CEO: how many “small” people does your company bully?
Kenyan CEOs are always busy giving away cheques to worthy causes, speaking noble words at gatherings of luminaries, and championing the agenda of good corporate citizenship. Here’s a question for them, though: why is your company so virtuous for the cameras, and often an outright bully when it comes to the “small” people it deals with?
I’m referring today to the universe of small businessfolk who supply products and services to our large corporations: the hard-working entrepreneurs who provide taxi and messenger services, printers and stationery, repair work, cleaning and maintenance, or just specific raw materials used in production.
For this group of people sealing a contract with a large organization is a dream come true: a big boost in revenue, often accounting for a huge chunk of sales. Sadly, that dream can often turn into a nightmare, thanks to the bully-boys (and girls) who sit in the procurement and finance departments of our leading companies.
Over the years, I have watched many small businessfolk suffer indignities and financial harm at the hands of these bullies. Today, I write this tirade on their behalf.
First, there is the issue of landing the contract in the first place. In Kenya, as we know, the process is not the thing – it’s whom you know that counts. These contracts are routinely dished out to relatives or to companies fronting for a senior manager. Any honest businessperson offering good quality is often forced to give in and offer kickbacks, just to stay afloat in business.
Next, there is the problem of collecting payment. The large company that breathes fire down your neck when the supply deadline looms suddenly becomes extremely relaxed about paying you once supply is completed. Payment terms are officially rarely any better than 60 days; in practice suppliers are often stretched to 90 or 120 or even 150 days. For small businesses with fragile cashflows, the difference can be critical.
Even worse are the tortures that small businesses are put through when trying to collect payment: “It’s still in Finance – come back next week.” “The cheque is ready but not signed – we’ll call you.” “We have no record of outstanding payments – provide a statement.” Or the worst one: “Prove that we haven’t paid you!”
This stuff is done either because it’s simply big-company policy to pay suppliers as late as possible so as to maximize the interest gain of holding their money; or because of the bully-boys and gatekeepers sitting in key seats who simply enjoy throwing their weight around – or want to receive some envelopes under the table to make the payment accelerate magically.
Either way, if you’re a CEO I suggest you take a very hard look at how your suppliers are treated. The big ones are probably fine; but I’m pretty sure the small ones would have some interesting stories to tell you. Call them in quietly and listen.
This stuff matters. A great business is not just about squeezing every dime of profit, legitimate or not, out of every person it deals with. A great business is web of mutually beneficial relationships in an ecosystem that protects all its components. Is bullying part of the brand you wish to project to the world? And do you not want to build up a cadre of loyal suppliers who are part of your mission and great ambassadors for you? Why not?
As I often write here: big need not mean ugly. No matter what size your business is, this practice is cheap and needless. Fix it. It stains your brand.
In my business I make it a rule to pay every small supplier as soon as the invoice is received. I learned this early in life from a gentleman I have had the privilege to observe for many decades. This person has an iron rule: never pay your suppliers late. Over many years, I have watched him go in person across town to present his cheque to suppliers big and small. As a result, he has been everyone’s favourite customer all his career. He grew his business very substantially by championing everyday virtue.
Mr B. D. Seedhar, if you’re reading this, please stand and take a bow.