Category Archives: Talent

Do you need a Chief Strategy Management Officer?

Perusing the CFO Research Services site, I came across the “Corporate Performance Management: How Committed Leaders Drive Results” Report, consisting of conclusions papers from the CFO executive conference held earlier this year in New York, New York.

The second mini-paper in the report was Aligning the finance function to strategy execution based on a presentation by Robert Kaplan, co-developer of the balanced scorecard and a Professor at Harvard Business School. In this presentation, Robert Kaplan discussed various approaches for aligning the finance function more strategically with the goals of business units and corporate leaders, including:

  • the use of balanced scorecards as a shared framework to run the business, guide the operating agenda, and evaluate progress against strategy;
  • the use of activity-based budgeting to link the strategic planning capability of Balanced Scorecards with the operational budgeting mechanism of a time-driven ABC (activity-based costing) model; and
  • Establishing a new Office of Strategy Management to help execute strategy more effectively.

These are all fantastic recommendations, after all, scorecarding is something I recommend you use in your sourcing organization as it is one of the few mechanisms for addressing operations as a whole, activity-based budgeting makes more sense to me than silo-based budgeting since most activities today cut across traditional organizational boundaries, and the key to the development of a first-class supply chain is a good strategy.

My question is whether or not you really need an Office of Strategy Management and a Chief Strategy Management Officer. I whole-heartedly agree on the paramount importance of good business strategy and the need to elevate strategy at the senior executive level, definately agree that you should have a strategy team, and see the importance of good execution and communication of strategy throughout the organization, but am curious as to why this function cannot be appropriately handled by the CEO, CFO, COO, CPO, and CCO. (Chief Executive Officer, Chief Finance Officer, Chief Operations Officer, Chief Procurement Officer, and Chief Communications Officer.)

According to the mini-paper, Kaplan advocates the adoption of a new two-to-six person Office of Strategy Management to be led by a Chief Strategy Management Officer (CSMO). This CSMO would ideally report to the CEO or COO but could also report to the CFO, especially at companies where the planning chief already reports to the CFO. The CSMO’s job would be to formulate and communicate strategy and to oversee its execution. He would help breach silos by coordinating strategy across functions. He would make sure that all business and support groups were aligned with the enterprise strategy and that strategy remained a high management and board priority.

I don’t know about you, but this sounds like a CPO role description to me. After all, with procurement about to become the center of tomorrow’s organization (as per my e-Sourcing Forum [WayBackMachine] Purchasing Innovation series, including my post on “Sourcing the New Organization”), it is going to be the CPO’s job to breach silos, align business groups, and lead strategic initiatives on a daily basis. Thus, I believe that strategy should be led by the CPO, with appropriate input and support from the rest of the CXO team, especially the CCO who will need to help communicate the corporate strategies to the rest of the organization.

But the role of executive leadership is critical to sustain the focus in people’s busy lives, Robert Kaplan is not just any bloke, I was not fortunate enought to attend the talk and had to settle for the summary, and this topic certainly deserves some very deep thought. Strategy is critical. Maybe you need a separate unit and a new CXO, maybe the CPO can handle it appropriately backed by the rest of the executive team, and maybe you need a strategy coordinator that reports to the COO or CPO. It’s a tough question. Anyone have any additional thoughts or comments on the matter? Any fellow bloggers want to chime in?

Are you getting what you’re worth?

Tim Minahan of Supply Excellence [WayBackMachine] offered us a great post on “How to Assess Your Net Worth” back in June IF you were a purchaser in the US, leaving Canadian purchasers out in the cold. Fear not, as reported in this month’s Frasers/PMAC NewsLetter, the 2006 Purchasing b2b/PMAC Salary survey was recently released and here’s what the numbers say.

On average, supply chain practitioners are receiving a salary of $66,357, up 4.2% from last year; male purchasers are still earning 17% more than their female counterparts, $70,089 vs $60,119; and Alberta is the best place to be with an average salary of $75,418. Furthermore, the most lucrative industry is retail and wholesale trade, where purchasers pulled in an average of $81,092, followed closely by natural resources at $80,709.

Here are the average salaries, by job title, for the last three years.

Title 2006 2005 2004
VP Dir Net $90,700 $84,250 $78,158
VP Dir Purch $87,118 $80,068 $75,182
VP Supply Mgmt $104,000 $99,000 $84,000
Chf. Dir Supply Mgmnt $96,750 $91,000 $84,500
Dir Mtrls Mgmnt $85,000 $79,000 $76,000
Mtrls Mgr $88,778 $91,967 $85,328
Purch Mgr $71,465 $66,728 $62,108
Purch Agent $52,218 $48,428 $45,415
Sr Buyer $58,779 $56,583 $54,951
Other Buyer $48,617 $46,800 $44,718
Other $66,162 $66,600 $65,215

The full report is available. How do we stack up to the US, the average buyer makes more $66 vs. $62 (adjusted to Canadian based on the average of the ISM and Purchasing Magazine surveys), the average Director makes less $91 vs. $120, and the average VP makes significantly less $94 vs. $160. This is bad news for Canada, already number two in the world in the talent crunch with 76 million baby boomers in the US eligible for retirement in the next five years, since you know the US compensation for supply chain leaders is only going to increase, making it even more unattractive for those leaders to stay in Canada when south of the border starts paying not 33% to 70% more, but 50% to 100% more.

The only thing on a Canadian company’s side right now is that it’s more profitable for a purchaser to start his or her career and gain valuable experience in Canada. So my message to corporate leaders is this: make an effort to slowly increase your pay scales to match US rates for senior professionals and keep our talent here – and over the next decade we can show the US how efficient operations are done Canadian style.

The Talent Series VI: The Impending Crunch

THESE are heady days for most companies. Profits are up. Capital is footloose and fancy-free. Trade unions are getting weaker. India and China are adding billions of new cheap workers and consumers to the world economy. This week the Dow Jones Industrial Average hit a new high.

But talk to bosses and you discover a gnawing worry—about the supply of talent. “Talent” is one of those irritating words that has been hijacked by management gurus. It used to mean innate ability, but in modern business it has become a synonym for brainpower (both natural and trained) and especially the ability to think creatively. That may sound waffly; but look around the business world and two things stand out: the modern economy places an enormous premium on brainpower; and there is not enough to go round.

So starts the well-written article The Search for Talent (subscription required) in a recent issue of the Economist. You know that talent acquisition is a real issue when even the economist starts harping about it!

According to the article, companies of all sorts are taking longer to fill jobs — and, according to a survey quoted therein, many companies say they are having to make do with sub-standard employees! In addition, they say there is evidence that the talent shortage is about to get worse! In addition, the proportion of American workers doing jobs that call for complex skills has grown three times as fast as employment in general. Moreover, as other economies move in the same direction, the global demand is rising quickly! For example, where are our best construction engineers? I’d bet some of them are in Dubai working on the Dubai Mega Islands project while tens of thousands more are probably scattered on engineering projects the world over! After all, the talent crunch is worse in some countries, with Mexico, Canada, and Japan leading the pack. And when you consider that by 2025, the number of people aged 15-64 is projected to fall by 7% in Germany, 9% in Italy and 14% in Japan, talent these days truly has global opportunity.

Not to say the talent crunch isn’t bad at home … with the baby-boomers preparing to retire, some estimates predict that half the top people at America’s 500 leading companies will go in the next five years! Ouch! And the Economist is not the only publication to point out this fact in recent times, an article in last month’s Inside Supply Management, entitled “The Greying Supply Chain” notes that 76 million baby boomers in the United States will soon be eligible for retirement!

And it’s going to be just as hard to replace our leaders as it is replacing everyone else. After all, with all of the downsizing, outsourcing, and rightsizing crazes of the eighties and nineties, employee loyalty is a distant memory for many employers who will continue to lose current and potential employees to the highest bidder. (There’s something to be said for putting your employees before your stock price!)

So what can you do? First of all, you can prepare to open your checkbook. Talent is not cheap … but when you consider the ROI on a talented employee vs. a sub-par employee, it’s not as expensive as you think … especially when a talented supply chain professional can save your firm millions upon millions of dollars with just one brilliant idea. How do you attract talent? Although my last post was a bit lengthy on the topic, the answer is simple. Really simple. Be a Great Place to Work!

The truth is … talent is attracted to talent, and great places to work attract talent. This starts with an innovative culture focused on success and the people who enable it. One where employees are empowered and encouraged to try new things, even if they fail once in a while. We often learn more from our mistakes than our successes, and a failure in a small controlled experience is often worth more than a major success. (Read my earlier posts on innovation here and on eSourcing Forum.)

What can you do to prepare for the impending crunch that will result from your retiring workforce? The ISM article provides some good tips.

  • Make sure you understand the demographics of your supply chain organization.
    Who’s nearing (early) retirement? What do they do? And, more importantly what do they know?
  • Put plans in place to preserve your most critical institutional knowledge before it walks out the door!
    Your employees, and the knowledge in their heads, is your most critical asset. Give them time to document it, buy systems to help them document it, and make sure those systems are accessible by all employees.
  • If you haven’t already, put alternative work arrangement programs in place.
    Can your employees work part time? Remotely? On a project basis? Not all employees may want to go from 60 to 0 right away – you need to be prepared to take advantage of those who want to phase into retirement slowly.
  • Work on an open organizational culture that accepts and respects everyone.
    You need the knowledge of the seasoned veterans, the education of the new graduates, and the raw skills of the experienced individuals in between. Everyone should feel wanted – and needed – and each individual should be able to contribute on her or his strengths.

In parting, the following quote from the Economist article sums up the situation nicely: Eventually, supply will rise to meet demand and the market will adjust. But, while you wait, your firm might go bust.

What makes a Procurement Professional?

Even though it had a very academic bent, a good presentation at the Fourth Annual International Symposium on Supply Chain Management was Paul Larson’s presentation on “A Survey of Professionals on Topics, Tools, and Techniques for SCM”.

In this presentation, he overviewed a number of surveys carried out over the past few years that, as part of their design, attempted to determine what skills were required by a procurement professional. All of these surveys demonstrated that an effective procurement professional requires a broad cross section of skills to succeed. This indicates, at least to your author, that a procurement professional needs to be a very talented and skilled employee and that a good procurement team has the potential to be the superstars of your organization.

A study by Giunipero and Percy in 2000 identified the following skills:

  • Strategic
  • Process Management
  • Team
  • Decision Making
  • Behavioral
  • Negotiation
  • Quantitative

A study by Gammelgaard and Larson in 2001 identified:

  • Teamwork
  • Problem Solving
  • Supply Chain Awareness
  • Ability to see the BIG picture
  • Listening
  • Speaking
  • Prioritizing
  • Motivation
  • Cross-functional awareness
  • Leadership

And the recent study performed by the presenter identified the following top ten tools, topics, and techniques:

  • Communication
  • Negotiation
  • Teamwork
  • Computer (Analytics) Skills
  • Leadership
  • Contract Management
  • Price and Cost Analysis
  • Purchasing and Supply Management
  • Supplier Selection / Evaluation
  • Relationship Building

In other words, your average procurement professional needs the same breadth of skills required by a senior manager in any other department of your organization. Thus, it should be no surprise that a best-in-class procurement organization can make unparalleled contributions to your bottom line.

The Talent Series V.V: Breaking Update!

Two pieces of news to report to you today.

First of all, Jason Busch, The mighty Prophet of the spend management space of Spend Matters, has started his own mini-series on the issue. You can read “The Spend Management Talent Game (Part 1)”* through the link. I’ll summarize and post my thoughts when he finishes the series in a later post.

Also, Next Level Purchasing (acquired by Certitrek), which was recently recognized as the Innovative Business of the Year by the Pittsburgh Airport Area Chamber of Commerce (PAACC), is going to launch the first video installment of their “Purchasing & Supply Management Podcast Series” next Tuesday (October 17, 2006) on the importance of contract management. Be sure to take advantage of this free educational opportunity!

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.