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Supply Management Compensation Rose Last Year, But Not For Top Earners

06/06/2018 By

Salaries and overall compensation for supply management professionals not only increased in 2017 but also rose at a higher rate compared with salary growth for professionals overall.

According to the Institute for Supply Management (ISM)’s recently released salary survey, now in its 13th year, the average overall compensation for supply management professionals in 2017 was a respectable $117,425. This marks a 1.7% increase from the average overall compensation in 2016, which was $115,440.

“This year’s findings are fairly consistent with previous years in that there was steady growth in compensation,” says Paul Lee, director of ISM research and publications. “I think we’re seeing progress being made in the recognition of the profession from other parts of the organization, including top management.”

When looking at median compensation, the increase is more substantial. ISM found that the median compensation increased by 4.2% to $100,000 in 2017. In other words, 50% of supply management professionals earned at least $100,000 last year, in contrast to 47% in 2016.

Interestingly, this trend does not apply to top earners. In fact, the average compensation for the top 10% of earners decreased 2.9% from $295,887 in 2016 to $287,420 in 2017. The base salary for the top 5% of earners decreased even more, slipping 4.5% from $385,981 in 2016 to $368,505 in 2017.

Average salaries increased 4.1% last year, overtaking the 3% increase for professionals overall. Eighty-five percent of the ISM survey respondents reported increased base salaries in 2017, and only 5% said that their base salaries fell.

“More mature companies are finding that their suppliers can be looked upon as partners, [going beyond] a purely transactional relationship,” Lee says. “I think that’s one of the reasons we continue to see steady growth in compensation for practitioners in the field. Companies are seeing the importance of supply management as a source of innovation.”

Bonuses and Benefits

Two-thirds of the surveyed professionals reported that they received a bonus in 2017, with the average bonus being $23,603, or about 20% of average base salary. The median bonus was $10,296. Company and individual results factored the most into bonuses.

In contrast to overall compensation trends, top bonuses are growing. In 2017, the average of the top 10% of bonuses was $117,843, which marks an increase of 3.8% from $113,488 in 2016. And the average of the top 5% of bonuses was $165,258, a 6.6% increase from 2016’s average of $155,027.

Last year also saw an increase in the percentage of respondents who reported they received stock options: 12.6% compared to 2016’s 11.5%. The value of these stock options varied greatly, with the median at $15,000 and the average at $35,340. (The average of the top 5% of stock options was $263,816.)

The survey respondents reported a wide range of employer-offered benefits, as well as significant variation in how common these benefits are. Unsurprisingly, health insurance is the most common benefit, offered by 93% of the respondents’ employers. Dental insurance, retirement plans, life insurance, vision insurance and disability insurance are also offered by a majority of employers.

Paid maternity/paternity leave, however, was only offered by 55% of the respondents’ employers, less commonly than wellness programs (65%) and phones and other personal communication devices (56%). In a similar vein, employers are much more likely to offer personal legal services (21%) than child care (8%).

Which Factors Affect Salary?

Job title and tenure, industry, education, credentials and gender all figure among the factors that affect the salary that a supply management professional earns.

In general, more education and credentials lead to higher salaries. Supply management professionals earn 26%–29% more with each progressively more advanced degree. Those with a high school diploma reported an average salary of $83,283, compared with $85,107 for those with associate degrees; $106,909 for those with bachelor’s degrees; $137,670 for those with master’s degrees; and $175,827 for those with doctoral degrees. Holding one or more ISM certifications is also associated with an average boost in salary of 12.8%.

Respondents categorized by ISM as emerging professionals (those with eight or fewer years of experience in supply management) reported an average salary of $77,595, compared with $96,685 for those who have nine or more years of experience in the profession. Heads of supply management boasted an average salary that was more than twice than that of managers: $263,578 versus $114,170.

ISM found that the pay gap between men and women in supply management narrowed from 2016 to 2017, albeit not substantially. Last year, male supply management professionals earned 29% more on average than their female counterparts, compared with 31% in 2016. In addition, the survey found that the pay gap increases dramatically among more senior professionals. For instance, the pay gap at the VP level was 52%, in contrast to 7% at the director level.

What Do Job Candidates Want?

When evaluating job opportunities, professionals most value wages, job satisfaction and work-life balance, the ISM survey found.

An overwhelming majority (85%) of the respondents said that wages are an important factor when they are deciding which job to take. Job satisfaction ranked second, followed by work-life balance; benefits packages; and work environment.

On the other end of the spectrum were health and wellness programs; organizational commitment to sustainability and social responsibility programs; and mentorship programs — all factors that carried less weight in a professional’s decision to accept a job offer.

The full salary report is available only to ISM members, but a selection of the data can be found here.