News focus: Pay rises for procurement, but talent shortage continues

Will Green is news editor of Supply Management
11 May 2015

Procurement is enjoying greater prominence post-recession, with professionals on an average salary of more than £41,000 and getting pay rises that outstrip the rest of the economy.

Over the past 12 months 61 per cent of purchasing professionals received a pay rise, and while the rest of the economy received an average increase of 1.7 per cent, those in procurement got 2.5 per cent.

This led David Noble, group CEO, CIPS, to declare purchasers to be highly-prized professionals.“Despite the recession our salaries have grown above average,” he says. “The demand for good procurement people is increasing dramatically.”

The CIPS/Hays Salary Guide and Procurement Insights Report 2015 reveals there has been a 41 per cent increase year-on-year in the number of job vacancies. Of all grades, the buyer is most in demand. Indeed, with an average salary of £27,400 and having experienced an average 3.1 per cent pay rise in the past year, they are now “at a premium”, according to Nicky Taberner, director at Hays Procurement & Supply Chain.

She says there is a buyer shortage caused by a lack of graduates as firms ended graduate training schemes during the recession and universities failed to promote the function.

“Procurement is still not the first choice of profession for a graduate when they are thinking of what they want to study or do as a job,” she says. “There is still education needed, working with universities to encourage people. That will feed into buyer roles, but until that happens buyers are going to be at a premium because they are the people with two or three years’ experience, they are at the right level for progression, they are hungry, they are enthusiastic and they want to move up the food chain.”

However, while higher wages may be good news for professionals, for employers the picture is different. A shortage of buyers, and a survey finding that a third of procurement professionals are looking to change roles in the next 12 months, mean the job market is “incredibly tight”, says John Glen, CIPS economist and senior lecturer in economics at Cranfield School of Management.

“Having attracted the best talent you can get, you have to think about how you manage that talent,” he says. “You have to retain the talent you have got by managing it effectively. People leave managers, they don’t leave organisations. Financial remuneration is important but you also have people coming into the profession who want challenging jobs. We have to think about how we manage the talent available to us.”

A shortage of buyers is contributing to a skills gap, with the survey showing three-quarters of employers faced challenges in finding the right staff in the past 12 months, with the most common problem being a lack of sector skills and experience.

Across the public, private and charitable sectors, the most important skills were judged to be communication, supplier relationship management and negotiation. The private sector emphasised negotiation and sourcing, while the public sector was more interested in tendering and contract management.

Geoff Sims, regional managing director for the East of England at Hays, says: “Skills shortages is a very real issue impacting on employers. The competition for skills is high and expected to grow.”

He adds research shows last year just 17 per cent of people who asked for a pay rise received one, but the economy is in a different place. “If people come knocking on your door you need to listen to them,” he says.

The high value of MCIPS

Those who have achieved MCIPS will be pleased to learn their efforts are richly rewarded, for the survey shows those with accreditation at an “operational” level earn on average 23 per cent, or £5,000, more.

Glen says the endorsement reduces risk. “MCIPS is a hedge against recruiting a lemon,” he says.

Average salaries differ across sectors as the private sector leads with £44,500, compared to just over £40,000 in the charity sector and around £37,500 in the public sector.

Taberner says the recession focused minds in the not-for-profit sector on procurement and they had invested in it. “They know they are fighting against the private sector in terms of salaries, they have got a bit more flexibility around what they can offer because they are not restricted by salary bands, so they want the best talent and they are not looking for typical not-for-profit type candidates,” she says. “They want people with commercial experience.”

Gender pay gap

There is a clear disparity between the pay of men and women at every level except “tactical”. The pay gap increases with seniority, rising to an average of £10,300 at “advanced professional” level.

Taberner says salaries at the recruitment stage are the same, so “the likelihood is once they are in situ, that’s when we’re seeing the differentials because when they [women] get promoted, the salary increases aren’t as high”.

“It is changing,” she says. “At entry level salaries were the same and there are more females studying MCIPS and working towards it and therefore we see that gap getting slimmer.”

The clear message is that more needs to be done to encourage young people into the profession. On higher salaries Noble says: “It’s a sign of this profession becoming centre stage, but we have to attract new talent.”

Taberner says: “The really proactive CPOs and CEOs are working with universities and telling students how great the profession is and getting people to sign up to their grad scheme. They have to get out there and do it themselves.”

Sims says CPOs need a “good vehicle for getting new talent into your business”. “If you think that is just the answer, it isn’t,” he warns. “You’ve got to try and motivate, develop and retain staff. You’ve also got to bring marketing into that because more and more individuals are looking at the PR of an organisation, its employer branding.”

Glen predicts the economy will grow at around 2.5 per cent a year over the next parliament, and a new generation of procurement professionals will be needed.

“We have got to build new supply chains,” he says. “Competitive differences are supply chain against supply chain, and supplier network against supplier network. You helped the economy through that initial response to the downturn. As the economy grows it appears you’re playing a strategic role.

“These opportunities will require professionals who can operate in the new digital era. A new generation of procurement professionals is going to be required if the UK is going to win the future.”

☛ You can request a copy of the CIPS/Hays Salary Guide and Procurement Insights Report 2015 here.

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