Procurement salary guide: Are you being paid enough?

4 May 2018

Match your pay against your peers in the annual CIPS/Hays procurement salary survey

There’s nothing like a bit of benchmarking to get a feel for whether you are being paid enough, remembering of course that the more variables you factor in the more accurate your personal conclusion. As a snapshot of the profession generally, the latest CIPS/Hays Salary survey does appear to answer one question quite clearly: is procurement being recognised for its importance and getting rewarded with a suitable pay rise? And the answer to that is a resounding yes.

According to the survey of over 4,000 UK procurement professionals, the pay rises are averaging 5.1%, which is more than two times the national average of 2.2% – continuing a four-year trend of exceeding the national average.

Buyer benefits

The biggest winners in this year’s survey are the graduate trainee/buyers who have seen a rise of 8.1% in their salary, and sourcing managers, supply chain directors and contracts officers, all of whose pay rose by more than 6%.

Some of this may be explained by an increasing demand for their expertise in the aftermath of the Brexit referendum, says Scott Dance, procurement engagement director at Hays. But he also points to GDPR and data protection as a more immediate reason for skills needed in these areas, particularly contracts, with the new legislation requiring changes. 

Brexit may well be causing a growing need for procurement professionals especially around contracts, he agrees, but Brexit to date has not been a major factor across the whole profession. There has been no major drop in companies hiring or people looking for jobs. This indicates no sign of recession, yet at any rate, as in a downturn the job market slows, with businesses reluctant to hire and employees fearful of moving jobs.

“It is still a very buoyant market from an employer’s point of view,” Dance says. “If we go down a harder Brexit route, as most suppliers are not UK-centric, we will need new contract managers to negotiate trade deals etc. Procurement is probably going to be more prevalent.”

Salaries by job title

CIPS Qualifications count

When the survey was conducted in September 2017, the results revealed a continuing value being placed on qualifications, something that has been in evidence for the four years since the survey began, particularly around senior positions. This year, MCIPS senior buyers reported earning 23% more than their non-MCIPS counterparts, and for procurement practitioners studying for CIPS, the increase rises to 46%.

Given the skills shortage that was all too evident in last year’s report, this indicates that businesses are taking the problem into their own hands to resolve. “People training towards CIPS qualifications are normally at the operational level, but valuing training is seen across the board,” says Dance. “Businesses recognise that people who have gone through official training are seen as more rounded.”

Value of CIPS

Regional differences

The changes in salaries according to region reflect some of the investment that has been made outside London, while London itself has seen a fall in the average salary recorded. 

“We are seeing significant increase in the north west, due to businesses and companies moving out of London,” says Dance. The cheaper real estate is a factor, he says, and the fact that a commute is not too bad from the Midlands works for organisations such as law firms, where employees can still get back to the stakeholder community when needed, he says. He points to HSBC, which moved to Sheffield (not quite the Midlands, he admits). “All you need is one huge company to move there,” he says, and specific jobs are suddenly in demand, and “everyone has to increase [pay]”.

Scotland, too, has seen a rise in average salary to £44,183 from £40,712. Again, this could be down to investment – this time in the banking sector.

It is worth noting, however, that London still represents the highest salary and the highest bonus as a percentage of the salary (11%). But while 60% of London respondents reported a pay rise, increases were more prevalent in other UK regions.

People will move for money, says Dance, but there needs to be enough of a difference for some moves. This applies to the type of job as well as location, he says. “Would I move for £3,000 for a tactical function? Maybe not, but for £10,000, I might put up with boring.” 

Map of pay scales

Sector specific

The private sector remains the highest payer, with the top salary for professional and business services more than twice the average salary of those in sports  procurement or public sector defence.

It also gave the highest pay increases, at 5.6% this year, down from 6% last year. Benefits too were offered more than in the public or third sectors. Companies are still re-evaluating their benefits packages in order to attract the best talent in a highly competitive market, the report concludes.

Telecoms professionals reported the highest pay increase – 8% – which levels the playing field a bit, says Dance. “Particularly in London, where you have BT and Colt, [telecoms] permanent salaries have been lower than London procurement,” he says. Surrounded by banking and financial services, they have struggled to recruit at the right levels, he adds. Marketing, advertising, PR and communications, a sector that has also been behind the curve of professional services, reported pay increases of 7.4%.

In basic salary reporting, the hotel and catering industry showed the biggest increase from last year, rising from £43,554 to £57,455.

Arts, entertainment and recruitment stand out in the private sector as the sector receiving a lower increase. At 2% it is even lower than the 2.2% national average – and the only private sector industry increase to be lower.

The highest pay increases in the public sector were in central government and are likely to have been influenced by recruitment from the private sector as it transform the way it works. “They continue to seek people from the private sector to make them more efficient,” Dance points out, which may indicate a continuing trend for better pay.

Procurement professionals in non-governmental departmental bodies, such as NHS trusts and learning and skills councils, received the biggest public sector rise in average basic salaries, which could be down to a need to recruit from the private sector.

In the third sector, average salaries in charities rose by 6.2% to £43,351, with 69% receiving a salary rise. This shows a greater willingness to invest in a profession that is providing true value, as charities need to justify every pound.

Looking at the variation in private and public sector pay scales according to seniority, the difference largely increases with seniority, from public sector junior tactical staff actually earning 1% more than private sector equivalents, to heads of procurement and more senior staff in the private sector receiving 23% more pay than their public sector counterparts. The exception here is in managerial roles, where there is only a 4% difference compared with 7% difference in the lower operational roles, such as supply chain analyst or contracts manager.

Salaries by sector

 

Bonuses The bonus boost

Bonuses for procurement directors were more prevalent this year, rising from 70% receiving one last year to 75%, and the average bonus value up from 20% of the basic salary to 22%. Other roles were also given bonuses more frequently, with supply chain directors showing a significant increase (from 64% last year to 100%), and the value increasing from 12% of basic salary to 23%. This could be the start of the Brexit effect, the report suggests. Third sector organisations also gave bonuses to more professionals –increasing from 9% to 20% of charity and not for profit respondents. This reflects the increased value placed on procurement, the report says, despite the average value falling from 11% of base salary to 3%. Professionals in the pharmaceuticals and life sciences (81%) and telecoms (70%) were most likely to receive a bonus.

 

Procurement doesn’t escape gender gap

If you’ve opened a newspaper in the last few weeks, you’ll have seen headlines about the gender pay gap. The deadline for all employers with more than 250 staff to publish the difference in what men and women are paid was 4 April. The data showed 78% of organisations pay men more than women.

So perhaps it’s no surprise the gender pay gap is alive and well in the procurement profession. The salary survey reveals that across procurement, the gap is at its greatest in senior positions, a reflection of most other corporate professionals. Men earn 33% more than women in head of procurement roles and upwards, a rise from 25% last year.

While more men may hold the most senior roles, agrees Scott Dance, he also points to personal salary negotiations making a difference, with women less likely to negotiate for a higher salary than men. This is also reflected in the day rates charged by procurement interims: £404 a day for women, compared to £537 a day for men.

 At the professional level, including supply chain manager, men earn 14% more and at managerial level, women lose out by 11%. It is only in operational and tactical levels – procurement specialist, assistant buyer – where you find roles where women earn more than men.

Pay gap

Contracted staff

For the second year running, contract lengths of six to 12 months have fallen from favour, this year reducing from 29% to 26% of contracts awarded, with shorter three-to-six-month contracts increasing from 43% to 44%. Boosting resources is still the most common reason to hire an interim, more than specific project work.

The tasks they are then given are most commonly for change and transformation projects, but there is an increase of 5% in generalist procurement roles being given to contractors, covering sickness and maternity, 4% more strategic sourcing exercises – which could be related to Brexit and a need to address currency and import/export issues – and 3% more end-of-tender process tasks.  For those who choose to become interims, variety, flexibility and pay are the top three motivators, with redundancy overtaken by experience as the fourth top reason. 

Contracted staff

Moving on and all that goes with it

With companies offering an increasingly diverse package of benefits, Dance sees total packages – not just salaries – being discussed more frequently, something that is reflected in reasons given for moving jobs. “Salary used to be the big spike,” says Dance. “But other elements, such as location and content of work, are catching up.” Career progression is high too. “If you don’t get a sense that procurement is backed at board level, you may not join [the company].”

Businesses can take heart from the fact that many benefits don’t cost money. Pension contributions over the statutory requirement remains the most common benefit, followed in the private sector by medical insurance, and flexible working in the public and third sectors.

Training is particularly popular with junior staff, as is mentoring, points out Dance – and neither has to cost a great deal if carried out in-house. And in addition to flexible working, which is sought after by more senior staff, being flexible on location can be a cost-free benefit if working from home is an option.

If businesses talk about these options with current employees, staff retention could also be improved, says Dance, pointing to the 56% of employers who have struggled to recruit in the last 12 months. “Many people don’t get on the front foot with [career progression and benefits] to help retention. Look at the people who are looking to recruit in the next year – 60%. Maybe if they had done this, they might not be needing to recruit in such high numbers,” he says.

Dance concludes that the procurement industry is still a bouyant market, but employers struggle with softer skills, such as stakeholder management, supplier management, communication skills. In job ads, mention training opportunities, the strategic focus of your department, “tell them why they would want to join your team”, he says.

And for those planning a job change, take training and networking opportunities to practice your soft skills. Be prepared to talk through your CV in interview and give examples of how you delivered on a project and the variety of teams you engaged with to demonstrate your softer skills.

On the move

Read the CIPS/Hays Salary Survey in full.

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