Why Organisational Culture is more important than price to many public sector bodies
Reports are emerging that supports the movement towards organisational culture being effectively managed in order to win public sector contracts. A part from the usual factors there is to be a focus on bidders to demonstrate a:
- Reduction of modern slavery and cyber risks in their supply chains
- Climate change, a focus on environmental sustainability
- Increase in employee’s employability through, for example, training and development
- Employment of people through diverse backgrounds.
The thought process being that tax payer funded projects should have a social responsibility angle beyond the cost. For too long the lowest cost wins has, it is claimed, resulted in the above practices being needed in order to deliver costs expressed in the Tender.
“By making sure that these social values are reflected not just across the government, but through all the companies we work with, we will take a major step towards our goal of creating an economy that works for everyone,” Mr Lidington will say. https://www.bbc.com/news/business-47518333.
But how do we provide this information without increasing procurement costs?
No doubt many organisation’s are already looking at or seeking to address these issues so what are the challenges:
- How do know what the exposure is to modern slavery risks? What are the behavioural indicators that determine whether or not modern slavery exists in our supply chains or in our business? How do we measure it?
- Is the training we deliver effective? How do we know the level of risk that training and development poses to optimising employee employability?
What these more social requirements are factoring in is a recognition that people related issues are as important as the financials associated with project delivery. They may have been a by product before but now have equal importance.
The focus is on measurement of outcomes
Was is interesting is that these requirements appear to have defined business outcomes. For example, doing training and development isn’t good enough. There is a need to demonstrate that the outcome of the training is increased employability. It is a reduction in modern salary, just knowing the risks and having the right processes and procedures in place and auditing these across the supply chain isn’t enough.
The impact on Financial Management and Balance Sheet
Whilst not mentioned in the article above I was speaking with a gentleman based in London concerning the inclusion of data related to business culture and its impact on risk to business results. This influences, he felt, both business and intellectual property valuation.
The conclusion being that if the factors mentioned are being managed effectively and it can be demonstrated that their risk is being managed and minimised there is a direct link to business worth.
If you want to know how to manage these factors as part of your procurement process or generally given the business environment in which we work then let us know and we can explain.
About the author: Ian Rosam from HPO Risk Solutions is the creator of unique intellectual property to measure risk and business culture to business and compliance management outcomes. A system thinker, author and facilitator supporting the implementation of ERM and Management systems. Ian has worked in many different industry sectors.