Leadership and Vendor Management
Posted on | September 2, 2011 | CLICK HERE TO COMMENT OR ASK QUESTION
Vendor managers are usually expert in their own subject matter area. In some cases, they may have been trained in project management and business skills. But leadership is not an area where a vendor manager typically receives training or mentoring as preparation for that job.
In the world of 2024 outsourcing and use of contract third parties, Artificial Intelligence (AI) adds a different dimension to outsourcing contracts and performance metrics especially. Some vendor managers will find they need skills and proficiency in AI, or in-house AI executives and experts.
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In other posts and articles, I have written on the differences between managing employees and managing vendors. In this post, I look at specific elements of being a leader in a vendor manager role, and how it may differ from leading an internal team of direct reports.
This is a shorter version of the full article. Click here to download complete article as a PDF.
People often ask, “What makes a good leader?”. The answers to this question are broad. In a similar way is the question, “What makes a good vendor manager?” There is not a definitive list of “one size fits all”.
For many vendor managers, their work is mostly about managing the day to day stuff – handling difficult situations and people, keeping projects on track, ensuring that vendors meet standards and deliverables, fixing things that go wrong, working with internal clients and stakeholders, and helping teams buy into and work towards common goals and deadlines.
For roles where stronger, more skilled leadership is needed to guide teams or vendors through new projects or ways of doing things, leadership still depends on the type of task or project, the size, what is at stake, complexity, budget and duration.
Also, the leadership required depends on what has been agreed in the contracts and ground rules, the parties involved and stakeholders, the culture of the client and the vendor, the business environment, and the overall context of the work being done.
On Being a Leader
Leadership is not a standalone behavior or set of skills. It is not something one “does”, like create or review a proposal. It is complex, variable, and integral to a given situation, the players, the process, and where the power lies. So, what is it that the right leadership can do?
- Drive initiatives, shape vendor actions and priorities, take corrective action
- Create business relationships around performance, delivery, quality, innovation, and value, rather than just compliance and driving via the authority of the contract.
- Solve problems more collaboratively, thus exploring a wider range of options than either party could put forward alone. For example, the vendor may have a depth of experience from similar situations in other industries with other clients.
- Reinforce company values, ethics and culture. This is important if a vendor is interacting directly with customers, either through sales or support.
Whatever the level of leadership required, there are a few key requirements. One is emotional intelligence – the ability to read a situation, the players, to know oneself, and respond accordingly to all these. It helps to have good communication skills and the ability to influence others, and convey requirements.
How well a person is able to lead can depend on what they bring that motivates or drives others to follow. In some cases, it is because the leader is an expert in the field, knows more than anyone else, and is able to communicate this expertise to others. It may be his or her problem-solving ability, or their reputation for getting results.
It is valuable for leaders to see themselves in the situation from the perspective of others, and understand the impact and influence they have, or don’t have. As part of this, it is important to understand one’s own credibility and influence, and source of authority, in different settings, so as to act accordingly and work from strengths.
People who come to vendor management, or other company roles, from prior careers, professions, cultures (geographic or industry) or generations often bring legacy leadership styles. For technical SMEs, scientists, engineers, sales persons, creatives, large or small company, community programs, government, other countries, small business etc., each background tends to create its own style.
People from large structured organizations may be more comfortable using rules and a set chain of command, whereas a person with a background in a community organization, a creative agency, or a startup may be more comfortable with simply going to whomever they need to get something done or approved, or making spot decisions.
And if a person from a different background has style or set of values that is a mismatch, such as from a different culture, industry, or profession, then they may be less than effective as a leader when using that approach in the new setting.
Leadership in Vendor Management
Vendor leadership may easier than leadership in a company setting in some ways, and harder in others. In a corporate role, line management does have the backing of the positional authority. In a mixed team, especially cross-functional or with multiple vendors, leadership skills are more crucial to the effectiveness of a vendor manager.
With managing outsourced projects, and the use of external resources, skilled leadership is often not seen within the company as a key part of the vendor manager role, which may be viewed more as administrative of project management.
Not all vendor management roles require highly developed leadership skills, especially where strong, prescriptive and high-level contracts are in place, or the job is more checking delivery than shaping it.
Parties in the outsourcing process who need to place value on the role of leadership in a client-vendor relationship are the vendor managers themselves, the manager of that individual, and the overseeing corporate function such as the Sourcing group (aka Purchasing), or governance team.
And if the vendor manager does not see or place value leadership and its importance in the business process and relationship, then he or she will not see the value and positive effects skilled leadership can have in managing vendors.
Skilled leadership can be a crucial element to move projects forward, getting buy-in from a vendor (beyond mere compliance), involving internal stakeholders, solving problems, fostering innovation, gaining extra quality, loyalty and value from the vendor, and renegotiations of agreements.
So how is leadership in vendor management different from leadership with employees and company groups? These are some key points and questions I will touch on in this article, and expand in future.
- Employees and internal teams, partners and vendors, all have different criteria for what they expect from leaders, and tend to respond differently.
- When a vendor manager is problem-solving process with a vendor, who leads?
- What is “emotional intelligence” in leadership with vendors, and how important is it?
- How does leadership play into managing exactly to tightly constructed contracts?
- Should a vendor manager use a collaborative style or one that is controlling?
Some people think “driving a hard bargain” automatically equates to strong leadership. It can be, if a hard-nosed vendor is over-pricing their services. But if the vendor prices fairly with a lean operating margin, then simply beating them on price may put their capacity to deliver at risk, compromise the quality of the work done.
When vendors take control, and the client feels compromised or disempowered, something was not done right in the selection, negotiation and engagement process, or the vendor manager was not adequately prepared for or supported in the role.
There is a range of ways the client can take or regain control over time. Typically this should not be left just to the individual vendor manager, but done in conjunction with more senior managers, Sourcing or Purchasing, governance teams, or designated more senior vendor relationship managers.
In any relationship, heavy-handedness often comes with a price. Fixing issues and problems by issuing threats of additional penalties may work in dire situations with problem vendors, but is not a universally successful mode of operating.
Where a functional team uses vendors extensively and members of the team each have a vendor to manage, the leader of that team not only has to understand the processes of outsourcing, and be able to manage vendors, but he or she also also needs to know how to develop team members in vendor management, and assess their performance in the role.
So, what part does “leadership” play, and how is it different from “management”? Is there a role for “leadership style” as there is for “management style” when managing vendors and leading outsourced projects?
Some of the Leadership Qualities for Vendor Managers
Whenever leadership is required, whether at a small immediate level, or in a large and complex situation, some qualities and skills tend to be universal. What varies is how well-developed these need to be, and how crucial they are to success. These are just a few.
- A vision of the outcomes, and a style that conveys that vision so others can grasp it
- Strong communication abilities to create understanding and clarity
- Emotional intelligence to read situations, and strength to take a stand as needed
- Ability to connect and work with a range of people, professions and styles
- A sense of deadlines and project timelines
- An ability to gain buy-in from others
- Good negotiating skills, for overall work agreements, and for day-to-day issues
- Planning skills and the ability to articulate the plan and steps to others
- Problem-solving skills, and the ability to engage others in the process
- Dealing with change, and flexibility to adapt and help others to adapt
Strength, presence, toughness, intensity, likability, humor, credibility of track record, reputation, presentation and explanatory power, skills in decision-making, problem-solving and negotiating can be powerful leadership assets.
Learning to Lead
People in new situations and new roles use approaches and behaviors that have worked for them in the past, and that they are comfortable with or where they have strengths. Or they may look around for a role model and seek to copy those skills and behaviors.
When professionals and specialists move from being an individual contributor or subject matter expert to a management role, one of the key skills they need to develop is how to use influence and exert leadership, without over-reliance on their subject matter expertise alone.
Now they have to be able to listen to alternative perspectives, assert themselves in terms of strategic direction and company priorities, and established agreements.
Leadership skills can be strengthened or learned through coaching in the role, appropriate training or classes, behavioral modeling programs, structured feedback from others, learning from a role model, and self-study with practice for the more straightforward techniques.
So, with all this in mind, a vendor manager, or their manager, need to do a stocktake of their job, the leadership component and potential, levels of expertise in leading others, and from that identify what further development is needed and how that will be best done.
Download the extended article as a PDF.
Tags: business relationships > client-vendor > collaborating > competencies > expertise > leadership skills > learning > managing vendors > mentoring in leadership > outsourcing > training in vendor management > vendor management skills