CIPS/Hays salary guide 2019: benchmark your salary

21 June 2019

It’s been another good year for procurement pay, with UK practitioners again receiving rises above the national average. The annual CIPS/Hays procurement salary guide lets you benchmark yourself against the profession.

The good news is procurement’s value continues to grow, with 72% of UK procurement professionals receiving a pay increase in the past year – 4% more than in 2018 – and the average UK salary now stands at £45,159, the CIPS/Hays procurement salary guide shows.

What’s more, the increase in pay for procurement professionals was 5.3%, continuing a five-year trend of exceeding the national average – which this year was 2.7%. So, the results of this year’s survey of more than 3,500 procurement professionals show that the profession is firmly on the rise, but what are the driving forces behind this?

“The huge challenge right now is a clear skills shortage in the market,” says Scott Dance, UK & I procurement engagement director, Hays. In 2019, he says, 65% of managers are actively attempting to hire procurement professionals, a rise of 5% on 2018, with more than half of those (56%) saying they have struggled to hire.

According to Dance, the increase in recruitment activity is coming from companies that are looking to improve their procurement functions: “I think there’s more expansion happening than simply backfill of roles. Even with Brexit and the uncertainty in the economy at the moment, those expecting to hire has still risen by 5%; that’s an extremely positive sign for the profession.” 

The struggles to hire are from salary expectations and candidates leveraging multiple job offers, budget restraints, and a lack of skills, he says. These include sector-specific skills and experience, technical skills, for example legal or contractual experience, and lastly a lack of soft skills that match the culture of the organisation.

 “Companies looking to hire will be more successful if they can allow themselves to recruit from a wider pool and not be too siloed,” says Dance. “A bank does not necessarily need to hire a procurement person who has banking experience. And if budget restraints are preventing you attracting the top candidates, then why not try to offer a more diverse overall package? Often the candidates chasing the highest salaries are the ones who will leave after a year anyway.”

Grow your own

On average, salaries are £7k higher for employees with MCIPS accreditation. In addition, two-thirds of employers are asking for MCIPS accreditation when advertising their vacant posts.

Results show that, between 2015 and 2019, MCIPS professionals have enjoyed 17% higher salaries that their non-qualified counterparts.

“The increased demand for procurement professionals is creating pressure for many organisations in terms of attracting the right quality of employees,” says Dr John Glen, CIPS economist. “If anything shouts, ‘Grow your own!’, then this trend is exactly that. Organisations must look to attract, retain and develop the best talent.”

The bonus of a package

With the report showing that nearly a third of procurement professionals expect to change role in the next year, talent retention must be considered a priority, says Dance. One way to achieve this, he points out, is to look at the whole package rather than just salary alone.

“We’re now more likely to be talking about packages,” he explains. While the most widely received benefits remain a work mobile phone, life assurance, pension contributions and flexible working options, some employers are striving to offer further benefits such as the availability of doctors and dentists on site. 

However, as Dance explains, to be competitive, the package needs to include a bonus, which on average stands at between 7.5% and 13% of salary.

The most substantial increase in the number of professionals receiving a bonus was at tactical level – where the likelihood of getting a bonus rose from 4% to 25%.

 “It’s vital to offer junior staff a bonus in order to retain them,” says Dance. “Compare it to the banking industry, where junior analysts all get bonuses. If the procurement industry wants to attract people at graduate level, they have to be equal to competitors.”

While bonuses are determined by seniority, with CPOs on average receiving 25% of their salary, the largest decrease in bonus pay-outs was at the professional level with 9% fewer professionals receiving a bonus, at 37%, while the overall average size of bonus was 9.2%, marginally less than in 2018. 

Public vs private sector

There were big bonus discrepancies between the public and private sectors: while an average of 51% across all job functions received a bonus in the private sector, that reduced to just 16% in both the public sector and charity/not-for-profit sector.

However, this trend is not borne out in terms of salaries, where the disparity between private and public sectors has narrowed. The private sector continued to offer the highest salaries in 2019 (13% up compared with 2015) but the public and charity/not for profit sectors both saw substantial salary increases, by 4% and 9% respectively, compared with figures from 2015.

The charity/not for profit sector outperformed the private sector in terms of number of salary increases, with 74% of professionals receiving a rise, compared with 72% of professionals in the private sector receiving a rise.

“Naturally the charity sector has less resource, so it’s investing in talent from the private sector because it needs experienced procurement professionals who are very commercial and creative with achieving cost savings and other efficiencies,” explains Dance.

The Brexit effect

The public sector equalled the private sector in pay increases, with 72% of professionals receiving an increase in both sectors. Here, Dance points to the number of change and transformation projects.

As a result, he says, employers in this sector are hiring experienced professionals from the private sector to take on such projects, creating inflated salaries to secure this talent.

Dance says that public sector pay rises are often linked to Brexit, and the fact that the public sector is recruiting staff from the private sector “in order for them to transform in preparation for Brexit; to be more efficient as a government body or an NHS”.

According to Dance, Brexit is a contributory factor. Indeed, 42% of respondents felt that changing EU procurement regulations would be a main challenge facing procurement in their organisation in the next 12 months, up by 16% on 2018. The increase in professionals citing this challenge was particularly prominent in the private and public sectors.

Dance cites Defra as an example of an employer looking to recruit “a fair amount” of people for Brexit-related projects.

He points out how Brexit is also having an effect on the interim market, with the most common project for temporary hires, 36%, being change and transformation projects. Again the increase in such projects within central government could be responsible for the 5% increase on 2018, says Dance.

Continuing the trend for parity between the sectors, day rates have increased across the private and public sectors, from £553 to £566 and from £404 to £410 respectively.

Mind the London gap

In London, there has been an even closer narrowing pay gap between the public and private sector, with a reduction from 29% in 2016 to just 5% in 2019, when the London private sector salary average stands at £60,765 compared with £57,610 for the public sector. 

Again, this could be due to central government seeking to attract highly skilled procurement people from the private sector for transformation projects, the report states.

Professionals in London report the highest salaries at all levels of seniority, with an average salary across all sectors of £58,960. This is an increase of 3.2%, breaking the pattern of a year-on-year decrease in London that was identified in previous reports. According to Dance, London is becoming less attractive due to high travel costs and long travel times. 

“London is the most buoyant market, but people are looking to avoid the commute,” he says. “In regions where the salaries are between £8,000 and £10,000 less, professionals might gain two hours a day by a shorter commute, and that’s far more beneficial to most than an extra two or three thousand pounds a year once the travel cost is taken out. That’s a huge reason why London salaries have jumped in order to compete with the regions.”

The largest salary increase, at 7.8%, was in the North West, where the Northern Powerhouse continues to attract business and talent, with many blue-chip and financial services companies heading north to take advantage of lower overheads and more affordable office space. The North West also saw the largest increase in the number of interims being hired – 8% more than in 2018.

 Download the CIPS/Hays UK and regional salary guides: www.cips.org/salaryguide

And look out for an upcoming report on the five-year procurement salary trend.

Global gains

Internationally, procurement is on a winning streak. With salary increases and improvements in perception of the profession, it is gaining respect, says Scott Dance, director, Hays procurement and supply chain. In many cases this can be attributed to “proof of concept”, he explains, pointing to a groundswell of procurement professionals who are now talking about their work.

“People are saying: ‘I’m the first person in procurement to work here’; ‘This is how I’ve mitigated supply risk’; ‘Here are the processes I’ve put in place to make your business more efficient, and I need to be paid more’,” he explains.

Australasia

Dance believes the Australasia region, where 67% of respondents are looking for talent, is one to watch for procurement professionals: “There are a number of large corporate firms out there that already have global footprints. Some of the financial services, for example, that have procurement in London and the UK, understand it a bit more, so they are more likely to invest in those areas.” And Brexit also has a role to play here, says Dance: “Some of the banks, for example, are taking their procurement functions out of the UK because of Brexit; they are having a bit more presence in Australia or the US. These firms are more likely to recruit regardless of location. Thanks to technology, you don’t have to be based in London.”

MENA

In the Middle East and North Africa region, salaries increased across all levels of seniority. Although the number of professionals receiving a pay rise decreased by 11% since 2018,

the number receiving a bonus rose by 5%. Pay continues to be highest in the private sector and lowest in the charity/not-for-profit sector. However, the latter saw a sharp hike of 36%. Men continue to earn more than women, but the gender pay gap has decreased from 56% in 2018 to 39%.

South Africa

With 71% of respondents trying to recruit procurement professionals in South Africa, it is perhaps no surprise that 87% of respondents have received pay hikes in the past year – a 7% increase on 2018, says Dance. “Once procurement professionals can demonstrate added value, they become desirable to other businesses. Existing employers’ retention strategies come into play, and they start realising that procurement people don’t just look at contracts all day and begin to offer them pay increases,” he explains. The nation’s gender pay gap has decreased by 9%, although men are still paid 22% more than women. According to the report, this is a situation where “improvements can be made and the equality goal is a little nearer to attainment”.

Sub-Saharan Africa

While millions are stolen from businesses in Africa and around the world, the report says, “procurement can make businesses more innovative and more financially viable by detecting and preventing fraud in the supply chain”. And in Sub-Saharan Africa the value of procurement is being recognised with 45% of professionals receiving a salary increase in the past 12 months and 34% receiving a bonus. Moreover, the MCIPS members in this region were paid 47% more than their non-MCIPS colleagues – 15% more than in 2018.

Gender transformation – from the bottom up

After one full year of mandatory reporting in the UK, the gap between male and female pay has narrowed in many areas of the procurement profession. On average, the gender pay differential has fallen from 23% to 21%. 

Again, the CIPS/Hays report shows that more men than women have received salary increases, but while this stood at 71% of men and 64% of women in 2018, today’s figures are only a sliver apart, at 73% for men and 72% for women. In addition, the women’s pay rises, at 5.6% of salary, were again higher than the men’s, at 5.1%.

Interim day rates are also rising faster for women, who commanded 5% more per day than last year, with an average day rate of £426. This compares with a 1% decrease for men to an average £534.

“It’s imperative that organisations continue to work towards closing the gender pay gap,” says Dance. “The benefits of having a more diverse and inclusive workplace are many." 

Although men were still paid more than women on average at all levels of seniority, lower down the pay scale there were a number of roles, including procurement analysts and contracts managers, where women outperformed men in salaries.

“Last year we saw operational and tactical levels of the profession make really big strides in equal pay, and this year it seems they have stayed the same or tipped slightly in favour of the female,” says Dance. “At the professional and managerial levels it’s going in the right direction, with a 5% narrowing of the gap at professional level and a 6% narrowing at the managerial level since 2018. Unusually, it seems to be closing from bottom to top, so hopefully this time next year, with more data and more transparency, the gap will close even further.”

The widest disparity remains at the highest level – advanced professional – where the pay gap has widened by 2% since 2018 to 35%, with men earning on average £87,404 and women almost £23,000 less on average in the same role.

 “Given the raised profile of this issue in the media and new mandatory open reporting on gender pay, this is disappointing,” says Dance. “At the top, the gap is sizeable. Will we see it close completely next year? No, it will probably take a couple of years.” 

So how do companies conquer the inequality? “There’s an overall change of mindset that needs to happen. A cultural change is needed within companies to help with gender pay gap; looking at the whole workforce as a collective.” 

And it’s not just a pay gap. There’s also a gap in the most desirable sectors. For men these are sport, manufacturing and engineering, energy and utilities, IT and banking, finance and insurance industries, while women are more attracted to retail and wholesale, UK NHS, education, local councils and charity.

 

What does the future have in store?

Five predictions for the next five years from Scott Dance, director, Hays procurement and supply chain.

  1.  Rising stock The need for procurement and the perception of procurement professionals will rise. Slowly but surely, businesses are starting to rely on procurement to offer best practice, increase business efficiencies, cut cost and impose real control on what’s happening within their organisations.

  2. Entry-level strategists As technology evolves, the entry level will no longer be analysts. It will have to be more commercially minded and include stakeholder management to interpret data and think more strategically. They will need to interface with business stakeholders and suppliers to work out what is needed for the business.

  3. Interim turbulence When IR35 legislation changes come into force for the private sector in 2020, there is going to be a lot of turbulence around the interim market, as we saw in 2017 for the public sector when many contractors moved into the private sector. We may see an increase in permanent hires, or an increase in consultancy services, as opposed to individual contractors.

  4. Upskill yourself to become CEO Expect to see more transition of chief procurement officers into CEOs. This is a natural progression but to achieve it, the skillset of the CPO needs to be more rounded. If a CPO wants to become a CEO, they need to manage upwards, get involved in senior-level meetings, understand and experience different functions and attend internal and external courses. 

  5. Close the gap With transparent mandatory reporting, companies risk brand and reputational damage if they don’t close the gender pay gap. If they don’t, what else are they getting wrong? And they’re going to struggle to hire since potential employees won’t agree to join.
LATEST
JOBS
Trowbridge, Wiltshire
Salary – £71,903 to £79,270
Wiltshire Council
More London Place or Norwich
£42,500 to £50,000 (More London) £38,250 to £45,000 (Norwich)
Clarion Housing Group
SEARCH JOBS
CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates
GO TO CIPS KNOWLEDGE