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.
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