Turnover: a new leaf

4 April 2013

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9 April 2013 | Anna Reynolds

Staff turnover is rising and unless you offer an attractive career package, the brightest procurement talent could walk, warns Anna Reynolds.

Finding skilled procurement professionals is a challenge, but holding on to them is even harder. At the moment, staff retention is something even the largest, most successful companies are struggling with.

And it is not just a problem in the procurement profession. The 2012 Chartered Institute of Personnel and Development (CIPD)/Hays Resourcing and Talent Planning report found staff turnover had increased in a third of organisations.

As Ashley Readshaw, chief procurement officer at AstraZeneca, highlighted at a Procurement Talent event in London during March: “Other companies are offering more senior positions to graduates and so they leave. How quickly do you stop seeing people as junior graduates?”

Many senior procurement professionals at the conference admitted their organisation lacked a succession plan for when employees leave. Some went as far to say their firm is reluctant to invest in training graduates in procurement roles because they doubt their future loyalty.

Russell Soan, associate director, procurement and supply chain at recruiter Barclay Meade, says: “If you are losing graduates, it’s your own fault. You need to have set structures in place to keep them.”

He recommends employers undertake regular reviews so employees know what part they play in the business and have fast-track systems for people to move up. “Not enough companies have performance-related bonuses in procurement, which is crazy,” he says.

SABMiller is one company that does operates a yearly performance bonus scheme in procurement and, for those at senior levels, shares.

For the past eight months, the global brewer has also been developing a career framework to assist the recruitment of staff to five new, regional procurement hubs located in Australia, Colombia, South Africa, Switzerland and an as yet unconfirmed central European location.

The framework will explain what skills and abilities are needed for each position – all job specifications are open, so employees can see what experience is required to get promoted – and if an employee wants to get ahead in the organisation the company will help them to acquire the necessary skills. As well as aiding retention, Chris Taylor, talent acquisition manager at SABMiller, thinks the framework will help to boost staff engagement.

Taylor says: “If we don’t communicate this to staff, we find they get frustrated and leave,” which is something the business has suffered from in the past. He adds the framework will ensure that the company considers internal talent for promotion before looking externally to fill more senior roles.

He also believes in investing in junior roles. “For organisations like us, ‘growing your own’ is an absolute requirement – we don’t steal junior staff from our competitors, or smaller firms, as the training cost to us is a lot lower than it would be to a small firm.”

When it comes to external hiring, Taylor wants “real experts”. “We are building our procurement function and want it to be better than before,” he says.

In his experience, most procurement professionals in the UK don’t have international experience, so Taylor looks to Switzerland and Germany where there is a wider selection of people who are more technically qualified.

Nicky Taberner, procurement and supply chain director at Hays Procurement, says employers are right to focus on retention, but is concerned they do so in reaction to a resignation rather than as a proactive part of their talent management strategy.

Andrew Croston, CPO at Fujitsu, has been developing such a strategy since he joined the company 18 months ago. The company is currently training around 200 apprentices, two of whom are in procurement, with one more anticipated later this year. It also runs a graduate scheme.

Croston says that creating a positive environment is crucial. “We provide an opportunity for varied work, which graduates would struggle to find elsewhere. Everybody here has a mentor and coach. It makes people stay. If you get it right, you don’t lose many graduates at all,” he says.

“We had too many middle managers when I started,” he adds. “Hiring graduates and apprentices helped to address the lower grade work that wasn’t being done.”

Croston believes the “danger age” is staff in their late twenties and early thirties who are on their second or third job. “Circumstances change and it’s this category who are most at risk of moving if they get offered more money.”

Just like at SABMiller, experience of international markets is becoming increasingly important as companies globalise. Fujitsu recruits internationally, but is also providing opportunities for UK staff with six of the procurement team moving abroad later this year to develop their experience.

According to the CIPD/Hays study, the most common methods used to address retention are to improve learning and development opportunities, boost the people skills of line managers and change the induction process.

Christina Langley, managing director of Langley Search & Selection says companies need to be more flexible, to let staff move into other areas of the business to get those leadership roles that they so desperately want.

Nick Brazier, UK CPO at investment bank BNP Paribas believes the changing role of a purchaser is an opportunity for companies to retain staff by showing them “some kind of development path”. He warns that employers are missing out on talent because they are looking for a procurement background on a CV, rather than skills like communication and the ability to sell rather than buy.

Taberner says a high-profile CPO and board support also make the function an attractive proposition for candidates. 

Just over a year ago, BNP Paribas carried out research to identify who was doing purchasing. “We had staff doing procurement who were called entirely different things,” says Brazier. “It’s important to understand where people are and what they do, to plan for career succession at a group level.”

On the lack of graduate schemes in the procurement profession, he says: “We don’t yet have that approach as a profession – unlike accountancy or consultants – so we are left trying to get hold of the cast-offs from other professions.”

While this is limiting in terms of skills, Brazier believes that until procurement reaches a “critical mass” there will not be a need for a “conveyor belt” of young blood. British Airways (BA) is another company that has been giving more attention to its graduate programme. Steve Sledger, general manager of operations procurement at BA, says the scheme attracts high-quality applicants in large numbers.

“It is tougher to recruit good external people who have two-to-four years’ procurement experience in the workplace,” he says, so the airline is looking to develop its own talent. The programme also provides CIPS training and Sledger says retention rates are very high.

Graduates at BA get a huge range of experiences and could be buying anything from jet fuel to Champagne. After the three-year programme, they then have the opportunity to progress within the company. BA’s procurement team of 90 is responsible for a spend of around £7 billion and, because of the company’s size, Sledger says it is important there is a mixture of recruitment at all levels.

While some companies still need to be convinced the short-term investment will pay off, the advice from recruitment experts is straightforward. If you value a person in your business, you need to provide them with a career package they can’t refuse.

It is also clear that employees are demanding more from employers than they have in the past. At a time when competition for talent is greater than ever, both at home and abroad, holding on to your best assets makes good business sense.

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