Category Archives: Talent

Avoiding The Talent Shortage

Regular readers of Supply Excellence [WayBackMachine] will recall Tim Minahan’s recent post “New Supply Risk: Losing Your Top Talent” where he noted that talent poaching has reached new heights in the supply management arena and pointed out a new study from Denali Consulting and SupplyStaff that examined the labour challenge of how to retain your best people.

The Denali study reported that the typical company experiences a nearly 40% voluntary turnover rate by employees. It also reported that a good salary is often the top indicator of employee retention. Neither of these results should be startling when you consider the recent articles on the European Leaders Network and SupplyManagement.com that highlighted the Increased Competition for Procurement Professionals and that Interims Cash in on Demand Boost, with top-skilled individuals easily able to command $1000/day, or more.

Fortunately, management approach and work environment also affect employee retention, with top performers preferring a work environment that continually challenges them, provides a clear career path, and autonomy. The study, as Tim Minahan pointed out, highlights the following secrets:

  • Keep the work challenging
  • Nurture highly skilled candidates
  • Encourage and support a work-life balance
  • Deploy Mentoring programs to encourage advancement

An article in the summer issue of CPO Agenda also took up the issue of how to retain your best people. The article, by Sharon Jordan-Evans of the Jordan Evans Group, offers three additional suggestions.

  • Conduct a ‘stay’ interview
    Instead of guessing, find out what your staff really want. Ask meaningful questions such as: Are you challenged in your day-to-day work? What would provide more interest? What could I do more/less of? What will keep you here? What might entice you away? What do you want to learn this year?
  • Give them some space
    Provide the freedom that allows people to get the job done in ways that work best for them. Telecommuting, flexible work schedules, casual dress, etc.
  • Mine for Opportunities Link arms with your best people to mine for the next opportunity. They might enjoy heading a new project or spend category (marketing or legal services, for instance). Let them touch the end customer or build relations with a key internal stakeholder. Rotate assignments to deepen or broaden their skills. Support their investigation of new supply markets.

And, finally, even though you might not always be able to compete on salary, remember that there’s nothing to stop you from competing on performance-based incentives. After all, when every dollar of bonus they get is the result of tens of dollars of captured savings to you, it’s a win-win situation. (If you’re having trouble measuring savings, I would suggest you start with my Cost-Reduction and Avoidance write-ups {Introduction, Metrics, and Incentivize for Success!} over on e-Sourcing Forum [WayBackMachine].

Si, Se Puede! (Yes, Procurement is Able!)

While browsing through the European Leaders Network portal earlier this month, I came across the article “Firms yet to realise procurement potential” and then the article “Increased competition for procurement professionals” in rapid succession. To me, the connection is obvious. As Tim Minahan points out in Supply Excellence [WayBackMachine], great supply management organizations use a simple strategy to stay on top: buy the best talent.

The first article notes that a recent study by PA Consulting Group found that only a quarter of leading organisations have realized the full potential of best procurement practice and that current firms are focusing too much effort on reducing procurement overheads, which does not deliver significant benefits. After all, as the study explains, “The disproportionate focus on reducing procurement overheads risks undermining the ability of many organisations’ procurement functions to deliver significant sustainable benefit.”

The quoted study concludes that CEOs and CFOs must invest in procurement capability through restructuring the procurement function in order to achieve a genuine transformation. This transformation can be achieved by extending the capabilities of their staff, rotating them to increase awareness, and recruiting to fill identified skills gaps.

However, what it overlooks is the importance of having top performers on your team to lead the way and mentor your junior staff. The reality is that top results often come from efforts led by top performers who have the best ideas and the most relevant experience and expertise in the job they do. I believe that is the main reason competition for professionals is heating up, as pointed out by the second article, which notes that competition for procurement professionals has hit an all time high.

The second article references the 2006 Salary Survey by recruitment company PSD and supply chain consultancy State of Flux that found competition for high-calibre procurement professionals has risen as more companies demand candidates who have well rounded commercial skills in addition to their purchasing backgrounds. The survey found that salaries in the technology and banking sectors are up ten percent while regional senior salaries have risen five percent.

Given the constantly increasing demand for experienced procurement professionals and the limited talent pool, what can you do? Focus on retaining the top performers that you already have and on moving them up into senior roles where they can help you groom your future all-stars into top performers down the road. After all, as Dr. Joseph Robert Carter, the Avnet Professor of Supply Chain Management and Department Chair at the W.P. Carey School of Business at Arizona State University, says, the key to great supply chain performance is to 1. Train your existing team. 2. Repeat step #1.

*Si, Se Puede!, a famous quote attributed to, Cesar Chavez translates as “Yes, we are able!”

Skills Development (Talent Management)

Last month, the ISM awarded a number of individuals and organizations the R. Gene Richter Award for Leadership and Innovation in Supply Management. The recipients were primarily organizations that had demonstrated massive improvements in their sourcing and procurement functions which came about through concentrated improvement efforts. These improvements were the direct result of the adoption and consistent implementation of best practices across the sourcing and procurement functions in the organization. This week we are going to discuss the best practices that helped one or more of the recipients transform their organizations and win these coveted awards.

Today we are going to talk about skills development and review how it helped BP transform their sourcing organization, as described in the article “Accelerating Procurement Capabilities” in the latest issue of Inside Supply Management.

In July 2004, BP introduced the Capability Accelerator Program, a modular skills development program focused on improving the skills of its sourcing professionals over a rigorous six month period. Consisting of eight modules, the program was tailored to each participant based on independent assessments of each individual against a role model job profile. The program included hands on expert coaching and peer learning groups. Surveys indicated that nearly 50 percent of the participants indicated a perceived significant improvement while the remaining responses indicated some improvement for an average of 3.3 on a 4 point scale.

The program was developed because BP realized “There is a direct link between the skills of our procurement professionals and our ability to capture value.” The reality is that the effectiveness of your sourcing organization is ultimately not dependent on the technology you use or processes you put in place but the people who staff it. Yes, tools will make them more efficient and process that institute best practices will increase the value of each activity they perform, but the real value stems from their ability to find innovative savings opportunities, streamline processes, and lead innovation. The more skilled they are, the better they do (especially if they have good tools to support them).

As with Information Technology, Sourcing and Procurement is an area where star performers really shine. I’ve read studies that demonstrated, based on bug free lines of code, that your best developer is up to 22 times as efficient as your average developer (with an average efficiency of 10 to 15 times). This sounds astounding – one star performer can do the job of up to 20 average performers, so you can hire 10-20 warm bodies at market rates or one star at 2X to 3X the market average rate and save a bundle, huge ROI – how else can one person save you that much money? Well, if you’re a large organization with over 1B in spend, with a sourcing manager who manages 100M in spend, and she finds an innovative way to squeeze 2% out of your production costs above and beyond what is obtained by using auctions to drive down prices and decision optimization to optimize award allocations, that’s 2M in savings that directly resulted from the action of one individual, sans technology or process. Every event she conducts is going to save you money, whereas your star IT performer just reduces fixed headcount costs!

Thus, investing in skills is one of the best innovative practices that you can employ. (Innovative because most companies do not invest near enough in employee skills development, regardless of the function). There are multiple ways you can go about this. In addition to designing and implementing a program in house, you can quick start a good skills development program by partnering with universities that offer customized programs (such as the W.P. Carey School of Business at Arizona State University or the Supply Chain Resource Consortium at NC State University), organizations that offer training and certifications (such as the CSCMP or the ISM), or even specialist consultant and training organizations (like Next Level Purchasing). Each of these options can bring you tremendous value, so just go for it!