News focus: Greater rewards for strategic roles

3 June 2011

7 June 2011 | Angeline Albert

While the CIPS salary survey shows an end to the increases of the last few years, buyers are being recognised for their increasing importance, finds Angeline Albert

This year’s CIPS salary survey presented a mixed picture of purchasing pay.

Although heads of function and procurement directors saw remuneration increase by 3.2 per cent and 6.7 per cent respectively, overall, the profession saw an end to the growth of the past few years. The average salary was 0.5 per cent lower compared to last year – although this is slightly skewed because more junior members of the profession answered the survey this year, driving the median figure down. A total of 1,200 CIPS members responded.

The Purchasing & Supply R£wards 2011 survey, conducted
by Croner Reward, found senior and mid-level purchasers are generally on higher wages than equivalent colleagues in HR, marketing, finance, IT and sales. Pay was also higher than the national average. This conclusion was drawn by comparing the results of Croner’s surveys in other professions.

Portsmouth City Council’s head of purchasing, David Pointon, says this shows buyers’ important role is now recognised.

“Purchasing officers have for quite some time lagged behind other functions on pay. At a time when organisations are trying to achieve savings, purchasing can make a big contribution to the bottom line,” he says.

“I’m not sure the other functions make as large a contribution to that. In the past 10 years, organisations’ procurement has moved from operational to more strategic roles and it may be that salaries are starting to reflect this.”

But he, like other buyers, would be surprised if the pay of a CFO was lower than a CPO. “You only have to look at the job adverts for CFOs to see that.”

Mark Langrish, head of procurement at Experian, agrees. “An organisation’s size would have an impact in the case of a CPO in a big organisation being paid more than a CFO in a small organisation.”

The average salary for a procurement director was up from £90,000 last year to £96,000 in 2011. Senior managers in procurement received pay of £51,134, with counterparts in IT
on £46,444 and those in finance on £45,675.

“Market dynamics drive pay,” adds Langrish. “A shortage of highly skilled people will raise salary levels. I think it’s harder to get hold of talented procurement professionals with good commercial experience who are needed to drive efficiencies. Procurement is a relatively new function in comparison to others and I think the number of applicants for purchasing jobs is lower.”

But even though many buyers are being paid more, they are having to work harder to earn it.

In response to demands from the government to cut costs and make efficiencies, the proportion of buyers working longer hours has risen significantly. A total of 43 per cent of public purchasers now work between 41 and 45 hours a week, compared with just 27 per cent a year ago.

Michael Wood, head of procurement at the London Borough of Haringey, said organisations’ greater focus on cost reduction was a key factor.

“To drive efficiencies, there has been an increase in demand for more collaborative procurement. This can put pressure on resources, causing people to work longer hours. We have just centralised procurement and this has led to the removal of a number of procurement posts,” he says.

By contrast in the private sector the proportion of buyers working 41 to 45 hours a week fell from 39 per cent in 2010 to 31 per cent now. In addition, 28 per cent of private purchasers are working up to 39 hours, when only 9 per cent did so last year.

Almost half, 46 per cent, of public sector staff felt they had no prospect of promotion in their current organisation. Private buyers were more optimistic, with a quarter, 25 per cent, holding this belief. They also thought job security was better, with 54 per cent feeling safe, compared to 28 per cent in the public sector.

Some 47 per cent of survey respondents in the public sector said they have received a pay freeze. In the private sector, 5 per cent said this had happened to them.

Wood tells SM this negative news had been turned to procurement’s advantage during negotiations with suppliers. “We don’t expect suppliers to request inflationary increases in the prices they charge. We have highlighted the pay freeze issue in our talks with suppliers in large spend areas and they have responded positively by not to raising the prices they charge or reducing them.”

Another knock-on effect of the pay freezes has been to attract talent away from the public to the private sector. Wood reports two colleagues have recently made the move.

Data from the survey also suggested greater equality in pay between the sexes, particularly in roles below senior level. The gap between male and female salaries has got smaller, when compared the 2010 survey. But pay differences remain. The female senior purchasing managers who responded to the survey found their average remuneration of £65,125 was 7 per cent lower than the male equivalent of £70,000 in the same role.

Again the lack of data from female procurement chiefs was an issue, with just nine responding to the survey. 

“I think the survey results are indicative of the fact there is a procurement glass ceiling. Procurement is having a hard time getting up to the board level,” says Alyson Brett, chief executive of NHS Commercial Solutions (a collaboration hub for Surrey, Sussex and Kent).

“The small number of female procurement professionals who get to director level is even more of a problem.” But, she adds, such a situation would not arise in the NHS because pay levels are standardised.

CIPS qualified professionals can also expect to earn up to £5,000 more than those who are not.
Median pay for a senior manager who is a member of CIPS is £70,000 compared with a non-member at the same level whose median salary is £65,000.

For middle managers the difference is £4,000 and for junior buyers the difference is £1,000.

Purchasers say they expect those with training to be able to get better jobs, which in turn attract a higher salary.


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