You Shouldn’t Have! How to Manage Gifts from Suppliers

It used to be de rigueur. Gifts from suppliers, particularly around the festive season, were commonplace and expected. Up until the end of the 20th century, tickets to corporate boxes at the footy match or meals at fine-dining restaurants were all part of doing business, and a gift policy rarely considered (if it even existed).

Today, non-compliance costs organisations nearly $15 million a year, so the view on receiving supplier gifts has – understandably – dramatically shifted. If an employee in your organisation receives something for free from a supplier, no matter how token it is, there needs to be clear guidelines in place on how to respond.

Why supplier gifts can be hazardous

Procurement needs to be objective. In order to make the right purchasing decision or recommend the most appropriate product or service to clients, procurement officers can’t be swayed by anything other than what’s relevant. They have an obligation to their employer and competing vendors to make decisions without bias. And this has to be demonstrable. In other words, not only do they have to be disinterested, they have to be seen to be so as well.

This is why policy around supplier gifts must be clear cut. Even if the recipient isn’t swayed by the gift, it will be hard for them to make decisions in favour of that particular supplier without looking like they are. Company-wide policies also make it easier for employees to decline gifts without offending the supplier, avoiding potentially awkward and relationship-damaging situations.

How to handle gifts ethically

Questions to consider

Ask yourself these questions when deciding whether to accept a gift from a supplier:

  • What is the supplier’s relationship to me? Could they benefit from a decision I make?
  • What is the timing of the gift? Am I about to make a decision that could affect the supplier?
  • Would accepting it make me feel obligated to return a favour?
  • What would my colleagues think if I accepted this gift? What would the public think (if, for example, you work for a government department)?

Stipulate policy around monetary value

The above questions offer good guidance when it comes to ethics around accepting supplier gifts. Asking employees to make the right call, though, can be stressful and unfair. Sometimes, a company-wide gift policy is the best method of handling tokens of appreciation from suppliers.

Include stipulations based on the worth of the gift. For example, employees can accept tokens worth less than $20 without informing anyone. Gifts between $20 and $100 can also be accepted, though they must be included in a company gift registry. Anything dearer requires managerial approval.

Share with the team

Procurement is a team effort. The reality is, though, that those whose function it is to speak directly with suppliers are the ones who usually receive the gifts. To avoid any suspicion of bias or resentment from others whose roles are equally important (though less visible), share the gift with the team. It removes the smear of bias from any individual and boosts morale.

Use the gifts to incentivise the workforce

Stockpile all supplier gifts and use them to incentivise the team throughout the year. For example, reward those who suggest innovative ways to reduce the organisation’s carbon footprint or, on a smaller scale, reward those who consistently bring snacks for the morning coffee break. Incentivise and motivate the team.

Raise money for charity

Auction off the gifts within the workplace and give the proceeds to a charity. Obviously, this removes any notion of bias that might otherwise befall an individual, but it also provides an opportunity to get the workforce together for a social event that benefits those in need.

Develop a clear and consistent policy

To successfully navigate the minefield of supplier gifts, you need to develop a gifts policy. To be effective, it needs to be easily understood, consistent and without ambiguity. At Comprara, we not only offer training courses on probity, we also have a consultancy service, providing policy review across the entire procurement spectrum. We can help you make sure that you have the right policies in place to protect against the increasing cost of non-compliance. Get in touch today.