More than 50% of employers around the world struggle to find procurement talent and the percentage goes up to 73% when it comes to senior leadership and executive positions, finds a CIPS conducted survey. The percentages tend to increase every year.
But it’s not only procurement which suffers from a shortage of talent, this is a struggle for most departments and industries.
There is no main reason why this is happening, it is rather a mix of reasons, from talent shortage, lack of sector skills and experience to budget restraints, salary expectations and organisational fit.
According to the same study, it seems that each year less procurement managers expect to hire new people in their team. This raises the question: Have they given up hope or decided to outsource instead? Probably the latter.
The above summarises the situation, now let’s look at some of these reasons and analyse how they became an issue.
1. Procurement’s perception within the organisation
For many organisations procurement is still perceived as a back-office function, rather than a strategic business partner. This affects procurement’s reputation and desirability to potential candidates.
Although things have improved over the last years and more and more businesses involve procurement in their strategic decisions, businesses need to understand that a close collaboration with their procurement department is needed to ensure cost effective processes are followed, savings are achieved and procurement is aligned to the organisational strategy.
This last phrase makes us think of another issue procurement needs to solve, which is aligning its own strategy to the business strategy. More often than not procurement doesn’t build or align its objectives to the strategic outcomes of the business.
We believe there is room for a more collaborative approach from both the business and the procurement function, as it shouldn’t be about working in a back-office function, it should be about working in a revenue generating strategic function.
2. Many employers only accept applications from candidates with experience in their sector
We know that experience in the industry in which the company operates, is a must-have skill for most candidates. Procurement is no exception to this rule and must understand how this translates to their own needs.
On one hand, many companies buy very specific, niche goods and services, and knowing what attributes to look for is very important for the business. They are looking for procurement professionals that really understand the goods and services required and know how to find the best cost/quality ratio even for niche products.
On the other hand, this kind of approach really shrinks the talent pool.
Procurement, as well as HR departments need to know when to compromise. It’s OK to wait for the right person, with the right set of skills to fill a position, but at a certain point waiting too long might be damaging to the business and companies need to keep an open mind and look for transferrable skills.
3. In an uncertain business environment budget restraint are becoming a bigger issue
The shortage of talent companies are facing, whether we’re talking about procurement or other parts of the business, is very much due to the uncertain business environment companies are operating in. With the risks of an economic crisis, political issues or natural disasters, companies are operating in a precarious world. On top of this we also need to add the constant pressure of cost savings, especially when it comes to procurement.
Let’s take this scenario: your business is growing, and it has been for the last year. What if there was a political conflict in the country your suppliers are operating? This is just one example of an issue companies are raising when it comes to the question of: “Should we expand?”
Another issue when it comes to budget restraints are salary expectations. It often happens that the right candidate for your business has salary expectations that are too high which your company can’t afford without increasing risk.
Note: If budget restraints are one of the issues your company is facing you might want to check back in for part 2 of this blog series where we will be talking about outsourcing.
4. The continuous struggle of hiring of new talent vs development of talent internally
A recent Deloitte survey found that 72% of respondents spend less than 2% of operating budgets on training and development. Having in mind the topic of this article – shortage of talent in procurement – that is a worrisome number.
Could it be that companies are not allocating enough resources for the development of their procurement teams? Which, in turn, has led to a shortage of skills in procurement, under-prepared staff and low employee loyalty? Most certainly yes.
Managing existing talent should be as important as the strategy for external hiring, if not even more important. Most successful organisations have understood this and started to allocate more resources to the development of their internal talent.
In addition to this, companies must keep in mind the importance of periodical reviews, employee satisfaction surveys and the concept of transferable skills within different departments. This can allow organisations to get a different perspective on things – you never know how a marketing manager could help fix the commercial arrangements with an advertising agency or how a salesperson could help with a contract negotiation situation.
The issue of shortage of talent in procurement is getting more and more serious and besides the lack of talent, companies are also facing an aging existing procurement and supply chain workforce, that is at or beyond retirement age.
Stay tuned for part 2 of this blog series as we explore some of the solutions that can help companies tackle the issue of shortage of talent in procurement.