Insights for Procure-to-Pay and Finance Leaders

Emotional intelligence for procurement: why it matters and how to get it

The need to invest in ‘soft skills’ is not new to procurement. In most cases we think about improving our ability to communicate, collaborate, or adapt gracefully to unexpected changes. But what about developing our Emotional Intelligence (EI)? Is there a place for emotion in the supply and demand, quantitative, terms and conditions world of procurement?

Absolutely.

If that seems like a stretch, it is probably because we don’t often think about the importance of emotion in managing the supply chain. Wikipedia defines emotional intelligence (EI) as “the ability to identify, assess, and control the emotions of oneself, of others, and of groups.” The key differentiator between traditional and emotional intelligence is perception. While traditional intelligence is based on logic and reason, emotional intelligence is based on the ability to perceive subjective dynamics in individuals and groups. As procurement moves away from tactical responsibilities, it will be our ability to excel in soft areas such as perception and leadership that will determine our capacity for success.

For further evidence of this, look no further than the myriad of articles that stress the need for procurement to be relationship-oriented. We must build (or repair) relationships with suppliers, internal stakeholders, the executive team. In some cases, procurement is even building relationships with the company’s end customers. Developing a skill that has a direct positive impact on the top line can hardly be called ‘soft’ under the circumstances. Being successful will rely heavily on our ability to read and handle the perspectives and reactions of the people we work with.

EI and stakeholders

Procurement has long had to accept the fact that business owners in the organization sometimes don’t want to work with us and often don’t like the changes we bring to their processes and sources of supply. Being emotionally intelligent doesn’t enable us to prevent them from reacting emotionally, but can absolutely help us understand their reactions and be prepared to respond appropriately. Understanding the cause of internal resistance allows us to react constructively. Stakeholders may be afraid of looking like they did a poor job managing the category in the past, or worried about having to manage the implementation of a new supplier. Since it is procurement’s responsibility to make the entire project a success, diagnosing and resolving stakeholder anxiety falls within the scope of each project.

EI and negotiation

In the Wikipedia definition of emotional intelligence, we see that it is an active soft skill. While being able to read the emotions of others is critical, controlling the feelings of self and others is the real goal. Both are important in a negotiation. Possessing sufficient self-control to mask reactions to an offer is a classic trait found in strong negotiators. The greater challenge, and therefore the opportunity to apply emotional intelligence, is in leveraging the emotions of the other party. Every negotiation strategy needs to be tailored to the other party’s communication style. Will the outcome be improved if you are assertive, approving, quiet, or openly skeptical? Taking the time to determine the best approach may also uncover possible gains based on appropriately matching team members during a negotiation to get the right combination of styles.

EI and suppliers

Looking at emotional intelligence in negotiation is certainly a valid application, but it is less and less the focus of procurement’s time with suppliers. Whether we partner with a supplier, or just have a pleasant working relationship, all interactions between procurement and suppliers are people working with people. When we decide to invest in a full strategic relationship, we need to understand and consider the wants and needs of that supplier’s executive team and their customers just as well as we understand and represent all the priorities coming from our own organization.

The most important application of emotional intelligence may actually be when a supplier is advocating for a strategic relationship that the buy-side company does not feel is an equally important investment of their time and resources. Tough decisions must be made, but if handled with great care and awareness it is possible to avoid committing to a relationship without causing greater harm to the interactions between the two companies.

Strengthening your emotional intelligence

Luckily for procurement, emotional intelligence does not have to be a ‘given’ skill. It can be strengthened and improved over time. If you don’t know how to improve your EI, you are best served by admitting as much and making it an overt part of your planning process. When preparing for a stakeholder meeting, ask yourself what each person’s view of the situation is likely to be and watch for cues that indicate anxiety or frustration. When you see them, try to diagnose the cause and respond to that rather than to the anxiety or frustration itself. If you are strategizing for a coming negotiation, document what you know about each person you will face across the table and make that part of your approach. Identify and articulate the role that emotion will play in all supplier interactions, mutual or otherwise.

As is the case with other soft skills, building your EI is a long-term process. Fortunately, so is the evolution of each procurement group from tactical to strategic. By including it in your development plan and annual review process you should get credit for being aware of your capabilities and taking a forward-looking perspective on your own ‘soft’ skills development. 

This post was authored by Kelly Barner, the Managing Director of Buyers Meeting Point, and updated from a previous article that ran on Procurement Insights. 

Join Kelly and Tradeshift this Wednesday for a panel on how procurement can succeed at improving the supplier experience. Register here