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Case Study: Purchasing and HR working together – Nomura

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The Japanese investment bank, Nomura, has over 500 staff based in its City of London offices. Purchasing has been “much more” involved with the procurement of Human Resource services over the last 5 years, making estimated HR expenditure savings of £1.5 million every year.

“It is all about personalities – developing trust and communication”, says Nicola Luxford, Manager of Compensation and Benefits for the bank, when asked what makes the relationship between Purchasing and HR so “great”. It is successful because “we are in constant communication, and working together towards the same objectives” according to Jonathan Rollaston, in charge of Purchasing as Head of Corporate Client Services.

Although both stress their relationship is informal, it is supported by formal operating structures within Nomura. HR Director Kathy Harvey is also Chief Adminstration Officer to the Bank, and is on the main Board. Corporate Client Services, which includes Purchasing, reports directly to her, as does the separate department of Corporate Communications.

Each quarter, Nomura’s Purchasing department reports on costs across every part of the bank. HR-related costs, which (excluding permanent salaries) amount to 20% of the Bank’s expenditure, are an important part of this exercise. In addition to the major costs of temporary workers and IT contractors, it includes payroll, compensation, medical costs, recruitment, pensions, life insurance and benefits of all kinds sourced from secondary suppliers. These quarterly reports are central to HR’s ongoing value analysis, helping them identify and plan action wherever improvements can be made.

When contracts come up for renewal, the final choice of supplier is always HR’s decision, with Purchasing adamant they are firmly in a “support role”. However, equally important is Purchasing’s understanding that “quality is
king”, and the development of success criteria which – they emphasise – it is essential to “agree up front”. Purchasing writes the initial tender document, before incorporating HR comments and changes. Both work as a team assessing responses.

When asked about the gains from the relationship, Nicola points to the excellent negotiating skills Purchasing brings which “we don’t traditionally have in HR”, while Jonathan highlights how much he has learnt about “what a tough job HR is”.

Both agree Purchasing has taken away a load of secondary work from HR, but above all successfully helped to
“leverage the bank’s expense, while making sure we get a quality service”.

Related source
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