefit of learning that is often overlooked, and frequently misunderstood, is being able to separate behaviors and activities from end results or outcomes. If the vendor manager gains experience in assessing outcomes, both those created by the vendor, and their own performance in the role, then that is a very valuable skill and mindset for more senior roles in managing.
When managing employees directly, managers can often be influenced by whether they like the individual (chemistry), share similar viewpoints, or how the employee describes (“sells”) their own accomplishments to the manager. Managing vendors typically requires more objective assessment of performance against defined objective criteria.
Other areas an employee can learn or hone skills and expertise through a more broadly responsible vendor management role are (as set out in an earlier post):
- Business & financials – large budgets, analysis, forecasting, cash-flow
- Interpreting, creating and modifying agreements
- Management and leadership skills, esp. remotely and cross-culturally
- Communications – explaining, running meetings, negotiating
- Relationship management – day-to-day work or long term partnering
- Project management – timelines, milestones, multi-source delivery
- Program management – service levels, quality and value
- Problem-solving, including other stakeholders
- Operations – logistics, processes, integration
- Subject matter expertise from a management perspective
What capabilities a person can demonstrate in the role
Doing a visibly effective job in managing delivery and outcomes from a vendor may provide a great opportunity for a professional or non-managerial employee to showcase his or her abilities. And maybe the right senior people within the company get to see that person in action. Or a vendor may want to hire the person. This will depend on who a person connects with and where he or she gains positive visibility.
Managing outsourced work and a vendor relationship may demonstrate problem-solving, leadership, getting results, managing across disciplines and stakeholders, analysis of metrics, and other areas that build a positive reputation.
Working with external resources, and having responsibility for engaging and managing the work done by vendors, can give valuable experience, exposure and insights. Or, for some, it can be a step away from the career they had planned.
Having the right person in a vendor manager role is just as important as having the right vendor. HR development groups, and department managers need to work together, along with Sourcing (Procurement/Purchasing) and any outsourcing governance groups, to ensure that there is a good match between skills, career, experience and vendor.