Daily Archives: June 24, 2015

Sourcing Your Salary: What Should You Be Paid?

This is a good question. Not only are salaries in the Procurement profession all over the map, but so are the salary surveys and reports produced by different organizations, including the ISM, CAPS, and the APS. However, these can sometimes be hard to get, and, with the exception of the ISM, not regularly produced.

But there is an alternative, and now that it is in its fifth year, it is becoming a very reliable one. That alternative is the Next Level Purchasing Association Annual Salary Survey, and it is a survey you should be familiar with. This survey, which collected data from over 1,300 participants, provides very reliable salary data for North America (39.6%), Africa (24.9%), Asia (22.9%), and Europe (7.1%) and starting data points for South America (3.2%) and Australia (2.3%).

As expected, the highest salaries are in North America, followed by Europe, Asia, and Africa; the average supervisory salary in North America is almost 50% more than the average salary, compared with 30% more outside North America; and salaries increase according to position title. And, despite the proliferation of equal opportunity employment advertisements, we should not be that surprised (especially given the number of women in corporate board rooms), that male procurement professionals not only make more money than their female counterparts, but they also get more higher-level opportunities. And, as those of us who have both climbed the ladder and jumped ship know, Procurement professionals who are recruited from the outside make more than those who are promoted from within. Once you’re inside, you’re on a standard progression track with a small raise tied to each progression. But if another organization is desperate enough, you can get the high end of market value, even if it’s 30% more than you are currently making, and a signing bonus.

However, not all of the results are as one might expect. Two findings in particular that stick out are the facts that

  • Buyers of indirect goods and services make more than those who buy direct goods and services
  • The use and size of bonuses in procurement is trending steeply upward

While a decent amount of market intelligence and negotiating capability is often required to identify and seize the opportunity in an indirect (services) category, the expertise required to properly should-cost model a direct materials category such as custom hardware or aircraft engines is staggering. For any modern piece of electronic or engineered equipment, you often need an advanced university degree just to understand what you are buying on top of the knowledge required to do a great purchasing job, which will likely require a background in operations management as well. Given the average level of education and skill required for direct vs. indirect, one would expect direct buyers to be paid more.

And while the doctor has been promoting performance-based compensation in Procurement for years, because the right incentives can often produce absolutely amazing results (just like appropriately incentivized sales people can lead to incredible growth), it was not something he expected to see. The average (laggard) organization believes that a Procurement professional’s job is to save money, that she should do the best job possible (even if she has to work 60 hours a week), and that her only reward for going above and beyond and identifying hidden millions in savings should be knowledge of a job well done.

the doctor strongly encourages you to check out the Purchasing & Supply Management Salaries in 2015 (Login required) report. A Basic Next Level Purchasing Association (NLPA) Membership is required, but basic membership is fee and Sign Up is simple.

Time to see how you stack up.