Blurred Lines Means Bad Business: Why Financial Integrity is Vital to Procurement Success

By Andy Beth Miller

When I was approached by Steve Fisher with writing an article covering the subject matter of financial integrity, specifically in the procurement realm, I was immediately on board. Not only was I on board, but I was excited, as integrity — of any kind — is a rare anomaly these days.

As we jumped into the interview, Fisher, who is a Procurement Advisor for Emerald Textiles, began telling me about the journey that first brought him to the procurement field. It was a tale that began with the requisite college degree, followed by grad school, and as Fisher extolled his evolution, it quickly became clear how motivated, self-aware, and mindful an individual he is. “After college, I became a customs broker/freight forwarder and learned the nuts and bolts of moving and storing goods globally. After realizing how little I knew, I went back to graduate school,” Fisher explained of his progression.

Following his graduation from grad school, Fisher decided to learn the third major component of the global supply chain: buying. For five years, he worked as a consultant and advisor for a company whose business was to reduce indirect spend and to optimize categories.

As he described this season of his career to me, I couldn’t help but imagine him on one of my favorite game shows that rewards such acumen. The iconic “Let’s Make a Deal” came to mind as Fisher admitted with a grin, “I have always enjoyed reducing costs and negotiating.” Fisher’s revealing words and infectious smile were telltale signs of his intense affection for altering that bottom line and finagling his way to a better financial reward for his company, and the fact that achieving such a feat was intensely satisfying to him was clearly evident.

But, as he soon assured me, Fisher has never—and will never—cut corners or cross any ethical lines in order to get there. Indeed, there are no shortcuts or kickbacks allowed here, as Fisher explained one example of where he often sees colleagues allowing fringe benefits to muddy the waters of financial integrity, “One thing I [have] learned, among many, is that no matter a person’s title, if that person has pictures of golf or trip outings between company members and suppliers, the company is not getting the best pricing because they are spending at least something on keeping decisionmakers happy outside the confines of real business.”

And for those that will assure Fisher that this is just the way the world—and business—works, Fisher will readily assure you that it is not, or certainly should not be. “I know [that people say] it’s just ‘part of the game,’ but it is not,” Fisher stated flatly. He then directly follows this statement with a declaration that does not mince words, while pointing to the accountability of every single individual in this scenario, “I believe that everyone involved in buying decisions, directly or indirectly, must treat spending company money as if it were your own. If you do that, you will always hold the best interests of the company first.”

He continued to bring his point home via this summation, “In a nutshell, it means spending every dollar as if it were coming out of your own pocket. It means putting the best interests of the company before your own wants. It also means being a professional, honoring the ‘code’ of ethics requiring procurement professionals to always keep supplier/customer interactions at arms length. This way, as a procurement professional, you always make the right financial decision that is in the best interest of the company. This is the right thing to do.”

Fisher then offered a perfect real world example of how to do just this using a common situation that many of us many have already have found ourselves in during our own procurement process, “If a vendor offers you tickets to a game, just because you want to go—you should not. Having a few drinks paid for by a potential supplier—don’t do it. Actually, if you want to do it, pay for it out of your pocket. Then you won’t be beholden to that vendor.” Simply put, Fisher is cautioning us from blurring the lines in our business practices and extracurricular activities outside of the office. “Those in buying decisions should only [make decisions based on] what is best for the company, and [they] should never be influenced by who they like because [that individual or company] offers great meals/tickets/gifts.”

Speaking of lines, Fisher reminds me of that really ahead of the curve kid whose crayon portraits in kindergarten were out of this world, all because he was the one ingenue who colored inside the lines versus all the rest of us, whose Picassoesque portraits portrayed much more slapdash strokes.

This “stay inside the lines” mentality clearly marks this professional’s no compromise MO. For Fisher, Picasso’s abstract out of bounds masterpieces may be prized in the art world, but when it comes to procurement, precision—and self-discipline—is key. And although Fisher is heavy-handed when it comes to insisting that all of us tow the ethical line and does not allow any lee-way for our shirking that responsibility, he does realize that this world’s corporate culture does not make it easy.

Fisher pointed out the main problem areas that he sees facing us today, the ones that really can trip us up and lead us out of bounds quickly:

1. Being unaware of basic situations that can influence buying decisions.

“I was once offered an allexpense paid trip to Vail with my wife. I politely said no, but my boss took it. I think many people just don’t associate the two (accepting a gift and being beholden to a vendor).”

2. Being apathetic about ramifications.

“[People] let their desire for personal satisfaction get in the way. Case in point—I was offered courtside seats to the championship basketball team the Warriors, which, of course I turned down. But my boss (actually the CFO of all people) took the tickets. He knew what he was doing—he just ignored the impropriety and the company had no policy against it.”

3. Having a lax company policy.

“If a company has both a policy and has leadership that en-forces good procurement behavior, there will be less possibility of improprieties. Stiff penal-ties for not adhering to policy are also important.”

4. Lack of leadership.

”It takes leaders to influence the behavior of others.”

Luckily, Fisher did not leave us hanging after hearing all of the obstacles facing our accomplishing this balancing act of walking the line when it comes to financial integrity, but instead provided us with several proactive steps that any one of us can take in order to keep in stride and succeed. The best part is, they are suitable for any pace:

1. Be the role model you want everyone to be by doing the right thing. Specifically, always remain focused on the primary mission, which is to buy the right products at the right prices. Also, remember procurement is a support function —it is generally not our function to decide which are the right products/services, but to present options that enhance the financial viability of the company.

2. Ensure strong procurement governance that limits process holes that allow improper behavior to occur.

3. Communicate to your supplier community the rules concerning proper (and improper) behavior.

“One of my favorite quotes comes from a man who, you could argue, literally saved the world, Dwight Eisenhower,” Fisher stated. “[Eisenhower said,] ‘The supreme quality for leadership is unquestionably integrity. Without it, no real success is possible.”’ While speaking of success, Fisher then pointed to one of his mentors, entrepreneur Mark Bressler, who was instrumental in instilling ethics and integrity in all of his procurement decisions. Fisher also credits Bressler with showing him how to “not let integrity get in the way of doing great business.” In fact, according to Fisher, “The two can coexist very nicely—and should.”