Research & Surveys
Creating Opportunities for Talented Practitioners
March/April 2013, eSide Supply Management Vol. 6, No. 2
According to a CAPS Research benchmarking report, many companies are experiencing a lack of qualified supply management job candidates and are beginning to consider talent management as a viable business strategy.
Finding and retaining supply chain management practitioners can be challenging for most supply management organizations. However, several companies are committed to adapting their talent management strategies as business and global strategies evolve, according to a report by CAPS Research, Maintaining a Talented Workforce in the Supply Management Organization Metric Report 2012.
CAPS Research, based in Tempe, Arizona, first studied talent management in a November 2009 survey and report jointly developed by CAPS Research, the Ohio State University Fisher College of Business and Rutgers Business School. The 2012 survey was developed to show the research team how talent management strategies have changed and to capture new information about the impact of technology in today's work environment. This report contains some intriguing facts.
Respondents reported the functions most frequently included in their supply management organization and the number of staff members assigned to each function. The top five functions were, in order: procurement/purchasing; contracts administration; administrative support; supplier relationship management; and logistics. These are considered the core functions within any supply management organization. Very few organizations reported that accounts payable functions and risk management functions (about 8 percent and 20 percent, respectively) are assigned to the supply management organization. The actual size of the supply management organizations has been growing. More than half of the companies surveyed (51 percent) reported an increase in the total number of supply management employees between 2009 and 2012. Twenty-two percent said the number has not changed, and about 27 percent reported a drop in the number of supply management employees.
It was also noted that about 80 percent of those surveyed reported talent shortages in one or more of the aforementioned function areas. This is in contrast to the CAPS Research Talent Management Benchmarking Report from 2009, when only 46 percent of survey respondents said they were lacking employees with skills in those particular functions.
The Challenge to Find Qualified Talent
In 2009, it wasn't quite as difficult to find qualified talent for open positions as it is today. In the 2012 report, 58 percent said they were able to fill all the open positions with qualified candidates, but in 2009, 80 percent found the right talent. What has changed to make the qualified-candidate search such a challenge?
According to the survey results, most companies cited several reasons. An overall lack of qualified candidates was cited as the primary reason for almost 80 percent of respondents, and a freeze on hiring affected about 40 percent of the survey populations. The inability to offer higher compensation was a roadblock for almost 20 percent. In other cases, participants wrote in reasons such as, "Geographic needs not aligned with local talent supply" and "Market pressure due to overall increase in hiring in companies like ours, and customers hiring these types of resources."
It was also harder to find qualified applicants for positions requiring complex tasks such as risk management, quality assurance, procurement/purchasing and contracts administration. While 40 percent of respondents said it was "not difficult" to find qualified candidates for their organization's procurement and purchasing function, 53 percent reported it was "difficult" or "very difficult" to do so. The survey's authors conclude this is likely due to the different levels of supply management experience being sought. According to the survey results, one company that hired a large number of new employees over the past year mostly reported they hired recent college graduates to fill entry level positions which require little or no practical experience.
One of the main concerns when employees cannot be found to perform certain tasks or fill positions is that some of the work will not be completed. The survey asked what companies did when jobs went unfilled, and found that the work is either being completed by someone else, the task may be automated or the work simply doesn't get done. Some companies reported they have invested in automated tools to offset staffing shortages, outsourced certain supply management functions or used temporary employees to perform different functions. One thing was clear, however: Having the flexibility to assign additional work to current supply management employees was rated "very important" both in the 2009 and 2012 surveys. Employees today should prepare themselves for additional responsibilities if the need arises to take on extra assignments. It could very well become a regular part of the employment landscape when qualified talent is scarce.
Salary and Skill Levels
Some organizations may need to exceed salary guidelines if they want to attract the qualified talent they need. Survey participants were asked if "normal" salary guidelines were exceeded in both 2009 and 2012. In 2009, 24 percent of the responses indicated that they did have to offer more compensation, and in 2012, that increased to 31 percent. The most common amount by which salary guidelines were exceeded by survey participants was between 6 percent to 10 percent. Just over 10 percent of those who exceed salary guidelines had to pay 15 percent or higher to get qualified candidates to join their organizations.
Paying more for skilled employees might make sense when the future demands of the supply chain management profession are brought into consideration. A new question on the 2012 survey asked respondents to rate certain statements regarding skill level on a scale of 1 to 5, with 1 equaling "highly unlikely" and 5 being "highly likely," and most companies reported it highly likely they'll need to ramp up the skill levels of their employees in the next two years. The report also shows more companies plan to increase the use of automated technology than outsource job functions. The statements and their average rate and likelihood were reported as follows:
- "There is a need to increase the skill level of existing personnel in my supply management organization." Average rate: 4.22; Likelihood: Highly likely
- "Outsourcing of supply management job functions is expected to increase." Average rate: 2.16; Likelihood: Likely
- "We will increase our use of automated tools and technology." Average rate: 3.82; Likelihood: Likely.
The survey also found that it was unlikely that companies will offshore (in any great quantity) their supply management responsibilities. These companies do not plan to delegate supply management employees and responsibilities to the business unit level as a means to offset talent shortages. Clearly, those surveyed felt it was much more valuable to raise the skill level of current employees during the next two years, and keep certain job functions within the supply management organization.
Of course, if an organization plans to increase the skills of its employees, a logical first step is to take stock of current skill levels. Survey participants were asked if their organizations have a formal process in place to measure the skills of their supply management employees, such as ISM's Diagnostic Needs Analysis (DNA™). However, most of the companies surveyed are not using formal processes for skills measurement — only 31 percent of the survey population reported having a formal process in place.
As far as how much money is spent on each employee for professional development, the survey respondents spent an average of US$982 each year. The survey data range from a high of $4,333 per person, to a low of $0 per person.
Often, training and development budgets are victims of reduced corporate budgets, especially in a downward business economy. The authors of the report state, "An improving economy might signal that additional dollars are budgeted for development and training, but this might not necessarily be the top priority for supply management leaders." As the survey results indicated, improving job training and skills development will be of key importance during the next two years, so it's likely this will influence the amount of dollars budgeted for professional development and training.
In the final three benchmarks of the report, survey participants were asked to report the extent to which their organization encourages supply management employees to improve their skills and/or work toward professional certification. The survey data indicated that 78 percent feel their organizations encourage or highly encourage their supply management employees to improve their professional skills. At the other end of the spectrum, 6 percent said their organizations are not actively encouraging this kind of development.
Regarding professional certification, such as the CPSM® or CPSD®, 93 percent of the participants provided an answer to this question on the survey. Of those, every participant who answered the question about "actively encouraging professional certification" also answered the question about "compensation being adjusted for professional certification." The report shows that 64 percent of the organizations surveyed encourage their supply management employees to purse a professional certification, but only 19 percent of their companies currently adjust salaries based on professional certification.
Detailed data of the report have been released to all of the survey participants and are now posted on the CAPS Research website (www.capsresearch.org). This also includes a list of participating companies as well as five addendums. To view the metric report, click here: Maintaining a Talented Workforce in the Supply Management Organization. You will be prompted to enter your CAPS Research login and password to download the PDF.
Lisa Arnseth is a senior writer at Institute for Supply Management™. For more information, send an email to email@example.com.
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