The Amazon Effect: Competition for Procurement Talent

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Spend Matters welcomes this guest post from Nick Lazzara and Naseem Malik, of MRA Global Sourcing.

No one and no thing is now safe from what is known as the “Amazon effect.” As Bezos’s behemoth continues to expand in multiple locations, including the addition of the impending HQ2, it is disrupting hiring and retention efforts in all business functions. Top procurement talent is especially susceptible, as it’s hard not to be seduced by arguably the No. 1 supply chain company in the world, with a Gartner Supply Chain Masters honor to boot.

If you think you’re safe as an employer, think again. Not only is Amazon’s footprint expanding relentlessly, the company is also scooping up many A players as it can acquire. And while industries like retail seem more in the path of Amazon’s human resources hurricane than others, realistically no one's talent is safe.

This should rightfully strike fear in leaders of procurement organizations. Luckily, we have a few strategies to help procurement organizations compete and hold on to high-performing employees.

Career Pathing

The best way to combat these external pressures is to continually focus on keeping your team members engaged by recognizing their efforts and mapping out realistic career paths.  CPOs and leaders of sourcing departments should spend time with their teams and focus on the right roles for their employees and the results garnered. Provide them the recognition and stretch assignments they seek and you’ll increase the odds of them sticking around.

A multi-divisional medical device leader in the Chicago area, with a knack for keeping employees around far longer than its competition, deploys an interesting approach to talent management that has proven to be successful. One employee we spoke with there said hi-potential sourcing workers are evaluated in-depth by leadership, who then determine what’s needed to get them to next level and throw them in higher-impact situations, such as a crucial high-dollar negotiation. The employee then receives direct and immediate feedback for improvement and can also receive spot bonuses for good performance.

In addition, the organizations performs a semi-annual talent management review where divisional procurement execs meet to discuss key players and, similar to Major League Baseball’s upcoming winter meetings, propose “trades” that could benefit their best performers by exposing them to different areas. This model may not work for all organizations, but by making talent management a top priority, this company is protecting itself from losing its difference-makers. 

CPO Branding

Besides just the brand of your company and procurement group, the personal brand of your CPO is just as important. Potential employees want to know his or her story. What has been the CPO’s track record and accomplishments? What about reputation as a leader? Or the ability to empower and provide opportunities? Has the CPO been able to attract talented people and inspire employees to follow regardless of company or location?

Do not underestimate how much this impacts an organization’s success and gives it a competitive edge. We have seen many successful transformations undertaken from renowned CPOs and how they have spawned the next generation of leaders to carry the mantle forward. The opposite is true, as well, as we have seen ineffective, toxic procurement executives leave their groups in disarray.

As per Korn Ferry and other surveys the past few years, CPO tenure continues to decrease, and it’s now down to 2.9 years on average. Particularly interesting to us is that as CPOs gain a seat at the table with the C-suite, their career tenure may start trending the same way — that is, the same direction as dwindling CEO/COO tenures in Fortune 500 companies the past several years. So, time is of the essence for procurement leaders to utilize their reputation to help attract, and keep competitors away from, the most valuable assets they have: their talent.

MBA Recruiting

Top-flight MBA programs should rebrand their degrees as “Master’s by Amazon,” since the company is snagging up these coveted future leaders at an alarming rate. According to info from US News and World Report, Amazon hires more than twice the number of MBAs from elite US schools than the next tech industry competitor, and nearly as many as the Microsoft, Apple and Google (ranked second and fourth on the list) combined.

These savvy professionals provide strong analytical skills that have kept, and undoubtedly will continue to keep, Amazon on the cutting edge of supply chain innovation. Amazon’s strategy is to aggressively pursue candidates and make offers shortly after they step foot on campus to proactively secure their future employment. This simple but brilliant play keeps their talent pool stockpiled and has other companies playing catch up with the terrifying thought of what could happen if Amazon scoops up all of the land’s top sourcing talent before they’ve even begun recruiting.

Some companies aren’t going down without a fight. One of those resilient contenders is Wal-Mart. As Bloomberg reported earlier this year, the infamously stingy retailer is opening up its piggy bank to recruit from Ivy League MBA programs. Traditionally, Wal-Mart has searched in the surrounding region to its home base of Bentonville, Arkansas, for its post-grad talent, but the company has seemed to acknowledge the fact that most of the US’s B-school grads prefer major metro areas to calling Arkansas home. As such, Wal-Mart has started to emphasize its e-commerce family of companies, including Jet, Bonobos and ModCloth, to present a tech-focused front and offer opportunities in their many different locations. Wal-Mart has also invested heavily in tools to spread this message on campus, including a touring RV equipped with TVs, iPads and an interactive map highlighting where in the US it’s hiring.

Aside from the well-covered approaches of offering higher compensation and increased flexibility, procurement groups need to also focus on securing top MBA talent, leveraging their CPO’s brand and creating internal growth opportunities to land A players and keep them at arm’s length from the $150 billion gorilla in the room.

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