Want the best-paid job in procurement? The upshot from two key reports: be prepared to move, think strategically and develop your soft skills.
At a time of supply chain globalisation and the frenetic adoption of e-commerce, procurement professionals are emerging from dusty back rooms and warehouses to claim their rightful place as key facilitators of doing business.
The advent of online giants such as Amazon is placing an increased emphasis on moving goods swiftly into consumers’ hands – often on the same day. At the same time, borders are becoming increasingly irrelevant as multinationals seek to source goods and services in ever-efficient ways.
Given the seismic changes, it’s a great time to work in procurement.
But be warned!
The increased demand for skilled professionals does not necessarily translate into greater monetary rewards, let alone more perks, with some sectors (or geographies) offering better conditions than others.
Two recent major salary surveys highlight the remuneration trends – and discrepancies – across the key English-speaking jurisdictions of the UK and the US.
Australian and Irish surveys also support the overall picture of excellent demand outstripping supply in most markets.
In some cases, employers are battling to find the right candidates. But the surveys also show the environment is fast evolving and practitioners need to upgrade their skills constantly.
On a disappointing note, the surveys also show the empowerment movement that emerged from Hollywood’s “Me Too” push is yet to translate into equal salaries and opportunities for women.
Some employers also bemoan a dearth of soft skills. In other words, job candidates may be technically proficient but are poor communicators or lack emotional intelligence.
The bottom line – UK salaries
Brexit is increasing demand for procurement professionals in the British market, according to the annual survey undertaken by the UK Chartered Institute of Procurement and Supply (CIPS), in league with the recruitment firm Hays.
As CIPS explains, Brexit (Britain’s withdrawal from the European Union) is already creating supply-chain upheaval, with one in seven EU businesses with UK suppliers already sourcing these goods and services elsewhere.
The spectre of protectionism and tariffs promises even more upheaval.
“Professionals will need strategic skills, data management and a steady disposition to help businesses find their way through the particular challenges faced by their organisations,” CIPS says in its 2018 Procurement Salary Guide and Insights.
Overall, 68 per cent of the 4000 survey respondents earned a pay rise in 2017, averaging 5.1 per cent. That’s 4 per cent more than the previous year and well above the 2.2 per cent increase for British toilers overall.
At the top of the tree, Chief Procurement Officers (CPOs) earned an average £124,000, 11 per cent higher than the previous year’s £112,000.
Experience, overall, is being rewarded: of respondents with more than two decades’ experience, 72 per cent received a pay rise compared with 53 per cent for those with fewer than two years’ experience. However, the latter received an average 6 per cent rise compared with 4 per cent for the veterans.
The bottom line – US salaries
Naseem Malik, managing partner of Virginia-based recruiter TYGES Elite describes the US market for procurement staff as being at an all-time high. Latest reports suggest there are 650,000 more openings than there are qualified workers.
“The procurement market has been tightening for the past couple of years and is definitely showing no signs of abating,” Malik says.
The US Institute for Supply Management’s 13th Annual Salary Survey presents a more cautious picture, showing overall compensation (pay) grew 1.7 per cent in 2017, to $US117,425 from $US115,440 previously.
This was less than the 5 per cent increase recorded in 2016. However, median compensation rose 4.2 per cent to $US100,000 ($US96,000 previously).
At the rarefied end, average pay for the top 5 per cent of earners fell by 4.5 per cent to $US368,505.
Emerging practitioners – those with less than four years’ experience – could expect $US77,996 on average.
Of the respondents – 2979 in all – 85 per cent saw their base salary increase, with only 5 per cent taking a salary haircut.
Of the former, the average increase was 5.3 per cent, while those who missed out saw their pay packet decline 7.6 per cent.
Malik says that US entry level to mid-management level salaries have steadily increased by 8-10 per cent annually since 2016.
“When it comes to senior levels, we are finding their total compensation packages have stayed competitive, with a focus on enhanced long term incentives as a reward.”
Mind the (gender) gap
Sisters might be doing it for themselves, but it looks like they will need some help at a structural level to reach pay parity with their male peers.
“Across all industries there’s a gender pay gap; it’s talked about daily,” says Tony Megally, general manager of specialist Australian procurement recruiter The Source. “That’s an ongoing challenge and a conversation we need to have.”
The firm surveyed 1000 industry professionals and found 59 per cent were male and 41 per cent were female. At leadership level, the imbalance rises further – to 62 per cent male and 38 per cent female.
Megally finds that men are far more willing to nominate an ambitious salary, “whereas females feel they need to be an expert and have all the knowledge in order to ask.”
As a result, the firm is consistently coaching female candidates to push for what they think they deserve and to back themselves.
The UK report revealed slippage in progress, however, with 71 per cent of men and 64 per cent of women receiving a pay rise in 2018.
This compared with a 65-63 per cent split in 2017 and marks a regression to 2016 levels.
But of the women who did win an increase, they did better than men: a 5.3 per cent rise as opposed to 4.9 per cent.
“The most striking pay disparity remains at advanced professional level, where men earned 33 per cent more than women (£85,398 compared with £63,986), a pay gap that is even larger than last year’s 25 per cent,” the CIPS report says.
However, women earned more than men in a number of operational and tactical roles, including as procurement officers, contract officers, assistant buyers and purchasing assistants.
The US study shows a similar disparity at all seniority levels.
Male chief procurement officers earned an average $US279,413 compared with $US221,137 for their female counterparts, a 26 per cent disparity.
At procurement manager/sourcing manager levels, men earned an average $US119,492 compared with $US103,903 for women, a 15 per cent difference.
There’s always a ‘but’: average salaries for females increased 1.8 per cent to an average $US98,780, pipping the average male increase of 0.9 per cent. Then again, the average male salary of $US127,908 was that much higher in the first place.
TYGES Elite’s Malik says the US gender gap is shrinking, with the trend likely to continue because of new laws in several US states that ban employers asking candidates what their current salary is.
“Companies now have to put a competitive offer on the table to ensure they close the candidate,” he says. “Otherwise, they lose out to companies that have a better handle on the marketplace.”
In Australia, Jigsaw Talent Management reports an average salary of $A172,730 for males placed this year, compared with $A153,139 for females. That’s a difference of 13 per cent, compared with 11 per cent four years earlier. But the story is nuanced, with females out-earning males in the highest category ($A200,000 and above) and the lowest category ($A100,000 and below).
According to Nikki Bell, the chair of the CIPS Congress, the profession does not appear to be bucking the “ever present” gender pay gap despite its reputation as enablers and innovators.
“We simply must do more to enable skills and career opportunities and eradicate any diversity-related road blocks,” she says.
Where to find the best (and worst) positions
The ISM survey shows that taking a global approach helps bolster the pay packet: international sourcing operatives topped the scale at $US140,565 overall.
There also appears to be industry appetite for aspiring James Bonds, with ‘market intelligence’ professionals earning an average $US139,472.
For a market intelligence chief – the industry equivalent of ‘M’ in the Bond movies – the average pay was a chart-busting $US337,132. (Keep that confidential, of course.)
While candidates might not rate social responsibility highly on their list of imperatives, it pays – literally – to take on those roles. A sustainability/social responsibility officer earns an average $US135,300, while a chief supply chain sustainability officer (or equivalent) earns $US325,992.
In the UK, the best industry sub-sectors for getting a raise were defence (88 per cent of staff), pharmaceuticals and life sciences (85 per cent), hotels and catering (83 per cent) and fast moving consumer goods (81 per cent). But the best pay rises in quantum terms went to workers in the telco and marketing/advertising/PR sectors, with increases of 8 per cent and 7.4 per cent respectively.
The ISM survey reveals a vast disparity between salaries depending on industry sector.
The best sector to be in is healthcare, which would appear to be generally impervious to economic conditions. With ageing western populations, it’s also a natural growth sector.
Healthcare procurement professionals earned an average $US148,360. Also faring well were those in fuel and utilities ($US136,578) and telecommunications ($US138,863).
The worst paid were those in manufacturing ($US117,636), metals ($US120,255) and electronics ($US121,316).
Hot demand Down Under
Thanks partly to billions of dollars of infrastructure projects, including massive rail network expansions in Melbourne, Australia can’t get enough of the right procurement people.
“It’s been a really hot market this year,” says The Source’s Tony Megally. “The Australian economy is growing generally so it’s really tight finding the right people across all industries.”
On the services side, candidates with deep knowledge of the telco and I.T. sectors are also in huge demand, especially at mid-to-senior levels such as sourcing or category manager.
Megally says more mid-tier corporates are investing in procurement functions, often the result of bringing in management consultants to review the supply chain.
“Traditionally, they have not had a centralised procurement function and bring on a leader to create the pathways and processes on how to better spend their money on goods and services.”
At the periphery, talent supply has been constrained by the Australian government’s crackdown on 457 visas – temporary working permits for foreigners – with procurement removed from the list of eligible professions.
Irish eyes are also smiling
Irish-based recruitment firm Morgan McKinley says supply chain management has become one of Ireland’s fastest growing sectors, partly because the country will remain a member of the European Union. This means that many companies prefer Ireland over the UK for their procurement activities and shared service functions.
That is being reflected in remuneration, with average salaries increasing by 3-5 per cent year on year.
Employees in highly skilled senior roles are enjoying salary packages that are 15-20 per cent higher.
“Those planning to secure a new career opportunity can expect an increase of between 8-12 per cent. With an increase in opportunities and a continuing skills shortage, we expect this trend to continue next year,” the firm says.
“We equally expect there to be an increase in the number of supply chain professionals choosing Ireland as their desired work location in the coming years, therefore increasing the talent on offer and potentially suppressing continued salary growth.”
More than money?
Most professionals would likely volunteer that job satisfaction factors outweigh the amount that lands in their bank account every month.
But don’t be fooled: money is important.
The US ISM survey asked respondents to rank 14 factors when considering a job. The result? Eighty-five per cent cited the hip pocket, followed by job satisfaction (81 per cent).
An improved work-life balance (80 per cent), pension plans (78 per cent) and medical and dental benefits (79 per cent) also ranked highly.
Respondents were less enamored with health and wellness schemes, with only 60 per cent considering morning calisthenics or a free gym an influential factor.
Only 58 per cent considered sustainability or social responsibility programs to be important, while 58 per cent were attracted by mentorship programs.
Also ranking lowly were childcare and elder care benefits. Given the ageing population, we might expect the latter to become a more elevated consideration in coming years.
For procurement professionals, the embossed paper on the wall does count when it comes to salary and – presumably – job satisfaction.
The ISM survey shows the average industry salary for a high-school graduate is $US83,283 – above that overall for those starting out ($US77,996).
For those with a bachelor’s degree, the stipend increases to $US106,909 and then to $US137,670 for a master’s. For doctorate holders – only 2 per cent of procurement professionals have them – the average salary rises further to $US175,827.
Industry-specific qualifications are even more crucial: practitioners holding one or more ISM certifications earned an average 12.8 per cent more than those without: $US123,041 versus $US109,087.
Holders of the Certified Professional in Supply Management qualification boosted pay by 14 per cent to $US125,158, relative to peers without the paperwork.
Similarly, holders of a Certified Professional in Supplier Diversity pulled in $US124,337 – 14 per cent more.
In the UK, CIPS members (MCIPS) earned an average 16 per cent more, with the disparity increasing according to seniority. Senior buyers who are MCIPS earn an eye watering 23 per cent more than non-MCIPS.
“But we must not rest on our laurels,” says CIPS CEO Gerry Walsh. “Continuing professional development should be high on everyone’s agenda to always improve and find the right level of achievement.
“So, I hope this year our professionals will read more and do more to up their game and increase their usefulness so boards and CEOs sit up and take notice of how fundamental good procurement is for their business.”
Soft skills give a hard edge
The UK survey shows that employers highly value so-called ‘soft’ skills such as effective communication, active listening, empathy and emotional intelligence.
It’s instructive that 67 per cent of total respondents said they had never received formal training in these skills, while less than one quarter (23 per cent) thought that academic institutions instilled the right skills.
The Source’s Megally says, traditionally, procurement has been perceived as a technical function, “but soft skills are front of mind.”
“Rather than talking about processes, it’s about building relationships and being a sales person, really,” he says.
“You can train someone in the technical elements, but those with a strong emotional intelligence are able to connect.”
TYGES Elite’s Malik says: “Soft skills have absolutely become just as important, if not more important, than merely technical skills when it comes to landing A players in the procurement world.
“Employers assume that the technical know-how will be there and they can assess that in their interviewing process. But they are just as concerned on the EQ side as well. They want candidates who understand stakeholder engagement and can build relationships both internally and externally.”
Meeting the industry’s challenges
As with any profession, procurement professionals must take the initiative in enhancing their worth to an organization. To borrow from John F Kennedy, ask not what your company can do for you, but what you can do for the company.
CIPS Congress chair Nikki Bell says the solution lies with individuals taking an active approach to learning and development, with an emphasis on the soft skills such as communication.
“As senior professionals and employers, we should not only be using our honed influencing and negotiating skills to address the matter directly within our hiring, reward and recognition policies,” she says.
“We should also be looking at what we can do individually and collectively to actively encourage, enable, mentor or support diversity in all its forms within our procurement communities, from entry level through to senior and executive leadership positions.”
She adds the profession must also seize the opportunity to ensure ethical and fair work practices across all supply chains.
A key message from the surveys is that the biggest pay rises are being awarded to those who can rebrand themselves as ‘analysts’: think of big data specialists, predictive analytics, e-procurement, artificial intelligence and machine learning.
As in so many walks of life, presentation is paramount in procurement.