The Future Talent Shortage Within The Procurement Industry

Tom Graham

Talent shortage and talent management have been on the agenda of procurement leadership teams for many years. Tom Graham (pictured), a consultant in the Procurement and Supply Chain practice of Berwick Partners, investigates why this gap continues to exist, and reports on his interview with supply chain and operations leader Stephen Day, in his quest to find the answers.

These are not new issues. Yet, talent shortage and management were again major topics of discussion at the World Procurement Congress in May.

A 2018 CIPS survey found that 56% of employers are struggling to find talent. According to DHL, this figure rockets to 73% for senior leadership and executive positions. To discover why there is such a disconnect between what a business wants, what we think is available, and on whom the onus is to improve this, I spoke with Stephen Day, whose portfolio of executive roles within blue chip organisations include Cable & Wireless, Vodafone and Pearson.

Our discussion centred on three themes:

  • the misalignment between a corporate strategy and a procurement strategy
  • the hiring of new talent vs the development of talent internally
  • talent pipelining for the future

The perception of procurement at an executive level is still a major issue. A recent McKinsey study found many executives feel procurement is a ‘back office function,’ a claim supported by a recent Deloitte survey, which found that only 31% of the 504 respondents feel ‘highly supported’ by their procurement function.

Changing expectations 

The expectation of procurement is changing. Procurement leadership is challenged to develop strategies that map more closely to business priorities, delivering results to maintain high levels of executive support.

I asked Stephen how this changed the dynamics when looking for talent:

“Let’s reflect on the alignment of the function as a whole to the corporate objectives of the business. How often does procurement actually align the strategic outcomes of the business with its own objectives? Not easy to do, but it’s a necessity. As we transition away from a period of settled trade arrangements and low-price inflation, driven by outsourcing to China, and into a period of trade disruption, price inflation and increasing concerns on the protection of intellectual property and customer data, most procurement functions continue to focus on price savings - a tangible measure of the function’s value. Arguably, the function should be orienting towards building long-term meaningful relationships with suppliers, to become the ‘customer of choice.’

“Before thinking about the talent you need, consider the challenges your business faces and what’s important for its long-term success. This gives a better appreciation of the challenges ahead and the resources needed to meet them. Often, the basic principle is not adhered to, resulting in an irrelevant function and board frustration at the limited progress on supplier topics, which in turn is misdiagnosed as a lack of talent.”

A DHL survey found companies excelling in talent management increased revenues 2.2 times as fast and their profits 1.5 times as fast as ‘talent laggards.’

However, Deloitte’s survey found 72% of respondents spend less than 2% of operating budgets on training and development. In contrast, high performers are almost twice as likely to spend 4% or more on training. So, what can be done to better manage existing talent, if current financial investment from the board is not as high as it is in other functions?

Stephen believes the answer lies within existing talent pools:

“In the search for new hires, have we forgotten the need to manage existing teams as a resource to be nurtured and developed? Do we put the team through regular development reviews, identify areas of strength and areas to develop, think through functional rotation and invest in skills training? Managing the existing talent should be as important as the strategy for external hiring. Perhaps the most relevant topic today is whether your function or firm is an employer of choice, where existing talent feels it can thrive, face interesting and diverse challenges and, of course, meet financial objectives.”

Transferable skills 

Transferable skills are an area where employers can definitely do more. Currently, an estimated 25% of the supply chain workforce is at, or beyond, retirement age, leaving many procurement teams with an aging, unqualified workforce. Statistics suggest around 70% of procurement professionals feel there is a lack of career path.

What can be done to entice more people into procurement at the start of their  careers, and where can we find transferable skills in other functions?

“We need to think differently when it comes to talent pipelining,” says Stephen. “Encouragingly, things are changing. It was not so long ago that the primary route was through a university degree, but nowadays employers offer a more modern form of apprenticeship with part-time degrees. The challenge for employers is how to engage with a younger talent pool to steer them into a career in procurement and supply chain.”

“As a profession, we should encourage rotation through the functions. Rather than looking externally for talent, we should look within the organisation. Imagine the power of seconding a marketing expert to work with the sourcing team to fix the commercial arrangements with an advertising agency, or an HR expert working on a contingent workforce sourcing model. In my experience, this leads to much-improved outcomes, particularly as you transition from sourcing to on-going contract and relationship management with the selected supplier.”

Fresh approach

The expectation of procurement has significantly changed, yet it seems the approach to hiring talent and talent management has not. Executive boards with negative perceptions of the function, or CPOs who believe there is a skills gap in their team, may recognise a need to change, yet are unsure of what change should or could look like. Hiring is often done through a lens of fixing a particular problem, rather than maximising the opportunity to try something completely new.

Until we have a fresh approach to talent, looking more widely at transferable skills, broader backgrounds and a less risk-averse approach, this is a topic we will continually discuss.

 

Disclaimer: the opinions expressed in this article are those of the author and do not necessarily represent those of Spend Matters. 

Voices (3)

  1. Tom Graham:

    These are some really interesting points that you’ve raised and I often wonder if this style of hiring is down to managers being ‘lazy’ or risk adverse? There’s a view that actually suggests ‘no sector experience’ is an excuse used when there is nothing else to separate two candidates, although I agree that we often, we ‘ square peg- square hole’ hires, when things could be done differently.
    It’d be interested knowing if this is siloed within the procurement function though- my experience would say it’s not?
    I agree with you though, some of the most talented procurement functions I know have come from bringing diversity of thought to the table. My second paper on this topic is about bringing in talent from different functions and how this delivers outstanding results (link below).

    https://www.berwickpartners.co.uk/what-we-think/leadership-insights/the-future-of-talented-procurement-teams-12424/

    1. MA:

      Some good points there Tom. Often the battle hatches go down say for example where such a different approach was used and deemed not a successful one. I do see why the risk adverse nature comes to the fore when there are so many differing priorities to manage, probably time being the main one. I’ve sat with many managers in the past and when it comes to recruiting new talent, rather than taking the opportunity to review job specifics and the kind of talent we want to attract, the same old job description is dusted off and the dates on the JD changed and thrown out there. I find when recruiting it serves as an opportunity to reflect on myself and if I am live and current not just for the organisation I serve, but the profession too. If it’s a good time to change the way we do things, it is a good time to get the people in that can help drive that change.

      I agree with the developing procurement professionals from other functions. The Public Sector has done well with this with commissioners in services. IT has to be the biggest no brainer given the shortage in that specific category. However, many who have gone through various procurement exercises or activities are not enamoured with doing it on a daily basis given the feeling mainly is one of a hard slog to achieve an outcome.

      Being bold in looking in different markets for talent isn’t tearing up the rulebook, but more just bringing in a set of fresh eyes.

  2. MA:

    Somewhat of an oversight with the view here on why there is a talent shortage. I disagree there is a shortage on the scale that has been overstated. I believe in terms of hiring and seeking out talent that many hirers have become lazy. Many of the barriers and lazy approaches I have witnessed has been:

    – Too much emphasis on sector/industry experience. Making the wild assumption with what has worked well previously will work well forever
    – Lack of understanding with what skills and experience that a procurement professional currently owns and how that can deliver within a sector/industry
    – CIPS qualification not being more universally recognised in the profession which drives the 2 recurring behaviours above

    What was interesting about the Hays/CIPS salary guide whereby Soft Skills was seen as one of the major requirements procurement functions were looking for which you’ll find possessed by many across the profession and in all of the sectors and industry. Yet, the same behaviours continue on. It’s like the battle cry “What do we want?” “Change” “When do we want it?” “Never”

    I will say I have a seen a handful of organisations changing their approach to recruiting and are removing those barriers. Seeing experience as something gained through opportunity rather than looking for the perfect solution and absolutely shorting their own target talent pool. Seeing an experienced procurement professional as just that, a procurement professional regardless of sector, industry experience.

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