Category Archives: Talent

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.

Where is Procurement Headed?

Will Procurement ever graduate from the status of misfit toy to that of
one eyed one horned flying purple people eater?

Procurement is still the back room function in many organizations. The early achievers adopted new technology and new processes in the early to mid noughts. The leaders adopted new technology and new processes from the late noughts to the early teens. But the laggards are still on the fence. And not just because they are laggards — but because their organizations are laggards and not giving them the respect and support they deserve.

Let’s face it, with the vast majority of Procurement organizations not having a seat at the table, they are still being treated as a misfit toy. Graduating to the status of one eyed one horned flying purple people eater would be a grand accomplishment — if they could get there.

But first they need to be a rockin’ band. But in order to rock, they need instruments. Technology, which they don’t get budget for, processes, that they haven’t been trained on, and knowledge, that they don’t even know they need. And even if they could get the tools, processes, and knowledge that they needed, they still need to learn how to play in sync.

We’ll start with the second issue first. In order to learn to play in sync, they need training. Training that they never got, even when training was a top procurement survey issue for almost five years in a row. But this is not only hurting Procurement, it’s hurting the organization. Because if Procurement had the training, they would not only know how to play in sync, but they would have the knowledge. In particular, the knowledge they need to not only obtain great savings, and value, for the organization, but the knowledge they need to institute better processes, identify better technology, and convince the organization of the proper steps to achieve savings success.

Good training not only provides knowledge to execute, but knowledge to educate, and knowledge to entice the rest of the organization to follow your lead.

So if your Procurement organization wants to excel, it has to get training. If it can’t get it by hook (by getting it in the budget), then it has to get it by crook (PO now and take the consequences when the invoice come in later), or if there are no other options, with the personal check book (and replace the funds with the bonus you’ll get when the savings materialize). And only then will Procurement be a band of one eyed one horned flying purple people eaters.

We Don’t Need Licenses, We Need Knowledge!

There comes a time in every profession where someone goes beyond screaming the need for certification and starts screaming the need for licenses and self regulation, like Engineers, Lawyers, and Doctor’s have. It doesn’t always happen (and CIPS, no, not CIPS, CIPS failed when it tried to get ISP, no, not your ISP, the ISP certification a regulatory standard in Canada), but some people (either because they like the attention or, more commonly, want the dollars that will come their way as they already offer the certification that they want to see as the foundation for licensing) try anyway.

And while the dialogue is sometimes useful, because it usually results from a lack of appropriately skilled individuals to fill industry need, sometimes it isn’t. Where Procurement is concerned, it isn’t. The problem isn’t lack of regulation, it’s lack of knowledge. As implied by SI’s recent repost on Why Your Organization Can’t Find Top Supply Management Talent, it’s because there just aren’t enough talented individuals out there. And the reason, they just don’t know everything they need to know.

Why?

First of all, most people still see Global Supply Management as backroom Procurement, a function that is so unsexy that the only place in the organization that is worse is the mailroom. As a result, they don’t study Procurement or anything seen as related to it in College.

Secondly, even if they decide to retrain, they are looking at what they can train for quickly, easily through a plethora of courses, and be pretty much guaranteed of getting a placement. Most private colleges focussed on getting people to work quickly with 4 to 8 month programs focus on traditional accounting, IT support, medical transcription, physician / dentist office manager, etc. Procurement isn’t even on their radar. As a result, the (re)training (& certification) offerings are, with only a couple of exceptions, limited to the professional associations, which the average non-Procurement individual isn’t going to know about.

But third, and most critically, you don’t train your people! (And neither do your peers!) Year after year after year your organization will rank lack of talent as one of the three most critical Procurement issues, but year after year you will slash the training budget. If you want talented people, you need to start with knowledgeable people. And if you want the people to have the knowledge they need, you need to give it to them, because they’re not going to get it anywhere else.

And once they have the knowledge they need, they’ll have a much better chance at reaching the level of success you expect. So forget about licensing when the average individual doesn’t even have the knowledge to pass the most basic of certifications, and just give them the knowledge they need. And do it for free if you really want to effect a wide-spread change.

Why Can’t I Find Top Supply Management Talent? (Repost)

This post originally ran four years ago today. But it’s relevance has not waned.

The simple answer: you’re looking for a resource that is so rare it may not even exist! And I’m not the only one who thinks so. After talking with a number of thought leaders over the years it’s become clear that this is the most common reason Supply Management organizations can’t find talent. (Note that this is only the case with respect to “find”. The reasons a Supply Management organization can’t hire talent or keep talent are different.)

As Supply Management has become more and more challenging, the average reaction of a supply management organization has been to continually augment the job description of a supply manager to the point where the individual is expected to not only be a jack of all trades but master of all. This has resulted in a search for senior buyers with an eclectic collection of skills and experience so rare that you can probably count the number of global supply professionals around the globe that make the grade. For example, whereas the average job description for a senior buyer ten to fifteen years ago might have looked like:

  • good communication skills
  • college degree
  • negotiation experience
  • buying experience in chemicals, pharmaceuticals, and energy
  • some supervisory experience

Today’s average job description for a senior buyer looks like:

  • great communication skills
  • excellent writing skills
  • master’s degree with 10 years experience, PhD preferred
  • expert in negotiations with a global supply base
  • buying experience in manufactured goods, services, IT & Telecommunications, legal, marketing, and temporary labour
  • supervisory experience of global business teams and outsourced services
  • buying experience in Europe and Asia
  • speaks English, Hindi, and Mandarin fluently
  • experienced in contract drafting
  • expertise in import/export requirements of the US, the EU,
    India, and China
  • in-depth knowledge of REACH, WEEE, RoHS, and similar regulations
  • expert in should cost models, TCO models, and global logistics models
  • experienced user of e-Sourcing and e-Procurement applications and expert in e-Negotiations and award optimization
  • expert in spend analysis
  • great project management skills
  • risk management skills
  • working capital management skills
  • financial reporting experience
  • innovative and capable of leading cross-functional innovation teams
  • NPD experience
  • implemented multiple successful SRM initiatives
  • experience with CSR and sustainability initiatives
  • expert at market intelligence
  • high CQ
  • great leadership skills
  • adept at navigating regulatory issues
  • speaks techie
  • etc.

See the problem?

If you don’t, think about it for a while.

Or, better yet, to get a clearer picture, check out “The Chief Procurement Officer Job Description: An Overview” co-authored by yours truly and the maverick over on the new Spend Matters CPO site as well as the follow-on posts:

  • CPO Job Description: A Procurement Leader
  • CPO Job Description: Primary Responsibilities
  • CPO Job Description: Picking Procurement Technology
  • CPO Job Description: Managing Procurement Staff
  • CPO Job Description: Developing Procurement Staff
  • CPO Job Description: Aligning Procurement With Other Business Functions
  • CPO Job Description: Budget Management

Talent IS the Biggest Issue Facing Procurement Today.

the doctor follows a wide-range of Procurement topics and channels. There’s a lot of noise. There’s a lot of repeat messaging. But sometimes there’s not enough repeat messaging. One area where there’s not enough repeat messaging is with respect to talent: the lack of talent, the difficulty in retaining talent, and, most importantly, the lack of necessary investment in talent by companies that need it the most.

A recent post over on the Argentus Talent Acquisition site on what are the biggest issues facing Procurement today correctly pointed out that there are two main issues: the shortage of attracting talent, and the shortage of retaining talent. But, to be fair, that’s not the biggest issue.

The biggest issue is the lack of training for emerging and existing talent. For years, talent has made the top three issues on Procurement survey after Procurement survey and for years, the investment in talent has been minimal or non-existent. The average university does not have a Supply Chain Management / Procurement program, the average individual looking for a career and funding her own continuing education doesn’t even consider Procurement, and the average subject matter expert (SME) hired into, or transferred into, Procurement barely understands basic Purchasing policy.

So where does an organization expect to get the talent it needs if it is not willing to invest to create that talent? And how does it expect to retain the ration of talent it gets if it does not continually invest in that talent to give it a reason to stay?

Talent is the issue. And will be the issue for years. It’s not a prediction. It’s not even an observation. It’s just reality.